The White House lobbied heavily for the measure, and the Republicans in the House shot it down. That's interesting.

House Republicans are the only group that are (fiscally) conservative anymore.

I'm so glad my representative (Barbara Lee) voted against this madness.

The bill is duplicitous from the get go. It's entitled "To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes"! If that kind of doublespeak don't get yer hackles up, I can't imagine what would.

Some honest discussion, some real consequences for the people that caused this meltdown (and it was caused, it was not an accident), and some oversight in how a bailout proceeds. Perhaps we, as the folks footing the bill, would also like to know what the total is actually going to be before agreeing to it. My understanding of the bill (admittedly weak) is that it is a blank check for Paulson to distribute amongst his friends in the finance industry, with no oversight and no transparency about how it's going to be used.

The fact that a bailout is being presented as "OMG! We have to do this now, imagine the consequences if we don't!" it has a strikingly similar ring to the "We have to invade Iraq now!" pose of a few years ago. I don't trust salesguys that insist I need to buy now, and I really don't trust politicians when they use the same tactic, especially when they're arguments are based on lies and misdirection.

Yes, something must be done. Accountability would be a great start. Bringing some trust back into our finance industry would be a good way forward. A bailout? I dunno. Maybe there are other ways forward that directly help the people hurt rather than the millionaires and billionaires that caused it.

I don't understand. Surely if all the banks failed that would be a great opportunity for people to start new banks with extra incentive to prove their honesty and trustworthiness, for instance.

It can't be the case that banks will collapse and everyone goes "Oh shit money is now worthless, I'm shutting down my business, firing everyone and going to find a soup kitchen".

Can it? Really?

Good question. And one I think ought to be asked. It's a standard tactic of both sides to frame a debate such that any result is one they'd be happy with. This appears to be a classic case of that. Both sides want a bailout, and so they've framed the debate as "What kind of bailout do we want?" rather than "Do we need a bailout, or can this problem be solved in other ways?"

Interestingly, a huge percentage of Americans (even a few who understand what's going on) don't want a bailout, at all.

Yet the oft mentioned depression of the early 1900s showed people queueing for handout foods.

Farmers would still work because people still need to eat. People would still trade with farmers because they need to eat and farmers need work doing. People would trade with builders and mechanics and plumbers and cooks and delivery people and oil companies because they want things that those people have, and in exchange they have skills that other people want. This is business, this is life, has been for hundreds of years.

So how can that also coexist with unemployed people relying on handouts? What went missing to turn the ongoing network of trades into a fallen pile of cards?

Why are some economies sparkling and growing and others filled with peasants eeking a miserable existance?

Is credit somehow the missing link I'm not getting? If so, why doesn't printing more money fix Zimbabwe? If it's not credit, what else can vanish? America isn't suddenly out of education, is it? Is it trust?

Is there really any kind of meaningful answer to this that doesn't involve pointing at the whole world and saying "that, that's it. Everything that is, that's the answer"?

Zimbabwe has deep problems unrelated to money supply. If you build a successful business in Zimbabwe Mugabe's thugs will kill you and steal it (or allow you to escape the country with the clothes on your back, if you're lucky). In a culture where everyone has to either be a part of the gang that runs the place, or pay for the privilege of mere existence, business cannot grow. The incentives are simply wrong for business to exist. There is no incentive to work hard, build something new, take risks on new ideas, or provide a service (to anyone other than the thugs in charge). If you had no hope of becoming successful would you start a new business? Would you bother working every day to maintain an existing one? Everyone who has the capacity to build products, grow food, and provide knowledge services, has either fled the country or been killed or imprisoned by the government. Of course the economy of Zimbabwe is a shithole.

So, I don't have any answers to any of your other question. I'm by no means an expert on the subject. But the causes of the economic failure of Zimbabwe seems pretty obvious to me. And, the more the US looked like Zimbabwe, politically speaking, the more our economy would look like the economy of Zimbabwe. Luckily, we have a long way to fall to be in quite the same kind of mess as Zimbabwe. But, I do think a bailout without serious oversight and some accountability for the people that caused the problem, would be a big step in the wrong direction.

Base populism has accidentally arrived on what I think is the correct side, for once.

Economics is far from a fundamental science. Very far. It is really more of a description of what happens via all sorts of analogies that usually hold true & help to explain the things that we see happening. Some parts of economics are stronger then others because they are based on manipulating tautologies of various sorts. But others are really more along the lines of: 'If we put a dog here, the sheep will go there'.

As with most non fundamental sciences, economics can break down in extreme circumstances. Neuton's Mechanics is not as fundamental as relativity. It breaks down in extreme cases. That only seems strange because physics is very fundamental. But with Zoology, Sociaology, Phsychology or other "downstream" sciences, this is expected. No one's surprised when techniques break down during psychoanalysis of a woman raised by wolves.

Psychology is explained by Biology, explained by chemistry, explained by physics. And each of those words is just really a number of links in this chain in themselves. Economics is two or three links up that chain. So here's how we go back to the topic:

If a supermarket chain that supplied 85% of food in a region goes out of business, leaving it empty of competitors, what happens? The rules still apply. Consumers seek alternative. Small shops, mail order shopping, markets become very lucrative. Consumers spend more on food or get 'less' for a period. Eventually, a new equilibrium is found.

But what happens if the equivalent food producers go out of business? Wheat doesn't get sown. Coke doesn't get bottled. Sure it's a great opportunity for boutique vegie growers. But the same rules no longer apply. 20% of the food supply means there isn't enough for everyone to eat right. Maybe people sell off Apartments to buy houses with backyards (to grow food). Maybe they take time off work to plant. Maybe things are too volatile for boutique farmers to get investment to grow.

I'm not saying this is a close analogy. I'm certainly not saying the 'bailout' should've happened. If I were American, I'd be as suspicious as SwellJoe of a bill that's called "tax breaks for Peace Corps & stuff" which gives unreal sums to big companies while the salesman-like proponents chants 'This is too complicated for you to understand', 'You need to decide now' & 'Apocalypse is coming so pick mine.' But I am saying that relying on high level economic principles here is not like relying on gravity. Not at all. At best it's like relying on wolves attacking a calf over a bull. It makes sense. It usually happens. But who know what happens to traumatised wolves from a a circus during a thunderstorm.

I was greatly disappointed to see your vote of "Aye" for the bill entitled "To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes". The bill, of course, includes the provision for the "bailout" of the financial sector.

My first problem lies in the title of the bill. As a friend of mine said, "If that kind of doublespeak don't get yer hackles up, I can't imagine what would." Have you read George Orwell's 1984, sir? I would not like to imply that we are in such a situation, but to allow a bill to pass which is so clearly titled in an obfuscating way is a mistake, one that is insulting to the American people.

My second problem lies in the bailout itself. Instead of punishing those companies that mismanaged their finances, we are instead calling for the entire country to pay for their mistakes. A massive tide of bankruptcies would have 3 major effects:

1. People employed by such companies would lose their jobs. These people are largely white-collar workers who should have some savings put away and should be able to find another job without much trouble. Surely it is better for these individuals to be out of work than for the entire country to be handed a debt that was created by the private sector.

2. It will be harder to get low-rate credit. In a nation that is addicted to such credit, I consider this to be a good thing in general, as it will encourage saving (or filing bankruptcy and starting over without a penchant for overspending). This still poses a minor problem, which I will address below.

3. Some people will lose their retirement investments. This, of course, is a bad thing.

Based on points (2) and (3), I think that $700B+ would be better allocated to:

1. Subsidize home mortgage interest rates and/or offer tax credits for people in low tax brackets. This will allow lower- and middle-class individuals to still be able to purchase homes and spaces for small businesses in spite of the inevitable credit crunch.

2. Create a program for individuals meeting certain criteria (age, total assets) that uses government funds to restore some of their lost investments. This will bring some relief to those who depended on the ill-run companies for their retirement.

I believe that my ideas are better than a bailout because instead of punishing the entire country for the mistakes of a few, it offers relief to the uninvolved parties who will be hit the hardest, while allowing those responsible for this mess to receive the brunt of the punishment.

If, instead, the government proceeds with the bailout, the government is subsidizing the risk of high-risk business practices, which causes companies to take irrational risks and unfairly rake in short-term profits, profits which are later paid for by tax payers who bail the company out when it inevitably goes under.

I plead with you to consider the fair course of action in this case, the one which does not punish everyone for the mismanagement of a few. And if the bailout package is allowed to go through, at least ensure that the bill is correctly titled.

I'm not in favor of footing the bill for mistakes these financial institutions made. But if we don't help them out it will continue to trickle and things will get worse. But we may help them out and things may get worse anyways. We are in some big trouble and its not even close to over.

If there is only $100 in the world, and a bank gives it to you and you pay it back with interest, where does the interest come from?

If there's $100 in the world, and a bank "gives $100" to 10 people, who all have to pay back $100 + interest, where does that come from?

You have to borrow it from another bank. Total money in the world increases, the economy grows, but it's a con, a mirage, a convenient consensual fiction. A system based on eternal growth, which relies on pushing around ever increasing debt for its very existence, where repaying the total debt would require giving the banks back all the money they ever loaned plus all the stuff in the world to the value of the conjured extra. How is this not silly?

That's not how fractional reserve banking works. Banks don't lend more than they have in their vaults, they just have less in their vaults than the sum of their depositors' accounts.

That's tangential to your main point, which seems to be an objection to a perpetually increasing amount of money that only exists as numbers in a computer backed by nothing. That only becomes a problem in a severe recession, where the rate of wealth creation slows so much that loans can't be paid back. The system breaks, and governments have to intervene to fix it. This isn't done by just giving banks money, as you suggest. The government typically takes over the banks. The proposed bailout involves buying assets, but it's still not giving banks money.

That is only a problem if you think we'd be better off with the slower economic growth that would result from banning fractional reserve banking. We're not. A system that breaks on a regular basis sounds like a bad idea, but you still have to compare it with the alternative before you condemn it.

Basically: money lent is less or equal to money deposited; no interest (only fees). Interest including fees is ~2.5%, and will "never" change.

The main difference is that that system isn't built on the assumption that the economy will always expand, which the current system is. I'll leave it to someone who actually knows something about the pros and cons of each to tell you if that's good or bad.. But basic reasoning tells me that it's not likely that something that takes place in a fixed environment (Earth) can expand for ever.

As for fractional reserve banking (the regulated version, anyway...), the bank needs only to hold enough capital to write down expected losses on loans. Much of this mess has been caused by the banks voluntarily levering out of this safety margin.

You could skip money and use seashells or chickens or whatever you wanted, the mechanism would still work.

And never mind the fact that even if you support a bailout this one was setup with language to specifically prevent oversight of any kind and would hence almost certainly be extremely corrupt, which rather does characterize that bailout as an attempted net transfer of wealth to me.

They didn't. My comment wasn't an argument, it just stated my position. Someone else replied with a different position, and I explained further. In an ideal world, I would've fully explained my position in the first place, but it wasn't worth the time if no one disagreed.

I do call things "silly" too much.

Seize a bank when it's in trouble, "fix" it, and sell it in a public offering. If the income from the sale nets more than the government spend to fix it, that profit is distributed to the original shareholders.

This happened i Sweden in the early 90's. Some banks were in trouble, and the government said that they'd help them, but by nationalization. One of the major banks were then suddently conveniently able to get some capital, and survived on it's own.