UK lender Bradford & Bingley (Santander bought B&B's deposits) AND
Belgian-Dutch group FORTIS this morning, it made for a great Bush "see I'm trying to help guys, really I am, trust me, I know we've done wrong but we're really trying to get it together yada yada" type media op.
So this had to be done today, eh? How convenient for this administration when the first thing you see on CNBC are flat markets worldwide and the facts that B&B and FORTIS just got snarfed. And the bright, bushy-tailed young things worldwide speaking in important tones about how nice it is that we have a pro-active government. For the markets, looking at the numbers, it's maybe too little too late. But Bush said, we had to do something. Right this very second. Before markets open on Monday. Buffett after all agreed (of course he did, he's going to make a killing). I find the timing of these three events very convenient for an administration whose approval ratings are the lowest of any, ever. And that everyone agrees that well, gee, the credit markets aren't going to unplug right away, in fact it could be months...well, thanks to Bush's failed economic policies, we're about as good a banana republic as you can get these days.
The markets worldwide don't seem to have much confidence in this "rescue remedy" as they are flat to down at the moment. Here's an interesting article by Dan La Botz at MRzine, which talks about nationalization of banks: The Financial Crisis: A View from the Left
La Botz states some things I believe are important about this whole nationalization trend, even if I question some of his language, but still, in principle, I agree with his conclusions.
Faced with the failure of the financial sector and the possible collapse of the economic system, Republicans and Democrats are working together feverishly to come up with a plan and find the funds to save the American financial system. The Congress that has been unable to provide adequate funding to health, education, housing, public transportation, social welfare, and environmental programs has suddenly found billions of dollars to save the banks and insurance companies. When the crisis was ours, they had had no money and no answers. When the crisis is theirs, they find both the funds and a plan
He continues:
The bankers and financiers, who fought for deregulation arguing that the free market would regulate itself, now call for government intervention to save the market from collapse. The Republicans, who have argued against virtually any social control or social distribution of wealth, have suddenly become advocates of socialization: the socialization of the economic crisis. The American people who have seen their standard of living stagnate and then decline while the banks and corporations enriched themselves are now expected to absorb the cost of the bankers' failures and losses.
I've read the 110 pages, btw and I am still convinced this is a bad idea, thought up as yet one more way to justify the Bush administration by Bush administration people, and now adopted by Democrats who are truly, Bush Dog Democrats. Frankly, I'm appalled. The more I read on this, the more I'm convinced that the immediate positive consequences for the people from this new proposal are limited, at best. I still see jobs going away, and housing flat -- based on technicals, these are far from bottoming.
People still need to understand that even if Congress can quickly arrive at an agreement with the Bush administration and Secretary Paulson about the bailout, the financial situation in particular and the economic situation in general will probably get worse, and could stay that way for a very long time. Inadequate exploration of alternatives may be the worst move this Congress has ever made for the people.
Gee, even Poulson admits same, there are no guarantees anyone is going to go for this, and Pelosi hedges her bet with we know its going to hurt the taxpayer but maybe we can make some of the money back, and if we see it isn't working after five years, and so forth and so on...the alternative is worse some say...and the opinion of some 200 economists from Barack's home turf (Northwestern and U Chicago) mean nothing...cause we have to do this Monday morning. How convienent for Bush. Were it not for the fact that people realize McCain would be a far worst choice on the economy that Obama, and that Obama's poll numbers are improving, I'd be packing right now.
If the Congress snafus the bill, Warren Buffet stands to make a few more bucks. One of the Goldman banks, in Utah, will probably serve as a clearing house for mortgage swaps, and lo and behold...since people are both long and short on the same blocks of business, he makes money both ways and so does anyone who has a mind to invest in mortgage strategies.
If the plan passes, the government has effectively saved the banks and sent them forth to do exactly what they did before. Otherwise, Congress goes into the mortgage business, and we might make PART of our money back.
In any event, credit markets will not be loosened immediately so people should prepare for that.
I'm supporting Obama principally because of what I believe his working with a scalpel approach can do to help. Having personally just checked the available pork reports online through the Oklahoma US Senators link, I see quite a bit of money that could be directed to say, healthcare? or something that might benefit people in a more immediate fashion? The American people are not going to see immediate fallout from this "rescue remedy", in fact, by not exploring other options, it may be painfully obvious to everyone by Christmas that perhaps this wasn't the best of ideas. More research is clearly needed. This is stopgap, at best, and at worse, is going to really get in the way.