The Plans

The Savannah paper has a breakdown of the Senate candidates’ plans for the bailout.

Jim Martin’s is interesting:

Payment to mortgage borrowers. Rather than giving tax money to investment companies and banks, Martin would target homeowners who have suffered foreclosure or are in danger of it, saying the price would be the same as giving the money to Wall Street.

I’m opposed in general to the bailout plan, but I understand those who do support it. What is interesting, however, is this alternative plan put forward by some left of center economists. The Paulson plan is designed to deal, at its heart, with the credit crisis. There is a real fear that people won’t be able to cash paychecks by the end of the week because of it.

The alternative plan, giving money to mortgage borrowers, would not even touch the problem, but would most assuredly be more popular with the public because the government would be paying their mortgages for them.


  1. Chris says:

    What I’m not 100% clear on is whether the sub-prime loans are the problem, a contributory factor, or a symptom.

    I suppose if you’re a free-marketeer, then the real problem is Government Policy designed to put people who shouldn’t be homeowners in their own home.

    However resolving that issue is not likely to solve the Wall Street credit crisis. Would the Wall Street credit crisis go away if all the at-risk and defaulted loans were to return to whole status?

    I suspect that in Janauray, then Obama’s Treas Sec goes to Congress for the next $350B, instead the Democrat Congress will give him $500B to pay off or pay down these sub-prime borrowers’ notes.

  2. Ga Values says:

    You have to hand it to Saxby, he has been working the phones with bankers to shake them down for contributions. We have the best Sen
    ator money can buy. McCain says COUNTRY FIRST, Saxby Says LOBBYIST (especially Bo Chambliss) FIRST.

  3. GeorgiaValues says:

    Ga Values’ comment has nothing to do with what is being discussed here. It actually just like the Jim Martin commericals – while people are dealing with real issues, Jim Martin runs negative TV ads attacking Saxby on anything he can find.

    Erick is correct that the Martin plan is a cash hand out to voters just in time for the Election. Saxby’s effort is to stabilize the financial system, restore public confidence in the underlying fundamentals of our markets, and ensure that the taxpayer is looked out for, not Wall Street.

  4. Trevor Southerland says:

    Yes, we should “stabilize the financial system, restore public confidence in the underlying fundamentals of our markets, and ensure the taxpayer is looked out for” BY THROWING MORE MONEY AT THE PEOPLE WHO CAUSED THE PROBLEM IN THE FIRST PLACE.

    Yep… makes sense to me…

    God forbid we actually help the poor and the middle class… there are bankers having to sell their European sports cars!

    The horror! Oh, the horror!

  5. Bill Simon says:


    Frankly, I am in disagreement with your assessment.

    1) What is your basis for this statement: “There is a real fear that people won’t be able to cash paychecks by the end of the week because of it.”

    WHAT “people?” The investment banks? The people that threw money at multi-level derivatives? The people who were just as stupid, if not stupider, than the homeowners who were able to sign-up for no money-down homes?

    2) While I understand from whence you come from in your attitude of “bailing-out the homeowner”, let’s look at it from this angle:

    Let’s say a home buyer was sucked-in to buying a house because the terms were incredibly generous (i.e., little to no money down and interest-only payments for 5 or 7 years) from the lender, AND all that home buyer had heard for years and years from his/her government of the value in owning a home.

    What is the difference in this between a drug dealer (as an analogy to the lender) and drug buyers (home buyers)?

    I’m not interested in hearing the obvious (Oh, Bill drugs are illegal and that’s no comparison…blah-blah-blah. Erick didn’t graduate from UGA so I expect a little deeper argument).

    The drug dealer/lender is supplying drugs/easy credit to the easily addictive consumer. The drug dealer gets a higher degree of punishment when caught by law enforcement.

    So, I would contend that it is actually the drug users/home buyers who deserve to be bailed-out more than the /crack dealers/lenders do. They are more damaged than the lenders.

  6. bowersville says:

    Trevor, I truly expect Obama to win. I also believe congress will be controlled by Democrats.

    Stand by friend, you are going to get a full cup of socialism and maybe Martin will be there to help them.

  7. Bill Simon says:

    Conclusion: Without drug dealers, there would be less distribution of illegal drugs.

    Without the money being easily made available, there would have been no crisis here.

  8. My kin folks call me Nick says:


    Good point!

    What is being overlooked here is that some business did make money on these loans. The first, second or even third time the bad loans were sold, a profit was made. After that point the investment in those types of loans became risky.
    Now, not every loan was sold two or three times but some were.
    Therefore, if the loans purchased at that point were risky and they did not pan out! The end result (failure) was part of the risk.

    Additionally, I think this is only a part of the whole problem.

    Debt, has sunk many a house holds and nations. It always has and it always will.

  9. Doug Deal says:

    I am not an economist, but thinking about the stuff I learned in my economics classes back in college…

    If the problem is liquidity, then could it not be solved by increasing the funds available to be borrowed from the Fed and lowering the interest rate?

    Then, companies can borrow from the Fed and loan that money to the whoever needs it, including companies that can purchase the bad debt at fire sale prices. Perhaps the companies responsible for the mess can then be shut down.

    I know that greater availability of funds usually causes inflation, but I would rather have inflation than socialization of the economy in a way that we will never retreat from.

  10. debbie0040 says:

    This is from a parody web site, but it pretty close to what is about to happen:

    Bush: Free Market Experiment a Success, Done
    by Scott Ott for ScrappleFace · No Comments
    (2008-09-29) — President George Bush this morning, in calling for rapid Congressional approval of a $700 billion takeover of mismanaged sectors of the financial industry, declared American free market capitalism “a successful experiment which is now over.”

    “The Founders’ instincts were correct,” said President Bush, “The invisible hand of free markets has succeed beyond anyone’s wildest expectations, lasting more than 225 years. Like all experiments, however, once the data is in, you write your paper and then you shut down the laboratory. That’s what this legislation is designed to do.”

    In a Rose Garden ceremony at the White House this morning, President Bush handed the symbolic keys of the U.S. economy to Treasury Secretary Henry Paulson, whom he called “the man I’ve picked to make the invisible hand of capitalism visible at last…to put a human face on the formerly-intangible U.S. economy.”

    What caused this crisis:

  11. Ga Values says:

    Looks like 1 of the Chambliss staffers is trying to steal my name.. Why aren’t you on the phone shaking down bankers?? Saxby is going to be mad you are wasting his time.

  12. Icarus says:


    That’s what they’ve been trying. The problem is, the loan portfolios that are toxic are no longer worthy of being considered capital, can’t be traded (they are assumed to have almost no value, even though most estimates are they will ultimately pay 60-70 cents on the dollar), and are being written down on the books of those that hold them. That’s putting banks and brokers into a position of being insolvent, and the fed can’t loan to insolvent companies.

  13. My kin folks call me Nick says:

    Well, I guess the next logical question is; Who does President Obama replace Henry Paulson with?

    Does anybody think it would be a bad idea to bring in someone with DOJ experience? Maybe white collar crimes division?

  14. Ga Values says:

    Where Saxby Chambliss gets his money::

    Agri Business—-$1,368,000 Banks, Insurance, Real Estate—-$1,332,000 Lawyers & Individual Lobbyist——$641,000 Misc Business —-$679,000 Other ——$606,000..

    The Agi Business got a gift of $20 billion waste from Saxby’s Farm Bill. The Banks, Real Estate & Lawyers just got a $2 TRILLION gift from the Bail Out the Banks act which Saxby & Johnny will voted for. Not a bad return on your money.

  15. Gray says:

    Why reject out-of-hand the idea that giving the money to homeowners wouldn’t solve the root problem- the credit crisis? If liquidity came from homeowners rescuing their foreclosed homes by paying the bank, that’s essentially the same thing as the Govt Bailout, except it also rescues middle-class families.

    Trickle-down economics doesn’t work… maybe some trickle-up economics might?

    I’m also against the bailout plan, whether it’s distributed to Wall Street or to individual taxpayers… But if you’ve gonna do one or the other, I’d rather see a $700B bad idea go to mom and pop first.

  16. jsm says:

    “God forbid we actually help the poor and the middle class…”

    Nearly 70% of the federal budget goes to entitlements, Trevor. What more can you socialists ask for?

  17. bowersville says:

    Trickle up economics.

    That’s right, a sucker is born every minute. That sucker believes there is pie in the sky, something for nothing and buys into a sales pitch that could have been easily dispelled with “if it’s too good to be true, it probably is.”

    Trickle up does nothing to help the middle class working smuck that works everyday, makes timely mortgage payments in a timely fashion, etc.

    What happens with trickle up, is the middle class working smuck keeps on working, paying bills and starts to believe, “What the h#ll, it ain’t worth it,” as he/she watches all home equity go away.

  18. Gray says:


    But Trickle-Down Economics, that’s a great idea right? You’re a huge advocate of paying the wealthy with the idea that they’ll spend more in goods and services and raise the middle class, right?

    How’s that Bush brilliance working out for ya?

  19. Icarus says:

    I’ll try one more time to point out the benefits of my bailout plan. It hits between the plan that apparently will pass today, and the giveaway that Jim Martin wants to do to reward the folks that aren’t paying at the expense of those who are.

    1) It’s open to anyone with a current mortgage.
    Benefits all, but does give more of a benefit to anyone with a high rate mortgage, presumably the sub-primes and Alt-A’s that are on adjustable ARMs.

    2) Guaranteed refi at below market rate. – Gives incentives for literally everyone to refi. The toxic portfolios are clensed, and replaced with government back mortgages.

    3) The banks are, in effect, bailed out, without a check ever being written to a wall street bank.

    4) Capital markets can return to normal functino because these notes are now Gvt guaranteed, and thus can be traded accordingly.

    5) Consumers get the benefit of lower payments across the board, and are thus likely to spend money elsewhere to prop up the economy.

    6) With the mortgage being assumable, the consumer who owes as much as the house is worth has incentive to stay in the house and make payments, as the assumable mortgage will give them a competitive advantage to market their home as prices begin to rise.

    Politically, it would put the Republicans on the side of “main street”, while the dems are pushing a bill to fund wall street. I think the irony there is too good to pass up.

    But alas, I think we’re a bit late in the game at this point.

  20. bowersville says:

    No Gray trickle down is not a plan either.

    What is happening is the middle class working person that pays as he/she goes, stays with in a budget, encumbers themselves with a reasonable credit line, is caught in the middle.

    Standard home purchasers (lot with home), especially in the last 3-5 years, will watch equity slip away.

  21. jsm says:

    “How’s that Bush brilliance working out for ya?”

    Beats democrat Congress stupidity any day.

    BTW, a poor man never gave anyone a job.

  22. bowersville says:

    a poor man never gave anyone a job.

    No, but the government will hire 10 stooges to take care of a poor man and we call them community organizers.

  23. Ga Values says:

    Looks like our 7 Republican Congressmen are voting for the Georgia Taxpayer with a big NO to this RIPOFF. Our 2 RINO Senators are followling their LOBBYIST with a big YES to RIPOFF the taxpayer.. McCain SAYS COUNTRY FIRST..Saxby SAYS LOBBYIST(especially his son Bo) FIRST

  24. Doug Deal says:


    Then the problem is artificial, and is not a crisis except for the investors in the companies holding the bad loans. That’s what it means to have your investments at risk. To paraphrase a popular 80’s theme song, “If you take the good, you take the bad, you take them both, and there you have the Facts of Life.”

    Sadly, we have a number of investors who only expect to take the profits and not the losses. Too freakin’ bad. It’s time for bankruptcy for the bad companies, and auctioning off the “bad” debt to companies that can realize a profit on it.

    Set up a temporary government guarenteed loan program, fine, but none of this debt should be aquired by the government. If my local restaurant went out of business, would the banks forgive 90% the debt on my kitchen equipment since I can only sell it for 10 cents on the dollar?

  25. My kin folks call me Nick says:


    You do realize that Bush is the President of the U.S. don’t you!

    He may not be the sole cause of this mess but he bears a lot of the responsibility.

  26. My kin folks call me Nick says:

    Oh, by the way. That sign that was on Harry T’s desk that said “The Buck Stops Here”. Someone please go find it and put it back for the next President.

  27. Icarus, I’m sorry, but your plan falls short on several counts. Here’s the only one that will work in the long term.

    The mortgage crisis and the current economic turmoil is a direct result of the Federal Reserve’s artificial lowering of interest rates – which spurred major banks and other corporations to back bad mortgages.

    And the bills are now coming due. With each new bailout, WE are forced to take on the liabilities of Wall Street, all while the value of our paycheck decreases due to the inflationary policies of the Federal Reserve.

    Now, Henry Paulson (former CEO of Goldman Sachs) and Ben Bernanke want American taxpayers to take on $700 billion in bad mortgage-related assets.


    There IS a solution.

    America became the greatest, most prosperous nation in history through low taxes, constitutionally-limited government, personal freedom, and a belief in sound money. The way out of this current financial crisis is to return to those timeless principles:

    1.) End the Bailouts – The Federal Reserve’s authority to use taxpayer money to bail out Wall Street must be revoked and the Fed must be held accountable.

    2.) Stop Congress’ Reckless Spending – We must freeze all non-entitlement spending by the federal government at current levels and eliminate wasteful spending both domestically and in our trillion-dollar overseas budget.

    3.) Cut Taxes – If Wall Street can be given your tax dollars, shouldn’t you get some back? It’s time to cut taxes and return your money to you. Combined with spending reform, this will increase the purchasing power of our dollars and help lessen the economic storm.

    4.) Reform the Monetary System – If we are to have long-term economic progress, we must end the system of printing money out of thin air. The current laws limiting the circulation of gold and silver-backed currency must be overturned.

    Thank God many Americans are seeing through this piece of garbage our “leaders” are trying to ram up our butts today, and are overwhelmingly telling their Reps to vote NO. Let’s hope it’s enough, or our grandchildren will spit on our graves.

  28. Ga Values says:

    My kin folks call me Nick

    you are correct..sorry

    I am a conservative & I want my Party back from the RINOes

  29. Gray says:

    Ga Values –
    We agree. I want your party back from the RINOes too.

    If Goldwater ran today, I’d vote for him. Today’s Republicans would hammer him for not wearing a flag pin.

  30. jsm says:

    “You do realize that Bush is the President of the U.S. don’t you!”

    Nick, last I heard, the President does not preside over the Congress, set budgets, or pass legislation.

  31. CHelf says:

    I guess Bush forced thousands of unqualified people to take on mortgages they could not afford. If anything, the former President had more influence in relaxing the ability for people with little, no, or bad credit to walk into getting mortgages on homes they clearly could not get otherwise. Go back to Bush’s early state of the union addresses with him talking about more people than ever owning homes. It wasn’t just coincidence that more people in history became homeowners. And hard to believe right after Bush came into office that this happened.

    Go back to about 2005 and see many Republicans trying to reform Freddie and Fannie and warning this was coming. Also note who blocked every attempt to reform as well. Bush didn’t stop it. Reforms never made it out of committee…one of which was a committee whose membership includes a Christopher Dodd and also Charles Schumer. You cannot blame Bush for that. Bush has no control over legislation being stalled in committee.

  32. bowersville says:

    Go back to 2005 and check the record.

    Republican President and Republican Congress spending like a bunch of drunken sailors.

  33. jsm says:

    Hitting the kool-aid a little hard there, huh Konop? Barney Frank & friends are wallering in this disaster, and you want to contribute it to Bush? Then that dumb clown, Frank, stands with the dufus squad (Pelosi, Reid & Dodd) on Sunday, and they talk about how they solved this problem and worked out a bailout. What a bunch of buffoons. If they would be honest, warrants would be out for many of their friends right now.

  34. Bill Simon says:

    John Konop,

    “The truth is Bush hands are all over this.”

    ACTUALLY…you’re wrong to not slap Obama, Frank, et al. for their hands in causing the mortgage “crisis.”

  35. bowersville says:

    The Senate Republicans did not bring this to the Senate floor because they were threatened with a Democratic filibuster.

    The Senate Republicans yielded to the likes of Senator Maxine Waters and Senator Dodd intimidating them with outcries of not caring for the poor, the blacks et al.

    One false claim of racism and what does every white that is not suffering from white guilt do? They are intimidated and immediately go on the defensive.

    By Gd I hope that works come January when Obama plays the race card on Putin.

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