There is no shortage of news and commentary on the bailout, so I won’t summarize it here.  Instead, I will offer a few quick and random thoughts of my own, in no particular order:

  1. Main street vs Wall Street bailout - The politicians are posturing about how the bailout only helps wall street and does nothing for main street folks struggling to pay their mortgages.  In reality, main street is just as guilty as wall street for creating the mess.  Anyone who does not fully understand the terms of a $500,000 loan document (or any size loan document!) should not have signed it in the first place.  Also, let’s not forget how many people have walked away from their mortgage obligations as soon as they went underwater.  If they were willing to accept the leveraged potential appreciation in their home values, then they need to accept that leverage can also work against you and it sure stings when it does!  The very fact that banks are allowing people to walk away in mass - without paying the banks for the lost equity - is evidence enough of the bailout helping a large part of main street.
  2. Bailout market prices - If the bailout is approved, it’s unclear how Paulson would handle purchasing the toxic mortgage waste of the financial firms.  Warren Buffet suggests selling a small percentage of the toxic waste into the open market just to determine a market price, and then using that as a gauge for all the toxic bailout.  But rumor on the street suggests that Paulson is going to pay full face value for all the toxic assets.
  3. Limits on executive compensation - Unfortunately, Paulson and Bernanke are right that this crisis is very serious and could very well bring down the entire world economy.  That is the justification for wanting a quick rubber stamp of the 3 page $700 billion bailout.  But every executive of the financial, building and rating sectors have proven their complete incompetence over the last 10 years.  Congress is absolutely right for wanting a little extra time and a few more conditions.  If the idiots who caused this mess want taxpayers to bear the burden for their lunacy, then they need to accept any mandates we shove down their throat for giving them the money.  Limiting future executive compensation is a small price to pay for saving their firms!  If they think they can get a better deal somewhere else, then by all means, they should go get it.  But if they want the taxpayers to bail them out, then they should accept whatever mandates the taxpayer representatives come up with!
  4. Robert Willumstad, who was only at the helm of AIG for a few short months before the government canned him and took over, kindly refused his $22 million contractual severance pay.  Perhaps other former and current financial executives should take his example, and donate their past fraudulently earned bonus payments to the general ledgers of their failing companies.  I know, wishful thinking, but it’s worth a thought.
  5. Collapses prior to the mega bailout - If this mega bailout passes, how will the ex-morons in charge of Netbank, Indymac, Bear Sterns, and others reflect on the timing of their own implosions?  I guess if they had concealed their losses just a few more months, they would still be around to benefit from the taxpayer handouts.
  7. Foreign bailouts - What is it with all this talk about bailing out foreign purchasers of our toxic waste known as mortage pools, tranches, etc.?  Have they not heard of the term “buyer beware”?  The United States can not afford this massive bailout even if it is limited to US corporations.  We certainly can not afford to bailout foreigners who lost money on the toxic waste.  Let them eat their own losses!
  8. Jail time for rating agencies? - The blame for this financial crisis is certainly wide spread, but at the center of the mess is the rating agencies whose job it was to sound the alarm bells at the first sign of trouble.  Instead, they looked the other way and rubber stamped everything that crossed their desk as “AAA”.  If that doesn’t warrant jail time, then I don’t know what does.
  9. McCain vs Obama - Let’s face it.  The financial problems we face are complicated.  I’ve listened to each of them over the last few weeks and although they each make legitimite criticisms of each other, it’s fairly obvious that neither one of them has any clue of what the problem is, how it was caused, or how to get out of the mess.  And that comment also applies to at least 90% of the members of congress.  Proposed solution: We need standardized financial/economic aptitude tests for presidential candidates and every member of congress.  If they don’t know what a derivative is, then their votes pertaining to regulating them will not count!
  10. Gregory Meeks, representative of New York recently stated to Paulson and Bernanke that his biggest fear is that the banks will still hoard money after the bailout, preventing affordable loans from being available.  Just what exactly does Gregory Meeks want?  More easy and stupid $500,000 loans to unqualified borrowers?!?!?!
  11. We need lower housing prices, not 100 year mortgages - The financial mess we face is directly related to artificially high housing prices.  Even if we bail out all the financial institutions, it does not change the fact that housing prices need to come down a lot more.  But beware of the coming lunacy from the financial markets after the bailout.  They will likely follow Japan’s “solution” of artificially high real estate and create new 100 year mortgage products to lower the monthly payments and make houses appear to be cheaper.  Wake up America!  The 100 year mortgage is coming, and it needs to be resisted!
  12. Foreclosure moratorium - This is not an acceptable provision of any bailout plan.  If you can not afford to pay your mortgage, then stop stressing out about it, and move into an apartment that you can afford.
  13. When Paulson was asked who would manage the purchased toxic waste, Paulson stated that the details were still being worked, but it he is looking to private enterprise to help manage the toxic waste.  Doesn’t he realize that the private financial sector are the ones who caused this mess, and can not be trusted?!?!?!