Bailout Fails In House
While I believe that the Congressional leadership of both parties will, within a couple of days, get their sh*t in one sock and deliver the votes needed to pass the Bailout, I admit I was kind of surprised that it failed today. Many Congresspeople, including my own, are claiming they're against it because the public seems to be against it. A quick look at some representative people for and against the bailout tells me all I need to know.
Michael Moore: Against the Bailout
Warren Buffett: Supports the Bailout
I think I'd rather take my economic advice from Warren.
Update 2226 01 Oct: As I figured they would, the Senate easily passed a "sweetened" version of the bailout tonight; I predict the House will go along (but by a closer margin) when they vote on Friday. The "sweeteners" should be enough to give cover to some of the previous naysayers who looked into the abyss on Monday afternoon and finally realized the potential hazards of failing to act. For those who say that we shouldn't do anything at all -- that we should just let the market run its course without government interference -- we pretty much tried that once already, from November 1929 to February 1933. Pure capitalism would be good in theory if everyone played nice; the problem is that human nature doesn't really allow for that. I think only the most ardent Ron Paul supporter would say that the government shouldn't step into the marketplace for the good of the whole, either by regulating monopolies, ensuring product safety, or -- as in this case -- keeping the economy from going into a 4- or 5-year long deep recession if it's preventable without too much irreversible long-term damage.
Well-meaning people can disagree on whether or not this particular bailout is the right way to fix the problems in our economy, but it seems to me that it's the only one that could have passed, and that we had to do something. To advocate doing nothing in the face of potentially severe society-wide dislocation for the sake of adherance to a philosophy that doesn't have any real-world applicability is, to me, the worst kind of politics. (Especially when, like one Kooky Local Simpleton, you simply refuse to face the facts as they exist.)
Update 1142 03 Oct: It has happened as I foretold; the House voted by a substantial margin for the bailout with the added sweeteners.
posted by Bubblehead at 2:26 PM
56 Comments:
The bailout plan will undermine everything. One of the things that keeps the financial markets cautious over the long run is the certainty of losing one's shirt unless due diligence is done. As painful as this will be, the "system" needs to re-learn a hard lesson about value. If the government steps in to nationalize these failed instruments, it will have exactly the opposite effect. People will take greater risks in the future because they know the downside will be covered by the full faith and force of the government.
As we say in the South... there needs to be a reckoning.... on Wall Street, on Main Street, and in DC.
9/29/2008 2:55 PM
To be honest, I have no idea whether bailout or bankruptcy is better. But I think bailout just might be simply because bankruptcy will affect so many of the common people who don't have golden parachutes.
What's really ticking me off right now is the finger pointing. I say shut up your whining and get your butts working on a compromise that everyone can support.
9/29/2008 3:09 PM
I'm ambivalent, but that doesn't mean I would sit on the fence in a decision like this. I would have voted for the bill. But, the resultant was equally beneficial for the American people. The republicans voted no, because they wanted to make it look as if they were all "mavericks" saving the people's money. This was a poor choice becuase it looks as though they were gambling with all of our lives. This in NO TIME TO PLAY WITH FIRE.
The republicans are makign this a huge blackmail project, and Mccain is at the top of it. They are acting as if we ALL have to either vote for Mccain as our next President, or go down with the ship together. This, of course, is a bluff... and Obama called them on it... and the American people will struggle a little, but we will be satisfied to know that Barack Obama will walk into the Whitehouse on January 20, 2009, and restore immediate confidence in everyone, because we will all colelctively know that the Busha Administration and the power grabbing Mccain will no longer be looming over the American collective conscience. Confidence will be restored, once we learn that Obama wins.
If we can ride out the Bush Administration once and for all, then we can surely ride out this storm for four more months.
9/29/2008 3:16 PM
There are times when the electorate does not know what the right thing to do is. I think this is one of them. Do I want to bail them out? NO! But do I think there needs to be a specific bailout plan ... with the reckoning and consequences? YES! It was irresponsible of the House to vote down the plan that had been hammered out. The economy will be much worse in the long run and for a longer period of time if there isn't. The SEC and banking regulations are needed to protect the taxpayers assets from the irresponsible financial analysts, traders, etc, too.
9/29/2008 3:33 PM
Dan - Quit the drivel and put down the party flag.
There are probably less that 10 politicians in DC that have true character and real concern for the citizens of this country. Some are republicans, some democrats and some independents. Some probably voted for the bailout, some against. But as a whole, both parties are no different. They are like the AFC and NFC in the NFL. They need each other and are no different than each other. Obama and McCain are one in the same.
Until we as America change (vote out current politicians and vote in people with real substance) life will not change.
Everyone needs to drop the R and D labels and start voting with their concience.
I am glad there is no bailout at this point. The market needs to learn. But I am sure a bailout will be forthcoming soon.
9/29/2008 3:33 PM
I have mixed feelings about the bailouts. Of course, I recognize the reason for these mixed feelings...I am angry at using taxpayer dollars to bail out companies that have acted irresponsibly. I am angry that so many people took out loans that they could not afford.
Logically, I think they will have to pass this bill in some useful form to allow lending to continue, although I hope it will be more responsible than it has been in the past. I also think that the companies that eventually accept money from the bailout need to be strictly regulated.
I have less than a year left until I finish school. When I get a job and settle down, I will certainly want to purchase a home. I will be taking out a loan for this.
I find it very ironic that I will have to prove to the mortgage company that I am responsible and honest enough to take out a loan.
9/29/2008 3:36 PM
133 out of 199 Republicans in the House of Representatives voted no today. 65 Dems voted no.
The Republicans are to blame for everything that we hate. I am an Independent.
I voted for Barack Obama twenty minutes ago on my absentee ballot. I am elated, and I felt a weight lifted off of my chest. I know that this country will no longer be haunted by greedy Republicans, because of what they have done to this country. I don't think we will ever see another Republican as a President, for as long as all of us who are consciously aware of what is happening, will live.
9/29/2008 3:53 PM
You know something Joel,
I am always suspicious of people coming to me in a panic telling me that something terrible will happen unless we do something quick that will cost a lot of money. This is a complicated problem and I just get the feeling that the bailout plan isn't really well thought out.
I guess we are going to find out what the alternatives are...
-phw
9/29/2008 3:58 PM
Here's a reasonable Bailout Plan that may actually work. It addresses the issue of this not being a bailout, but rather an investment, and it pushes $ back to the US Citizens, and saves Social Security. That's what I'm talking about!!
http://sinatraco.com/blog/2008/09/27/the-sinatra-bailout-plan/
9/29/2008 4:01 PM
How they voted
95 Democrats voted No
133 Republicans voted No
This is not a Dem vs Rep issue. This is a bailout vs no bailout issue.
9/29/2008 4:01 PM
One more point, with 95 Dems voting No...
the democratic party could have bailed out the country themselves without the Republicans.
But why did 95 of the Dems (40% of the total Dems in House) vote No?
Again, it is not R versus D issue. Some of the most liberal Dems voted lock-step with Bush.
Agree with other poster that anytime someone says you have to "immediately" spend to stop a crisis, it is not a smart thing to just go forward.
The more this is argued, the better the end result will be. Look at where we are already from the very first bailout suggestion (initially $700 billion in aid with next to no consequences for Wall Street). That was the first offer. The second was better. The future bailout plan will be better.
9/29/2008 4:07 PM
And now they go home until Thursday!? Does anyone else out there get to stay home, holiday or not, when there is a crisis at their job? Obviously, neither the republicans or the democrats "get it".
9/29/2008 4:11 PM
Yep, a lot of people will lose the jobs...
And a lot of them will be located in India, the Philippines, China...
I think I'd have a wee bit more sympathy for companies who actually hired American citizens to work for them.
But maybe that's asking too much, eh?
It doesn't do much either, to make me support this bill, when the purported "oversight committee" would consist of people from the Treasury Department, Housing and Urban Development, Homeland Security, etc...all Presidential appointees.
Rather like setting the fox to guard the henhouse, methinks.
9/29/2008 4:14 PM
No Bail out! Great! Congress for once had the courage to take the consequences and do what is right. The Bail out helps the "bad" bankers save on their investments and sticks it to the poor people. The money goes first to the bankers and their investors. Every man, woman, and child has to pay about $2300.00 each. How do you pay? With inflation and higher energy and food prices after the market gets flooded with more paper money. When inflation goes up, people buy less stuff and that hurts the economy as a whole, not just one segment (the mortgage industry).
The bankers weren't selling their mortgages because they wanted to see if they would get bailed out. If they don't than they have to declare bankruptcy and a "good" bank will buy them out. Don't believe me. Morgan bought Washington mutual. Citigroup bought Wachovia. Bank of America bought somebody...I forgot there are so many "good" banks buying these bad ones.
Don't let Bush scare you into giving your money over to him and Paulson to bail out their buddies. Last time someone told me I needed to ACT NOW or miss out was a used car salesman.
People who wanted this bail out are the stupid short-sighted ones. You want to pay $6 for gas to help out Bush's buddies.
9/29/2008 4:38 PM
Congress voted against this because it "appears some people were against it"? Jeez, you need to surface more and ease up drinking on the Thyokol juice. Dems and Repubs voted it down because the majority of Americans were against it and said so loudly.
9/29/2008 4:55 PM
While I don't like the bailout what options are being put forth. The insurance one would have paid out a large amount as well. Bankruptcy lets see what would happen.
Financial institutions fail they stop buying from other companies such as high tech (i.e. IBM, Dell, HP, Oracle, Microsoft), office supplies (i.e. Staples) and so forth.
Now you have the domino effect. So is it in the interests of the American taxpayers to be without jobs? How about lets send more jobs oversees they'll come back when this correct is done right? Governement paying out more unemployment claims is good for everyone right? Government taking in less tax dollars because people are unemployed is good to right? People losing money in their 401K and retirement plans is good to right?
Wake up people. While the bailout isn't good right now it is the only option that anyone is really putting forward. You have Warren Buffett and others saying that the option that is needed.
If congress has a better alternative put it forward and get it passed. Bankruptcy is not an option because of the ripple effect. Bankruptcy would be far worse for both the US economy and the American worker.
9/29/2008 5:09 PM
Actually, the first link in my post indicates that the latest polling showed both the pro- and anti- sides were in the mid-40s, so there really wasn't a "majority".
9/29/2008 5:10 PM
To Dan who said: The Republicans are to blame for everything that we hate.
The Democrats have a majority in both the House and the Senate. If the Democrats really wanted to pass this, they would not need a single republican yes vote on it, yet the Democrats (who hate Bush) cannot get united on this either.
As for whether or not McCain or Obama should be involved in crafting this bill.
Whoever wins the Presidency is going to be affected big time by this for the next four or even eight years. Don't you think they should both be in the thick of it?
9/29/2008 6:28 PM
My two cents: do you realize fraud has been perpretrated, but the entities offer immunity from corporate SEC regulations because of their quasi-governmental status (part public, part governmental - not accidental)?
Whatever is done becomes the legal precedent for future disposition of similar financial corruption.
- An independent voter.
The first auditors of record, by the way, were from the era of the Egyptian pyramids ... it seems even in those days there were grain inventory irregularities.
Human nature is constant - it definitely needs verification, especially where lawyers ( Raines and Gorelick ) were involved.
Personally, I would prefer sticking to Reagan's edict of "trust, but verify" rather than succombing to fear and tossing logic out the window.
9/29/2008 6:39 PM
Let's put this into perspective.
Monday Night Football is on, the beer is cold, and tomorrow after I've been at work for about an hour the Sun will still rise.
Who wants pizza?
PW
9/29/2008 9:22 PM
I am elated and feel a weight lifted off my chest... Come on Dan. Get real. The fact is that two of the Fannie Mae CEOs (mid-90s and late 90s to early 2000s) that started Fannie Mae down the bad mortgage track were Clintonites and are advisors to the Obama campaign.
My point is not to say Democrats are bad and republicans are good, but to say that a group of greedy bankers, both democrats and republicans, who are walking away with millions were responsible. It is incomprehensible to me how the left can say with a straight face that it is all the fault of the Devil Bush.
Speaker Pelsoi today blamed it all on the evil Bush budgets. Last time I checked the Democrats have had control of Congress for awhile and write budgets for the President's approval or veto. I'm not sure how she said this with a straight face.
Bottom line there wouldn't be any crisis if Americans were smart enough to do a simple balance equation and figure out that if you are paying out more each month than you are taking in, then sooner or later you will default on your mortgage.
9/29/2008 10:59 PM
LOL Patty...I just hope you aren't planning on paying for the pizza with a credit card.
In all seriousness, this problem will begin to impact Main Street a lot sooner than people expect if nothing is done. No liquidity means no credit, which means no car loans, vacation loans, equity loans, no auto repair loans, NOTHING. If the bank that issued you your credit card fails, you may find yourself without access to credit or worse.
In my mind, it is self-evident that something needs to be done. Paulsen has come up with a plan that will infuse cash liquidity quickly to minimize the damage to our economy. Rest assured that even if the bill were passed today by both houses and signed by the President, there would still be damage and Main Street would eventually still feel pain. Perhaps that isn't so bad.
Fannie Mae was created in 1938 and along with Freddie Mac (created as a substitute for Fannie when Fannie was taken off the budget books and made a quasi-private corporation). The Community Reinvestment Act told secondary mortgage lenders that if they did not give a certain amount of sub-prime (or unsecured loans to poor people) that they may be fined for redlining and not allowed to merge with other banks in the future. Of course, this was done amid cries for increased regulation.
Well, this regulation basically told lenders (1) You must lend responsibly, but (2) If you are too responsible, you will be punished. As secondary lenders become more bold, Fannie and Freddie continued to buy up the mortgages. Seeing this, secondary lenders ultimately turned the mortgage market into the wild west and attracted more and more people of ill repute or insufficient assest to make the loan a safe bet, but with governments wink and nod, they just kept on selling.
It's easy to blame the lenders for this debacle, but if you look objectively, it was regulation that got us into this mess. More regulation won't get us out. The market needs liquidity and it needs to function with as little government involvement as possible beyond adjudicating disputes and crimes.
If you love liberty, you should appreciate the fact that it has been capitalism that has enabled it to flourish and strengthen over the past 200+ years. A bail out means that the government is essentially nationalizing our financial system. Nationalization equates to Socialism and Socialism is anathema to liberty - the very thing we gave a good portion of our lives defending. Don't forget that.
We do need the government's aid to restore liquidity, but they must also include provisions to minimize government intrusions in the future, to recind stupid and harmful legislation like Sarbanes Oxley or SOX, the Community Reinvestment Act and so on.
The SEC needs to be forced to repeal the "mark to market" rule, the ban on "short trading" and to restore the "uptick" rule, among other changes in policy. The Congress and the Executive need to end "capital gains" taxes retroactively and leave the moritorium in place for at least 3 years to encourage investment. It needs to keep the planned tax cuts in place - raising taxes will be more disasterous than the bailout.
There are many other tools in the bag of the Fed and Treasury that they could be using. If they aren't going to use them, then they need to explain why not and to do so in language that even the most impaired cretin can understand.
I wish I could provide more information, but I'm extremely tired and really don't like to express myself much. Have a fabulous tomorrow - I will: I'm on vacation! :-)
9/29/2008 11:15 PM
Personally I'm glad congress voted No on this bailout bill. there were no teeth in the Executive compensation limits (check the details) and given Bushs track record of signing statements I would expect him to redline a lot of the oversight provisions in this bill so he could give a huge parting gift to his wall street cronies.
Last week I received 2 offers for credit cards in the mail. today I received another. Also received an offer from my credit union for a home equity line of credit on Saturday. Check the MSN home page. Countrywide is still offering those Mortgage "Special Deals." On my main street, things seem to be going on as normal.
I'm against any top-down bailout. I'm also against any bailout for property buyers who were counting on continuing increases in value and playing the odds that they could do a flip. One good thing, that will be the end of those flip-that-house programs.
Oh, one more thought. Wait till the loan insurance swops( can't remember the exact title) start coming due in a big way. thats in the trillions of dollars. Then your really going to see some crying on wall street.
My two cents, and keep a zero bubble.........
DBFTMC(SS)USNRET
9/29/2008 11:59 PM
This problem was precipitated by gubmint mandated programs such as the Community Reinvestment Act and the like. These programs were foisted onto financial institutions by socialist democrats. Like it or not that is the truth. Having said that, I realize that it was also these businesses that then repackaged these subprime mortgages and traded and sold them as high risk investments. As one "minister" was recently quoted as saying, "The chickens . . . are comin' home . . . ta roost."
The fix to this will be painful, but the only one that is fair will require the institutions and investors that traded in credit default swaps & mortgage backed securities to live with the free market results. If that means failure, so be it.
1) Allow the market to re-establish true asset value
2) Investigate the financial institutions & prosecute any fraud
3) Eliminate the Federal Reserve
9/30/2008 6:41 AM
One quick note for Dan; you, my friend, are NOT an independent. You have made that clear. Claiming that you are may make you feel good, but if you fool yourself, then the number of fools is one.
RM1/SS
9/30/2008 7:42 AM
Would domeone explain to me why WaMu (which was absorbed) is still sending me credit card offers?
9/30/2008 8:07 AM
My only comment is about Warren Buffet and Wall Street (not because I can't say more, but because I don't want to pile on and at this point refuting Dan is feeding the Troll). Warren Buffet and the rest of the elite managers know exactly what they are playing with. Buffet didn't put money into Wall Street out of patriotism. He made a calculated move that he could make big money. He had the liquidity and made a move to maximize profits. If the bailout fails he won't make AS MUCH money. The assets he bought were undervalued and he has the time to wait so he will make some money. Buffet and the rest of Wall Street know how to play the game. They are knocking the stock market around like a tennis ball, selling short and making profit timing the market, while Washington panics. Wall Street may be nervous or they may be pretending, because they all know they can make a bunch more money taking it from the tax payer than from each other. If I had the money and smarts I'd do it too.
9/30/2008 8:42 AM
I find it interesting that with ample blame for all for the current mess that everyone is going to vote the same knuckleheads back into office. One would think that if you want real change that you would vote for someone new or at least voice your concern to your member of Congress. I for one let my voice be heard and I rejoice in the fact that we are not adding $700,000,000,000 to our debt, which would never be repaid except by our tax dollars. The bailout was poorly structured and only helped the thieves and the politicians. We need true economic reform starting in Washington with the federal government spending. You want to fix things than force the feds to spend only on the things the fed is required to spend on, such as defense and forreign affairs vice education and local issues. Much of what the fed spends money on these days should be state issues, but the states find it easier for the feds to tax you and give them the money so they aren't the bad guys, but this is stupid and adds an unnecessary middle man that steals/wastes large protions of your tax dollars. I for one am glad the bailout failed.
9/30/2008 8:53 AM
I know this is off topic, but I would like to know what the acronyms,
CHOP and A-Ganger stand for.
I'm not prior Navy, but I like reading this blog and that's what makes me ask.
Thanks, J.
9/30/2008 9:31 AM
J.,
Chop is simply slang for the Supply Division Officer on a submarine - usually an ensign or lieutenant.
A-ganger is a non-nuclear trained machinist mate assigned to a boat's Auxiliary Division (aka A-gang).
9/30/2008 9:50 AM
I'm gonna side with Warren Buffett who said that the derivatives that were concocted, sold and held by Wall Street were "financial weapons of mass distruction." Thank you Phil Graham, Hank Paulson and the rest of the Wall Street Gang that created the ponzi scheme that is now coming apart. This financial meltdown has very little to do with the community reinvestment act. I lay it at the feet of the "greed is good" crowd that are always lurking around the edges of unregulated financial systems. Lets see.... Keating the poster boy for the S & L meltdown 20 + years ago. Our republican candidate for President got his peepee whacked for trying to influence investigators looking at keating. Then there was Ivan Boesky. Remember him?? another poster boy for the late 80's early 90's junk bonds ponzi scheme. Think I'll nominate Phil Graham for a poster boy spot for this latest fiasco. If we've learned anything over the last 30 years, unregulated financial markets always end up creating massive ponzi schemes. Based on emperical evidence just recounted, there needs to be rules and law, police and courts to manage behavior in financial markets. It's really no different than our society in general.
My two cents......
Keep a zero bubble......
DBFTMC(SS)USNRET
9/30/2008 11:27 AM
To anonymous who:
I know this is off topic, but I would like to know what the acronyms,
CHOP and A-Ganger stand for.
Expanding a bit on the previous explanation, The Supply Officer is call a "Chop" because he is in charge of buying the food such as porkchops, etc. It may also be that he must put his "chop" on any requistions leaving the boat.
The "A" in A-Ganger stands for Auxilliary equipment, in this case equipment that the Nuclear Trained personnel don't operate.
9/30/2008 1:16 PM
I am glad the bailout failed and I hope to God one does not pass. I keep hearing all of these arguments about why or why not one should pass but no one asks one very important question - Where in the Constitution does it give Congress or the Federal Government the authority to do this? There used to be a time (I know, way back) where those knuckleheads in Congress ACTUALLY debated on the Constitutionality of a bill. The closest we came to for that yesterday was Rep Shelia Jackson Lee from TX stating that the Constitution was written to protect "Main Street" (gotta love these little catch phrases - Save Main Street not Wall Street) from these financial companies. The fact that she still has a job as a Representative in the US Congress is a disgrace. Obviously she has a GCE in her understanding of the most important document in our history. Pathetic. The Federal Government caused this mess: requiring banks and financial companies to make loans to risky clients - usually minorities, under the penalty of law, lowering the borrowing rate to essentially less than zero between 2000-2005. These are the same clowns that said back in June that Fannie Mae and Feddie Mac should back all of these bad mortgages because they were so financially strong - oops. These are the same idiots that got us into this mess. To paraphrase Ron Paul - 535 idiots in Congress are not the experts and will more than likely screw stuff up (see fuels, ethanol). Bottom line this is going to hurt, no 2 ways about it, but if we continue to finance bailouts to the tune of over $1 TRILLION we will destroy the dollar and destroy our country.
-SOAC student
9/30/2008 1:17 PM
Its a hard lesson, but I am going to have to agree with rs on this one.
9/30/2008 1:35 PM
My congressman voted for it despite multiple emails explaining why it is a bad idea. Even if a better more though out plan comes up for a vote later in the week it will still be trying to put a bandaid on unsustainable system. Our monetary system can only work when there is an exponential increase in the money supply and credit. It is absurd, and like any exponential system it blows up at some point. We are there and no amount of patching it up will help for long. The bailout is like trying to pour gasoline on a fire in hopes of dousing the flames. Check out http://www.chrismartenson.com/
9/30/2008 4:43 PM
Not to keep switching subjects, but Supply Officers are called "Chop" due to the similarity of the Supply Corps Oak Leaf insignia's resemblance to a pork chop, not because they buy the food.
And I'm with Patty ... Let's get some Pizza and watch the fun.
9/30/2008 5:30 PM
The "Chop, or Porkchop", the nickname for the Supply officer only came into common usage on submarines after the arrival of Nuc boats. diesel boats didn't have supply corps officers assigned. A Line JO was usually assigned as the Food Services Officer. After COSAL arrived in the early 60's on submarines supply was centralized as a department and SK's were assigned to the boats. when I went on my first boat a fleet-snorkeler in 1961 all the Spare Parts PO's were validating the first COSAL list for their departments. When you ordered supplies back in the day it went straight to the department head, then you took it off the boat to Subbase supply. At that time we maintained our own supply record keeping systems by department. We didn't have a SK onboard. On my last smoke-boat (70-75) our SUPPO, a Line JO, was also the Food Services Officer. We had an E-8 storekeeper and an E-4 storekeeper.
And there you have it, how Pork Chops came to submarines!!!
Keep a zero bubble......
DBFTMC(SS)USNRET
9/30/2008 6:58 PM
Thank You DBFTMC(SS)USNRET, Fastnav, and the other two Anons here, thanks for answering my question. It amazes me how much closer you Gents work together...than we typically do in the Air Force. It seems to me that the cohesion in the Navy (especially on Subs) is much stronger than it is in the USAF as whole. I enjoyed my active duty years and time spent in the Air Guard, Security Police(6 years active, 2 years Air National Guard) but, if I was 17 years old again, I think I would have joined the Navy as either a C.S. or an S.K. But hey, hind sight is always 20/20 is it not?
I've clearly Hi-jacked this political thread enough for one turn. So, back to our regularly scheduled program.
Thanks again,
SSGT J. Casey
9/30/2008 8:34 PM
Joel,
What a strange method of determining if something is the correct course of action.
The markets are in a shambles right now precisely because of government intervention. Not only in the long term of looking the other way or actively encouraging Freddie/Fannie to falsify records and make bad loans, but also in the short term. Since the U.S. government is contemplating becoming a player in the markets, the $700 Billion is scaring away private sector solutions.
We should be investigating and prosecuting the perpetrators, not bailing them out.
What is the impact of injecting such a large sum of fiat money into the system? Inflation. U.S. taxpayers take it in the shorts not only on taxes, but by paying more to live. The bailout plan is insane.
We need to do this why? Because Bernanke says so? Why is this man still in charge of the Fed? What credibility does he have?
At the very least, we need to take our time and at least have an open dialogue on the best course of action. We owe it to ourselves and to the future taxpayers that are going to be paying the bill.
Here is a reference if you don't want to hear it from Michael Moore.
DBF, McCain did not "get his pee pee whacked" for the Keating Five, the charges were dropped, you know it, and your reference is truly pathetic.
So John McCain is satan incarnate for his part in the Keating Five and you say nothing about Obama and his associations and dealings with William Ayers and Tony Rezco? At least be consistent.
As far as placing all of the blame on the Republicans, get your facts straight. The Democrats didn't want to reform Fannie/Freddie because they would lose their kickbacks. Phil Graham? Try Barney Franks.
Our Republican candidate was the one that tried to stop all of this before it happened, look up the Federal Housing Enterprise Regulatory Reform Act of 2005.
9/30/2008 8:54 PM
seems to me that banks and lending institutions are getting most of the blame re: the collapse of the financial market and freeze in credit. I have a somewhat different take on that.
Granted banks and lending institutions did make risky loans. However it was wall street huckster greed that saw an opportunity to make a killing with passage of financial market de-regulation pushed through congress by Phil Graham in 1999 and 2000. And so the great derivative ponzi scheme was hatched to bundle up mortgages, clear them off the books of banks that wrote them, slice and dice them, and RE-LABEL them as solid, mortgage backed securities sold around the world by wall street hucksters like Hank Paulson. Reminds me of the old saying, "There's a sucker born every minute" and "If it sounds to good to be true it probably is." Well there's plenty of suckers to go around now. there are solid banks out there that didn't play the greed-is-good game such as Wells Fargo and Bank of Hawaii to name two. However, there's going to be a lot more that are going to get burned by these mortgage backed securities not to mention retirement funds, 401K's and IRA's.
Next, the Wall Street greed-is-good gang thought up another derivative scheme. they created Credit Default Swops! These were insurance policies to cover any defaults with their mortgage backed securities. These got so popular that more and more policies were written by insurance companies like AIG and were bought and sold thousands of times on the market continuously increasing in paper value. It is estimated that financial institution balance sheets are riddled with Credit Default Swops now worth next to nothing. At it's height the total value of Credit Default Swop Market was in excess of 50 TRILLION dollars. Thats right, 50 TRILLION DOLLARS. Have you noticed--Hank Paulson isn't talking about this yet. When the Credit Default Swop market collapses it will be Warren Buffets financial weapon of mass distruction. It's already taken out AIG.
My take, no bailout or what ever you want to call it for wall street period. Tax payers should not be propping up these wall street ponzi schemes. The 700 BILLION dollar "smoke and mirrors" show of Hank Paulson won't keep this ponzi scheme from collapsing, and a lot of those institutions taking the money from going under. The Fed and treasury have other tools to get credit moving again with sound banks like Wells Fargo. It's time for the ponzi schemes on wall street to collapse.
My two cents, and keep a zero bubble...........
DBFTMC(SS)USNRET
9/30/2008 9:45 PM
Well there you go again JQ5,
McCain said in his autobiography that his intervention with federal investigators on behalf of keating was the biggest mistake of his life. He may have got off on a technicality, but he was sweating plenty while the investigation was going on and even he wasn't sure he was going to survive.
Re; Obama and those two other guys? Did he intervene with federal investigators? don't think so. so where's the comparison?
Re: McCain and reform, I needed a score sheet just to keep track of his hourly positions on the financial mess and the economy last week. As he has said and I paraphrase, economics ain't his strong suit. Being erratic sure is though.
My two cents, and keep a zero bubble......
DBFTMC(SS)USNRET
9/30/2008 10:07 PM
Two points.
Has anyone noticed that congress spent more time "investigating" the pro sports steroid issue than the financial issue?
Are we really comfortable shoving more money into a venture that has been so badly managed? Congress completely abrogated their oversight responsibility while management (Raines, et al) raided the coffers through creative bookkeeping. Do we really want more of the same?
SSNCOB
10/01/2008 6:42 AM
Joel:
Off topic but worthy of you posting a separate topic:
PBS anchor Gwen Ifill, who is moderating Thursday's VP debate, is releasing a new book on Barack Obama, raising questions about her objectivity. The book's release date is 20 January 2009 and is subtitled "in the age of Obama."
Can someone please find out how we get her to recuse herself due to failure to be objective (real or perceived)?!?!?
10/01/2008 9:18 AM
Dan, your Koolaid is going bad.
DBFTMC, Ponzi schemes uh? what do you think social security is? Wait until that comes home to roost.
As for government intervention. This mess is caused in part by government "do-gooders" who dicated to private organization who to lend to. This increasing HYBRID from of government needs to stop. Either nationalize everything or get your di#k-skinners out and provide ONLY the requist level of oversight.
My unrealistic proposal. All Republicans for 20 years and then all Democrats for 20 years. At the end, the one with the best track record wins and that's who we go with, the other party relegated to insignificance.
10/01/2008 9:41 AM
I look at the bail out like this; if I have 4 people in my family our share of the bail out is $8000. I should take that $8000 of MY money and bring it to a neighbor who is on the verge of losing their house and GIVE it to them so they can pay their mortgage company - sad thing is, this would be the "Ideal circumstance" of any bail out. But in reality the money will be given directly to the mortgage investment companies and some neighbors will still lose their house.
10/01/2008 9:52 AM
Tom,
Actually a couple of well respected Yale finance professors suggested an idea sort of like yours in this mornings Washington post:
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/30/AR2008093002316.html
The problem with their idea is that if we think there is a moral hazard problem bailing out Wall Street firms, that problem would be even worse if we give money to homeowners and let it “trickle up” to bail out Wall Street. Why should my buddies who took out huge loans they can’t afford to buy a house benefit from my tax money when I was prudent enough to just suck it up and rent until I could afford a normal 30-yr fixed rate mortgage?
On another note, for those of you railing against the government’s regulation of anything, please explain coherently how Fannie/Freddie’s implicit government backing explain the willingness of other lending institutions to make and securitize non-conforming loans – the ones that Fannie and Freddie wouldn’t take?
10/01/2008 11:32 AM
Submaster,
Social security a Ponzi scheme? Bush and McCain want to privatize social security. Now there's a thought. Lets turn that over to the wall street-Bush McCain kleptocracy. Maybe they can bail out their Mortgage Backed Securities and the Credit Default Swops with the proceeds that they steal from ALL working Americans. No thanks, Me and the Mrs. will keep our government provided social security going in the bank every month. And thank you for doing your part to cover that. Gee! Now I know how the wall street ponzi scheme hucksters feel as they roll out with their bank accounts full of taxpayer dollars.
My two cents......
DBFTMC(SS)USNRET
10/01/2008 11:33 AM
@Anonymous
I am against any bail out (I should have noted that). I was attempting, not very eloquently, to show how absurd the whole proposal is. We are supposed to be a free market, free to succeed and free to fail. People and companies should be accountable for their own actions. IF a person can show laws were broken or if they were mislead when making the loan then they should seek compensation/relief within the courts. Bankruptcy may be their only option, so be it.
10/01/2008 4:29 PM
DBF - to not admit that SS is a ponzi scheme, where you make 2% on your "investment" either marks you as an idiot or a partisan.
You can take any 20 year period in the last 120 years, including the entire depression, and you will find the stock market returns at least a 7% rate of return.
So, in my world, I'd rather invest MY (MY, MY, MY) money in the stock market than in a wealth transfer scheme, funded by government IOU's, known as Social Security.
Of course, I see you're collecting yours already, so what do you care, like many liberals, you got yours already, why should anybody get theirs.
Of course, if Obama wins, we'll see if he has a Clinton-like conversion to conservative fiscal policy to get re-elected, or if he's a true believer in the liberal/socialist pablum.
As for this plan, it's a POS, but probably needed to restore confidence in the credit markets. Let's hope (and for the religious, pray) it's execution is at least as succesful as the RTC from the 80's.
10/01/2008 9:11 PM
Bubblehead - I will say one very good thing about a discussion like this - it brings out a lot of new bubblehead bloggers to check out!
Keep it up guys, even if you're a bleeding heart, no-nothing lib. (Come on, can't you guys take a joke??)
10/01/2008 9:17 PM
And another thing....
McCain was implicated in the Keating scandal because the senate needed a republican to take a fall, too, to make it a bipartisan affair, and McCain happened to be tangentially involved. As I recall (Wiki article source) "Senators John Glenn and John McCain were cleared of having acted improperly but were criticized for having exercised 'poor judgment'."
Of course, Libs should love that this happened to McCain as his shame over this led him to pursue McCain-Feingold, which has made George Soros the Obama kingmaker.
If anybody should hate McCain over the Keating scandal, it should be Republicans.
As for the current mess, it's a shame we can't watch Barney Frank and Chris Dodd being handcuffed and frog-marched out of the Congress.
10/01/2008 9:29 PM
Sigh, Mr. Jay,
You seem so uptight about your witholding for Social security. Any opportunity conservatives had to privatize SS just went up in smoke along with the financial markets. that will be dead on arrival for sure for the next 50 years, and justifiably so. Lets see...Wealth transfer scheme=SS? I don't think so. The real wealth transfer scheme was the Bush tax cuts 8 years ago. Can't argue with the data. The current wealth transfer scheme pushed by Bush and Paulson and about to be inacted by congress is to give 700 Billion to their wall street cronies.
If you've read my previous comments on this thread you should be aware I'm against any bail out for financial markets using taxpayer $$$. The fed and treasury have other options to free up credit to SOLVENT banks. I don't know what congress is thinking. There is absolutly no guarantee that participants have to turn on the credit spigot if there bailed out of toxic securities. They can hold on to the liquid assests, invest overseas, pay dividends, pay themselves on their grand scale or whatever. There is also no guarantee that participating financial institutions after taking the $$$$$ won't go belly up.
I've stated in other threads on this blog that I consider myself a Fiscal conservative and a social progressive. We own our home, paid off early I might add, own a 10 year old pickup and a 1 year old Avalon, being paid off early also. Have some bank stock (in a well managed bank that pays a quarterly dividend regularly), IRA in Utilities (over 25 years and done quite well with it), and a 401K. We are conservative investors. We live within our means. Seems to me the wife and I made the right decisions. I'm disgusted by Bush-wall street kleptocracy and it's final act before leaving office, that is to pick our pockets on the way out the door.
Am I a partisan in my political persuasion? Based on what I've seen over the last eight years, You bet your ass I am.
My two cents, and keep a zero bubble......
DBFTMC(SS)USNRET
10/02/2008 2:10 PM
DBF,
This current mess is the fault of both Rep and Dems. Both are equally culpable. SS is a ponzi scheme, problem is, Congress R's and D's keep raiding it to pay for everything but what it is intended for. Lots of blame to go around.
The Bush tax cuts were/are a success. Revenues to the Gov. are UP, I say again, UP. The rich pay a higher percent of the total tax burden than they did under Clinton. Problem is, spending is also UP, both Reps and Dems again to blame. As I see it, you live within your budget, you don't have the ability to tax your neighbor to gain additional income; unlike the Government. The government needs to reign in spending and stop paying for things the government has no business paying for.
Life is not fair, it's time to stop the class warfare, envying the rich, and thinking that the government is the final arbiter of who should make what and who should get what.
10/03/2008 7:38 AM
Submaster,
guess you and I are going to disagree on some things and agree on others. Here's reality from my prospective. SS is here to stay. I'm a realist. I paid SS witholding for over 40 years. I'm drawing mine as is my wife. you'll get yours as well. It's nothing but political BS and scare tactics to suggest otherwise. the politicos who suggest otherwise are just trying to get you to believe that it won't be there for you. don't buy into it. I'm hunching your parents are drawing social security also. It may be a ponzi scheme (it's the best one going) however I trust the social Security Administration a hell of a lot more before I'd trust the wall street hucksters who want me to invest in there schemes. I believe the old saying, "If it sounds to good to be true, it probably is."
I've (we've) also availed ourselves of what the markets have offered. As a realist who has observed politicians and wall street hucksters for too many years to count, I've (we've) been careful with our $$$$ investments. I don't believe either politicians or wall street hucksters. If there lips are moving they're lying. All they want is to sell us whats best for them. the worst I've ever seen has taken place over the last eight years. Agree, Dems have been complicit, even though in the minority for 6 of those 8 years and having very little power to influence the current administrations policies.
Getting back to the theme of this thread, I'm disgusted by the rush to buy into the Paulson Administrations (it ain't Bush's anymore after today) transfer of taxpayer $$$$ to wall street. The senates loading more pork to make it palatable for the house makes me want to throw up. anyway, it won't have much impact because the mortgage foreclosures are going to go on for a long time to come and they'll run out of $$$$$. In my judgement, the insolvent financial institutions should be allowed to fail. Taxpayer $$$$ can find better use priming the credit pump by supporting solvent banks, state, county, and city governments that are going to be severly hurt by the recession. My local county government MUST provide for basic community services. I don't know how the're going to do that with whats looming on the horizon.
I don't want to engage in philosophical debates about free market capitalism vs socialism anymore. We're out of time and we gotta deal with whats at hand as best we can. If I sound pesimistic about America's immediate economic future, I am. I think I'm fortunate that my wife and I are well positioned to ride out some tough economic times. I hope you are as well.
My two cents, and keep a zero bubble.......
On a personal note, today I was able to participate in a joint VFW/MC League memorial service for a recently deceased Korean war era Marine. It made my day to honor his service for America.
DBFTMC(SS)USNRET
10/03/2008 11:49 PM
My final shot on this thread. Bubblehead, we all own the title of your BLOG. Congress, the Senate and we-the-people. We are stupid and we're going to be punished.
As expected, the Paulson Administration announced today that the very people who have ripped off all the $$$$$$ on wall street are now going to be the contractors to administer the distribution of the $$$$$ we just gave the Paulson Administration.
Bush's final gift to his wall street cronies.
The American public oughtta be up in arms about this!!!!! Just kicken the can down the road. See you'all back here same time next year for more of the same.
My two cents, a disgusted DBFTMC(SS)USNRET
10/04/2008 8:31 PM
Amazing post! I really like it.
12/28/2011 7:39 AM
Post a Comment
<< Home