Obama: Crisis 'Will Be Worse If We Do Not Act Now'

Sen. Barack Obama (D-Ill.) just wrapped up his speech in support of the $700 billion Wall Street rescue plan, telling his colleagues that the legislation must be passed to "prevent the possibility of a crisis turning into a catastrophe."

Obama sounded the same theme that billionaire super-investor Warren E. Buffett sounded earlier in the day: "This is not just a Wall Street crisis, it's an American crisis."

The Democratic presidential nominee said that there may be better rescue plans out there, but there's no time to consider them. He also said that even if the rescue bill is passed, the underlying poor fundamentals of the economy "probably will" mean "big problems" in the coming months.

Nevertheless, he said, the bill must be passed because the credit market is seized up and businesses, for instance, can't get loans to meet payroll.

"And if they can't make payroll on Friday, workers are laid off on Monday. And if laid-off workers can't pay back their bills or loans to someone else," the crisis ripples through the economy.

Obama had a few extra suggestions he would like to see implemented down the road, such as allowing the U.S. Treasury to buy individual mortgages "like we did in the 1930s."

-- Frank Ahrens

October 1, 2008; 5:35 PM ET  | Category:  business
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Obama needs to pasy the "equal pay for eqaul work" law to help women within his first 100 days of office.

Then he needs to pass the mandatory 7 days of sick leave for all wokring Americans with the caveat that it can be used to care for sick dependents as well as personal illness.

It is the promises he has made to working women of America - and he needs to keep them now more than ever.

Posted by: In For Women | October 1, 2008 6:16 PM

Change the relationship between Wall Street and Government. If a Bailout is needed; Purchase the actual Mortgages (at 20% Discount) upon which the Wall Street securities are based. That gives the Taxpayer power over Wall Street policies instead of the other way around, and it pumps needed CASH into the Credit Market.

It's OK if the Democrat Blue Dogs vote against the plan. 47 Republican Votes can replace theirs, making for a near 50-50 split of support from the two parties. That's Bi-partisanship.

What Both Parties need to make clear is that the Bailout is to protect Trillions of Credit Swaps/Slices and Collateralized Debt Obligations (CDO) that companies have invested in. If these fail, the World Economy may fail under an Avalanche of Debt.

Both parties and the Financial Industry are Guilty as Deregulation of the Financial Industries, Fannie Mae's qualifying of Unqualified Loans, and Wall streets creation and selling of "Credit Default Swaps" and “ Collateral Debt Obligations (CDO) equally threaten to Ruin the world economy.

BUY the actual MORTGAGES from the BANKS and not these Wall Street paper “Black Holes”.

If we buy these ”Paper Debts” at discounted rates, other Banks and Investors will realize how little they are actually worth, which could accelerate the Bank Failure rate.

IF we must invest in Wall Streets problems; BUY THE MORTGAGES at 20% below cost, NOT “the discounted mortgage-backed securities that are choking off credit and roiling the markets”.

Read: How 'credit default swaps'—an insurance against bad loans—turned from a smart bet into a killer.

http://www.newsweek.com/id/161199

Posted by: Derek | October 1, 2008 6:36 PM

Now that the bill includes the $17 Billion for Solar Energy Investment, I’m for it as a first step towards massive Job creation and Renewable Energy investment:

http://www.renewableenergyworld.com/rea/news/story?id=53592

If Congress Extends ITC, 440,000 Solar Jobs Will Be Created, Study Says:

Navigant Consulting released the results of its new economic study this week indicating that more than 1.2 million employment opportunities and US $232 billion in investment would be supported by the U.S. solar energy sector alone through 2016 if Congress extends the solar investment tax credit (ITC) for 8 years.

According to the study, by 2016, the solar energy industry would create 440,000 permanent U.S. jobs with much of the direct growth occurring in domestic manufacturing, construction and the trades. This figure reveals the strength of the solar job creation engine when compared to the current 79,000 direct employees of the coal mining industry and the 136,000 direct employees in oil and gas extraction.

Posted by: Derek | October 1, 2008 6:40 PM

Obama wants to coverup his party's involvement since 1999 setting up the financial crash.

What do ENRON, WORLDCOM, FREDDIE MAC, and FANNIE MAE have in common? Everything; they are identical cases of criminality. There is one difference, however, the FREDDIE MAC and FANNIE MAE crimes are not being investigated nor are they being reported fully to the origins and persons involved of the crimes committed.

Posted by: tucanofulano | October 1, 2008 7:03 PM

Again, Obama shows the kind of initiative and leadership McCain is sadly lacking. Note also that Warren Buffet is on Obama's hefty team of financial advisors. With Obama, you get Buffet and a whole crew of the people who brought you the Clinton surplus.

Posted by: JamieRoberts | October 1, 2008 8:09 PM

I'm including the blog comments regarding Obamas statements re the current Senate bailout vote: "Nevertheless, he said, the bill must be passed because the credit market is seized up and businesses, for instance, can't get loans to meet payroll.

"And if they can't make payroll on Friday, workers are laid off on Monday. And if laid-off workers can't pay back their bills or loans to someone else," the crisis ripples through the economy.

What is disturbing is that this statement was made with no substantial supporting documentation. For example, his statement that "businesses can't get loans to make payroll on Friday" is pretty scary..and without any support. We must really be in bad shape, according to Obama, if American businesses have to take out loans each week to meet payroll???? I would assume that business revenues versus operating expenses cover payroll payments for most firms in the US?

I haven't seen any press coverage re the proposed bailout that documents ongoing failures of US businesses in failing to pay employees?

Is there something I'm missing or is Obama just out of it like all the other US Senators on this issue?

Posted by: Susie McGeehan | October 1, 2008 8:13 PM

No bailout. The current crisis is just a last-minute money grab before Bush leaves office. For our representatives in Congress to even consider it is an insult. Obama is only supporting it so his job of cleaning up the rest of the mess Bush and his cronies will leave behind will be easier.

A vote for this bailout plan is a defeat for taxpayers. This filing season, my husband and I won't be filing a federal return. We weren't part of the problem, we won't be part of the solution. If the IRS wants to make a BFD out of it, then we'll just pack up the kids and move to Canada. As for the rest of you, good luck.

Posted by: Heather Czerniak | October 1, 2008 8:16 PM

Obama is a liar, and you are fools to believe his lies.

Obama says that he will tax the upper 5% and not tax the lower 95%.

That is a lie.

Obama can't fund all of the spending he proposes unless he get's more tax revenue, and additional taxes on the upper 5% simply do not provide enough revenue. And the bailout will also require more taxes.

So get ready middle class. You will be taxed.

And you are fools if you think that you will not be taxed simply because Obama made a promise.

Obama's promises are worthless.

Obama has lied to us before, and he has voted to raise taxes on us before. That is his record.

Posted by: You_correctly | October 1, 2008 8:22 PM

Lap Dog suporting the greatest taxpayer robbery ever conceived. There are far better alternatives out there. Look, the econoomic fundamentals are a mess, thats why the market will go down. All this bill does is cement power with Wall Street. Feinstein has the audacity to say that we just do not understand. Gee I trade derivatives professionally spare me that crap Dear Senator MANY DO UNDERSTAND and that is why we are enraged...It is U that wanders like a sheep driven by false confidence and self righteousness.

Posted by: Shark89 | October 1, 2008 8:25 PM

Obama would have all to gain from opposing any action.
It's really likely he knows the situation can turn into a catastrophe.

And remember, in the middle of a confidence crisis, you can't hear all the truth about how things are worse. Consequently, if a politician is running against his own political interest by saying 'we are on the verge of a catastrophe' in a confidence crisis, it's better to take him seriously.


By the way, a catastrophe may start somewhere else in th world and spread everywhere else. It could be a bank in Asia, in Europe and we lack INFORMATION. Under incomplete information, it's better to take the worst scenario a litlle bit seriously.

Posted by: stearm | October 1, 2008 8:29 PM

You can't perfume this pig. Larding it up with a pile of pork doesn't get past real problems:
"SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS. The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work to ward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101."
Uncle Sam bails out the world!

Posted by: Jon404 | October 1, 2008 8:31 PM

I'm not sold on this bailout...I think that we shoild wait until after the election to pass it, if need be.I don't like the way our country handles things when under pressure,and this could be a real bomb!

Posted by: PUREDEMO | October 1, 2008 8:31 PM

I hope these comments help Americans still on the fence about who to vote for that we don't want a leader who is advocating knee-jerk reactions to problems, rather than effective and solid solutions.

This man would be nothing short of a disaster as president.

Posted by: Lynn | October 1, 2008 8:32 PM

OBAMO IS THE PHONEYIST COMMIE IN MY LIFE TIME AND AT 78 YEARS O AGE HOLLY WOOD CREAPS LOVE IT

Posted by: BOBB | October 1, 2008 8:35 PM

OMG, this man wants to be president and he wants to make rash decisions that border on socialism because he fears there is no time to consider options. God help us. His thinking will be worse than the shrub's.

Posted by: Juan | October 1, 2008 8:35 PM

Well it looks like Obama has shown his true colors.Siding with the Wall Street bankers over the objections of the working people.I have been a dem since 1968 and I know a con artist when I see one. Obama ,I wouldnt spit on you!TRAITOR!!!!

Posted by: Joe | October 1, 2008 8:39 PM

My bank, the First Socialist Workers Bank of Bazukistan, unfortunately has troubled assets of $124,997,634,233,450 which, thanks to God, the Merciful and Compassionate, will now be redeemed thanks to the generosity of Section 112. Thank you, Amerikansky Congressmenskii!

Posted by: Jon404 | October 1, 2008 8:41 PM

Está equivocando Obama el rumbo estimo que quiere apoyar la ayuda ofreciendo algunosas mejoras para la clase media pero está salvando su responsabilidad en un posible gobierno suyo olvida lo que pasará con el máspobre.De donde saldrán esa cantidad de dineroharán funcionar la maquinita sembrarán de papeles sin respaldo al mundo es una locura espero que cuando vuelva a la cámara de representantes lo rechacen.es mi humilde opinión

Posted by: aldo07@fibertel.com.ar | October 1, 2008 8:42 PM

The bailout would be a disaster for all working people. Obama should be ashamed of himself for supporting it. It only goes to show just how trustworthy politicians really are.

I'd go along with a federal tax revolt. It's long overdue and necessary to send a message to all politicians, regardless of their party affiliation.

Posted by: Mary Witherspoon | October 1, 2008 8:42 PM

This "crisis" has really opened my eyes.

No one far enough up the food chain has had to deal with the kind of hard times they are threatening us with. So for them, it's urgent.

Rank-and-file Americans already know what it's like to not be secure in their jobs.

We the Stupid People who don't get golden parachutes know what hard times entail. We know they'll be harder than they already are.

What THEY don't know is that we would rather deal with hard times than make any deals with any of them, anymore.

Posted by: tmonk | October 1, 2008 8:48 PM

Meet the new boss (Obama),same as the old boss (Bush).

Posted by: Ted | October 1, 2008 8:50 PM

What does it say about a candidate who is into fear mongering? No money to meet payroll? Jeez let's spend that 700 billions on paying workers instead.

This is like JFK saying the commies have missiles in Cuba already. There is no time to consider other options. We must take them out ASAP!

This is a hoax. And BHO you are no JFK!

Posted by: Anonymous | October 1, 2008 8:51 PM

I am 100% in agreement with the revised bail out bill in Congress. I have changed my mind. "If a business can not make Sales, then the business can not make the payroll." WE MUST DO SOMETHING BUT NOT NOTHING.

Posted by: Futurejumps | October 1, 2008 8:51 PM

THIS OBAMO HAS FLIP FLOP ON EVER I-TEM HE IN HIS LIFE CAN YOU BE THAT DUMD

Posted by: BOBB | October 1, 2008 8:51 PM

Obama should start by offering an ultimatum to the three of his "ecconmic advisors" who were instrumental in the pillaging of Fannie May: Give back your golden parachutes or be gone. That would be leadership by example.

Posted by: Give It Back | October 1, 2008 8:52 PM

Re: Bobb

And at 78 you still can't spell?

Perfect.

In general,

Both sides agree that this will be a work in progress. This is a solution to restore confidence in the markets, nothing more nothing less.

Value cannot possibly be determined at arms length. It's posturing on the scale of the Jets v. te Sharks. Instead of Natalie Wood, we're fighting over a pile of specious loans.

There's no "shotgun" solution.

Cooler, calmer and smarter heads need to be involved. Doing this in the backstretch of an election is crazy. Trying to exploit it to garner votes is even more reckless.

Posted by: Ron in L.A. | October 1, 2008 8:54 PM

Soros says there are other options, contrary to BHO!


Oct. 1 (Bloomberg) -- Billionaire investor George Soros said the U.S. should inject equity into banks rather than buy their bad debts as proposed by Treasury Secretary Henry Paulson in his financial-rescue package.

``The plan is ill-conceived or not conceived at all,'' Soros said today in a telephone interview, calling the current credit meltdown ``the crisis of a lifetime.''

Posted by: Anonymous | October 1, 2008 9:13 PM

Obama has utterly disgraced himself in this. Vote after vote he always sides with taxpayer monies going to pork and pigs. Bridge to Nowhere - Aye, Taxpayer dollars to Big Oil - Aye, Taxpayer dollars for Big Bankers - Aye. Welcome to change we can believe. I've come to a startling realization... Obama IS the lipstick on the pig! A fat, swollen corrupt congress more concerned with the special interests and the money they bring, than the citizens they were elected to represent.

I'll be voting independent. The two party system has failed and failed utterly. We have two worthless candidates and no honest politicians in sight.

Posted by: Newly Independent Voter | October 1, 2008 9:20 PM

no bailout, unless it primarily includes direct, definite aid to homeowners; and it doesn't give additional power to the Treas Sec.

Posted by: saracooper | October 1, 2008 9:26 PM

The Powers that Be are liars, thugs, and theives, and it's time to stop handing over our wallet to them, even though we're told it's the "safe" thing to do. Obama has lost my vote, along with my Democratic Senator, if she caves in to fear and votes for this abomination. I wrote my Republican Representative to thank him for his "no" vote and to encourage him to stick to it. I've got a freaking Obama magnet on my fridge. He, like our Congress, either doesn't understand or isn't listening. Same Spit, Different Day.

Posted by: Anonymous | October 1, 2008 9:33 PM

Of course he want a bail out. Look who his investors, oh I mean, campaign contributors are! The mortgage companies that he is bailing out.

Posted by: Nobama | October 1, 2008 9:38 PM

Hussein Obama is a liar and still has not said a thing about how he will do what he says he will do. Elect this guy and we will get 18% interest rates on mortgages again just like we did when Jimmy Carter was President. Hussein Obama is a marxist and you should be very scared of his socialist plan for America.

Posted by: Nobama | October 1, 2008 9:41 PM

Hussein Obama is right. The crisis will get worse if we don't act now so you need to vote for McCain. Hussein Obama is an elitist, socialist, marxist who wants to be a world dictator. This guy is power hungry and voters should be very afraid of what he will do to this country.

Posted by: Nobama | October 1, 2008 9:48 PM

Hey, I've got an idea. Let's wait until after the election and If John is the winner (fat chance) he could put Sarah on the job of straightening out this financial mess that we are in. If John loses (better chance) BO could hire her for the same purpose. Who knows, she could come up with some solutions that would be even better than what some of the power guys are coming up with now. So, what do you think about this idea Sports Fans?

Posted by: Joe | October 1, 2008 10:02 PM

Senator Obama has one of the few voices of credibility left in Washington. He has earned respect for his intelligence and integrity. Above Paulson, Bush, and all the others trotted out to make the case for bailout, I trust Obama.

Warren Buffett, on the other hand, is greed personified.

Posted by: Arye Michael Bender | October 1, 2008 10:28 PM

How is YOUR 401K doing? How about the investments of your employer? Have you ever been to one of those towns that was full of closed shops? Out of business. Boarded up. Sad.

Too many people reject everything they don't understand. By the time it hits you personally, it will be too late. In the meantime, you latch onto catchy slogans and stupid sound bites as if they actually meant anything. You're cutting off your nose to spite your face.

Posted by: DoTheMath | October 1, 2008 10:32 PM

I love it how everyone is an expert in here.

This is step one. Obama wants something on the table because the banks and businesses are starving. We'll move to healthier meals as soon as we can afford it. Washington folk position themselves around something as simple as a cheese sandwich, don't expect this to come out like glistening mana from heaven, don't expect it to come out completely clean.

Where were your passions before it hit. NOW you're 'involved'. No matter how you slice it, rushing to plug a hole in the dam is better than saying "there's no hole really, it's sound", with water spraying all around you.

Watch less TV. Get out more, get your own head back.

Peace

Posted by: IMeanReally. | October 1, 2008 10:35 PM

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