The Bailout Simplified: Courtersy of vexati0n
THE BAILOUT PLAN SIMPLIFIED
STAGE 1: DEREGULATION
MILLIONS OF POOR AND MIDDLE-CLASS AMERICANS CLAMOR FOR BETTER OPPORTUNITIES,
ESPECIALLY HOME OWNERSHIP. THEY ARE TIRED OF GETTING THE SHORT END OF THE STICK
EVERY TIME, AND DEMAND A PIECE OF THE "AMERICAN DREAM."
PRESIDENT BUSH AND HIS DEREGULATION BUDDIES RIDE TO THE RESCUE. "WE'LL GIVE YOU
WHAT YOU WANT," THEY DECLARE, "WE'LL CALL IT 'THE OWNERSHIP SOCIETY,' AND WE'LL
TAKE AWAY THOSE ROTTEN REGULATIONS THAT STAND BETWEEN YOU AND THE AMERICAN DREAM."
BUSH PROCEEDS TO HACK AWAY AT THE POWERS OF REGULATORY AGENCIES AND COMMISSIONS TO
GOVERN BUSINESS PRACTICES ON WALL STREET.
STAGE 2: BOOM ON WALL STREET
BANKS BEGIN ISSUING LOANS THAT WOULD HAVE BEEN CONSIDERED UNETHICAL OR EVEN ILLEGAL
UNDER PREVIOUS STANDARDS. BALLOONING INTEREST RATE LOANS, A LACK OF CREDIT CHECKING,
AND POOR DETECTIVE SKILLS ON THE PART OF LENDERS RESULTS IN AN ENORMOUS SURGE IN THE
VOLUME OF NEW HOMES BOUGHT ON CREDIT. THIS DRIVES A REAL ESTATE BOOM LIKE NEVER SEEN
BEFORE IN THE US.
ENCOURAGED BY THE REAL ESTATE BOOM AND THE APPARENT SUCCESS OF FINANCIAL DEREGULATION,
BANKS AND PRIVATE INVESTORS FROM EVERY SECTOR OF THE ECONOMY BEGIN BUYING MORTGAGES
FROM REAL ESTATE LENDERS, AND USING THEM AS COLLATERAL FOR THEIR OWN LOANS AND OTHER
FINANCIAL OBLIGATIONS. THESE LOANS, IN TURN, ARE TRADED AS WELL, RESULTING IN A HUGE
INCREASE IN THE VOLUME OF THE STOCK MARKETS.
MIND YOU, THE ECONOMIC GROWTH IS BASED NOT ON ANY NEW GOODS OR SERVICES, BUT ON
SPECULATION, OR THE EXPECTATION THAT EVERYTHING FROM THE ORIGINAL MORTGAGES TO
LOANS AND STOCKS BASED ON THOSE MORTGAGES WILL CONTINUE TO GAIN VALUE.
STAGE 3: HOUSING CRASH
THE MORTGAGES SIGNED IN STAGE 2 BEGIN TO MATURE. INTEREST RATES RISE, AND HOMEOWNERS
ARE EXPECTED TO MAKE INCREASINGLY LARGE MONTHLY PAYMENTS. PROBLEM IS, MANY OF THESE
PEOPLE NEVER SHOULD HAVE BEEN GIVEN THESE LOANS IN THE FIRST PLACE, BUT THANKS TO THE
DEREGULATION OF THE BANKING INDUSTRY, THE ORIGINAL LENDERS DIDN'T HAVE TO ACTUALLY
KNOW THAT BEFORE SIGNING THE PAPERS.
PEOPLE BEGIN DEFAULTING ON LOANS THEY ARE UNABLE TO REPAY. BANKS NOTICE THIS, AND PANIC.
THEY KNOW THEY'VE SOLD THEMSELVES SHORT. A RAPID DEFLATION OF THE HOUSING MARKET
ENSUES AS BANKS DO EVERYTHING THEY CAN TO OFFLOAD MORTGAGES THEY ARE AFRAID WILL NOT BE
REPAID. HOUSES BEGIN TO BE FORECLOSED BY THE TENS OF THOUSANDS. HUNDREDS OF THOUSANDS OF
PEOPLE SUPPOSEDLY "LIFTED UP" BY BUSH'S "OWNERSHIP SOCIETY" ARE NOW HOMELESS AND HAVE
RUINED CREDIT RATINGS.
STAGE 4: THE CRASH SPREADS
THE BANKS THAT HAD PREVIOUSLY HELD THESE BAD MORTGAGES FIND THAT THEY HAVE USED THEM AS
COLLATERAL FOR TOO MANY OTHER OBLIGATIONS. WHEN WORD GETS OUT THAT THE ULTIMATE BASIS
FOR MANY BANKS' OWN CREDIT RATINGS IS FALTERING, BANKS BEGIN TO DISTRUST ONE ANOTHER.
AS BANKS STOP TRADING WITH AND LOANING MONEY TO EACH OTHER, THE ECONOMY IS AT RISK OF
SEIZING UP. THE PANIC SPREADS TO OTHER SECTORS OF THE ECONOMY AS FINANCIAL PROFESSIONALS
VOICE THEIR FEARS THAT AN UNSTABLE HOUSING MARKET COULD HAVE NEGATIVE EFFECTS ALMOST
EVERYWHERE.
THE GOVERNMENT, IN A FRANTIC ATTEMPT TO GET THE ECONOMY MOVING FROM THE OTHER, MORE
DIRECT END -- CONSUMER SPENDING -- SENDS 1.5 BILLION DOLLARS IN "TAX REBATE" CHECKS TO
THE AMERICAN PUBLIC. THIS GIVES THE ECONOMY JUST ENOUGH POWER TO MAKE IT THROUGH THE
SUMMER.
IN LATE SUMMER 2008, THE RESULTS OF THE HOUSING CRASH ARE BEGINNING TO BE SEEN. MILLIONS
OF JOBS HAVE BEEN LOST, THE ECONOMY IS STAGNATING, AND BANKS CONTINUE TO WRESTLE WITH
THEIR BAD JUDGMENT. THE PROBLEM IS MADE WORSE BY THE FACT THAT MANY LARGE FINANCIAL
INSTITUTIONS AND BANKS HAVE GONE BANKRUPT. FIRMS THAT WITHSTOOD THE GREAT DEPRESSION ARE
BOUGHT OUT, RAIDED, AND DESTROYED BY THIS CRISIS. PEOPLE ACROSS THE COUNTRY ARE GROWING
UNCERTAIN OF THEIR FINANCIAL FUTURE AND STOP PUSHING THE ECONOMY BY SPENDING MONEY
ON USELESS CRAP.
STAGE 5: THE BAILOUT
FACED WITH THE POTENTIAL FOR A GLOBAL ECONOMIC MELTDOWN SO BIG IT WOULD MAKE THE GREAT
DEPRESSION LOOK A NEOCONSERVATIVE'S BRAIN, PRESIDENT BUSH, SUPPOSEDLY A 'SMALL-GOVERNMENT
CONSERVATIVE,' MOVES TO PUT INTO ACTION THE LARGEST WELFARE PACKAGE EVER CONCEIVED. HIS
PLAN IS TO TAKE BETWEEN 700 BILLION AND 1 TRILLION DOLLARS FROM THE POCKETS OF AMERICAN
TAXPAYERS, AND GIVE IT TO THE BANKS AND OTHER FINANCIAL INSTITUTIONS WHO CREATED THIS MESS
IN THE FIRST PLACE BY MAKING CARELESS LOANS TO PEOPLE WHO DIDN'T KNOW ANY BETTER, SO THEY
CAN KEEP DOING BUSINESS.
IN THE HISTORY OF FREE MARKETS AND CAPITALISM, THERE HAS NEVER BEEN A MOVE SO DECISIVELY
AND REGRESSIVELY SOCIALIST AS THIS. RATHER THAN ALLOWING RICH CORPORATE FAT-CATS, WHO CAN
AFFORD TO LOSE THE MONEY, TO INCUR THE CONSEQUENCES OF THEIR OWN MISGUIDED GREED AND BAD
JUDGMENT, THE PRESIDENT IS PROPOSING THE AMERICAN PEOPLE, WHO ALL ALONG HAVE BEEN TRUSTING
THEIR GOVERNMENT TO STEER OUR ECONOMY WISELY AND HAVE BORN THE BRUNT OF THIS ECONOMIC
CRISIS, ACTUALLY SPEND THE NEXT 50 YEARS PAYING FOR THE PRIVILEGE OF BEING MILKED DRY BY
A GANG OF CORRUPT PIGS.
THE DEMOCRATS, MEANWHILE, ARE WRINGING THEIR HANDS ABOUT IT (BIG SURPRISE).
-Vexati0n
http://www.discoflux.com/node/263
STAGE 1: DEREGULATION
MILLIONS OF POOR AND MIDDLE-CLASS AMERICANS CLAMOR FOR BETTER OPPORTUNITIES,
ESPECIALLY HOME OWNERSHIP. THEY ARE TIRED OF GETTING THE SHORT END OF THE STICK
EVERY TIME, AND DEMAND A PIECE OF THE "AMERICAN DREAM."
PRESIDENT BUSH AND HIS DEREGULATION BUDDIES RIDE TO THE RESCUE. "WE'LL GIVE YOU
WHAT YOU WANT," THEY DECLARE, "WE'LL CALL IT 'THE OWNERSHIP SOCIETY,' AND WE'LL
TAKE AWAY THOSE ROTTEN REGULATIONS THAT STAND BETWEEN YOU AND THE AMERICAN DREAM."
BUSH PROCEEDS TO HACK AWAY AT THE POWERS OF REGULATORY AGENCIES AND COMMISSIONS TO
GOVERN BUSINESS PRACTICES ON WALL STREET.
STAGE 2: BOOM ON WALL STREET
BANKS BEGIN ISSUING LOANS THAT WOULD HAVE BEEN CONSIDERED UNETHICAL OR EVEN ILLEGAL
UNDER PREVIOUS STANDARDS. BALLOONING INTEREST RATE LOANS, A LACK OF CREDIT CHECKING,
AND POOR DETECTIVE SKILLS ON THE PART OF LENDERS RESULTS IN AN ENORMOUS SURGE IN THE
VOLUME OF NEW HOMES BOUGHT ON CREDIT. THIS DRIVES A REAL ESTATE BOOM LIKE NEVER SEEN
BEFORE IN THE US.
ENCOURAGED BY THE REAL ESTATE BOOM AND THE APPARENT SUCCESS OF FINANCIAL DEREGULATION,
BANKS AND PRIVATE INVESTORS FROM EVERY SECTOR OF THE ECONOMY BEGIN BUYING MORTGAGES
FROM REAL ESTATE LENDERS, AND USING THEM AS COLLATERAL FOR THEIR OWN LOANS AND OTHER
FINANCIAL OBLIGATIONS. THESE LOANS, IN TURN, ARE TRADED AS WELL, RESULTING IN A HUGE
INCREASE IN THE VOLUME OF THE STOCK MARKETS.
MIND YOU, THE ECONOMIC GROWTH IS BASED NOT ON ANY NEW GOODS OR SERVICES, BUT ON
SPECULATION, OR THE EXPECTATION THAT EVERYTHING FROM THE ORIGINAL MORTGAGES TO
LOANS AND STOCKS BASED ON THOSE MORTGAGES WILL CONTINUE TO GAIN VALUE.
STAGE 3: HOUSING CRASH
THE MORTGAGES SIGNED IN STAGE 2 BEGIN TO MATURE. INTEREST RATES RISE, AND HOMEOWNERS
ARE EXPECTED TO MAKE INCREASINGLY LARGE MONTHLY PAYMENTS. PROBLEM IS, MANY OF THESE
PEOPLE NEVER SHOULD HAVE BEEN GIVEN THESE LOANS IN THE FIRST PLACE, BUT THANKS TO THE
DEREGULATION OF THE BANKING INDUSTRY, THE ORIGINAL LENDERS DIDN'T HAVE TO ACTUALLY
KNOW THAT BEFORE SIGNING THE PAPERS.
PEOPLE BEGIN DEFAULTING ON LOANS THEY ARE UNABLE TO REPAY. BANKS NOTICE THIS, AND PANIC.
THEY KNOW THEY'VE SOLD THEMSELVES SHORT. A RAPID DEFLATION OF THE HOUSING MARKET
ENSUES AS BANKS DO EVERYTHING THEY CAN TO OFFLOAD MORTGAGES THEY ARE AFRAID WILL NOT BE
REPAID. HOUSES BEGIN TO BE FORECLOSED BY THE TENS OF THOUSANDS. HUNDREDS OF THOUSANDS OF
PEOPLE SUPPOSEDLY "LIFTED UP" BY BUSH'S "OWNERSHIP SOCIETY" ARE NOW HOMELESS AND HAVE
RUINED CREDIT RATINGS.
STAGE 4: THE CRASH SPREADS
THE BANKS THAT HAD PREVIOUSLY HELD THESE BAD MORTGAGES FIND THAT THEY HAVE USED THEM AS
COLLATERAL FOR TOO MANY OTHER OBLIGATIONS. WHEN WORD GETS OUT THAT THE ULTIMATE BASIS
FOR MANY BANKS' OWN CREDIT RATINGS IS FALTERING, BANKS BEGIN TO DISTRUST ONE ANOTHER.
AS BANKS STOP TRADING WITH AND LOANING MONEY TO EACH OTHER, THE ECONOMY IS AT RISK OF
SEIZING UP. THE PANIC SPREADS TO OTHER SECTORS OF THE ECONOMY AS FINANCIAL PROFESSIONALS
VOICE THEIR FEARS THAT AN UNSTABLE HOUSING MARKET COULD HAVE NEGATIVE EFFECTS ALMOST
EVERYWHERE.
THE GOVERNMENT, IN A FRANTIC ATTEMPT TO GET THE ECONOMY MOVING FROM THE OTHER, MORE
DIRECT END -- CONSUMER SPENDING -- SENDS 1.5 BILLION DOLLARS IN "TAX REBATE" CHECKS TO
THE AMERICAN PUBLIC. THIS GIVES THE ECONOMY JUST ENOUGH POWER TO MAKE IT THROUGH THE
SUMMER.
IN LATE SUMMER 2008, THE RESULTS OF THE HOUSING CRASH ARE BEGINNING TO BE SEEN. MILLIONS
OF JOBS HAVE BEEN LOST, THE ECONOMY IS STAGNATING, AND BANKS CONTINUE TO WRESTLE WITH
THEIR BAD JUDGMENT. THE PROBLEM IS MADE WORSE BY THE FACT THAT MANY LARGE FINANCIAL
INSTITUTIONS AND BANKS HAVE GONE BANKRUPT. FIRMS THAT WITHSTOOD THE GREAT DEPRESSION ARE
BOUGHT OUT, RAIDED, AND DESTROYED BY THIS CRISIS. PEOPLE ACROSS THE COUNTRY ARE GROWING
UNCERTAIN OF THEIR FINANCIAL FUTURE AND STOP PUSHING THE ECONOMY BY SPENDING MONEY
ON USELESS CRAP.
STAGE 5: THE BAILOUT
FACED WITH THE POTENTIAL FOR A GLOBAL ECONOMIC MELTDOWN SO BIG IT WOULD MAKE THE GREAT
DEPRESSION LOOK A NEOCONSERVATIVE'S BRAIN, PRESIDENT BUSH, SUPPOSEDLY A 'SMALL-GOVERNMENT
CONSERVATIVE,' MOVES TO PUT INTO ACTION THE LARGEST WELFARE PACKAGE EVER CONCEIVED. HIS
PLAN IS TO TAKE BETWEEN 700 BILLION AND 1 TRILLION DOLLARS FROM THE POCKETS OF AMERICAN
TAXPAYERS, AND GIVE IT TO THE BANKS AND OTHER FINANCIAL INSTITUTIONS WHO CREATED THIS MESS
IN THE FIRST PLACE BY MAKING CARELESS LOANS TO PEOPLE WHO DIDN'T KNOW ANY BETTER, SO THEY
CAN KEEP DOING BUSINESS.
IN THE HISTORY OF FREE MARKETS AND CAPITALISM, THERE HAS NEVER BEEN A MOVE SO DECISIVELY
AND REGRESSIVELY SOCIALIST AS THIS. RATHER THAN ALLOWING RICH CORPORATE FAT-CATS, WHO CAN
AFFORD TO LOSE THE MONEY, TO INCUR THE CONSEQUENCES OF THEIR OWN MISGUIDED GREED AND BAD
JUDGMENT, THE PRESIDENT IS PROPOSING THE AMERICAN PEOPLE, WHO ALL ALONG HAVE BEEN TRUSTING
THEIR GOVERNMENT TO STEER OUR ECONOMY WISELY AND HAVE BORN THE BRUNT OF THIS ECONOMIC
CRISIS, ACTUALLY SPEND THE NEXT 50 YEARS PAYING FOR THE PRIVILEGE OF BEING MILKED DRY BY
A GANG OF CORRUPT PIGS.
THE DEMOCRATS, MEANWHILE, ARE WRINGING THEIR HANDS ABOUT IT (BIG SURPRISE).
-Vexati0n
http://www.discoflux.com/node/263