what I think about this? well that the House is a bunch of idiots. Especially the Republicans. First they get us into this mess and now they don't have the balls to get us out. What they either just don't get or don't want to get (and I am not yet sure which one is worse) is that is Wall Street fails the economy fails.
In the Roosevelt Room after the session, the Treasury secretary, Henry M. Paulson Jr., literally bent down on one knee as he pleaded with Nancy Pelosi, the House Speaker, not to "blow it up" by withdrawing her party's support for the package over what Ms. Pelosi derided as a Republican betrayal.
"I didn't know you were Catholic," Ms. Pelosi said, a wry reference to Mr. Paulson's kneeling, according to someone who observed the exchange. She went on: "It's not me blowing this up, it's the Republicans."
Mr. Paulson sighed. "I know. I know."
How did we get to this point? It's the culmination of many past betrayals.
First of all, we have the Republican Study Committee blowing things up with a complete nonsense proposal -- solving the crisis with a holiday on capital gains taxes. How is that possible? Well, if a party runs on economic nonsense for 25 years, eventually many of its foot soldiers will be people who actually believe the nonsense.
Democrats weren't going to trust Henry Paulson, because behind him they see the ghost of Colin Powell (and Paulson's "all your bailout are belong to me" proposal, aside from being bad economics, showed an incredible tone-deafness.)
CNN Money said that even if the bailout didn't pass, we wouldn't face a Great Depression Part II, so there's no need to go jumping off any bridges. Unless you were one of the schmucks that mortgaged your life on a mortgage you knew you couldn't afford under anything but the most optimistic of circumstances.
First of all, I do not trust the Wall Street pundits nor the Republican appointees on this issue. They have gone from optimism to blind panic in a heartbeat, while a number of economic writers (Krugman, Roubini, and the folks at Calculated Risk) have been very clear in noting the dangers and results of the economic environment.
I think the bailout as initially proposed was the AUMF in Iraq all over again: Panic panic, give us authority, don't bind out hands with transparency or oversight. Once the plan had some accountability to it, the Republicans bailed: so I'm assuming that the lack of accountability was the most important point of the original bailout. Cynical? After 8 years of Bush politics, I'm probably being generous.
From what I've read from those same economists that were accurate in predicting the meltdown in the first place, nationalization of failing banks on a case-by-case basis would be more effective and less costly to taxpayers. If the real problem is that the leveraged debt bubble is irreconcilable, then the bailout would simply forestall the inevitable Depression for a vast cost to the taxpayer, rather than being available for the eventual recovery.
Regardless of what happens, tighter market regulations must be re-implemented to prevent these catastrophic debt bubbles from reoccurring, but I strongly doubt that will happen while the free market fundies are still in power.
The whole thing is an attempt to rob the treasury. There should be no bail-out for anyone making more than $100,000 a year or worth more than $250,000. These capitalists choose their fate, let them fail.
Better crisis legislation will emerge out of all this than the hasty emergency bill voted down today (I'm glad and surprised, Congress had the backbone to say no)... but there is no getting around the months and months and months of financial crumbling ahead.
And yet, the Dow Jones is still over 10,000 ... a number that was unheard of for all but the last year of the 1990's. Yes, things are going to get worse before they get better ... but they will get better. Bail out, or not bail out.
I'm not an economist, but something should be done. I graduated from college during the early 90's recession, and it was not fun, for me or many of my friends. The people who perpetrated these problems shouldn't benefit from the solution. But you really want to avoid a bad recession.
What went wrong with the bailout, in my opinion, is best stated in three parts:
-Neither side sold it terribly well to the American people -- the media didn't give it a proper explanation until after the vote, and it thus came out looking like what someone else described here on SB as a pipeline directly from the Treasury to Wall Street. Paulson, Bernanke, and Congress did a terrible job of selling the package, and the fact that they tried to slam it through on less than a week's notice made the lack of communication far, far worse than it would have been otherwise.
-The Democrats who didn't vote for it felt that it didn't give enough protection to those who had been railroaded into bad mortgages or were on the verge of losing their retirement savings.
-The Republicans who didn't vote for it framed it in terms of "economic freedom", a rather cynical code word for "we don't like regulation even if we desperately need it".
There was no way in hell this bailout package was ever going to pass, and I fear that the repercussions may seriously jeopardize the Democrats' chances of even holding onto Congress next year, never mind expand their majority as it's been expected they would.
You are watching Democracy at work. Now Jefferson talked about the need for an informed electorate. What we have is a desperate electorate that will not take the time to be informed.
Chuck Todd had an interesting analysis on NBC's Nightly News today. Those Congress Critters who have recently had a close race, or who expect one this year, voted "no". Those who are in safe seat, not having to weather a recent electoral challenge, voted "yes".
Actually Wes, many of the voters are informed, and what we see is a nonsensical rush to bail out banks (from a "we don't need no stinking regulation of the free market" administration), without any thought or energy given to dealing with the underlying toxic asset problem. The issue has been presented over an dover as one of the underlying loans (mortgages, car loans, student loans, credit cards) being defaulted on, depriving the banks of capitol because their leverage to capitol ratio was too far off. Nothing in the bailout voted on yesterday addressed how to keep those underlying assets from going bad in the first place - which would mean the banks wouldn't have to worry about the leverage/capitol ration on their books. Buying up a bunch of toxic securities that are build out of default prone "assets" without stabilizing the assets is not a good deal for the taxpayers.
Sorry, but I was taught long ago not to give my money away until I knew what it was being spent for, and in this "bailout" I, as a tax payer, don't know what my money is being spent for. And here's the rub - these are the same guys who said we needed to buy up Bear Sterns and let Lehman Brothers fail, and that would be that.
I am not an American but I think the proposed bailout was a bad idea. Much better to just guarantee the depositors money in the banks and then let the banks merge, sell out, fail, whatever. The package had too much power going to Treasruy and you know they would do something stupid like pay more than fair value for the financial assets which is partly what casued the problem in the first place.
The biggest danger is loss of confidence. People are still going to work, business still makes and sells product, the houses still exist, it's only the artificail value that people has put on the paper that has gone to hell. However what can cause the economy to tank is lack of confidnece, those with jobs and money stop spending and that puts more people out of work. It's not the markdet that casues recessions, the market is a symptom, it's lack of confidence (and liquidity) that can do you in.
This whole "Great Depression II" theme is little more than uninformed fear mongering.
It's bad enough that Bush and virtually all the main stream press were doing it to get the bailout passed, but I did not expect to see it here as well.
The bailout of the big wall street banks does little if anything to address the credit crisis, according to most economists.
The latter will require a direct infusion of capital and should (by all rights) also involve partial government ownership of the banks that get the capital.
But of course, Bush is not actually listening to experts whose interest is in helping ordinary Americans.
strange times these are.
what I think about this? well that the House is a bunch of idiots. Especially the Republicans. First they get us into this mess and now they don't have the balls to get us out. What they either just don't get or don't want to get (and I am not yet sure which one is worse) is that is Wall Street fails the economy fails.
Paul Krugman had a good post a few days ago on what he thought was going on:
CNN Money said that even if the bailout didn't pass, we wouldn't face a Great Depression Part II, so there's no need to go jumping off any bridges. Unless you were one of the schmucks that mortgaged your life on a mortgage you knew you couldn't afford under anything but the most optimistic of circumstances.
First of all, I do not trust the Wall Street pundits nor the Republican appointees on this issue. They have gone from optimism to blind panic in a heartbeat, while a number of economic writers (Krugman, Roubini, and the folks at Calculated Risk) have been very clear in noting the dangers and results of the economic environment.
I think the bailout as initially proposed was the AUMF in Iraq all over again: Panic panic, give us authority, don't bind out hands with transparency or oversight. Once the plan had some accountability to it, the Republicans bailed: so I'm assuming that the lack of accountability was the most important point of the original bailout. Cynical? After 8 years of Bush politics, I'm probably being generous.
From what I've read from those same economists that were accurate in predicting the meltdown in the first place, nationalization of failing banks on a case-by-case basis would be more effective and less costly to taxpayers. If the real problem is that the leveraged debt bubble is irreconcilable, then the bailout would simply forestall the inevitable Depression for a vast cost to the taxpayer, rather than being available for the eventual recovery.
Regardless of what happens, tighter market regulations must be re-implemented to prevent these catastrophic debt bubbles from reoccurring, but I strongly doubt that will happen while the free market fundies are still in power.
The whole thing is an attempt to rob the treasury. There should be no bail-out for anyone making more than $100,000 a year or worth more than $250,000. These capitalists choose their fate, let them fail.
There should be no bailout. Period.
Better crisis legislation will emerge out of all this than the hasty emergency bill voted down today (I'm glad and surprised, Congress had the backbone to say no)... but there is no getting around the months and months and months of financial crumbling ahead.
The Dow fell 777 points, or over 7%, the WORST performance in the history of the Stock Market.
And yet, the Dow Jones is still over 10,000 ... a number that was unheard of for all but the last year of the 1990's. Yes, things are going to get worse before they get better ... but they will get better. Bail out, or not bail out.
I'm not an economist, but something should be done. I graduated from college during the early 90's recession, and it was not fun, for me or many of my friends. The people who perpetrated these problems shouldn't benefit from the solution. But you really want to avoid a bad recession.
What went wrong with the bailout, in my opinion, is best stated in three parts:
-Neither side sold it terribly well to the American people -- the media didn't give it a proper explanation until after the vote, and it thus came out looking like what someone else described here on SB as a pipeline directly from the Treasury to Wall Street. Paulson, Bernanke, and Congress did a terrible job of selling the package, and the fact that they tried to slam it through on less than a week's notice made the lack of communication far, far worse than it would have been otherwise.
-The Democrats who didn't vote for it felt that it didn't give enough protection to those who had been railroaded into bad mortgages or were on the verge of losing their retirement savings.
-The Republicans who didn't vote for it framed it in terms of "economic freedom", a rather cynical code word for "we don't like regulation even if we desperately need it".
There was no way in hell this bailout package was ever going to pass, and I fear that the repercussions may seriously jeopardize the Democrats' chances of even holding onto Congress next year, never mind expand their majority as it's been expected they would.
You are watching Democracy at work. Now Jefferson talked about the need for an informed electorate. What we have is a desperate electorate that will not take the time to be informed.
Chuck Todd had an interesting analysis on NBC's Nightly News today. Those Congress Critters who have recently had a close race, or who expect one this year, voted "no". Those who are in safe seat, not having to weather a recent electoral challenge, voted "yes".
Actually Wes, many of the voters are informed, and what we see is a nonsensical rush to bail out banks (from a "we don't need no stinking regulation of the free market" administration), without any thought or energy given to dealing with the underlying toxic asset problem. The issue has been presented over an dover as one of the underlying loans (mortgages, car loans, student loans, credit cards) being defaulted on, depriving the banks of capitol because their leverage to capitol ratio was too far off. Nothing in the bailout voted on yesterday addressed how to keep those underlying assets from going bad in the first place - which would mean the banks wouldn't have to worry about the leverage/capitol ration on their books. Buying up a bunch of toxic securities that are build out of default prone "assets" without stabilizing the assets is not a good deal for the taxpayers.
Sorry, but I was taught long ago not to give my money away until I knew what it was being spent for, and in this "bailout" I, as a tax payer, don't know what my money is being spent for. And here's the rub - these are the same guys who said we needed to buy up Bear Sterns and let Lehman Brothers fail, and that would be that.
Sheril, you write an amusing column; and get some pretty interesting responses.
I've been suggesting this *This American Life* episode to people, on the "Giant Pool of Money." It's a pretty good:
http://www.thislife.org/Radio_Episode.aspx?sched=1242
I am not an American but I think the proposed bailout was a bad idea. Much better to just guarantee the depositors money in the banks and then let the banks merge, sell out, fail, whatever. The package had too much power going to Treasruy and you know they would do something stupid like pay more than fair value for the financial assets which is partly what casued the problem in the first place.
The biggest danger is loss of confidence. People are still going to work, business still makes and sells product, the houses still exist, it's only the artificail value that people has put on the paper that has gone to hell. However what can cause the economy to tank is lack of confidnece, those with jobs and money stop spending and that puts more people out of work. It's not the markdet that casues recessions, the market is a symptom, it's lack of confidence (and liquidity) that can do you in.
This whole "Great Depression II" theme is little more than uninformed fear mongering.
It's bad enough that Bush and virtually all the main stream press were doing it to get the bailout passed, but I did not expect to see it here as well.
The bailout of the big wall street banks does little if anything to address the credit crisis, according to most economists.
The latter will require a direct infusion of capital and should (by all rights) also involve partial government ownership of the banks that get the capital.
But of course, Bush is not actually listening to experts whose interest is in helping ordinary Americans.
He has never done so before. Why start now?