Clark's message on the eve of the bailout bill re-vote on clarkhoward.com

As an American, Clark is frustrated by the strident polarization in politics and on the airwaves during these past few weeks. When the chips are down, people can either overcome their differences and work together, or magnify their differences and have a complete breakdown of trust.

The latter has happened several times in our nation's history. On the eve of the Civil War, our country split in two and there was enormous self-inflicted destruction and death. After the market crash of 1929, there was another breakdown in trust. History buffs can ponder the fact that borrowed money and speculation fueled the crash of 1929 -- and that's the same thing happening today!

By way of contrast, we've also overcome differences at many times throughout our history. Clark thinks back to when George Washington chose to stand down after a second term instead of becoming a dictator. Several decades later, the Supreme Court stood up to the president and created a viable third branch of government. There were also the financial crises of 1907, 1987 and 1998 when we pulled together to avert a meltdown.

Today, the breakdown in trust across the political and media spectrums has created an "us vs. them" mentality. As an independent who voted Libertarian during the last two presidential elections, Clark doesn't have a vested interest in partisan politics on Capitol Hill. Nor does he have a hidden political agenda -- though many posters on Clark Stinks seem to think he does.

Clark is concerned that we've depersonalized those who don't believe the same things we do. McCain, Obama, Palin and Biden all strike him as decent people and good Americans, though he may disagree with them on certain issues. But he finds it repulsive that people question the candidates' loyalty to the American way of life.

As a free-marketer, Clark hates that we are looking at bailing out Wall Street. But if we are to bail them out, he likes something clean like we did with AIG where the taxpayers got ownership. Unfortunately, that's not the route it appears we're heading down.

So should the chips instead just be allowed to fall as they may? No, capitalism requires a functioning capital sector. We need to prevent the world's financial systems from going into a deep freeze. Therefore, we need a bailout -- even though Clark doesn't like the current rescue plan.

Based on what he's saying here, Clark could never be re-elected as a politician, and you as a listener may be so mad that you'll never listen to him again. So be it. He firmly believes we must preserve our capitalist system -- even if that means going with the "least bad option" today.

What others are saying

response to 'liquidity solution' from previous comment
Your 'liquidity crisis solution' is ridiculous, isn't it? It appears that having the Federal Reserve lend with 0% interest isn't making that big of a difference, isn't it?

And the second part of your 'solution' doesn't make any sense. The banks should pool their money into the Federal Reserve System to back up the lending? That doesn't make any sense. Their money is already in the federal reserve system. Regardless, when the Fed lends money, both an asset AND a liability are created on its balance sheet--the banks have accounts at in the reserve. No need to 'pool' money, it's already there.
By Andrew @ 01/16/09 01:11:56 AMreport abuse
A real and new solution to the liquidity and solvency crisis in mortgage derivatives
Liquidity Crisis Solution: Since banks are refusing to lend to each other, have the Federal Reserve lend with no interest to any bank that needs it. Have the remaining banks pool funds into the Federal Reserve system to back up such lending.
Solvency Crisis Solution: Let banks keep their failed instruments and lose money on their balance sheets, to be reported as a business loss. Mortgage backed securities are not the bank's only line of business- they have other sources of revenue. Even if they are in the red, let them declare Chapter 11 and restructure, but do not shift the burden to the government since the dollar will be devalued and run up debt already in the trillions. We don't want the government and taxpayer losing the money that should be the bank's and their investors. If a bank fails, standard methods can be used to secure the insured deposits.
PS Where are the PhD's in Economics and University Professors - let them craft a plan rather than letting politicos with conflicts of interest go at it.
By Bob Mocalocalocalocaloca @ 10/03/08 01:45:56 AMreport abuse
Rescue Plan
Like everyone I don't like having to do this, but understand the necessity. What is really getting to me now is the tacking on of items for special interest groups. If we are going to do this let's keep it clean. Just dealing with the emergency at hand, not tax breaks for victims of Hurricane Ike and extention of tax benefits. Let's keep it what it is, a rescue bill to correct our credit situation.
By Judy Bennett @ 10/03/08 12:47:35 AMreport abuse
Bail Out the Fat Cats!!!
Let's get serious here. This so-called bail out is a feeble attempt to salvage the people who caused the crisis in the beginning. Ask yourselves,who best benefits from this bail-out? The American people who works for less than $100,000 per year or someone who has $250,000 to preserve in an bank account? Most people do not have 100k to 250k in an account to protect. And further more, how does that helps the economy? If the new bill is approx. 450 pages long, how many politicians on the Hill has actually read it? Why aren't the people on Capitol Hill not consulting with the financial and economic experts? Politicians are not equipped to resolved this matter along. That would be the equivalent of a OBGYN operating on a open-heart surgery patient. Sure they are both medical doctors but one is more equipped to do the job than the other.

I am not going to stand silently by and watch the government ruin the country chance of thriving and rising about these issues. I will vote against those politicians who are not in favor of the public's concerns and those who are only feathering their own nest. Any politician that has been in office over 2 terms is not working for the people anymore (or ever did). To be a politician for the people it requires hard work to change things for the benefit of all citizens. You can not have a personal agenda and a career-minded plan to further your wealth. You are their to represent the cry of the people and not to please yourselves or your friends in crime.

A bail out, what a joke! We, the Americans, are not stupied! There will come a day when we will elect people to fight for the people. Government is of the people, by the people, and for the people. What happened?!

God help us!!!!
By Charles @ 10/02/08 05:54:20 PMreport abuse
Jerry Shaw copy of Dave ramsey common sense fix
Thank you to Jerry Shaw for copying what Dave Ramsey said on his website and posting it here as his own, Nice job.
By Tim @ 10/02/08 04:54:19 PMreport abuse
The Common Sense Plan
You should say Dave Ramsey for Congress, the Common Sense Plan comes directly from DaveRamsey.com. give him the credit, not Jerry Shaw.
By k @ 10/02/08 04:48:01 PMreport abuse
I'll chip in to send Jerry to Washington...
Hey, let's get this guy an plane ticket and send him to Washington. I find it incredible that no one already there has not thought of a plan like his and fought for it.
By JL @ 10/02/08 04:47:41 PMreport abuse
Bailout
I did not favor a straight bailout as such. 1) The CEOs and Board of Directors shot themselves in the foot with those large bonus payments and they need to accept responsibility. 2)I do not see how the government can buy up the mortgages and come out a head. Who is going to be responsible for making sure that the properties are maintained so that there will be a market for them later on? 3)The government will have to create another agency just to monitor the situation. Properties in foreclosre cost banks a lot of money so what is the cost estimate for the government to take over the foreclosure properties. 4)The political influence over regulatory issues caused financial institutions to make loans to people who could not afford the payments. This needs a closer look since the systems can ill afford to have politicians telling private sector financial institutions what risks they must make when lending money to private consumers. 5) Members of both parties sold us out in this situation and many of them should not be representing us come next election.
By Lee Stark @ 10/02/08 02:52:23 PMreport abuse
Jerry Shaw makes sense
I like the common sense suggestions Jerry put forth...too bad the politicians are trying to fix this instead of the economist.... i read about a scary underlying problem to this whole mess in Fotune that i wanted to share with y'all...it seems like it could be the other shoe to fall after all this mess is patched up.
(Fortune Magazine) -- As Congress wrestles with another bailout bill to try to contain the financial contagion, there's a potential killer bug out there whose next movement can't be predicted: the Credit Default Swap.

In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they've played a critical role in the unfolding financial crisis. First, by ostensibly providing "insurance" on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

"If CDS had been taken out of play, companies would've said, 'I can't get this [risk] off my books,'" says Michael Greenberger, a University of Maryland law professor and former director of trading and markets at the Commodity Futures Trading Commission. "If they couldn't keep passing the risk down the line, those guys would've been stopped in their tracks. The ultimate assurance for issuing all this stuff was, 'It's insured.'"

Second, terror at the potential for a financial Ebola virus radiating out from a failing institution and infecting dozens or hundreds of other companies - all linked to one another by CDS and other instruments - was a major reason that regulators stepped in to bail out Bear Stearns and buy out AIG (AIG, Fortune 500), whose calamitous descent itself was triggered by losses on its CDS contracts.

And the fear of a CDS catastrophe still haunts the markets. For starters, nobody knows how federal intervention might ripple through this chain of contracts. And meanwhile, as we'll see, two fundamental aspects of the CDS market - that it is unregulated, and that almost nothing is disclosed publicly - may be about to change. That adds even more uncertainty to the equation.
for those interested the full story can be found here: http://money.cnn.com/2008/09/30/magazines/fortune/varchaver_derivatives_short.fortune/index.htm
By Dave @ 10/02/08 01:55:52 PMreport abuse
Jerry Shaw for Congress!!
This guy's plan seems to make about 700 billion times more sense than the one congress is going to pass. I'm not rich by any means making around $35000 a year, but the capital gains tax cut/elimination sounds like a common sense thing to me.
By Still Confused @ 10/02/08 01:44:07 PMreport abuse
pork barrel politics
The senate added billions of "sweeteners" to this bill to get the people in the house to push it through, even if they don't like or understand the main chunk of legislation...i wonder if they all read the entire plan and understand all 485 pages of it? foxnews was reporting some of the pork added to this package, including 6 million dollar tax break for a manufacturer of children's wooden arrows...WTF??...multi- billion dollar disaster fund for midwestern flood victims over the next 3 years, maybe i can see but tax breaks for toy companies? the media needs to explain this plan to the public, they also need to expose the pork so we can demand it be taken out. Our stupid representitives will vote for anything as long as it has local pork for them to pig out on. I say vote them all out and let a new crew in that can be part of the solution instead of part of the problem!
By Dave @ 10/02/08 01:39:32 PMreport abuse
The Melt Down
With 30 years of experience in tax and financial consulting and employee management I know and recognize there are always better-ideas.
Years of bad decisions and stupid mistakes have created an economic nightmare, but $700 billion in new debt is not the answer.
As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy.
Instead, I submit the following three steps:
Common Sense Plan.
I. INSURANCE
A. Insure the sub-prime onds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps under-performing executives from being paid when they don't do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only sub-prime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it's not a time for politics. It's time for all of us, as Americans, to stand up, speak out, and fix this mess. It is fixable, and without turning us into a Socialistic bureaucracy. P.S. And fire Paulsen.
Respectively, Jerry Shaw Shaw Investigation & Research
By Jerry Shaw @ 10/02/08 01:37:37 PMreport abuse
Thank you to the ones who voted nay dont let us down this time!
Come on those representative who are on our side. Clark what can I say I guess seeing eye to eye isn't an all the time thing. We don't need this bill in any way shape or form. That's it just hoping those nay say voters pull through for us again .
By Franchesca @ 10/02/08 01:32:30 PMreport abuse
Confused
I thought that congressmen and women were elected representatives of the American people. If they are passing a bill that a majority of Americans oppose (I have yet to talk to a single person who likes the idea), how exactly is it they are representing us? I'm no economics genius or anything, but it seems to me that this could be structured as a loan in which these companies and their CEO's put up some sort of collateral to help earn our trust so that they have a vested interest in seeing this thing succeed. As it stands, if it fails or succeeds, they will make out like bandits. Please look to see how your representatives voted and let them know we will not tolerate them ignoring the will of the people. Remember their betrayals when you enter the voting booth.
By John @ 10/02/08 01:10:34 PMreport abuse
If we don't do this....
It's absurd and outrageous that we are in this situation. I generally think government intervention is the worst solution to any problem. But the bottom line is, this has to be fixed. This has gone way beyond any ideological or political arguments about the merits of capitalism or free markets. You can't have either if there aren't any functioning financial institutions to support it. This isn't a matter of suffering a little more or less, or letting the chips fall where they may, or seeing the stock market fall a bit more. This bill is one of the last known potential brakes on a total global financial collapse. The true risk has been poorly communicated to the public. There are already healthy businesses, from huge corporations to tiny storefronts - and local governments all over the country - starting to find it difficult to operate this week since the bond markets seized up in the last month. Not to thrive - but simply to continue to operate. If you don't understand how the bond and credit markets work, this would be a good time to learn so you know what is at stake. It's clear the public is unaware of how close we came - and still are - to a complete global bank failure in the last couple of weeks. Although this bill won't begin to solve everything, it has to be passed if we are going to have even a chance.
By Sydney @ 10/02/08 01:03:06 PMreport abuse
Private Mortgage Insurance
Why are the Private Mortgage Insurance Companies not responsible for the failed mortgages?
By walt @ 10/02/08 01:00:39 PMreport abuse
Sunk if you do, sunk if you don't
I understand that americans and even the global economy could suffer if this bill is not passed. I just don't agree that we will suffer MORE. At least let us go through this awful time with our dignity intact. Was I in the bathroom when my representative called me to ask me what I wanted in this bill? There is not much in it that reflects what the HEART of America needs or what we would find acceptable. All I know is that someone's bread is getting buttered on both sides and it's not mine. Oh, and I pay my mortgage and taxes on time and have a savings account that actually has something in it...I'm not looking for a handout.
By JL @ 10/02/08 11:18:40 AMreport abuse
What????
Clark looks only at the US economy. Don't you understand that we are in an interconnected GLOBAL economy and that our failure breaks the world economies....Clark, take off the blinders!!
By Lindy @ 10/02/08 10:07:18 AMreport abuse
Bailout
You don't preserve a capitalist system by having the federal government own businesses. The government must be in a position to regulate - not participate. This is too slippery of a slope for my tastes.
By TC @ 10/02/08 08:36:04 AMreport abuse
Were Screwed
Clark, I might disagree with you on some things, but I would vote for you to be President, You would be a better choice than what we have now. As far as I see it we have two senators running for president that have been the part of the reason for this mess, and what more of a mess will they make with their great plans. I don't like this bailout of the fat cats on wall street one bit. Maybe they really need a harsh dose of medicine to get them to wake up to the fact that we the people have had enough of this crap. They need to go bankrupt and lose all of their money before we the people spend a dime on their screw-up! After all that what happens to the small guy and no one bails them out. Hey I want my bailout too damnit. No more taxes for people who make less than $250,000.00 a year, how about them apples, Wall Street Bankers with your golden parachute. time to cut the riser's so you can fall to earth with a great big splat.
By Grandpa Gene @ 10/02/08 12:59:11 AMreport abuse
Bailout
I agree with Clark and with Neil. I think a government bailout, the way it is currently proposed, only encourages future carelessness in our free market economy. How does the proposal in its present form discourage similar conduct in the future? Won't the passage of this bailout just lend itself to more poor lending practices in the future? How do we as taxpayers funding this bailout get rewarded for our investment?
By Todd @ 10/01/08 09:59:19 PMreport abuse
Bailout
Today they talked about FDIC per account to $250,000.00 up from the current $100,000.00. I don't get it, one would just be able to have a larger account. What does this have to do with the price of a pound of potatoes and this bailout, I just don't get it.
By Guy @ 10/01/08 09:25:40 PMreport abuse
We "all" are not living beyond our means
Speak for yourself. We have not "ALL" been living beyond our means. What rubbish. This collective mindset is ruining the country.
By Ken @ 10/01/08 08:14:40 PMreport abuse
Who are we kidding?
"We're all in this together" -- B-A-L-O-N-E-Y! That is what the neo-Marxists and their pals in DC want you to believe. The problem is worldwide, and is too large to be solved by any government interventions. The proposed bailout will simply delay the day of reckoning by a few months and allow the guilty parties here in the USA to slip out with a few ill-gained dollars in their pockets.

Our country is going to experience pain and suffering unlike anything this generation as ever known. The only way out is through. We will have to work harder for less over a period of years to extract ourselves.
By Ed G @ 10/01/08 07:03:35 PMreport abuse
Help me government, help me.
By me @ 10/01/08 06:05:39 PMreport abuse
Government Bailout Mess
The american people no longer control their government. This is but one more example.
By patdesign @ 10/01/08 05:57:10 PMreport abuse
bailout
Clark, I agree. We're all in this together and together we have ALL been living beyond our means. This horrible bailout is another way of saying the bill is due now!! Find a scapegoat on Wall Street if you want (Glass-Stiegle anyone?), but I suspect most of the guilty have been spending more than they make for too long.
By jim @ 10/01/08 04:50:38 PMreport abuse
This bill FAILED the first time for a reason!
If you truly hate the idea of this bailout, then do not support it. The entire bill has not even been released to the public yet! American's are outraged at what they've seen thus far, which makes one wonder... what is it that we HAVEN'T seen that is in this bill?

This is not a matter of finding the "least bad option". The crooks at the top have deliberately created a panic / fear, and are now trying to coerce us to give them more powers that go against OUR constitution. The reckless power grabbing needs to be stopped!
**********
"It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder." Frédéric Bastiat
By Al @ 10/01/08 03:51:22 PMreport abuse

response to 'liquidity solution' from previous comment

Your 'liquidity crisis solution' is ridiculous, isn't it? It appears that having the Federal Reserve lend with 0% interest isn't making that big of a difference, isn't it?

And the second part of your 'solution' doesn't make any sense. The banks should pool their money into the Federal Reserve System to back up the lending? That doesn't make any sense. Their money is already in the federal reserve system. Regardless, when the Fed lends money, both an asset AND a liability are created on its balance sheet--the banks have accounts at in the reserve. No need to 'pool' money, it's already there.

By Andrew @ 01/16/09 01:11:56 AMreport abuse

A real and new solution to the liquidity and solvency crisis in mortgage derivatives

Liquidity Crisis Solution: Since banks are refusing to lend to each other, have the Federal Reserve lend with no interest to any bank that needs it. Have the remaining banks pool funds into the Federal Reserve system to back up such lending.
Solvency Crisis Solution: Let banks keep their failed instruments and lose money on their balance sheets, to be reported as a business loss. Mortgage backed securities are not the bank's only line of business- they have other sources of revenue. Even if they are in the red, let them declare Chapter 11 and restructure, but do not shift the burden to the government since the dollar will be devalued and run up debt already in the trillions. We don't want the government and taxpayer losing the money that should be the bank's and their investors. If a bank fails, standard methods can be used to secure the insured deposits.
PS Where are the PhD's in Economics and University Professors - let them craft a plan rather than letting politicos with conflicts of interest go at it.

By Bob Mocalocalocalocaloca @ 10/03/08 01:45:56 AMreport abuse

Rescue Plan

Like everyone I don't like having to do this, but understand the necessity. What is really getting to me now is the tacking on of items for special interest groups. If we are going to do this let's keep it clean. Just dealing with the emergency at hand, not tax breaks for victims of Hurricane Ike and extention of tax benefits. Let's keep it what it is, a rescue bill to correct our credit situation.

By Judy Bennett @ 10/03/08 12:47:35 AMreport abuse

Bail Out the Fat Cats!!!

Let's get serious here. This so-called bail out is a feeble attempt to salvage the people who caused the crisis in the beginning. Ask yourselves,who best benefits from this bail-out? The American people who works for less than $100,000 per year or someone who has $250,000 to preserve in an bank account? Most people do not have 100k to 250k in an account to protect. And further more, how does that helps the economy? If the new bill is approx. 450 pages long, how many politicians on the Hill has actually read it? Why aren't the people on Capitol Hill not consulting with the financial and economic experts? Politicians are not equipped to resolved this matter along. That would be the equivalent of a OBGYN operating on a open-heart surgery patient. Sure they are both medical doctors but one is more equipped to do the job than the other.

I am not going to stand silently by and watch the government ruin the country chance of thriving and rising about these issues. I will vote against those politicians who are not in favor of the public's concerns and those who are only feathering their own nest. Any politician that has been in office over 2 terms is not working for the people anymore (or ever did). To be a politician for the people it requires hard work to change things for the benefit of all citizens. You can not have a personal agenda and a career-minded plan to further your wealth. You are their to represent the cry of the people and not to please yourselves or your friends in crime.

A bail out, what a joke! We, the Americans, are not stupied! There will come a day when we will elect people to fight for the people. Government is of the people, by the people, and for the people. What happened?!

God help us!!!!

By Charles @ 10/02/08 05:54:20 PMreport abuse

Jerry Shaw copy of Dave ramsey common sense fix

Thank you to Jerry Shaw for copying what Dave Ramsey said on his website and posting it here as his own, Nice job.

By Tim @ 10/02/08 04:54:19 PMreport abuse

The Common Sense Plan

You should say Dave Ramsey for Congress, the Common Sense Plan comes directly from DaveRamsey.com. give him the credit, not Jerry Shaw.

By k @ 10/02/08 04:48:01 PMreport abuse

I'll chip in to send Jerry to Washington...

Hey, let's get this guy an plane ticket and send him to Washington. I find it incredible that no one already there has not thought of a plan like his and fought for it.

By JL @ 10/02/08 04:47:41 PMreport abuse

Bailout

I did not favor a straight bailout as such. 1) The CEOs and Board of Directors shot themselves in the foot with those large bonus payments and they need to accept responsibility. 2)I do not see how the government can buy up the mortgages and come out a head. Who is going to be responsible for making sure that the properties are maintained so that there will be a market for them later on? 3)The government will have to create another agency just to monitor the situation. Properties in foreclosre cost banks a lot of money so what is the cost estimate for the government to take over the foreclosure properties. 4)The political influence over regulatory issues caused financial institutions to make loans to people who could not afford the payments. This needs a closer look since the systems can ill afford to have politicians telling private sector financial institutions what risks they must make when lending money to private consumers. 5) Members of both parties sold us out in this situation and many of them should not be representing us come next election.

By Lee Stark @ 10/02/08 02:52:23 PMreport abuse

Jerry Shaw makes sense

I like the common sense suggestions Jerry put forth...too bad the politicians are trying to fix this instead of the economist.... i read about a scary underlying problem to this whole mess in Fotune that i wanted to share with y'all...it seems like it could be the other shoe to fall after all this mess is patched up.
(Fortune Magazine) -- As Congress wrestles with another bailout bill to try to contain the financial contagion, there's a potential killer bug out there whose next movement can't be predicted: the Credit Default Swap.

In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they've played a critical role in the unfolding financial crisis. First, by ostensibly providing "insurance" on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

"If CDS had been taken out of play, companies would've said, 'I can't get this [risk] off my books,'" says Michael Greenberger, a University of Maryland law professor and former director of trading and markets at the Commodity Futures Trading Commission. "If they couldn't keep passing the risk down the line, those guys would've been stopped in their tracks. The ultimate assurance for issuing all this stuff was, 'It's insured.'"

Second, terror at the potential for a financial Ebola virus radiating out from a failing institution and infecting dozens or hundreds of other companies - all linked to one another by CDS and other instruments - was a major reason that regulators stepped in to bail out Bear Stearns and buy out AIG (AIG, Fortune 500), whose calamitous descent itself was triggered by losses on its CDS contracts.

And the fear of a CDS catastrophe still haunts the markets. For starters, nobody knows how federal intervention might ripple through this chain of contracts. And meanwhile, as we'll see, two fundamental aspects of the CDS market - that it is unregulated, and that almost nothing is disclosed publicly - may be about to change. That adds even more uncertainty to the equation.
for those interested the full story can be found here: http://money.cnn.com/2008/09/30/magazines/fortune/varchaver_derivatives_short.fortune/index.htm

By Dave @ 10/02/08 01:55:52 PMreport abuse

Jerry Shaw for Congress!!

This guy's plan seems to make about 700 billion times more sense than the one congress is going to pass. I'm not rich by any means making around $35000 a year, but the capital gains tax cut/elimination sounds like a common sense thing to me.

By Still Confused @ 10/02/08 01:44:07 PMreport abuse

pork barrel politics

The senate added billions of "sweeteners" to this bill to get the people in the house to push it through, even if they don't like or understand the main chunk of legislation...i wonder if they all read the entire plan and understand all 485 pages of it? foxnews was reporting some of the pork added to this package, including 6 million dollar tax break for a manufacturer of children's wooden arrows...WTF??...multi- billion dollar disaster fund for midwestern flood victims over the next 3 years, maybe i can see but tax breaks for toy companies? the media needs to explain this plan to the public, they also need to expose the pork so we can demand it be taken out. Our stupid representitives will vote for anything as long as it has local pork for them to pig out on. I say vote them all out and let a new crew in that can be part of the solution instead of part of the problem!

By Dave @ 10/02/08 01:39:32 PMreport abuse

The Melt Down

With 30 years of experience in tax and financial consulting and employee management I know and recognize there are always better-ideas.
Years of bad decisions and stupid mistakes have created an economic nightmare, but $700 billion in new debt is not the answer.
As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy.
Instead, I submit the following three steps:
Common Sense Plan.
I. INSURANCE
A. Insure the sub-prime onds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.
B. In order for a company to accept the government-backed insurance, they must do two things:
1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while working with the borrower—again limiting foreclosures and ruined lives.
2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps under-performing executives from being paid when they don't do their jobs.
C. This backstop will cost less than $50 billion—a small fraction of the current proposal.
II. MARK TO MARKET
A. Remove mark to market accounting rules for two years on only sub-prime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.
B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.
III. CAPITAL GAINS TAX
A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.
B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it's not a time for politics. It's time for all of us, as Americans, to stand up, speak out, and fix this mess. It is fixable, and without turning us into a Socialistic bureaucracy. P.S. And fire Paulsen.
Respectively, Jerry Shaw Shaw Investigation & Research

By Jerry Shaw @ 10/02/08 01:37:37 PMreport abuse

Thank you to the ones who voted nay dont let us down this time!

Come on those representative who are on our side. Clark what can I say I guess seeing eye to eye isn't an all the time thing. We don't need this bill in any way shape or form. That's it just hoping those nay say voters pull through for us again .

By Franchesca @ 10/02/08 01:32:30 PMreport abuse

Confused

I thought that congressmen and women were elected representatives of the American people. If they are passing a bill that a majority of Americans oppose (I have yet to talk to a single person who likes the idea), how exactly is it they are representing us? I'm no economics genius or anything, but it seems to me that this could be structured as a loan in which these companies and their CEO's put up some sort of collateral to help earn our trust so that they have a vested interest in seeing this thing succeed. As it stands, if it fails or succeeds, they will make out like bandits. Please look to see how your representatives voted and let them know we will not tolerate them ignoring the will of the people. Remember their betrayals when you enter the voting booth.

By John @ 10/02/08 01:10:34 PMreport abuse

If we don't do this....

It's absurd and outrageous that we are in this situation. I generally think government intervention is the worst solution to any problem. But the bottom line is, this has to be fixed. This has gone way beyond any ideological or political arguments about the merits of capitalism or free markets. You can't have either if there aren't any functioning financial institutions to support it. This isn't a matter of suffering a little more or less, or letting the chips fall where they may, or seeing the stock market fall a bit more. This bill is one of the last known potential brakes on a total global financial collapse. The true risk has been poorly communicated to the public. There are already healthy businesses, from huge corporations to tiny storefronts - and local governments all over the country - starting to find it difficult to operate this week since the bond markets seized up in the last month. Not to thrive - but simply to continue to operate. If you don't understand how the bond and credit markets work, this would be a good time to learn so you know what is at stake. It's clear the public is unaware of how close we came - and still are - to a complete global bank failure in the last couple of weeks. Although this bill won't begin to solve everything, it has to be passed if we are going to have even a chance.

By Sydney @ 10/02/08 01:03:06 PMreport abuse

Private Mortgage Insurance

Why are the Private Mortgage Insurance Companies not responsible for the failed mortgages?

By walt @ 10/02/08 01:00:39 PMreport abuse

Sunk if you do, sunk if you don't

I understand that americans and even the global economy could suffer if this bill is not passed. I just don't agree that we will suffer MORE. At least let us go through this awful time with our dignity intact. Was I in the bathroom when my representative called me to ask me what I wanted in this bill? There is not much in it that reflects what the HEART of America needs or what we would find acceptable. All I know is that someone's bread is getting buttered on both sides and it's not mine. Oh, and I pay my mortgage and taxes on time and have a savings account that actually has something in it...I'm not looking for a handout.

By JL @ 10/02/08 11:18:40 AMreport abuse

What????

Clark looks only at the US economy. Don't you understand that we are in an interconnected GLOBAL economy and that our failure breaks the world economies....Clark, take off the blinders!!

By Lindy @ 10/02/08 10:07:18 AMreport abuse

You don't preserve a capitalist system by having the federal government own businesses. The government must be in a position to regulate - not participate. This is too slippery of a slope for my tastes.

By TC @ 10/02/08 08:36:04 AMreport abuse

Were Screwed

Clark, I might disagree with you on some things, but I would vote for you to be President, You would be a better choice than what we have now. As far as I see it we have two senators running for president that have been the part of the reason for this mess, and what more of a mess will they make with their great plans. I don't like this bailout of the fat cats on wall street one bit. Maybe they really need a harsh dose of medicine to get them to wake up to the fact that we the people have had enough of this crap. They need to go bankrupt and lose all of their money before we the people spend a dime on their screw-up! After all that what happens to the small guy and no one bails them out. Hey I want my bailout too damnit. No more taxes for people who make less than $250,000.00 a year, how about them apples, Wall Street Bankers with your golden parachute. time to cut the riser's so you can fall to earth with a great big splat.

By Grandpa Gene @ 10/02/08 12:59:11 AMreport abuse

I agree with Clark and with Neil. I think a government bailout, the way it is currently proposed, only encourages future carelessness in our free market economy. How does the proposal in its present form discourage similar conduct in the future? Won't the passage of this bailout just lend itself to more poor lending practices in the future? How do we as taxpayers funding this bailout get rewarded for our investment?

By Todd @ 10/01/08 09:59:19 PMreport abuse

Today they talked about FDIC per account to $250,000.00 up from the current $100,000.00. I don't get it, one would just be able to have a larger account. What does this have to do with the price of a pound of potatoes and this bailout, I just don't get it.

By Guy @ 10/01/08 09:25:40 PMreport abuse

We "all" are not living beyond our means

Speak for yourself. We have not "ALL" been living beyond our means. What rubbish. This collective mindset is ruining the country.

By Ken @ 10/01/08 08:14:40 PMreport abuse

Who are we kidding?

"We're all in this together" -- B-A-L-O-N-E-Y! That is what the neo-Marxists and their pals in DC want you to believe. The problem is worldwide, and is too large to be solved by any government interventions. The proposed bailout will simply delay the day of reckoning by a few months and allow the guilty parties here in the USA to slip out with a few ill-gained dollars in their pockets.

Our country is going to experience pain and suffering unlike anything this generation as ever known. The only way out is through. We will have to work harder for less over a period of years to extract ourselves.

By Ed G @ 10/01/08 07:03:35 PMreport abuse

Help me government, help me.

By me @ 10/01/08 06:05:39 PMreport abuse

Government Bailout Mess

The american people no longer control their government. This is but one more example.

By patdesign @ 10/01/08 05:57:10 PMreport abuse

bailout

Clark, I agree. We're all in this together and together we have ALL been living beyond our means. This horrible bailout is another way of saying the bill is due now!! Find a scapegoat on Wall Street if you want (Glass-Stiegle anyone?), but I suspect most of the guilty have been spending more than they make for too long.

By jim @ 10/01/08 04:50:38 PMreport abuse

This bill FAILED the first time for a reason!

If you truly hate the idea of this bailout, then do not support it. The entire bill has not even been released to the public yet! American's are outraged at what they've seen thus far, which makes one wonder... what is it that we HAVEN'T seen that is in this bill?

This is not a matter of finding the "least bad option". The crooks at the top have deliberately created a panic / fear, and are now trying to coerce us to give them more powers that go against OUR constitution. The reckless power grabbing needs to be stopped!
**********
"It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder." Frédéric Bastiat

By Al @ 10/01/08 03:51:22 PMreport abuse

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Oct 01, 2008 -- Clark's message on the eve of the bailout bill re-vote

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