I don't know. This seems like too much. Why not buy up all loans and make the entire thing state run?

Hey! lets fix our problem with the baking industry inventing wealth from nowhere by having the government invent wealth form nowhere. I'm certain there is no problem with this idea.

/do I really need a S tag here?

@kingmanic: A n is very important.

Hey! lets fix our problem with the banking industry inventing wealth from nowhere by having the government invent wealth form nowhere. I'm certain there is no problem with this idea.

The bailout I have been waiting for is finally here.

Nobody should ever lose just because they took on risk.

I didn't realize our cookies were in mortal peril.

This shows how pro mom and pop business our government is. I'm sure very time a small business is on the brink of failure someone will be waiting to absorb all their bad debt..

Where's my bailout. I still have 50K of student loans to pay back. I definitely consider it bad debt and I'm entertaining offers to be bought out at twice my share value.

that's 'every' not 'very'

The government doing this would be the worst idea in the long sad history of bad ideas, and I'm gonna be there to see it.

New plan, every American pulls a tooth out and the Tooth Fairy will leave us enough money to bail everyone out. WTF? The more I hear about these plans the more I want to move out of the country.

It should be pointed out that the last time the government did this (go Wikipedia "Resolution Trust Corporation" if you don't already know about this) the "bad bank" took on loans and liquidated assets. So it's not much more than an Uber-Bankruptcy agency, and there will be no lines forming by banks to unload their bad loans and then walk away.

Still, it does provide an orderly unwinding of these complex liabilities. There's a reason this caused a rally, and it's not because pit traders give a crap that I-Bankers get bailed out.

So this is more of a 'revolving bailout' rather than a discrete bailout that might need to be repeated and re-assessed on an individual basis? So, giant corporate-socialism bailout?

@kingmanic: yeah, we'd be rolling in the dough in no time!

@humphrmi: It should also be pointed out that the RTC ended up turning a profit. So if it all works out, taxpayers could actually end up earning on their investment and the money isn't just vaporizing.

Where does the government get all of this money? Who needs an economy when our government can magically make money appear!

sucks to be an American tax payer! (crap, that's me)

Will prices still come down to where regular people can afford houses? Or will this send them back up to the stratosphere?

Please let it be noted, and fully appreciated, that the bankers who created these products are only as stupid and shortsighted as those who took out ginormous mortgages they could not afford, who are, in turn, as stupid and shortsighted as the regulators, who failed to curb these irresponsible practices. We all let it happen, dear Americans. Now we (taxpayers) pay for it.

Also, please consult a 20 year chart of the S&P 500 (which includes ~1987, the last time an action similar to this was taken) and, with that as a rough judge, let me know if it is your opinion that this move by the government may not be such a poor one.

So, it seems that we're in the business of privatizing profits, while nationalizing losses, as a commenter on Fark said the other day?

Seems like a strange kind of socialism to me.

Amazing, these banks aren't even dead yet and they want to let them offload their bad loans.

Privatize the profits and socialize the losses is truely correct comrads!!!

So much for privatizing Social Security, eh?

LOL.

@11hawkinst: Same place where we wasted $2-3 Trillion on the War on Error.

This bailout is a drop in the bucket.

BTW, capitalism and the power to "self regulate" is the reason why you have a disaster. Also the fact that shady subprime lending and sloppy oversight by the current administration complicated everything.

Let's just give all our money to the Government and we can eat cheese sandwiches twice a day, for FREE!

@ironchef: Oh gawd, I forgot. Yeah, that's right: Ownership Society, baybie. Who needs those musty stacks of "just paper" and those Old Fogey notions of Social Security?
Privatize it all and watch the Magic of the Marketplace lift all boats!!

(four more years of the next eight years!!)

@humphrmi: It should also be pointed out that RTC was something that was required. The deposits were FDIC insured. The government was on the hook one way or another.

This is something else entire. Something like.... gift.

As a matter of fact I am near positive this is against WTO rules.

Note to self: Crime DOES pay...

@kingmanic: None of this would have happened had bakers relied on Perfect Oatmeal.

The US Republican Party has become more Socialist than the entire Kremlin, People's Great Hall and Fidel's lush beach villa, all rolled into one.

Yay - more socialized losses! This is much better than socialized medicine. /sarcasm

I guess I can hope that keeping the value of my 401k artificially high will eventually balance out the giant temporary refund adjustment we all have coming to pay for this.

@mpacuk: They are if I'm around.

Just what we need another black hole for taxpayer's money.

@ironchef: Capitalism isn't the problem, neither is the self-regulation. Failure is an inherent part of the system; it gets rid of the bad/broken businesses. People only like capitalism on the upswings.

You want to investigate and prosecute those that caused the mess, fine. Cut the golden parachutes and make those guys, but don't take MY tax-money to bail the bad businesses.

Is it too late for me to take out a loan that I can't afford so I can get a house I can't afford so the government can bail me out?

Is this like the Marshall plan, only for ourselves?

@Trai_Dep: and sink like the titanic just like the banking runs of the great depression.

Ironically, it is the Communists in China that's propping up all that debt America is drowning in. They seem to have better fiscal management than wall street right now, sitting with a massive surplus and a better savings rate.

@johnarlington: I have 70k in student loans, bail me out bail me out!!!!
I took a risk and in this economy it just isn't working out, where is the line for the gov't to assume my debts too?

@Xerloq: Self regulation is the problem here. All those mortgage backed securities are the invention of wall street, where they were able to finance low quality loans.

You know why the credit unions aren't in this mess? Because they were barred from creative financing deals like what Bear Stearns, Lehman Bros, etc where selling as mortgage backed securities.

As for your tax money...it's necessary to prop up AIG because so many retirement plans, construction bonds, government financed projects will collapse. You have to put a stop gap. In the end the money isn't a bailout. Even McCain had to REVERSE himself after realizing THIS WAS THE ONLY WAY TO PREVENT A COMPLETE COLLAPSE of the American financial system.

Now a Short Selling Ban is in the works. I am pulling all my money out of the markets ASAP!!!

[online.wsj.com]

Dear China,

Here is our economy. Feed it three times daily and let it out in the mornings and evenings.

<3 America.

PS
Don't let it play with Russia.

@kingmanic: You win today's prize. Fixing one problem with another does not equal a solution.

Isn't it nice that the regulations put in place after the Great Depression were removed that allowed the current debacle to happen. Another great depression in the future? I guess this should also put to rest that silly idea of privatizing social security.

Funny how people fear and loathe 'socialized medicine' but love 'socialized economic bail-out.'

YAY! Let's reward the thieves! Forget about sending a message to wall street that the days of cooking books are over... let's just give them a mulligan on this one.

If it's too big to fail it's too big to be private. Capitol hill should run wall street, not the other way around. Someone needs to close down the casino.

I really love all the armchair economists predicting or calling a depression. 25% unemployment. Millions of deposits lost in bank failures. Produce prices falling 40%. Export declines due to protectionist tariffs. A shrinking supply of money. These were the five major contributors to the great depression, and I haven't seen one of them yet today.

I got a better idea: How about our Federal government buy up all these corporate debts, including every citizen's credit card, student and other loan debts, pack them all together into a giant ball and shoot it into the sun?

"Trickle down theory" my ass -- what trickles down to the masses is not money but debt.

If it isn't apparent to everybody already: The American government no longer practices true capitalism nor true (as we will see once again in November) democracy.

@humphrmi: +1. Cheers, the sheer lack of understanding in some of the comments is remarkable

@humphrmi: I can tell you do not work in the finance industry or even have the first clue about how the financial market functions. History does not repeat itself, it rhymes. This is not the normal situation of too much inventory, it is a deleveraging of the financial markets.

Maybe you should do a little research before you call people armchair economists.

@laserjobs:

Deleveraging is not a depression either. RTC contributed to an orderly deleveraging of the S&L industry and made a profit while they were at it, and despite armchair economists calls for a depression then, none happened then either.

I double-majored in economics and wrote my masters thesis on elasticity of demand in public transportation. And I'm currently gainfully employed in the financial sector.

@humphrmi:

"25% unemployment" -- The actual unemployment rate in this country is higher than the government cares to report. If you are unable to find work after 6 months, you are no longer counted as "unemployed." Also, there are many citizens who are under-employed (working part time, or occasionally) who simply cannot find full-time employment.

"Millions of deposits lost in bank failures" -- That was back before the days of the FDIC. Today when a bank fails, the FDIC steps in, takes it over, rehabilitates it or dissolves it. Account holders are reimbursed their money. But where does this money come from? Taxpayers.

"Produce prices falling 40%" -- Debatable factor today, considering that most of the nation's food supply is produced by corporate agribuses, and not family owned farms, like the way it was before the Great Depression.

"Export declines due to protectionist tariffs" -- Irrelevant since we voluntarily import more than we export today to other nations, especially China. But we have been importing far more than we export... for decades now.

"A shrinking supply of money" -- No, it's not shrinking... instead, the Fed Reserve issues more money and sells off the debt packaged in the form of bonds to foreign investors.

@humphrmi: Well Black Monday lost 22.8% of the stock market in one day. We've done 25.3%(so far) in one year. And if you knew anything about the unemployment numbers. Bush started counting unemployment differently a long time ago, look it up. So what they say is 6% unemployment could be more like 10% and we don't know it cause they're cooking the books. Thanks to Richard Nixon we don't need gold to back our money and can print, and digitize, unlimited amounts of wealth. But with that you get Hyper-Inflation. O wait what have we been doing the last month? Just wait till inflation hits we'll all be knocked to our knees.

@thewriteguy: Thanks, you just made my point.

@nyaz: Black Monday was not a precursor to a depression either. The big crash prior to the depression saw a combined 89% drop in the DJIA. Sorry, still don't see evidence of a depression.