Bush says no to bailouts in 2008

The best way to butterfly away the bailouts in 2008 is to butterfly away the airline bailouts in 2001, which is also close to ASB.

Bush, the entire Republican Party, and most of the Democratic Party did a masterful job of selling to everyone the idea that opposing the airline bailouts after 9/11 was unpatriotic. For anyone, even on the street, to have spoken out against them was to invite even worse derision upon themselves than was seen during the worst of the McCarthy era/"red scare".
 
This isn't quite what OP was going for, but I think that if McCain doesn't support the bailout, and frames the message the right way (no bailout with taxpayer money, orderly dissolution and recompense for middle-class investors), they have a sliver of a chance of winning in 2008.

Keep in mind, that on October 17th, 40% of Americans supported the bailout, with 56% against. , and this support was trending downward. And while the bailouts are identified with Obama *now* (Bush initiated them, but Obama supported and continued them), they were identified with the Republicans then. Exit polls show roughly similar numbers.

Now, if McCain opposes Bush on the bailout, all of a sudden, he's a maverick again, he can talk a nice populist game against the banks, and if Obama continues to support the bailout, all of a sudden, Obama's hope and change message is gone, because he can then be cast as a "shill for the big banks".

Will that by itself erase the horrendous Bush years? Probably not. But can it keep the 2004 Bush states? Not out of the question.

Basically, a McCain anti-bailout stance turns him winning the election from completely ASB to still pretty unlikely, but nowhere near ASB. It's that big of a gamechanger imo. In any event, it's a lot closer.
 
The best way to butterfly away the bailouts in 2008 is to butterfly away the airline bailouts in 2001, which is also close to ASB.

Bush, the entire Republican Party, and most of the Democratic Party did a masterful job of selling to everyone the idea that opposing the airline bailouts after 9/11 was unpatriotic. For anyone, even on the street, to have spoken out against them was to invite even worse derision upon themselves than was seen during the worst of the McCarthy era/"red scare".


You can't compare the airlines (a tiny sliver of the american economy)

to the damn banks which represented trillions of dollars in market cap (the single largest sector at the time)

You would need POD's going back at least going back to the mid 90's but preferrably the 80's that stop the housing bubble and cheap credit in the first place

Simply choosing not to bailout without any other POD is completely implausible... Bush would have been just as likely to do that as to nuke Houston for the hell of it
 
This isn't quite what OP was going for, but I think that if McCain doesn't support the bailout, and frames the message the right way (no bailout with taxpayer money, orderly dissolution and recompense for middle-class investors), they have a sliver of a chance of winning in 2008.

Keep in mind, that on October 17th, 40% of Americans supported the bailout, with 56% against. , and this support was trending downward. And while the bailouts are identified with Obama *now* (Bush initiated them, but Obama supported and continued them), they were identified with the Republicans then. Exit polls show roughly similar numbers.

Now, if McCain opposes Bush on the bailout, all of a sudden, he's a maverick again, he can talk a nice populist game against the banks, and if Obama continues to support the bailout, all of a sudden, Obama's hope and change message is gone, because he can then be cast as a "shill for the big banks".

Will that by itself erase the horrendous Bush years? Probably not. But can it keep the 2004 Bush states? Not out of the question.

Basically, a McCain anti-bailout stance turns him winning the election from completely ASB to still pretty unlikely, but nowhere near ASB. It's that big of a gamechanger imo. In any event, it's a lot closer.


It didn't matter if the GOP in congress didn't support it; the democrats had control of congress and Bush was in step and they where prepared to bite the bullet to stop the run on the banks. McCain could have been dead set against it, and it would have still passed easily
 
This isn't quite what OP was going for, but I think that if McCain doesn't support the bailout, and frames the message the right way (no bailout with taxpayer money, orderly dissolution and recompense for middle-class investors), they have a sliver of a chance of winning in 2008.

Keep in mind, that on October 17th, 40% of Americans supported the bailout, with 56% against. , and this support was trending downward. And while the bailouts are identified with Obama *now* (Bush initiated them, but Obama supported and continued them), they were identified with the Republicans then. Exit polls show roughly similar numbers.

Now, if McCain opposes Bush on the bailout, all of a sudden, he's a maverick again, he can talk a nice populist game against the banks, and if Obama continues to support the bailout, all of a sudden, Obama's hope and change message is gone, because he can then be cast as a "shill for the big banks".

Will that by itself erase the horrendous Bush years? Probably not. But can it keep the 2004 Bush states? Not out of the question.

Basically, a McCain anti-bailout stance turns him winning the election from completely ASB to still pretty unlikely, but nowhere near ASB. It's that big of a gamechanger imo. In any event, it's a lot closer.
The only realistic way for McCain to win the election is for no crash to happen. He ran an absolutely horrible campaign, true, but I think it's ASB to visualize him running a better one.

Your scenario assumes that people will be willing to listen to him if he does any of this. By October 17, 2008, the tide has turned pretty irreversibly in favor of Obama and they might just assume that "the bad old greedy rich Republicans don't care about us" no matter what. And don't forget that even if he does take this tack, the much-better funded, charismatic, and media-popular Obama will be hammering home nonstop the idea that McCain only opposes the bailouts because a rich, greedy Republican like himself has nothing to lose from an economic crash.
 
Dude; we can hate on the banks all we want for being reckless and having insane leverage ratio's but you couldn't bankrupt them without blowing up the financial sector. We sacrificed Lehman as blood to the public that didn't want bailouts, and that directly subtracted over 600 billion dollars in wealth from the economy and threatened domino credit default swap fears

Dude?

"We" didn't sacrifice Lehman Brothers. No one was talking bailouts when Lehman was dragged under by Goldman Sachs and Bank of America in 2007. And blowing up the top ranks of the financial sector was exactly what was needed to clean out the fraud and mismanagement. There were plenty of mid-level and lower-tier banks waiting to pick up the pieces. If those top tier banks had been taken over by FDIC and gradually unwound, we might even have saved some of the several hundred local banks that have gone under in the two years since.

AIG had 1.6 Trillion in credit default swaps; you can't bankrupt them without taking all the banks who where counting on those swaps with them. It took more than 12 months to unravel and unwind even HALF of those assets (even with the company under semi gov't control and a recovery making it possible for that paper to be bought up)

As dirty and distasteful as tarp was, it gave people confidence in the banks
Wrong. TARP and the subsequent bailouts have done nothing except increase the distaste and hatred people outside Wall Street have for the big banks. It's been one of the biggest reasons for the developing class warfare that I've seen since the 1960s.
, and stopped the run on them

What run on the banks? There was no run on the banks, yet you keep bringing it up.

, and the government got paid back with interest from nearly all the banks they lent money to (only the autos, aig and citi really cost us anything, and there is still the chance we can make some of that back later)

You can't criminally prosecute someone for having a high leverage ratio, or being the victim of a run on the banks... exactly which laws where broken?
If you had been following the financial news, you'd know that many of the mortgage-backed securities were sold filled with worthless notes that haven't even been legally transferred. Look up MERS. The robo-signing scandal alone should have been worth a few hundred prosecutions that have never taken place. And that's just one example.

.... also the government is just as complicit in the high leverage ratio's that lead to the housing bubble, by keeping artificially low interests AND creating tax incentives that pushed even people who couldn't afford it into home ownership (I haven't seen Barney Frank or Chris Dodd subpeonaed yet or any of the previous banking committee chairpeople)
Agreed that the politicians are complicit, especially those that loosened the Glass-Steagall banking laws back in the Clinton Administration.
 
You can't compare the airlines (a tiny sliver of the american economy)

to the damn banks which represented trillions of dollars in market cap (the single largest sector at the time)

You would need POD's going back at least going back to the mid 90's but preferrably the 80's that stop the housing bubble and cheap credit in the first place

Simply choosing not to bailout without any other POD is completely implausible... Bush would have been just as likely to do that as to nuke Houston for the hell of it
I did say that it was close to ASB. But without airline bailouts, there is going to be less precedent for all the other bailouts, and probably more public cynicism about them.

The only way I can visualize the 2001 airline bailouts as being less likely is if Bush is much less popular right after 9/11 and the public blames him for it. How to go about that I'm not sure.
 
Lehman requested financial assistance from the gov't or at least a transitional loan so they could work out being sold to HSBC... (this had been done for Bear Stearns so that Chase could take over their paper and protect the bond holders and was later done for Wachovia so they could go to Wells Fargo, and Washington Mutual to go to chase)

In a matter of pure political gamesmanship the gov't tossed Lehman to the wolves in 2008 when they could have backstopped them for 40ish billion and gotten them into HSBC where they could have made the money back later.

You are grossly underestimating the size and scale of these institutions... we are talking about more than 20 percent of the economy at that time. They can't be unwound without nuking the economy... the banks market caps and outstanding default swamps where larger than the federal government share of the economy... the FDIC couldn't possibly eat them or back stop the bonds. Also the bonds where not just held by other banks, but by insurance companies, pension funds, international investors, international governments (cascade world wide effect), and money markets...the mid and small banks could never absorb or make good on that paper and neither could the government because if you unraveled the 10 biggest banks and brokerages houses; you would be subtracting 10's of TRILLIONS in personal, corporate, government and pension wealth... it would be unrecoverable and disasterous beyond anything we could imagine... worse than weimar
 
The only realistic way for McCain to win the election is for no crash to happen. He ran an absolutely horrible campaign, true, but I think it's ASB to visualize him running a better one.

Your scenario assumes that people will be willing to listen to him if he does any of this. By October 17, 2008, the tide has turned pretty irreversibly in favor of Obama and they might just assume that "the bad old greedy rich Republicans don't care about us" no matter what. And don't forget that even if he does take this tack, the much-better funded, charismatic, and media-popular Obama will be hammering home nonstop the idea that McCain only opposes the bailouts because a rich, greedy Republican like himself has nothing to lose from an economic crash.

I'm pretty sure McCain was leading or statistically tied for a brief period before the crash. I know a lot of conservatives make a lot of this to say that McCain lost because of the crash (he was going to lose with all things unchanged if there was no crash, but he would have lost close), but the race became a blowout BECAUSE of the crash, and because of the bailout.

And Obama can't and won't take this tack, because the bailout was, and still is politically radioactive. Does Obama *really* want to defend, at length, a 700 billion dollar transfer of wealth from taxpayers to big banks, with polls voting on average 60:40 against it (and some polls like Rasmussen posting support levels of seven percent)? And having taken more money from Wall Street than McCain? Obama voted for it, yes, but so did most of the big players in the establishment - the key thing was that he shut up about it, so it didn't hurt him that much. Defending the bailout, let alone from a populist perspective is suicidal.
 
Bush decides to stick to traditional Republican free market principals and refuses to bailout Freddie Mac, Fannie Mae, AIG, and doesn't create the TARP to bailout some of the biggest banks in the United States as well as the Auto Manufacturers what ends up happening domestically and internationally?

Can America avoid a major depression? Can the world economy avoid a major depression?

Personally, I think without the bailouts to stop the panic the U.S. and world economy both collapse. By the end of 2008 credit and then international trade grinds to a halt.

What happens to the balance of power around the world?

No it will be worse, because the guys with the dough will be even less interested in spend it in Wall Street.

Free Market is very nice ... until you found that every damn bank has run with your money ...

Great Depression x 10000

EDIT: You want to McCain win that election? Start by he choosing a real politician for VP ...
 
I'm pretty sure McCain was leading or statistically tied for a brief period before the crash.
I believe 2-3 days before the crash he was running 3-5 pts ahead and had a slim EC lead too. With no crash I don't see why this couldn't have been maintained.

I know a lot of conservatives make a lot of this to say that McCain lost because of the crash (he was going to lose with all things unchanged if there was no crash, but he would have lost close)

Not sure that I agree. He lost both because of the crash and running a campaign like he didn't want to win it, but before the crash the public had little reason for a "throw the bums (Republicans) out" mentality.

but the race became a blowout BECAUSE of the crash, and because of the bailout.
I wouldn't really call 6.7 percentage points of difference a "blowout". He could have still stood a chance if he had been willing to hammer the connections with extremists like Ayers, Khalidi, the racist church that he had attended for 20 years, etc. (though this could have easily created a massive backlash too), but him doing so is ASB.

And Obama can't and won't take this tack, because the bailout was, and still is politically radioactive. Does Obama *really* want to defend, at length, a 700 billion dollar transfer of wealth from taxpayers to big banks, with polls voting on average 60:40 against it
It doesn't matter, Obama was extremely charismatic, popular, and well-funded. Obama could have made a root canal sound like a good thing to the American public.

(and some polls like Rasmussen posting support levels of seven percent)?
Rasumssen is a heavily GOP-leaning poll; it is routinely held to be the least credible of all the major polling firms.

And having taken more money from Wall Street than McCain? Obama voted for it, yes, but so did most of the big players in the establishment - the key thing was that he shut up about it, so it didn't hurt him that much.
He was able to sell it as being necessary to save the economy for the aforementioned reasons (charisma, media-friendliness, financing).

Defending the bailout, let alone from a populist perspective is suicidal.
Doing nothing, in the eyes of the sheeple of the world, is worse.
 
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Lehman requested financial assistance from the gov't or at least a transitional loan so they could work out being sold to HSBC... (this had been done for Bear Stearns so that Chase could take over their paper and protect the bond holders and was later done for Wachovia so they could go to Wells Fargo, and Washington Mutual to go to chase)

In a matter of pure political gamesmanship the gov't tossed Lehman to the wolves in 2008 when they could have backstopped them for 40ish billion and gotten them into HSBC where they could have made the money back later.

You are grossly underestimating the size and scale of these institutions... we are talking about more than 20 percent of the economy at that time. They can't be unwound without nuking the economy... the banks market caps and outstanding default swamps where larger than the federal government share of the economy... the FDIC couldn't possibly eat them or back stop the bonds.

Again, wrong. The FDIC could certainly have taken them over and unwound the positions for far less than we've spent already.

Your willingness to buy into the banks' version of events is ... troubling.

Also the bonds where not just held by other banks, but by insurance companies, pension funds, international investors, international governments (cascade world wide effect), and money markets...the mid and small banks could never absorb or make good on that paper and neither could the government because if you unraveled the 10 biggest banks and brokerages houses; you would be subtracting 10's of TRILLIONS in personal, corporate, government and pension wealth... it would be unrecoverable and disasterous beyond anything we could imagine... worse than weimar

Good Lord, BW, you're outstanding at writing timelines but your grasp of the financial situation in 2007-08 verges on hysteria. Unwinding those banks' positions would not have subtracted anything close to "10s of TRILLIONS" in wealth. Where are you getting such figures?
 
Good Lord, BW, you're outstanding at writing timelines but your grasp of the financial situation in 2007-08 verges on hysteria. Unwinding those banks' positions would not have subtracted anything close to "10s of TRILLIONS" in wealth. Where are you getting such figures?

Isn't the American public debt only sitting at ten or so trillion dollars?
 
Again, wrong. The FDIC could certainly have taken them over and unwound the positions for far less than we've spent already.

Your willingness to buy into the banks' version of events is ... troubling.



Good Lord, BW, you're outstanding at writing timelines but your grasp of the financial situation in 2007-08 verges on hysteria. Unwinding those banks' positions would not have subtracted anything close to "10s of TRILLIONS" in wealth. Where are you getting such figures?

Where is the FDIC getting the trillions to back stop the bank and brokerage house bonds? Where is the FDIC getting the trillions to make good on the contracted credit default swaps (AIG alone 1.6 trillion, and there wasn't a market to sell them to without basically giving them away)

Lehman had 639 billion in assets and about 760 billion in debt (including bonds and swamps) according to the NY fed... all of that has to be unwound, and a considerable portion would have to be eaten; and the bond holders can't be left holding the bag unless you want to blow up the other banks and insurance companies

Bear Stearns had 13.4 TRILLION dollars in derivatives contracts! (Roddy Boyd's book the last days of Bear Stearns has all the relavent disclosure docs)... they only had 400ish billion in assets (many of them somewhat dubious)... how is the FDIC backstopping their derivatives and preventing a run on the banks due to inability to insure

Merrill Lynch, Washington Mutual Wachovia and Citi where larger and would have had an even MORE dire effect on the economy


The main reason the banks where failing was a collapse in confidence and people creating a run on them (not physically by withdrawing deposits; although that did happen to indymac) but by gang piling negativity onto their stocks and questioning their assets, compelling them to write off everything as if it was worthless

Consider nearly all of Tarp was paid back; and we have recovered a lot of the stock losses; we got off very easy for a modest price

The federal government's operating income hasn't had a wiff of ever 4 trillion and they are supposed to backstop the financial sector which is bigger than them?
 
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I think at this point it's closer to 13; but that might just be the "debt ceiling" Now, look, I myself you won't find championing banks or financial institutes but I think basically every economist out there agrees without bailouts things would have been much much much worse. Now, you don't have to believe these dozens of economic people with years of experience but I would wager they know what they are talking about. Goodness knows I'm no finance-egghead. The companies did pay back their TARP loans thought for the most part, right? So it's not like it was money down the drain exactly.
 
Consider nearly all of Tarp was paid back; and we have recovered a lot of the stock losses; we got off very easy for a modest price

That doesn't change the fact that according to current polling the bailouts are Bush's least popular major initiative as President.

Newsweek had a poll done late last year and still only 26% say the bailout was a good thing. Among Republicans that number drops to 19% and its 39% among Democrats.

http://www.pollingreport.com/business.htm

His next least popular popular major initiative is still immigration reform something he also doesn't talk all that much about.

It will be interesting to see how his major actions as President are viewed 10 to 20 years from now.
 
That doesn't change the fact that according to current polling the bailouts are Bush's least popular major initiative as President.

Newsweek had a poll done late last year and still only 26% say the bailout was a good thing. Among Republicans that number drops to 19% and its 39% among Democrats.

http://www.pollingreport.com/business.htm

His next least popular popular major initiative is still immigration reform something he also doesn't talk all that much about.

It will be interesting to see how his major actions as President are viewed 10 to 20 years from now.


Public opinion polls wanted America to stay neutral 9 to 1 when Hitler was gobbling up europe. Public opinion polls favored slavery at various times

The government is responsible for the general welfare of the people and if that means protecting the financial sector from implosion, then they have do just that; even at the price of political viability... considering Pelosi got INCREASED majorities after she passed tarp; it didn't hurt the dems
 
This conversation is of course missing the primary reasons the bailouts were needed in the first place.

The federal government, by way of Freddie Mae and Fannie Mac, had given easy credit to millions of people who did not meet traditional standards of risk versus profit. In their rush to push for universal home ownership Congress forced banks to lend billions to people who were rather high risks or well above normal healthy wealth to debt ratios.

On top of this the ignorant Sorbanes-Oxley Act, which along with making the cost of doing business much higher, made keeping risky assets on the books far more costly. Businesses were forced to list real estate and other collateral as zero value in order to avoid penalties once the real estate market began to slid. So if a house that was originally seen as worth $100,000 was now appraised at $70,000 many banks were forced to claim this as a loss at $0.00 value. These mortgages were never worth $0.00 but their worth had been greatly inflated by the Mae/Mac money hand out.

When other, often smaller banks, came along and offered to buy these mortgages up at discount rates the larger more politically connected banks balked. The big banks went to Congress and used their connections to get a multi-billion dollar bailout that screwed over many smaller banks. This was evident right after Congress failed to pass the big bailout the first time. Offers started pouring in to divide up some of the shakier bigger banks but the big banks whined that they were "too big to fail."

Congress used the bailouts to repay political favors. They weren't needed. Yes, there would have been many bank failures and higher unemployment...in the short run. Its called a depression and no one wants to go through it, but when a bubble is created it has to eventually burst. When there are bailouts there are no failures and no one/company gets punished for bad business decisions. Poorly managed fossils like GM and AIG continue limping along supported by taxpayer money. It would be better in the long run to let these bloated relics die. That's how the free market works, just ask ENRON and many others.

Benjamin
 
Public opinion polls wanted America to stay neutral 9 to 1 when Hitler was gobbling up europe. Public opinion polls favored slavery at various times

The government is responsible for the general welfare of the people and if that means protecting the financial sector from implosion, then they have do just that; even at the price of political viability... considering Pelosi got INCREASED majorities after she passed tarp; it didn't hurt the dems

The public considered the bailouts Bush's stupid idea and they blamed Bush for the crisis that was taking place in the first place vastly more then they blamed Pelosi and the Democratic party for it.
 
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