House defeats bailout bill

[maxiep]

If the voting split had broken more along party lines you might be able to claim this, but fact of the matter is, this is a wildly unpopular bill, and with the election some 30+ days away I'm sure it gave many the heebiejeebies ... and I also have no doubt that a good many representatives object to the whole notion on general principle.

one member of congress seems to think voting this Bill through could cost him his seat:
http://www.cnn.com/2008/POLITICS/09/29/marshall.economy/index.html

If anything, I think Obama and McCain have been mostly irrelevant to the process.

Wait, exactly what am I claiming? All I said was that while McCain at least tried to wade in the toxic waters, Obama has tried to put as much distance between him and this issue as possible. When the Democrats and (unintentionally) the White House put the tee on the ball for him, he blew it. Ever since then, he's led by running away--now that's leadership.

 

[Dumpy]

No, he put his campaign above his job as a Senator. In fact today he said Democrats and Republicans need to get together and get this thing done--as if he wasn't part of Congress.

Bottom line, the Democrats defered to Obama to speak for them in Thursday's meeting, and he blew it. He did shoot his mouth off and grandstand, and as a result the guy that crowns himself a uniter killed the first draft of the bill. Now he's pretending he has nothing to do with this mess at all.

Kepp in mind that the House of Representatives voted against the bill.

Both McCain and Obama are senators.

What obligation do representatives have to listen to senators? What sort of influence could senators have in negotiating a bill through the house? Would representatives resent interference from senators? What do you think?

 

[Denny Crane]

Kepp in mind that the House of Representatives voted against the bill.

Both McCain and Obama are senators.

What obligation do representatives have to listen to senators? What sort of influence could senators have in negotiating a bill through the house? Would representatives resent interference from senators? What do you think?

There's a sort of animosity between the two houses, in general.

Obama and McCain are senators, but they are defacto leaders of their respective parties from top to bottom.

 

[Dumpy]

I'm gathering that there are three schools of thought here.

(1) The bailout is needed to rescue the economy. It has weaknesses, but whatever. Let's do it!
(2) There's no way we should bail out some failed banks. They can go to hell.
(3) We really need to rescue the economy, but this bailout bill is horrible. Instead of buying derivative securities, which will just prop up the banks, their management, and the biggest investors such as hedge funds, the government should just purchase mortgages directly. That would be a much better plan.

Am I missing anything?

 

[The_Lillard_King]

People know what the consequences are. They just don't feel like its appropriate to bail out wall street. That's at least how I am. Probably others too, including many of the congressmen. Partisan politics aside, this is a very serious issue....but the process has to be run through the checks and ballances of the United States system of government...the executive branch of the government is not the end-all of what happens, despite what you may think.

Then you don't know the consequences . . . "despite what you may think."

 

[Denny Crane]

Hey Nancy,

Thanks for making my 401K lose so much yesterday.

Signed,
Not a fan.

 

[The_Lillard_King]

Well this ought to get it done:

WASHINGTON - President Bush warned Tuesday that failing to pass a financial rescue plan would bring severe consequences to the U.S. economy. "Congress must act," he declared.

http://news.yahoo.com/s/ap/financial_meltdown

 

[Nikolokolus]

Wait, exactly what am I claiming? All I said was that while McCain at least tried to wade in the toxic waters, Obama has tried to put as much distance between him and this issue as possible. When the Democrats and (unintentionally) the White House put the tee on the ball for him, he blew it. Ever since then, he's led by running away--now that's leadership.

My bad, I think I completely misread your post. I went back and re-read what you wrote and I'm missed your point the first time round.

 

[Nikolokolus]

Well this ought to get it done:

WASHINGTON - President Bush warned Tuesday that failing to pass a financial rescue plan would bring severe consequences to the U.S. economy. "Congress must act," he declared.

http://news.yahoo.com/s/ap/financial_meltdown

For once I actually agree with Bush ... but frankly I think his call for something to get done has about as much pull with the congress as if I had asked for something to be done.

I think these representatives are just scared shitless that they're going to get tossed out on their ear if they vote this through; it's wildly unpopular and they have done almost nothing to explain the situation in terms that most Americans can understand.

 

[maxiep]

I'm gathering that there are three schools of thought here.

(1) The bailout is needed to rescue the economy. It has weaknesses, but whatever. Let's do it!
(2) There's no way we should bail out some failed banks. They can go to hell.
(3) We really need to rescue the economy, but this bailout bill is horrible. Instead of buying derivative securities, which will just prop up the banks, their management, and the biggest investors such as hedge funds, the government should just purchase mortgages directly. That would be a much better plan.

Am I missing anything?

I fall into Camp Three. The problem is that the issue is at once simple and complicated. The best solution will be difficult to explain to voters, and therefore it's easier to find a crappy solution that people can understand.

There are two things that need to happen: Liquidity needs to be re-established in markets frozen by the crisis so that financial institutions can sell these assets; and capital levels need to be raised in these firms so that the market doesn't freeze up again.

Any idiot can understand the above paragraph. The problem comes from how to solve it. What if purchasing these bad securities at their perceived "held to maturity" price doesn't help set the market? Time horizons are critical here. You've then wasted a ton of money with no result.

Instead of opening a window announcing that the government will purchase all distressed bonds at a held to maturity price, set up a Dutch auction with everyone invited. If the government buys the security, attach Sen. Dodd's proposal of "contingent equity" in the form of stock warrants.

Second, require additional capital to be raised. Right now, going out and raising capital sends a signal that you're in trouble. By requiring it, everyone has to go out in the market. Hard bargains will be driven, but money will be attracted to these firms because there will be perceived deals. The Treasury could participate in some firms that can't raise requisite capital, through preferred stock. Those that can't raise the capital will be absorbed by those who can.

Finally, get rid of all the political crap off this bill, like compensation capping and steering some of the profits from these security sales to "affordable" housing.

We'll see what happens.

 

[Dumpy]

Hey Nancy,

Thanks for making my 401K lose so much yesterday.

Signed,
Not a fan.

I don't know about you, but I own the same amount of stock and shares in various funds as I did yesterday. I didn't lose anything.

The people who are truly screwed are the people whose children are about to enter college, and their college funds have tanked. You've got 20+ years before you start withdrawing from your 401K, during which time you will continue to contribute at the "discount" rates, thus mitigating the damage.

 

[Denny Crane]

I don't know about you, but I own the same amount of stock and shares in various funds as I did yesterday. I didn't lose anything.

The people who are truly screwed are the people whose children are about to enter college, and their college funds have tanked. You've got 20+ years before you start withdrawing from your 401K, during which time you will continue to contribute at the "discount" rates, thus mitigating the damage.

Sure. Day before yesterday, you owned 1 share at $100, now you own 1 share at $85. Sweet!

 

[Dumpy]

Sure. Day before yesterday, you owned 1 share at $100, now you own 1 share at $85. Sweet!

It is irrelevant unless you have to cash in. Just keep buying more.

 

[Denny Crane]

It is irrelevant unless you have to cash in. Just keep buying more.

Hopefully the (DOW) stock market won't be at 2000 by the time I cash in. That's the direction Nancy says it's headed.

 

[Dumpy]

Hopefully the (DOW) stock market won't be at 2000 by the time I cash in. That's the direction Nancy says it's headed.

Hopefully. The S&P 500, the Wilshire 4500, and the EAFE Stock Index (international stocks) have all increased over the past five years, and will still show a pretty good cumulative rate of return, even including this recent meltdown. Assuming things don't get any worse.

 

[AgentDrazenPetrovic]

Then you don't know the consequences . . . "despite what you may think."

Sure I do, at a minimum, more banks that have outstanding credit to people who can't pay it back will fail. From there, a domino effect will hit. People will lose their homes, the stock market will tank a bit and available credit will be at a minimum.

 

[PapaG]

Uhhh maybe . . . or maybe Bush just hasn't gotten across how important this bailout is to the future of our country.

The secretary of state has calls the sitaution dire. Buffett has said this is like the 9/11 for the financial sector. Obama and McCain both say there needs to be swift action instead of inaction.

But maybe it's all a big bluff game. Fuck the bailout, let's roll the dice and see what happens. Besides, not many seem to be buying Bush's address to the nation about this issue.

The Democrats and the media have spent 8 years telling us what a moron Bush is, and now it is Bush's fault that he has lost the ear of the country.

Twisted logic, for sure, and don't forget that true fiscal conservatives are fundamentally against this sort of bail-out.

 

[PapaG]

Stock market up over 500 points today. A healthy and unexpected immediate rebound.

I wonder if the Oregonian will use the red ink/WW II-esque 100-size font tomorrow morning to trumpet this news?

 

[The_Lillard_King]

The Democrats and the media have spent 8 years telling us what a moron Bush is, and now it is Bush's fault that he has lost the ear of the country.

Twisted logic, for sure, and don't forget that true fiscal conservatives are fundamentally against this sort of bail-out.

What are you saying, that the repubs and independents are now just realizing what the dems have been preaching is true?

I backed off on my calling Bush out because of all the responses and me realizing I understand a very thin layer of national politics so I'm probably wrong . . . but I have now read several articles that came out today that also mentioned what I brought up. No one cares or believes what our president has to say about the issues surrounding our nation. Sad really.

Some of it might be politics and everyone separting themselves from the Bush era, but I think a large portion of this dynamic can be blamed on the man himself.

 

[Jack RamsaysPants]

Sure I do, at a minimum, more banks that have outstanding credit to people who can't pay it back will fail. From there, a domino effect will hit. People will lose their homes, the stock market will tank a bit and available credit will be at a minimum.

And how exactly is that not something that should be attempted to prevent? If yo look around there are companies going out of business every where. Look at how much commercial real estate is vacant right now. Look at unemployment rates. All of that gets worse if the bleeding is allowed to continue. It's extremely naive to sit there and think "hey my assets are covered, I don't want this on principle" but that's not the majority. Small business' are greatly affected by the economy. Take a small business of 10 employees. If it goes under that
's 10 more unemployed, who then either have to find new work which isn't available, or draw on unemployment, which is paid for by... You got it taxes on business'. You have also taken 10 people (households) out of the circle of spending. Which then takes money away from other business'.

This literally is not a situation you simply want to try and weather. I am sure the initial proposal was unsatisfactory, but something does need to be done. If executed properly this whole mess could go away with minimal damage and our economy could resurrect o where it was pre-9/11.

 

[AgentDrazenPetrovic]

And how exactly is that not something that should be attempted to prevent? If yo look around there are companies going out of business every where. Look at how much commercial real estate is vacant right now. Look at unemployment rates. All of that gets worse if the bleeding is allowed to continue. It's extremely naive to sit there and think "hey my assets are covered, I don't want this on principle" but that's not the majority. Small business' are greatly affected by the economy. Take a small business of 10 employees. If it goes under that
's 10 more unemployed, who then either have to find new work which isn't available, or draw on unemployment, which is paid for by... You got it taxes on business'. You have also taken 10 people (households) out of the circle of spending. Which then takes money away from other business'.

This literally is not a situation you simply want to try and weather. I am sure the initial proposal was unsatisfactory, but something does need to be done. If executed properly this whole mess could go away with minimal damage and our economy could resurrect o where it was pre-9/11.

Well, in my book you either do it right or you get eliminated. The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Wall Street, but that other malfunctioning corporation called the USA.

 

[AgentDrazenPetrovic]

And how exactly is that not something that should be attempted to prevent? If yo look around there are companies going out of business every where. Look at how much commercial real estate is vacant right now. Look at unemployment rates. All of that gets worse if the bleeding is allowed to continue. It's extremely naive to sit there and think "hey my assets are covered, I don't want this on principle" but that's not the majority. Small business' are greatly affected by the economy. Take a small business of 10 employees. If it goes under that
's 10 more unemployed, who then either have to find new work which isn't available, or draw on unemployment, which is paid for by... You got it taxes on business'. You have also taken 10 people (households) out of the circle of spending. Which then takes money away from other business'.

This literally is not a situation you simply want to try and weather. I am sure the initial proposal was unsatisfactory, but something does need to be done. If executed properly this whole mess could go away with minimal damage and our economy could resurrect o where it was pre-9/11.

Seriously though, why do YOU think that its the American taxpayer's job to go out and rescue these companies that:

1. Dug themselves into this shit
2. Don't give a damn about you or I
3. Are composed of employees that AVERAGE $600k a year

The system is broken. Companies that exist on wall street that continue to work and function in the ways they do WILL FAIL in the future because they are all predicated on the same principles that caused this situation to come to this impasse.

Rabid overexpansion of America has created vacant office space. Poor ideas that were developed with no or little sense is why small businesses fail. People are unemployed because they are either not qualified to work or they don't know how to get the job. This isn't the America of the 1950s-80s. This version of america, is DISGUSTING IMO. The culture of America is broken, it has turned into a society in which people feel society "owes" them, and now this attitude is going all the way to the top.

I have been disgusted with the United States of America for several years, not the idea of the United States itself or the country itself, but the way that the country has been going, the attitude of the people in this country and the culture in general. I could rant about this for pages and pages.

This mess "will not go away" because we put a small bandage on this monumental problem. Companies NEED to fail. America needs to go into hurt. It is necessary to fail in order to succeed. America is so fucked up IMO it will take an "epic fail" in order to shake everyone up and get their ass to the grind.

To further quote wall street: A country looks in the abyss, there's nothing staring back at it. At that moment, the country finds its character. And that is what keeps it out of the abyss.

 

[Denny Crane]

Well, in my book you either do it right or you get eliminated. The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Wall Street, but that other malfunctioning corporation called the USA.

[video=youtube;JaKkuJVy2YA]

 

[maxiep]

Seriously though, why do YOU think that its the American taxpayer's job to go out and rescue these companies that:

1. Dug themselves into this shit
2. Don't give a damn about you or I
3. Are composed of employees that AVERAGE $600k a year

The system is broken. Companies that exist on wall street that continue to work and function in the ways they do WILL FAIL in the future because they are all predicated on the same principles that caused this situation to come to this impasse.

Rabid overexpansion of America has created vacant office space. Poor ideas that were developed with no or little sense is why small businesses fail. People are unemployed because they are either not qualified to work or they don't know how to get the job. This isn't the America of the 1950s-80s. This version of america, is DISGUSTING IMO. The culture of America is broken, it has turned into a society in which people feel society "owes" them, and now this attitude is going all the way to the top.

I have been disgusted with the United States of America for several years, not the idea of the United States itself or the country itself, but the way that the country has been going, the attitude of the people in this country and the culture in general. I could rant about this for pages and pages.

This mess "will not go away" because we put a small bandage on this monumental problem. Companies NEED to fail. America needs to go into hurt. It is necessary to fail in order to succeed. America is so fucked up IMO it will take an "epic fail" in order to shake everyone up and get their ass to the grind.

To further quote wall street: A country looks in the abyss, there's nothing staring back at it. At that moment, the country finds its character. And that is what keeps it out of the abyss.

There's too much wrong with your conclusions for me to take the time to correct it all. I'll just post a blanket response by saying that you are sadly mistaken.

 

[el_Diablo]

The Democrats and the media have spent 8 years telling us what a moron Bush is, and now it is Bush's fault that he has lost the ear of the country.

so now we have come to the conclusion that it's the democrats fault that bush is a sad excuse of a president?

 

[PapaG]

so now we have come to the conclusion that it's the democrats fault that bush is a sad excuse of a president?

Not my point. At. All.

 

[maxiep]

Here's an interesting proposal by Mort Zuckerman, founder of Boston Properties and US News & World Report

http://www.nydailynews.com/opinions...the_right_way_to_save_the_economy.html?page=1

I'm not sure I buy it, and I don't like the idea of the Federal Government sitting on the BOD of banks. What's missing is an exit strategy for this path.

 

[Denny Crane]

so now we have come to the conclusion that it's the democrats fault that bush is a sad excuse of a president?

Have you seen the democrats' approval rating? At ~3x better, they make Bush look good.

Sad, ain't it?