Paulson Finally Says What We Already Knew

We are all capitalists until we do not like the results of capitalism. Today's actions prove that we want to be capitalists, but be shielded from the results of our own recklessness. We are still caught up in the story that the worst has been averted, for now. The government has stepped in to buy the bad debt -- problem solved. Notice how the implicit assumption that this will normalize, and that the market will get back to wealth creation and everything will be over. But it does not work that way, and no amount of nationalization is going to make the bad stuff go away. And this time, the numbers are so big that we will choke on this -- literally we are risking sinking the dollar and hyperinflation. There is no way out but pain, pain, and more pain. Either you take the tough pain up front, or you delay and get 10x more pain down the road. That has been the real story of this market meltdown. The market teaches us that this is the only way we are willing to learn. Unfortunately, I think this crisis is our counterpart to the meltdown of the Soviet Union, and that we are really doomed to some serious poverty.

There is plenty of blame to go around on this issue. Lendors and borrowers. However, the whole thing was fueled by the fact that housing prices had been going up for the last 30 years - that I know of. My house increased in value every year since I built it 30 years ago - except perhaps this last year. This history lead a LOT of people into thinking that housing price increases would never stop. Two things changed all this, I think. 1. House prices got so high that the average family has to stretch everything to (and beyond) the limit to buy a home. Also, to keep the business going, lenders relaxed lending standards way too far. Now, many lenders and borrowers were relying solely on price inflation of the house as their only security for the loan. 2. Then gasoline and other costs increased so dramatically, that families went from stretched to snapped. Then the whole mess started to cascade and collapse.

Maybe we should all just stop paying our mortgages?

Amanda for VP !!!!

There is a silver lining in this dark cloud. Bernanke and Paulson have single-handedly solved the illegal immigration problem. America will become a place people are trying to leave; that is if they can find someplace where bankers only loan money to people who are willing and able to pay them back and the top half of wage earners aren't required to pay all of the taxes.

To Kelly......What an ignorant statement. There are rich people with poor credit and poor people with good credit. Not everyone is entitled to home ownership. Until this country gets over the idea that everyone is entitled to this and that, we will continue to sink deeper into debt. Only those who work hard, save and are responsibe individuals deserve to buy a house. Why do you think they have bad credit? (uh...lets see, they don't pay their bills) There is always renting. Nothing wrong with renting. I am so tired of the sob stories. I grew up poor, worked my but off and now consider myself middle class and I have never been given anything. Everything I have I have worked hard to obtain. This country needs to get back to the basics of economic and stop worring about entitlements and start worring about bringing home their own bacon!!!!

Once again we see the symptoms of a totally dysfunctional banking system maturing to the detriment of the American public and - to a lesser extent - the global community. The first real banking crisis occurred in 1764 and the Revolutionary War almost started then because of a banking law passed in Great Britain that threatened to bankrupt rich American planters and bankers. Sound familiar? Since then, the American public has been forced to bail out of the banking industry on a frighteningly routine basis. These bankers make millions and millions of dollars off of the backs of the American middle-class with loan programs and rules designed to enrich the bankers at the cost of their so-called "customers". When are we going to say enough is enough? When are we going to finally face the facts that the American public has been systematically hosed by the banking industry. A new banking industry is called for. A new banking industry where the bankers do not have control over the markets and the transactions. We created a banking system that is built around the concept of using liabilities to create new business cash flows when we could have based our monetary policy on using assets and equities to create new money in our economy, but that would result in a decentralization of power held by the bankers. If we are going to have to clean up after all of these bankers' mistakes, then we should have more say over what they charge, how they operate and what they can pay themselves. After all, when was the last time that a banker's personal fortune has been effected by a banking crisis? Answer: never. When was the last time the American public's personal fortunes were effected by a banking crisis? Answer: always. Maybe it is time for a revolution. We can start by standing Bernanke, Paulson and Cox against the wall along with the bankers and lawyers that have hosed us.

You are WRONG!!! Banks charge one interest rate for the rich (good credit) and a brutal interest rate to the poor, or thoose who have suffered job loss, medical crisis (poor credit). Banks and wall street were like vultures feeding from the bones with crazy interest, then they sold it back and forth within financial markets. Poor people with poor credit have the right to own a home, and shouldn't have to pay 11%; 13% or as high as 18% to own one. The credit system is to blame. Even people looking for jobs are impacted, you can't make more money to improve your credit score because the employer will check your credit report before hiring. If you've been the victim of idenity theft, if you suffered economically due to a layoff (outsourcing), a medical crisis or divorce you'll never get back on your feet. So now the poor will pay doubly, they'll pay the predatory interest rates, and their taxes will pay the bank bail out!!! How unfair. The banks and the rich get richer & the poor & middle class take the hit!!!

Well said. In an age when we constantly hear that someone else is to blame, it is fine time for all Americans to consider what responsibility each one has for this disaster. Banks did not "give out" bad loans. They offered them which in turn were accepted by millions.

I like the idea of trying to explain where this real estate debacle all started. How was this situation allowed to happen? When did the changes in lending policies change? How was congress involved in this? What policies did congress, regulatory commissions implement and change to allow? There are just so many unanswered questions. I am a small business man and i have never been rewarded for failure. I am so frustrated that so many people were rewarded for their mistakes and still walk away unscathed. If i make a mistake I am ruined with my bank and my credit scores drop and then i cant conduct business. David owen

I would like to know why the US Attorney's Offie in Washington D.C. is not filing criminal charges against Franklin Raines for fraud! It amazes me how these worthless politicans in Washington couldn't wait to haul in these baseball players to have hearings on steroid use (I could care less who takes them) but you don't see these same pathetic "leaders" calling for hearings concerning Freddie Mac and Fannie Mae. Americans should be outraged over this and it's time to vote these bums on notice that they're out in November.