And the bail out goes right in to the toilet

[sasvermont]

WTF?

We should put Buffett in charge of this mess.

By James B. Kelleher - Analysis

CHICAGO (Reuters) - On Main Street, insurance protects people from the effects of catastrophes.

But on Wall Street, specialized insurance known as a credit default swaps are turning a bad situation into a catastrophe.

When historians write about the current crisis, much of the blame will go to the slump in the housing and mortgage markets, which triggered the losses, layoffs and liquidations sweeping the financial industry.

But credit default swaps -- complex derivatives originally designed to protect banks from deadbeat borrowers -- are adding to the turmoil.

"This was supposedly a way to hedge risk," says Ellen Brown, the author of the book "Web of Debt."

"I'm sure their predictive models were right as far as the risk of the things they were insuring against. But what they didn't factor in was the risk that the sellers of this protection wouldn't pay ... That's what we're seeing now."

Brown is hardly alone in her criticism of the derivatives. Five years ago, billionaire investor Warren Buffett called them a "time bomb" and "financial weapons of mass destruction" and directed the insurance arm of his Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research, Stock Buzz) to exit the business.

[Karen]

It seems counterintuitive to let the people who got us into this mess in the first place to legislate our way out of it ... or to expect anyone to play nice in an election year ...

Never mind it's "we the people" who are hardest hit by all this ... the $700 billion is coming from whose pockets? Uh huh ...

But I hope that cooler, calmer heads prevail and some compromise or solution is worked out, and soon.

[Marigold2]

I still cannot believe the American people were dumb enough to vote for Bush twice.

[Catlady711]

What I don't understand is how they think pouring all that money into bad debts is gonna solve? From one guy I heard on tv he said it's so people could continue to get credit. Well isn't credit what got everyone into this mess? What's wrong with good old CASH!!!

As it is our own government is living on credit, and the FDIC is talking about borrowing against the treasury which is just more credit.

Stop the madness!

I hope they don't pass the money pit bill ever for any amount of money.

[Edwina's Secretary]

What I don't understand is how they think pouring all that money into bad debts is gonna solve? From one guy I heard on tv he said it's so people could continue to get credit. Well isn't credit what got everyone into this mess? What's wrong with good old CASH!!!

As it is our own government is living on credit, and the FDIC is talking about borrowing against the treasury which is just more credit.

Stop the madness!

I hope they don't pass the money pit bill ever for any amount of money.

It is not that simple. Businesses need credit. Take retail for example. They borrow the money to buy the merchandise and then pay back the credit as they sell the merchandise. A manufacturer needs to invest in new equipment. They need to be able to borrow the money.

I don't know many people who can pay cash for a home. Most people take out a mortgage. That is credit.

An absence of credit means businesses cannot operate and people get laid off.

It is careless use of credit...careless granting of credit -- among many, many other things -- that created this mess.

[Lady's Human]

Gruss Gott in Himmel!!!!!

Sara makes a post I agree with!!!

(Hello, Macy's? Yeah, it's Satan. I'm looking for some skis and a nice, down filled Parka?)

Also, the bail out bill as originally written, while flawed (lack of oversight in the original bill), stood to not cost the US Treasury money, but actually could have made quite a bit in the long term.

"700 Billion Bailout" is a misnomer, and it just reinforces my hatred for the crap that passes for reporting in the mass media.

[Edwina's Secretary]

"700 Billion Bailout" is a misnomer, and it just reinforces my hatred for the crap that passes for reporting in the mass media.

Cop out -- blaming it on the media. The media gives the people what they want. Simple pithy reporting. Quick snapshot. Most people aren't looking for indepth analysis and wouldn't read it anyway. Did the media coin the phrase or just report it?

So what would you call it? That fits in a headline.

[Lady's Human]

It's not a bailout, it's more of a loan guarantee package, but bailout is a nice, juicy headline.

Heck, it's not even a $700 Billion package, that's the possible maximum amount under the package that might be put into play.

I know the media gives the people what they want, but the press needs to bear a little responsibility to go with the obvious power they have.

[Lady's Human]

BTW, Sara, it's not a cop out.

The headline CNN, Fox, and others have been reporting bears no resemblance to the actual meat of the story. At least TRY to make it accurate, guys.

[ramanth]

Thank you Sara for explaining it in terms I understand. My knowledge of stocks and such is so poor.

All I know is that my employer uses AIG for our 403b's. I'm not sure if I should just ride this out (since I'm young) or take all my money out and reinvest later.

[Puckstop31]

I still cannot believe the American people were dumb enough to vote for Bush twice.

I cannot believe you think this is his fault, all on his own.

I am NO fan of him, but you clearly have no idea how this came to be.

Not surprising, BTW.

Remember dear, CONGRESS spends the money.

[blue]

Remember dear, CONGRESS spends the money.

Quoted for troof!

[sparks19]

I still cannot believe the American people were dumb enough to vote for Bush twice.

I still cannot believe that the American people believe that this is the result of JUST 8 years... th is has been a long time coming. A lot longer than 8 measley years... even with a war. The US has been giving money away like it grows on trees for too long.

[Edwina's Secretary]

I still cannot believe that the American people believe that this is the result of JUST 8 years... th is has been a long time coming. A lot longer than 8 measley years... even with a war. The US has been giving money away like it grows on trees for too long.

Gosh! I didn't realize what an expert you are on US economics.

How long has it been? Please explain to us...American people...how it came about! Even with that pesky war!

[blue]

Gosh! I didn't realize what an expert you are on US economics.

How long has it been? Please explain to us...American people...how it came about! Even with that pesky war!

I dont see any reason to dissagree with her. Let me try and find the amount of money given out under the Carter administration alone.