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There are few days were everything hangs in the balance, and where it is ordinary people who hold the scales. There are few days in the history of the Republic which are as important as today. Either it will be seen as a turning point, or it will be seen as the inflection point ever downwards in a spiral. Today it is not moghuls of finance, generals, or distant elites who decide our fate, but only us. We can look back over two hundred years, and see a few, a very few, days which decided the fate of the nation. Many were on the field of battle, some few were elections. Today we fight a war, not with force, but the force of our convictions, we fight a battle, where the wings of victory, are our own words.

We must say no. And we must tell the people who work for us. This bill is not nothing else than the meaning of America itself. We have a choice of two Americas, one where enabling acts are rammed through under the cover of darkness and obscurity, with and in the shadow of fear, the other where there is, yet, some slim hope for our Democracy. The waves of the people's revolution must overwhelm the dike and dams of privilege on this day, or there will be no tomorrow.

Why this day? Because this bill, and an bill so conceived in fear and hysteria, will bring forth a life of misery. Were it to be passed, it would join the odious acts, the AUMF, the Military Commissions Act, and the PAA among them, that signaled to ourselves and the world that the American experiment, has ended. It would be the capstone that would seal all the rest.

Why this act? Lend me your eyes and I will tell you.

The Economics of Fear

This act reeks of fear, but its excuse is that it will save us from a financial mushroom cloud. Yet, when looked at, the evidence for this assertion evaporates. It is claimed that the crisis is here now, because banks are not lending to each other. Instead, the problem is that the Federal Reserve has lost control of its own mandate to protect the currency. It is not that banks are cowering in terror at doing business with each other, they own each other's stock, they engage in balance transfers, they continue to sign contracts, accept deposits. If there were truly a general fear, we would see a pervasive collapse in credit. We do not. Instead what we see is bankers demanding higher returns on their overnight loans. This does not mean they deserve these returns, merely that the problem is that on one hand we have not controlled inflation, and on the other we demand that there be no recession.

Benjamin Bernanke has surpassed even Arnold Burns as a paragon of incompetence.

What has happened is that America went to war, and engaged in an orgy of consumption at the same time, joining states like France in the last days of it's Old Regime in demanding both guns, and butter. During the war, it was unthinkable not to lend, because a catastrophe in Iraq, would be a catastrophe for the world. America has made this mistake before, and the result was the economic crisis of the 1970's, a series of escalating recessions, each of which was more costly than before.

Since it is not bankers in fear, but bankers in the grip of greed, the solution is not to try and bribe them to continue to loan money. Since the problem is that America borrowed and squandered foolishly, the solution is not for America to borrow and squander even more. Fiscal, monetary, and social insanity brought us to this point, insanity will not get us out. The reality is that America is now headed for the recession that elites have flailed and thrashed and sought to avoid. It is time to pay the piper. Instead of bailing out billionaires, the urgent need is to catch the ordinary people who would otherwise slice through the net at the bottom of society, and never recover.

This bill meets fear with fear, and compounds greed with greed. It leaves in place those who created the crisis, profited from profligacy, and have hoped to forge the chains of slavery to debt around our necks. Their hope, as is the hope of every generation of aristocrats, is to force the living to be slaves to the dead. Never have so few, stolen so much, from so many, for so little return.

On it's face, this bill should perish. But it goes farther than that.

A Constitution of Corruption

With each shock, with each moment of peril, the elites have demanded, and received from cowering Congresses whose names will be carved in ignominy, new and more excessive grants of power. With each such grant, they proceeded to act, not in the public interest, but in self interest, not in the common good, but as common criminals. This act is not the first, nor, if it is passed, will it be the last. But it may be the last which we can prevent.

Paulson's plan was not conceived in a few hours, but planned and prepared for months, and only launched upon the public at a moment of perceived panic. The executive hid it in its dark recesses, waiting for a moment to launch it upon us. This alone should be enough for a legislature with any scrap of republican spirit, or democratic pride, or American honor, to reject it out of hand and demand that it be worked a new, from wholly different principles.

In the vast complex web of words we find the core and seed of the very same plan that was fired in dead of night from a White House besieged, occupied by an executive whose delusions of grandeur have crumbled around him. With all of the provisions, caveats, conditions, and cleavages, we find that there is no effective restraint on the unfettered power of the executive. No party, no President, no cabinet should wield such effectively unlimited authority, even in time of war. The oversight cannot restrain the spending, nor overturn the contracts, nor remove the individual who wields them, save by impeachment alone.

No bill has ever packed less restraint into more pages than this one.

Endlessly a complacent and compliant press has told us that what we, the people, purchase today, with the full faith and credit of the United States, "might be worth much more." But if it were so, then some one would buy it. And the truth is that this assertion is predicated on the belief that this bill will rocket America back to immediate prosperity, Almost no reliable and independent observer thinks that that is so.

What accountability is it for the Treasury Secretary to report to a board, on which he himself sits? It is an insult to the intelligence of a fly. What restraint is it for the President to spend, and then defy the Congress to claw back money that has fled round the globe? If we could trust the financiers to abide by the rules we have made, we would not, by their own admission, be here.

Legislation without Representation

Far from being a process where interest is pitted against interest, this bill is that species which was known to be fatal to the Republic from its inception. Madison warned that the death of the Republic would be a minority voting itself a subsidy from the majority. This bill is exactly that. It's profits and protections go largely to holders of bonds overseas, princes both private and public, royalty of foreign kingdoms, holders of debt contracted without public knowledge or assent. It's costs fall entirely on us.

For our Democracy to function, we must have the ancient checks and balances. This process has had none. Who has argued against? For our Democracy to survive, there must be accountability. This bill provides none, as it is being rammed through without public discussion or debate.

Who has spoken for the people? With all the cameras and conferences, we have not had a voice. Locked out from a Byzantine process, we have been told to wait while others decide our fate. A curtain of night and fog surrounded the negotiations, with repeated declarations that deal was reached, taking for granted in the absolute the people's assent.

What we have is not a compromise, but legislation that is compromised in the very means of its inception and elaboration. We are being told to create a potentate of the Treasury who will be, in effect, the Prime Minister for a Monarch in the White House, with a Congress that is expected to do no more than count out the years of our lives being turned over to others.

If this act passes, why would any executive ever expose their plans to the risks of election again. Instead, we will have government with years of inaction to create catastrophe, and then demands in dead of night for another drink of autocracy.

These repeated announcements of a deal are, in themselves, a corruption of the process. Each announcement has been an attempt to deceive the public into believing that the votes were there, and resistance was futile.

Toxic Politics

And it is not that the public has not noticed. By mounting majorities, the public has come to loathe this plan. When it was introduced a small majority seemed willing to give their assent, now, the bill is as unpopular as the Office of the President that gave it birth, and the Congress that is ready to pass it. A bare fifth of the public approves of any plan based on Paulson's. One could find more supporters for abolishing the Federal Reserve, overturning the Civil Rights Act, or making Broccoli the national vegetable. More people believe in witchcraft, than believe in this bill.

A leadership, lockstep and encased in a bubble, is trying to whip and deceive the public. It is possible to fool some of the people some of the time, but this requires that all of the people become fools for all time.

Already legislators locked in honest elections, those few were the outcome is in doubt, have fled for cover. Is there any more clear indication of the public sentiment, than that those who know that the people have a choice, will choose to vote against it?

It is at an end

For these reasons, that it is bad in premise, bad in principle, bad in policy, and bad in politics, this act is odious. But since it is at the crest of a tide of abuses and indiscretions, it represents either the last act of a people who could not sell their freedoms cheaply enough, or, by it's rejection, the first of a new era. If the powerful know that they can obtain any license merely by compounding failure upon failure, and then be unaccountable for the results, then we will have more failure.

Today is the test. If our expression means anything at all, this bill will fail. If there is a representative with the courage to declare that the emperor has no clothes, then this bill can be stopped. It might seem that this bill is a vast conflaguration, which burns without control, and that one small word cannot do more than be steam in the smoke. But it its of such small acts, added one upon the other, that all battles are made of.

This is your Democracy America, and if you are not here, now, in this moment, on this day, then what follows are an endless train of days, each one to be lived in the regret of having not stood here now. The choice is simple to war without end, and power without limit, we will add debt without accountability. It will be a burden too much, too heavy, too far.

We are told there are no alternatives, but this simply is not so. We are told there is no political support for the alternatives, but if a 27% President and a 17% Congress can pass a bill with 22% support for a bottomless well, then anything can be passed.

If we do not turn this back now, we will leave any hope of compromise and conversation, any hope of debate, and will turn instead to darker means which will destabilize the very foundations of our society. Strikes, and even violence, will grow over the coming months, as people are told that the people must pay in full, the debts that the powerful have washed clean.

We must say no. We must say no as often and as ardently as we can, as forcefully as our individual voices allow, until there is a great and mighty chorus to demand that this bill be sent back to the oblivion it came from, and a new act, crafted on better principles by better means, be formed on hope and not hysteria, on principles, not panic, and on truth, and not terror.

There is a crisis, but the sounds we hear are not falling bombs. We are not yet faced with financial catastrophe, but this bill represents constitutional catastrophe. It is not an election, but a democratic revolution, which will set us free.

-:-

The die is cast the House has voted No.The Fed has stepped in.

Since politics has defeated this bill, with a coalition of those facing re-election defeating a coalition of the safe seats, it is to politics that we must look to a solution. What is the political solution? Why was this bill wildly unpopular with the public?

It was that vast sums of money were promised, to the people who had caused the problem, without oversight or accountability, and without any sign how this would be paid for.

What do we need to do now? Like Jimmy Stewart, we just need to get the banking system through until January when a new bill can be written. That's all we need to do.

That means we need to Jump Back to Stability and Sanity.

Jump start lending by having the FDIC given wider an injection of money, backed by future FDIC insurance fees, to take over banks too insolvent to lend. This crisis has gotten worse because banks have been allowed to bleed for months. Have the treasury issue a large block of 1 month treasuries, and authorizing wider lending at rates below LIBOR, but above the Fed Funds rate. Basically if a bank is too sick to lend, then it is too sick to live.

Back the program by extending insurance coverage and costs to included all entities that deal in securitized debt. Wall Street, has to take out crash insurance.

Stabilize write down mortgages that are above market value, giving the government a lien of half of the profits of the sale of the property. Keep people in their homes.

Sanity close all of the loopholes now that allow the creation of more "toxic waste." The Treasury Secretary should be doing this, not being an economic Czar.

Then we come back in January and deal comprehensively with the problem, with a new President and a New Congress. No more compromising with the lamest of ducks. Think of it as foreclosure in place on the Bush White House.

Originally posted to Stirling Newberry on Mon Sep 29, 2008 at 06:30 AM PDT.

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Comment Preferences

    •  i'm SO not used to agreeing with SN. (22+ / 0-)

      quite a surprise to me.

      I am further of the opinion that the President must be impeached and removed from office!

      by UntimelyRippd on Mon Sep 29, 2008 at 06:34:20 AM PDT

      [ Parent ]

      •  I was thinking the same thing.... (24+ / 0-)

        For once I find myself actually agreeing with N.  Here's is a comment I made in an economics blog yesterday on this topic:

        I wonder if Congressional Democrats realize that the House Republicans have now given them the political cover they need to start considering alternatives, like those suggested by Brad DeLong, Paul Krugman, and the Swedes. You see...before, when "The Republicans" (in the form of Paulson/Bernanke and the Bush Administration) approached the Democrats, begging them to go along with their plan, Congressional Democrats sensed that if they were perceived to be obstructing the plan, the Republicans would crucify them as being responsible for the destruction of the economy.

        But now, House Republicans sense that there just might be a way for them to get re-elected in November----in spite of the worthlessness of the Republican brand---if they take a populist position opposing the bailout in the interest of the taxpayers, tapping into the popular resentment they're hearing in emails and polls. Political desperation is driving them, but what this does for Congressional Democrats is make it impossible for Bush Republicans to blame the Democrats for raising objections. The political ground shifts, and both parties are suddenly free to compete for the support of The Little Guy on Main Street.

        To me, that means there's hope. There is no guarantee that whatever the senior leadership agrees upon by tomorrow, is going to be approved by the House assembled, not if most Republicans decide to vote against Wall St. and a good many Democrats agree to do the same. If, as Pelosi is throwing up her hands, DeLong and Krugman and Stiglitz and a few other "Democrat Economists" start endorsing a variation of the Swedish Option, Congressional Democrats may begin to realize the opportunity they have to insist on some profound changes in the interest of the taxpayer and economic justice.

        The stock market may start trying to crash while this is unfolding, but then the Fed has all the resources it needs to bail out just about anyone in the near term, by simply buying up equity. If the Dems are smart, they may actually succeed is destroying the the perceived credibility of Republican Economic Mythology for at least a few generations....

        •  Here's another... (25+ / 0-)
          ...comment from the same blog that you might find relevant:

          This desperate, all-out effort to save Wall St. is a travesty of justice.  The medicine being prescribed at extraordinary cost is nothing more than a Resuscitation Hope that ultimately seeks nothing more than to continue---and thus reward---a failed financial model.

          Why is it so important that this corrupted mess survive?  Are they trying to tell us that a privately-owned banking sector driven by profit-hungry risk takers is the only kind of banking system that can give us prosperity?  Well, we know that isn't true.  Look at China's astounding 35+ years of uninterrupted economic growth.  It seems their state-owned banking sector has been able to accommodate all of the monetary needs of their extraordinarily dynamic economy.

          I'm not saying we should copy China's approach to banking.  I'm just saying that it is insanity for us to settle for a failed approach to providing our economy's need for loanable funds.  Why should we ever again tolerate being subjected to economic terror like this?  Why should we ever again put ourselves in a position where the rich manipulators of Wall St. are able to blackmail us into paying them a huge ransom, or else they're going to blow up the whole economy?  

          One thing that a Taxpayers' Bank would be able to provide to Main Street is all of the loanable funds that private banks are unable to lend at this time because of the mess they got themselves into.  A Taxpayers' Bank---owned and capitalized by the taxpayers---would fill the role of a 'heart-lung machine' that the patient can be hooked up to while blood flow is cut off to the damaged heart and repairs are carried out.  Main Street would hardly notice the absence of the private banks.

          Once the collapse bottoms out, the survivors will be in a position to start lending again, at a much lower level.  They (or that single bank) should feel free to borrow and lend money again, perhaps finding a niche in the more risky sorts of customers.  At such a time, Congress will have to finally decide to either re-privatize the Taxpayers' Bank (for some insane reason I can't think of) or simply continue with a mix of public and private banking.

          Please don't tell me that no economist has ever thought of such an approach.  Why was it ever rejected?

        •  BREAKING: (3+ / 0-)
          Recommended by:
          XOVER, wader, yoduuuh do or do not

          .

          THE HOUSE OF REPRESENTATIVES JUST VOTED DOWN THE BAILOUT!!

          Totally

          Freakin

          Awesome!

      •  Saving Democracy (1+ / 0-)
        Recommended by:
        UntimelyRippd

        what's left of it, demands a rejection of the "Conservative Bailout."

        Republicans can't bring themselves to "give up the dream" of their "free market" religion.  So they voted against the bailout.  

        But a collapse of their "system" is the best thing that could happen to America's tenuous Democracy.

        In this battle for the future of our country, some Americans will have to feel some pain.  

    •  High on rhetoric, low on detail ... (52+ / 0-)

      This bill meets fear with fear, and compounds greed with greed. It leaves in place those who created the crisis, profited from profligacy, and have hoped to forge the chains of slavery to debt around our necks. Their hope, as is the hope of every generation of aristocrats, is to force the living to be slaves to the dead. Never have so few, stolen so much, from so many, for so little return.

      Well this diary brings a lot of high-falutin' verbiage but little light.

      First, you claim without evidence that there is going to be no credit crisis.

      If there were truly a general fear, we would see a pervasive collapse in credit. We do not. Instead what we see is bankers demanding higher returns on their overnight loans. This does not mean they deserve these returns, merely that the problem is that on one hand we have not controlled inflation, and on the other we demand that there be no recession.

      Paul Krugman says otherwise, and it is foolish to claim that he's in the pocket of the big interests. The biggest bank failure in history happened last week (WAMU) which would tend to indicate that there could be a crisis.

      I'm ambivalent about the bill, but do note that the American taxpayer need not lose a single penny from the bailout.

      Democrats failed to win their proposal that Treasury be required to impose a fee on Wall Street transactions in the future to help cover the cost of any government losses as a result of the rescue plan. Instead the final compromise calls for the next president to make an assessment of any losses after five years and then send a proposal to Congress to raise money from the "financial industry" to recoup these funds.

      So, yes, the bill could be improved. And definitely, it could use more sunshine and time to build consensus.

      But explain why you hate it with specifics ... a populist jeremiad does not substitute for thoughtful analysis.

      I am open to argument on either side.

      Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

      by Bronxist on Mon Sep 29, 2008 at 06:53:34 AM PDT

      [ Parent ]

      •  I've provided thousands of words of detail (96+ / 0-)

        Today is not a day for a seminar, but for action.

        The proponents of this plan are wrong, the "contagion fear" that they claim is driving the crisis is not supported by the numbers. It simply is not there. All, repeat all, of the failure to lend can be explained by the lack of capitalization, and by the spread between inflation and LIBOR. All of it.

        This plan is bad in premise, principle, politics and policy. It has no effective restraint on the Secretary of the Treasury, it has no effective check on the spending, it has no accountability once the money is spent.

        This plan does not, by its own admission, solve the problem.

        •  Treasury has as much as said . . . (19+ / 0-)

          That the Chinese are demanding this or they will dump our Treasury bonds. You know exactly what that means, and you know there is plenty of reason to be fearful of this.

          Krugman and Buffet both back this plan. Why are you smarter then them Sterling?  Give us concrete reasons why we should oppose this plan?

          Is it because we need to wait to pay the mortgages of profligate people who used tricky loans to buy houses that are too big for them?

          Should the government really pay for my neighbors $750 k house that he couldn't afford when he bought it?  Should he really be allowed to negotiate those terms to the same as mine when I've been playing by the rules and living in a more modest house all this time?  And how would that even work, and when? And what would that do for financial markets?

          Answer some questions to yourself before you burn the house down.

          If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

          by dbratl on Mon Sep 29, 2008 at 07:02:53 AM PDT

          [ Parent ]

            •  I don't understand exactly what you are proposing (2+ / 0-)
              Recommended by:
              brentmack, CalGal47

              . . . corvo.  You don't have to recapitulate, but can you at least provide a link to something explaining your solution to the problem.

              Is it correct to say your solution is do nothing?  I'm not trying to put words in your mouth, I just don't know.

              If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

              by dbratl on Mon Sep 29, 2008 at 07:14:39 AM PDT

              [ Parent ]

            •  the big question... (9+ / 0-)

              ... who will buy the tsunami of new treasuries that will be needed to pay for this?  the chinese?

              •  Taxes are going up . . . (3+ / 0-)
                Recommended by:
                Bronxist, Seneca Doane, beijingbetty

                No matter whose president.

                Also, the assets have underlying value even if it doesn't turn out to be what we pay for them.  The cost to the taxpayer of this is not $700 bn.  $700 bn. is the stake.  

                In other words, the treasuries will be bought.  

                If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                by dbratl on Mon Sep 29, 2008 at 07:17:44 AM PDT

                [ Parent ]

                •  if the assets have underlying value... (6+ / 0-)

                  ...why would the banksters be trying to shunt them off on the taxpayers?  

                  •  Not being able to sell something . . . (6+ / 0-)

                    . . . is different from that thing being worthless.

                    I might not be able to sell my house in the present market but it has a great deal of value to me in that I get to live there.

                    There are some things that are in fact worthless and I suppose we're going to get stuck with some of those.  But if the total default rate is only 3%, them I can't see how all these securities would be worthless.  

                    If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                    by dbratl on Mon Sep 29, 2008 at 07:45:17 AM PDT

                    [ Parent ]

                    •  huh? (4+ / 0-)
                      Recommended by:
                      JuliaAnn, Flippant, ColoTim, publicv

                      not being able to sell something is the very definition of worthlessness!

                      •  No (15+ / 0-)

                        Not being able to sell something of value is the very definition of illiquid.

                        If I owned a hydrogen car, but there is no place to purchase hydrogen to run it, it would be difficult if not impossible to sell the hydrogen car.  However, once there are places to purchase hydrogen for use in vehicles, the car may be worth more than I paid for it.

                        Ego is the sedative that deadens the pain of stupidity. Unknown

                        by dazed in pa on Mon Sep 29, 2008 at 09:08:01 AM PDT

                        [ Parent ]

                        •  Very well put . . . (2+ / 0-)
                          Recommended by:
                          Seneca Doane, CalGal47

                          Much better than my long winded response below.  

                          I would say that this would be a much easier problem if it were just a liquidity crises.  

                          The poster is correct in his underlying concern that the assets may in fact be worthless in that they will be worthless given some plausible scenarios for the economy because the value of the bond is a function both of its yield and of the probability of default.

                          The government's gambit here is that by making a big play (and they are the only ones that can do it) they will reduce the probability of default system wide, and thus shove the value of the assets back towards their yield.

                          If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                          by dbratl on Mon Sep 29, 2008 at 09:17:35 AM PDT

                          [ Parent ]

                        •  wait... (6+ / 0-)

                          ...that's just crazy. and i think that's why this mess is so hard to understand for most people.

                          if i buy a hydrogen car, hoping that someday i'll be able to fill it up at a hydrogen station down the street from me, then i'm gambling that i made a good decision.

                          if hydrogen cars don't become the norm, then i've made a bad bet, plain and simple. isn't that what's happened here?? and if not, why not???

                          and when my hydrogen car sits in the yard and rusts out, then it's all been a worthless endeavor...except if i turn it into a quaint decorative flower pot for my petunias, i suppose.

                          ...this time, we listened to our hopes, instead of our fears. -- Michelle Obama

                          by FemiNazi on Mon Sep 29, 2008 at 10:18:42 AM PDT

                          [ Parent ]

                          •  Well that's right . . . (0+ / 0-)

                            The plan would transfer risk from the banks to the government.  Initially, they wanted us to do this for free.  Now we've extracted a potential upside stake in the form of stock or warrants.

                            If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                            by dbratl on Mon Sep 29, 2008 at 10:49:49 AM PDT

                            [ Parent ]

                          •  i don't feel comfortable... (0+ / 0-)

                            ...with "potential upside stake."

                            ...this time, we listened to our hopes, instead of our fears. -- Michelle Obama

                            by FemiNazi on Mon Sep 29, 2008 at 11:39:30 AM PDT

                            [ Parent ]

                          •  You are exactly correct. (6+ / 0-)

                            These mortgages and securities were packaged and sold based on the assumption the market will continue to go up. Risk was not adequately priced in (because it's more lucrative in the short term to forget about it while things are good) and the idiotic rating organizations refused to take a look under the covers.

                            Where is the outcry about AIG having an A rating before it went under? What about Bear stearns? If these institutions had been adequately watched and rated based on what the obvious implications of a receding mortgage market meant to their balance sheet assets the market would have priced in the risk as it arrived.

                            Instead we have rating organizations that were obviously either complicit in the fraud or completely incapable of doing their jobs.. I honestly don't know which is worse!

                        •  if no one will pay for it, (0+ / 0-)

                          it's worthless by definition.

                          if these "assets" had any value, someone besides the government would be willing to pay for them.

                          if you built a hydrogen car and couldn't sell it, it would be worthless -- that's a better analogy.

                      •  The argument is that . . . (1+ / 0-)
                        Recommended by:
                        CalGal47

                        If the economy can be stabilized then the assets would be worth something at least close to the hold to maturity value.  The problem is that with the economy falling apart the threat of default becomes higher and the assets devalue more creating a downward spiral which culminates in mass defaults.

                        The idea is that by the government taking a leap of faith and purchasing some of these assets at hold to maturity value that will recapitalize firms, which will inject confidence in the system, and get lending going again in a way that would minimize the chance of economic collapse which would lead to mass defaults.

                        That means the government will overpay for these assets relative to their current market value.  That is because these are bonds their value is determined both by their expected return and their expected probability of default.  By buying at close to hold to maturity value (i.e. enacting the plan) the government is essentially lowering the probability of default in the underlying bonds because the bailout is thought to diminish the chance of economic collapse.  

                        Thus, only the government has the market power to make this sort of bet.  

                        Now is there a risk of default anyway?  Yes, there most certainly is.

                        In the original proposal we were being asked to take on all this risk without a return of an equity stake.  Something no investor would do.  

                        The central argument of people like Krugman (and I should say Frank and Pelosi) is that we should never transfer this risk to the taxpayer without the hope of an upside.  

                        There other problems and risk, not least is trying to figure out what the hold to maturity value of these assets are, but there are big risks in doing nothing also.

                        Anyway, I'm not sure you are interested, but here and here are some good reading on the plan.

                        If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                        by dbratl on Mon Sep 29, 2008 at 09:13:49 AM PDT

                        [ Parent ]

                    •  It has more value . . . (0+ / 0-)

                      if you can relax at home more because you are not paying, and worrying about how to pay, higher rents to the bankers because of inflationary policies.  With Paulson's proposal for transfer of wealth, substitute worry about higher taxes and lower services.

                •  Taxes Have Been Going Up Since Reagan (0+ / 0-)

                  Just that it's our children and grandchildren who will be doing the paying, not us.  A deficit is nothing more than a tax deferment with compound interest.

              •  i think so, here's why: TAIWAN (5+ / 0-)

                check out this link Selling Out Taiwan To Finance The Bailout

                BEIJING, Sept. 22 (Xinhua) -- Chinese President Hu Jintao and his U.S. counterpart George W. Bush discussed bilateral relations and the financial upheavals in the United States in a phone conversation on Monday morning Beijing time.
                [...]
                Bush briefed Hu on the latest development of the U.S. financial market, saying his government was well aware of the scope of the problem, and had taken and would continue to take necessary measures to stabilize the domestic and world financial markets.

                Hu hoped the measures would soon take effect and lead to a gradual recovery of the financial market, which he said not only serves the interests of the United States, but also those of China, and benefits the stability of the world financial market and the sound development of the world economy.

                The Chinese president also praised the good momentum of the development of the Sino-U.S. ties in recent years in various areas.

                He said China is ready to work with the U.S. side to intensify dialogue, exchanges and cooperation, and properly handle issues concerning mutual interests and of major concern, particularly the Taiwan question, in a bid to push forward the sustained and steady development of the Sino-U.S. constructive and cooperative ties.

            •  As a side note... (6+ / 0-)

              I'd like to see the Chinese trash their own economy to spite us.

              Not saying that China is doing this right now, but I have long seen this as a strategic option available to them, and which could be used at some point.

              Why would China do that?

              1. If the US continues an adversarial geopolitical posture vs China and other emerging power centers, and continues to presume a natural right of inordinate wealth and global dominance as in the last 60 years.
              1. If the US uses its military power to threaten what China considers their essential strategic position. (China may see Obama's strategic emphasis on Afghanistan rather than Iraq in this light.)
              1. If China senses that the international system (economic, financial, geopolitical) is going to collapse anyway.
              1. If China believes that they can be sufficient unto themselves within their own population, borders, and historic sphere of influence. (Call this isolationism, xenophobia, or rational calculation-- in any case, in the long historical view, it has been China's normal position.)

              China's financial leverage is one of their stronger cards in an assymetrical power struggle relative to the US. I don't assume that they would never play this card, even though doing so would entail a high price to them. My advice to the US and allies-- let's play our own cards in a way to reduce the likelihood of this outcome.

              •  But this would only happen if (1+ / 0-)
                Recommended by:
                dbratl

                first they loaded up on enough commodities to offset the fall of the dollar.

                What's that you say?  They have been doing it?  Uh-oh.

                During the housing bubble, McCain's base made out like bandits.
                Now they'll make out like looters.

                by Seneca Doane on Mon Sep 29, 2008 at 09:46:59 AM PDT

                [ Parent ]

            •  Think So, Huh? (3+ / 0-)
              Recommended by:
              dbratl, kurt, jds1978

              Yeah, I'd like to see the Chinese trash their own economy to spite us.

              You seem to forget that they're dealing from a position of strength in this matter and we're not.

              The Golden Rule still holds that: He who had the gold makes the rules.

            •  Could be your lucky day, then! (2+ / 0-)
              Recommended by:
              dbratl, jds1978

              China would survive whatever followed.  We would too, but we might end up looking more like China, and not in a good way.

              During the housing bubble, McCain's base made out like bandits.
              Now they'll make out like looters.

              by Seneca Doane on Mon Sep 29, 2008 at 09:43:39 AM PDT

              [ Parent ]

          •  This blame on the subprime really *must* stop (26+ / 0-)

            It's wrong, it is a lie propagated by the GOP whiners.

            Just as housing became a one way bet, so did bets on corporate bonds. Things got totally insane when the credit markets allowed interest on bonds to be paid not with cash but with issuance of still more debt. Debt was paid back with more debt!

            Corporate bonds (and their recession, i.e. Delphi and their bankruptcy) are the underlying components of the credit swaps.  The credit swaps were created supposedly to protect the $5.7 Trillion worth of corporate bonds, but greedy speculation now has these CDSs at $62 Trillion.

            Now the other shoe is about to drop in the $62 trillion CDS market due to rising junk bond defaults by US corporations as the recession deepens. That market has long been a disaster in the making. An estimated $1.2 trillion could be at risk of the nominal $62 trillion in CDOs outstanding, making it far larger than the sub-prime market.  
            ...
            A chain reaction of failures in the CDS market could trigger the next global financial crisis. The market is entirely unregulated, and there are no public records showing whether sellers have the assets to pay out if a bond defaults. This so-called counterparty risk is a ticking time bomb. The US Federal Reserve under the ultra-permissive chairman, Alan Greenspan and the US Government’s financial regulators allowed the CDS market to develop entirely without any supervision. Greenspan repeatedly testified to skeptical Congressmen that banks are better risk regulators than government bureaucrats.

            The Fed bailout of Bear Stearns on March 17 was motivated, in part, by a desire to keep the unknown risks of that bank’s Credit Default Swaps from setting off a global chain reaction that might have brought the financial system down. The Fed's fear was that because they didn't adequately monitor counterparty risk in credit-default swaps, they had no idea what might happen. Thank Alan Greenspan for that.

            Those counterparties include JPMorgan Chase, the largest seller and buyer of CDSs.

            <div style="color: #a00000;"> Our... constitutional heritage rebels at the thought of giving government the power to control men's minds. Thurgood Marshal

            by bronte17 on Mon Sep 29, 2008 at 07:33:43 AM PDT

            [ Parent ]

          •  Hmmm.... (1+ / 0-)
            Recommended by:
            chumley

            ...the Chinese are demanding this or they will dump our Treasury bonds. You know exactly what that means...

            I know what this means, but I'm not sure that you know what it means.  All it really means is that the Fed will buy up all those bonds rather than let such a move drive interest rates through the roof.  (Actually, with the yield on Treasuries actually negative this morning, due to extraordinarily high demand, the Fed might not have to buy all that many.)

          •  This is interesting (6+ / 0-)

            Should the government really pay for my neighbors $750 k house that he couldn't afford when he bought it?  Should he really be allowed to negotiate those terms to the same as mine when I've been playing by the rules and living in a more modest house all this time?  And how would that even work, and when? And what would that do for financial markets?

            I would say that yes, it makes sense to keep him in his house with a sense of ownership, even if that means that you have to help him do that.

            The alternative is an uncontrolled crash of his property value that will seriously damage yours.

            It may mean that you have a derelict house for a neighbour with all the social and economic problems that entails, plus he and his family end up living under a bridge with all the problems THAT entails.

            I have skin in this game. I did the right things, I have no debts and a big garden and some cash in the bank, but if bailing out my neighbours means that I live in a decent society and not surrounded by people under huge stress, abandoning their homes to the rats and the drug dealers, I'll take it.

            The Number of the Beast 78-22

            by Deep Dark on Mon Sep 29, 2008 at 08:36:36 AM PDT

            [ Parent ]

            •  True or false... (3+ / 0-)
              Recommended by:
              dbratl, greeseyparrot, PsychoSavannah

              If you just stay in your home (I assume it's your primary residence) for the next few years, the housing market should be able to recover by then.  With prices dropping, your property taxes should be dropping during this time, also.  What exactly is the suffering you are anticipating?

              Now, I can see an enlightened Congress providing the funds for you to re-finance your home, if you are locked into a bad repayment contract.  They can and should do that directly to provide the innocent with relief; but why in the world would you want to protect your 'home investment' by bailing out the people who messed things up so badly?

              •  Foreclosure is NOT the root of the problems. (7+ / 0-)

                At this time the foreclosure rate is approx 11%.

                The problem, one more time, is the greed of the ibanks who have resold NOT mortgages but mortgage back securities. And they used a PONZI scheme to resell the same mortgage backed securities over and over to their best customers. What is happening is that since home prices are not rising these securities are now worth nothing. So we are going to buy them so that these crooked institutions can remove these BAD investments from their balance sheets. And repay their Saudi and Brunei investors their investment. I wish somebody would remove those shares or Lucent from my balance sheet.

                No matter how cynical I get, it's impossible to keep up.

                by Flippant on Mon Sep 29, 2008 at 09:18:57 AM PDT

                [ Parent ]

            •  I think you have the potential of really . . . (2+ / 0-)
              Recommended by:
              ColoTim, robertlewiws

              . . . tearing the country apart over rule changes like this.  

              You are basically granting the most irresponsible individuals in every neighborhood assets at the expense of their neighbors.  

              I think it will fundamentally offend the sense of fairness among most Americans to the point of putting the Dems back in the wilderness for years.

              The Republicans defined their past dominance on the premise of 'welfare cheats' getting handouts while 'regular folks' paid taxes.  Canarsie: The Jews and Italians of Brooklyn Against Liberalism offers an amazing discussion and illustration of this.

              I mean, hey I'm an open minded guy, but it offends my conscience to have profligate buyers bailed out - or worse, get to live in desirable neighborhoods, cities, while all the folks who took traditional mortgages are in the plain Jane houses in the the Plain Jane Neighborhoods.  

              If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

              by dbratl on Mon Sep 29, 2008 at 10:46:25 AM PDT

              [ Parent ]

              •  I completely agree (0+ / 0-)

                but what we are talking about here is which way do we dismantle this economy, not whether we do it.

                The alternative is that we tear apart the country by throwing people out of their homes and tearing away their last shreds of self respect.

                Maybe we multiply the number of beggars by 1000, and in the process we all start to live in neighbourhoods where half the houses are vacant and infested and overgrown.

                I'm prepared to pay a lot to avoid such a thing.

                Now I'm lucky, I don't have a mortgage, because I bought a smaller house and paid it off as my first priority, but my neighbours may be financially impaired the same way that some people are physically or mentally disabled; they don't have what it takes to figure out their own long term best interests financially.

                But that doesn't make me want to punish them for that any more than I want to punish a crack baby or a downs kid or an accident victim for their disability.

                I would want it done in such a way that they are not able to access funds in the future the way they have in the past, and they may find life a bit harder, make that a lot harder, and yes they are not innocent either.

                But it comes down in the end to what kind of world I want to live in and if enabling them to have some self respect through a bit of forgiveness means I don't have to live in a dysfunctional wasteland, do it.

                The Number of the Beast 78-22

                by Deep Dark on Mon Sep 29, 2008 at 03:22:35 PM PDT

                [ Parent ]

              •  one thing to realize is that people who bought (0+ / 0-)

                overpriced real estate on unmanageable terms are not the ones who get off scot-free under some sort of mortgage bailout. the ones who get off scot-free are the ones who sold the real estate at well beyond its rational price. your feelings may be hurt because you paid too much for your house, and will continue to pay too much for your house, while your neighbor getting the bailout will end up paying something more reasonable.

                but your neighbor isn't the person getting something for nothing. the something-for-nothing went to the speculators who sold the property at bubble prices. yeah, it would be great if you could "get your money back" the way your neigbor will. but that can't be done. and beggaring your neighborhood won't solve anything other than your sense that you've been ripped off. which you have.

                this all assumes, of course, that you actually did pay too much for your house. if you bought into the neighborhood before the spec bubble took off, then you aren't really losing anything, and your neighbor is really no better off than you are -- he ends up paying a comparable mortgage for a comparable property.

                I am further of the opinion that the President must be impeached and removed from office!

                by UntimelyRippd on Mon Sep 29, 2008 at 09:09:56 PM PDT

                [ Parent ]

          •  China quote (2+ / 0-)
            Recommended by:
            robertlewiws, cgirard

            Chris Martenson explains and documents the Chinese influence here.

            The intent of the bailout is to keep cash flowing into the US from central banks overseas, in support of our deficit spending and current accounts deficits.  It is also intended to prevent hedge funds from failing, which would bring down the derivatives system and most banks along with it.

            In fact the plan can accomplish neither.  Most of the money will end up in China and the Caymans.  We will still have a Depression but without the resources to deal with it.

            The Shock Doctrine by Naomi Klein -- best book ever, I nominate for a Nobel Prize!

            by xaxado on Mon Sep 29, 2008 at 10:43:03 AM PDT

            [ Parent ]

        •  What's the detail? (4+ / 0-)

          The spread between inflation and LIBOR proves there is no crisis? On a week when WAMU and Wachovia failed?

          Gimme a break!

          Today is not a day for a seminar, but for action.

          Thank you for confirming what I suspected -- you would rather rush to action without much prior discussion.

          What is the difference between what you're proposing and what Bush is proposing?

          Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

          by Bronxist on Mon Sep 29, 2008 at 07:16:04 AM PDT

          [ Parent ]

        •  Mathematically the bailout will NOT Help or STOP (25+ / 0-)

          financial crisis!
          The 'bailout' is ONLY to
          Rob the treasury of our tax dollars,  The 'bailout' is not prevent a castrophe or end the crisis.  The fiancial collaspe is inevitable, the math says so.
          What the bailout will do is take the $700 billion that could be used for social programs during the unavoidable depression and give it to millionaires from wall street.
          I Cannot believe the Dems are joining Bush is giving our "lifeboat" tax dollars to wall street thieves.
          Call congress now, no bailout!

          god help us

          Mathematics FAIL Paulson / Bernanke Bailout Plan (PDF)

          Known Facts United States non-financial private debt is $32.4 trillion dollars and household debt is $10.0 trillion as of 2Q 2008. This encompasses mortgages, auto loans, credit cards, HELOCs, commercial and industrial loans, LBO monies outstanding and all other forms of non-financial (e.g. not including margin loans and similar) debt.

          Henry Paulson and Ben Bernanke have asked for a $700 billion "revolving credit line" with which to buy "troubled" assets. Congress is strongly considering giving it to Mr. Paulson with some set of conditions. The assertion has been made by both Mr. Paulson and Mr. Bernanke that absent this credit line and absorption of these "troubled" assets, the financial markets will imminently seize and fail.

          The assertion has been made that the taxpayer will not recognize large losses and might make a profit. House prices are projected to fall by another 15-30% nationally (depending on who you ask); therefore, whatever level of stress exists in the system today far more will exist over the next few years.

          Mathematics $700 billion dollars is 2.16% of all non-financial private debt and 7% of all household debt. Provision of this credit line therefore would allow removal of a maximum of just over 2% of the current nonfinancial private debt from the banking system, assuming only US domiciled debt is included.

          If the imminent failure of the United States financial system is going to be averted by 2.16% (maximum) of the outstanding private non-financial debt being removed from the banks' hands and transferred to the taxpayer as the "responsible party", then the system is under leverage of 46.29:1.

          If, as many have projected, the actual losses to be sustained are $2.5-3 trillion in residential housing and a like amount among commercial real estate, credit cards and LBO loans, then the aggregate requirement is not $700 billion it is in the neighborhood of five to nine times what has been requested. If this is the case the aggregate requirement is double the US Federal Budget. The government cannot raise that amount.

          Conclusions Either (1) the system is not about to fail imminently OR (2) it will fail irrespective of whether this bill passes, as the actual amount required to "resolve" the problem exceeds the government's ability to finance it.

          If no failure is imminent then we are giving $700 billion to the people who caused the mess for no purpose other than enriching them. If the latter then we need the $700 billion for social programs and other spending that will become necessary as we work through a financial collapse and crisis worse than anything since the 1930s.

          EITHER WAY THIS BILL IS UNSUPPORTABLE IN ANY FORM; THE MATH DOES NOT LIE. ARE YOU PREPARED FOR A FULL PAGE AD IN USA TODAY AND/OR THE WALL STREET JOURNAL LISTING THOSE WHO CAN'T DO BASIC MATH? (PDF)

          http://theautomaticearth.blogspot.co...

          At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

          by Rachel Griffiths on Mon Sep 29, 2008 at 07:16:46 AM PDT

          [ Parent ]

          •  Are you aware ...? (4+ / 0-)
            Recommended by:
            bara, Thea VA, Seneca Doane, sherijr

            The 'bailout' is ONLY to
            Rob the treasury of our tax dollars,  The 'bailout' is not prevent a castrophe or end the crisis.  The fiancial collaspe is inevitable, the math says so.
            What the bailout will do is take the $700 billion that could be used for social programs during the unavoidable depression and give it to millionaires from wall street.

            Are you aware that the package explicitly calls for the President (Obama) to put forward a bill requiring taxation of the financial industry to recoup any losses in 5 years?

            That there will be a lot of oversight and transparency (on paper) this time?

            You are right to be worried -- and we will need to hold feet to the fire to make sure this does not end up costing us.

            And yes, my big worry is that President Obama will be driven away from health care and energy bills because of this bailout. So far, he's been holding firm and so have other Dems.

            Let's act rationally on specifics. Denying the current crisis does not solve it. An economic + financial meltdown will be worse -- Obama won't have the tax receipts to enact his plans.

            Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

            by Bronxist on Mon Sep 29, 2008 at 07:35:47 AM PDT

            [ Parent ]

            •  Are you aware that Obama my not be the next (9+ / 0-)

              president.
              Your arguements are weak at best. Talk about denial...the REALITY is this Bailout will not work in fact it will make things worse!
              Rationally we should not throw $700Billion of our tax dallors into a wallstreet blackhole, were it will have not effect on the Trillions of debt out there.

              No I do not agree with throwing our good tax dollars at bad debt.

              Is Purchasing $700 billion of Toxic Assets the Best Way to Recapitalize the Financial System? No! It is Rather a Disgrace and Rip-Off Benefitting only the Shareholders and Unsecured Creditors of Banks
              PrintShare
              Delicious Digg Facebook reddit Technorati Nouriel Roubini | Sep 28, 2008
              Whenever there is a systemic banking crisis there is a need to recapitalize the banking/financial system to avoid an excessive and destructive credit contraction. But purchasing toxic/illiquid assets of the financial system is not the most effective and efficient way to recapitalize the banking system. Such recapitalization – via the use of public resources – can occur in a number of alternative ways: purchase of bad assets/loans; government injection of preferred shares; government injection of common shares; government purchase of subordinated debt; government issuance of government bonds to be placed on the banks’ balance sheet; government injection of cash; government credit lines extended to the banks; government assumption of government liabilities.

              http://www.rgemonitor.com/...

              At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

              by Rachel Griffiths on Mon Sep 29, 2008 at 07:50:37 AM PDT

              [ Parent ]

              •  Thanks for the link ... (2+ / 0-)
                Recommended by:
                ksingh, dotdot

                the REALITY is this Bailout will not work in fact it will make things worse!
                Rationally we should not throw $700Billion of our tax dallors into a wallstreet blackhole, were it will have not effect on the Trillions of debt out there.

                No I do not agree with throwing our good tax dollars at bad debt.

                If it does not work, will we be worse off for having tried?

                If the entire system goes down, we'll simply declare bankruptcy as a nation -- do you care that we went bankrupt after borrowing another $700 B.

                I hear ya ... but I'm not sure there are other feasible solutions on the table.

                Maybe the bailout will fail in Congress today. And we will get a chance at the do over everyone is asking for.

                Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

                by Bronxist on Mon Sep 29, 2008 at 07:55:32 AM PDT

                [ Parent ]

                •  Yes we will be minus $700 billion dollars that (9+ / 0-)

                  could be spent on bread lines, rebuilding programs and social services.
                  We need TRUTH right now and a solution that deals with the Truth of our financial crisis.

                  The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

                  We are being told that this plan will help the economy by keeping the spigots of consumer credit flowing. However, to really address the fundamental problems, those spigots must be tightened. Since we have already borrowed and spent ourselves into bankruptcy, the last thing we need is for consumers to borrow more.

                  Our leaders maintain that without this bailout consumers will not be able to borrow money to buy cars. So what is wrong with that? We already have plenty of cars, and if we are broke, why do we need to buy more? Instead, we need drive our old cars longer, pay off our underwater auto loans, and produce more cars for export. It is also argued that without access to credit parents will not be able to borrow money to send their kids to school. That's fine by me as it will force Universities to reduce tuitions to levels families can actually afford. They will either have to cut out all of that bureaucratic fat, or go out of business for lack of customers.

                  In the end it is impossible for the American economy to be rebuilt on a sounder foundation of savings and production without a lot of economic pain. Government efforts to reinforce the shaky foundation of borrowing and consuming will result in the entire structure falling down around us.

                  http://www.safehaven.com/...

                  At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

                  by Rachel Griffiths on Mon Sep 29, 2008 at 08:11:16 AM PDT

                  [ Parent ]

              •  I Obama isn't the next president (5+ / 0-)

                were' f***ed anyway.

                John McCain, you don't deserve to stand within ten feet of the American flag.

                by verdastelo on Mon Sep 29, 2008 at 08:14:18 AM PDT

                [ Parent ]

                •  But in 5 years (0+ / 0-)

                  after Obama and Biden have done the thankless and difficult work of holding  us together through near apocalypse, another GOP looter will be elected, and will decide whether to tax his main supporters or keep sticking it to the slaves/citizens.

              •  Thanks for links to substance, not rhetoric (1+ / 0-)
                Recommended by:
                Rachel Griffiths

                That link was an eye opener.

                "It's the planet, stupid."

                by FishOutofWater on Mon Sep 29, 2008 at 11:08:22 AM PDT

                [ Parent ]

              •  Also, the 700 billion may not be there by January (1+ / 0-)
                Recommended by:
                Rachel Griffiths

                There's nothing I've read (having not read the bill - McCain's disease, I guess) that would prevent Paulson from handing out the 700 billion over the next three months, leaving a looted treasury and wolves at the door, waiting for Obama to try and accomplish any of his progressive agenda.

            •  What if McCain holds the reins... (1+ / 0-)
              Recommended by:
              Jacob Bartle

              Would you still be so confident?

            •  So? (0+ / 0-)

              President (Obama) to put forward a bill requiring taxation of the financial industry to recoup any losses in 5 years?

              Are you aware that a bill has to be approved by Congress?

              Why not pass such a law now?

        •  indeed you have, and eloquently (10+ / 0-)

          See SN's earlier diary on this piece of crapola legislation. See also his recommendations, which he summarized as follows:

            1.  Expansion of the FDIC to include money market funds, brokerages, and other financial funds. Institutions which are out of this expansion, if any, will be allowed to fail as a class. Assign the CBO as the Congressional means of oversight and give the CBO authorization to extend credit to the FDIC, which can be waived if, after Congressional review, the money is justified. Basically, anything that Bush does on the way out the door must be subject to review by the incoming Congress and Administration.

            2. Authorization of an HOLC type cram down of mortgages with government liens, the profits of which are split between home owners and the mortgage system, now in taxpayer hands anyway. Place this process in the hands of the FHA, and have the CBO assigned to continuous oversight. Authorize some 20 billion dollars in stock to be purchased by the government.

            3. Declaration of a national emergency, without expansion of the debt ceiling, and also with explicit judicial review. In the national emergency specific authorization can be given to review any transfer of effective control of banks or other financial entites. In this declaration can be rationing of gasoline, imposition of conservation and other austerity measures.

            4. Dramatically expand safety net programs for the inevitable economic shock: food stamps, unemployment insurance, suspension of interest on student loans, loans to the government by members of the National Guard, active Military, or Reserve and so on.

          FInally, for the real, winning, and croeect line on this fiasco, see OH Rep Marcy Kaptur's brilliant and penetrating speech diaried several days ago by gsadamb, Let's play Wall St. bailout.

          To see the dem's stampede to pretty up this awful bill by this awful administration made me sick.

          I've contacted all of my congress people, but have heard no responses, just dead air. I fear the fix is in.

          Fear is the mind killer - Frank Herbert, Dune

          by p gorden lippy on Mon Sep 29, 2008 at 07:24:01 AM PDT

          [ Parent ]

          •  I would sign up behind this ... (2+ / 0-)
            Recommended by:
            strengthANDwisdom, sherijr

            If the choice is between progressive legislation and the current "bi-partisan" compromise, I would pick the former.

            The choice right now is between the "bi-partisan compromise" and do-nothing.

            I again pick the former.

            Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

            by Bronxist on Mon Sep 29, 2008 at 07:38:17 AM PDT

            [ Parent ]

            •  here's what bothers me (17+ / 0-)

              i'm all for a bi partisan solution, but the timing is too suspicious.  certain confirmed facts should not be ignored

              Paulson's plan was not conceived in a few hours, but planned and prepared for months, and only launched upon the public at a moment of perceived panic. The executive hid it in its dark recesses, waiting for a moment to launch it upon us.

              anyone with their eyes and ears open knew a financial nightmare was comin' round the bend. krugman and other economists have been saying it for years. of course they want this legislation in place prior to an obama administration coupled w/a dem house and senate. i'm all for bi partisanship. but not the kind where dems are signing on to a cheney administration's designs.

              i don't know enough about how the economy works to be the judge of the best way to go forward, but what i do know is we have been stripped to the bone in terms of our constitutional rights under this administration primarily thru the shock doctrine scenarios. 700 billion is a hole lotta bucks. if they could stave it off a few months to pop in on us in the fog of election mania, we can stave it off until after the election.

            •  Bronxist- (3+ / 0-)
              Recommended by:
              NYFM, ksingh, Seneca Doane

              Just wanted to say thanks for your comments on this subject. There's obviously a lot of disagreement and anxiety, but you've kept your cool and stated your case. (I happen to agree with you, but I'd say the same even if I didn't.)

        •  (typo line 1, Stirling- "were" instead of "where. (0+ / 0-)

          "What's the frequency, Charlie?"

          by kate mckinnon on Mon Sep 29, 2008 at 07:39:26 AM PDT

          [ Parent ]

        •  Action, indeed (10+ / 0-)

          Make no mistake:

          THIS DEAL IS NOT DONE

          Kucinich says the leadership may not have the votes.  

          That's in part because they've shut out progressive and reached open to Republicans in hopes of passing a bi-partisan bill, so that both parties would own it. But therein lies an opening for us to pressure Dems to oppose it.

          Imagine an alternative universe, one in which Dems had courage. They could've seized on the "crisis" to pass a progressive bill. The Republicans used the "crisis" of 9-11 to invade Iraq and burn the Bill of Rights. Dems use this "crisis" to push a center-right bail out of Wall Street! Dems could've introduced a progressive bill and dared Republicans to oppose it. Oh, well.

        •  Teh markets (8+ / 0-)

          seem to be ignoring everything that everyone is doing and saying, except for a few like Nouriel Roubini.

          The fact is that the world has created a monster that it can't control and that monster is now eating up the stuff that it was designed to consume, solvency and trust.

          Some specific businesses are under-capitalised, certainly, some are short of cash, for sure, but the problem is that they have built their entire and very spectacular business growth for the last 5 years or so, on a mirage, a lie, a fairy tale.

          The financial house of cards that they have constructed with the compliance and connivance of the political leadership, is not even a real house of cards, its an imaginary one.

          And in building it they have paid themselves handsomely in real money and used it to buy real, extravagant, things.

          But like the Tulip mania, the underlying tokens of wealth have no actual value and at some point, about now as it happens, there has to be a revaluation to realistic levels.

          ALL of the imaginary wealth has to be wiped out before anyone will trust anyone else again, before they will engage in the market.

          When the car goes off the cliff, it doesn't matter what you do with the steering, the brakes or the accelerator, it doesn't matter whether you are in the front seat or the back, whether you are belted in or not, events have moved beyond your control or influence.

          Its not that the bailout plan is wrong, its that any plan is now irrelevant; the economic and financial vandals wanted to see what happens when you push the economy off the regulatory cliff.

          Now we know. And whether we survive as individuals or not is now up to pure chance.

          The Number of the Beast 78-22

          by Deep Dark on Mon Sep 29, 2008 at 08:29:14 AM PDT

          [ Parent ]

          •  Well... (2+ / 0-)
            Recommended by:
            ColoTim, FishOutofWater

            I mostly agree with your comment. But here

            And whether we survive as individuals or not is now up to pure chance.

            There is where it does perhaps make a crucial difference whether you're in the front or back seat, seat-belt or no, &c.

          •  love the reference to the Tulip mania (1+ / 0-)
            Recommended by:
            Deep Dark

            and it actually makes the current crisis a bit more understandable.

            My deepest regret comparing this to the much more recent crash of 1929 is that the present CEO's haven't enough integrity to throw themselves out of windows.

            I was wise enough to never grow up while fooling most people into believing I had. - Margaret Mead

            by fayea on Mon Sep 29, 2008 at 01:06:53 PM PDT

            [ Parent ]

      •  Absolutely . . . (8+ / 0-)

        This is an important moment and this is an important bill.  

        If not this bill, then what bill?  Evidently, the answer is none at all.

        If that's your argument, Sterling, then take responsibility for it and discuss the consequences of the none at all option.

        I know that you know this would mean a full scale dumping of US treasuries by our Asian credit holders leading to a great depression.  You know what happens in great depressions, you are just not including it in your diary.

        As an example, in Russia following their country's meltdown the average life expectancy for a male fell to 56 years.

        Is that what you are wishing on this community so that the socialists can somehow ride to the rescue?  If so, say so clearly.

        If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

        by dbratl on Mon Sep 29, 2008 at 06:58:57 AM PDT

        [ Parent ]

        •  Why this bill ? (7+ / 0-)

          Everyone agrees it stinks, but say they have no choice ...

          What a strange way to think and to operate a society.

          •  Who says it stinks? (2+ / 0-)
            Recommended by:
            The Zipper, beijingbetty

            Tell me what stinks about it?  Be specific?  And what would be a less stinky bill?

            If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

            by dbratl on Mon Sep 29, 2008 at 07:03:25 AM PDT

            [ Parent ]

            •  IOW, the need for the bill stinks; not the bill. (6+ / 0-)

              John George McHoover Bush

              by chicago jeff on Mon Sep 29, 2008 at 07:08:27 AM PDT

              [ Parent ]

            •  Many think it stinks (2+ / 0-)
              Recommended by:
              lettuce kucinich, Jacob Bartle

              McCain, Kucinich, me, this diarist.  Who else do we need?

              42.7% of all statistics are made up on the spot. A Wrightism

              by publicv on Mon Sep 29, 2008 at 07:23:53 AM PDT

              [ Parent ]

            •  What STINKS?? It will Not Work and only benefit (11+ / 0-)

              a select few on Wall Street (hand picked by the Treasury Secretary)!
              Mathematically $700 billion will NOT stop this crisis.

              "It like throwing basketballs into the Pacific Ocean"

              The urgency for passing this bailout bill is based on the claim that the American economy will collapse if nothing is done. If the government were to stay out, and allow the market to function, there will certainly be a great deal of economic pain. Companies will go bankrupt, banks will fail, real estate and stock prices will keep falling, and many people will lose their jobs. However, government action will not prevent any of this. At best, it will merely delay the inevitable, but only at the cost of increasing the severity of the underlying problems, thus making their ultimate resolution that much more painful to endure.

              The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

              http://www.safehaven.com/...

              At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

              by Rachel Griffiths on Mon Sep 29, 2008 at 07:26:46 AM PDT

              [ Parent ]

              •  Why do . . . (1+ / 0-)
                Recommended by:
                sherijr

                Krugman and Buffet support it then?

                If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                by dbratl on Mon Sep 29, 2008 at 07:41:44 AM PDT

                [ Parent ]

                •  Buffet stands to make a fortune off his recent (7+ / 0-)

                  large investment in Goldman Sacs...Paulson will see to it.

                  Scott Jagow: One person who says he's counting on a bailout is Warren Buffett. Yesterday, Buffet bought $5 billion worth of stock in Goldman Sachs. And he has an option for another five. He says he wouldn't have done that if he didn't think the government would act. Marketplace's Steve Henn has more.

                  http://marketplace.publicradio.org/...

                  This bailout is ONLY about enriching the Greedy Rich!

                  At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

                  by Rachel Griffiths on Mon Sep 29, 2008 at 07:59:08 AM PDT

                  [ Parent ]

                  •  . . . and Krugman? (2+ / 0-)
                    Recommended by:
                    PsychoSavannah, ksingh

                    I’m not being melodramatic. The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing. But it’s not what you’d actually call a good plan, and it won’t end the crisis. The odds are that the next president will have to deal with some major financial emergencies.

                    From here

                    If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                    by dbratl on Mon Sep 29, 2008 at 08:27:14 AM PDT

                    [ Parent ]

                    •  I think he speaks for himself (5+ / 0-)

                      But it’s not what you’d actually call a good plan, and it won’t end the crisis.

                      At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

                      by Rachel Griffiths on Mon Sep 29, 2008 at 08:34:23 AM PDT

                      [ Parent ]

                      •  And what would end the crises? (0+ / 0-)

                        Just asking?  

                        I don't anyone is jumping up and down in love with this bill and the need to do it.  The bill is like root canal.  I guess the alternative it to pull the teeth.  

                        If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                        by dbratl on Mon Sep 29, 2008 at 08:44:21 AM PDT

                        [ Parent ]

                        •  There are no easy or short term solutions (7+ / 0-)

                          We could start with our Governement admitting the Truth about just how bad and unavoidable the Crisis is, this would help.

                          We have created this mess and it will take a long time 10+ years to even get back to a decent way of living.

                          The thing is the financial crisis/depression will happen, it is mathematically unavoidable.  Don't pull your teeth out.  Further just because this awful mess makes us want to  pull our teeth AND hair out doesn't mean we should be blinded into making more mistakes disguised as solution (ie this bailout).
                          I suggest kossacks prepared for life to change drastically for the majority of the population in this country. Mental preparation is critical.  Maybe plan a victory garden for next year.

                          The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

                          http://www.safehaven.com/...

                          At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

                          by Rachel Griffiths on Mon Sep 29, 2008 at 08:57:07 AM PDT

                          [ Parent ]

                          •  Ouch . . . (0+ / 0-)

                            I'm not saying you are incorrect.  But I am saying its worth a try to try to mitigate the losses with this plan.  

                            Even if you don't trust Paulson, which I don't, I think you should trust that Bernake has the best interest of the country at heart.  

                            The plan is complicated, but as I understand it, the idea is to pay prices close to the hold to maturity value of the assets in order to recapitalize the market.  

                            We are paying above market value for these assets.  The idea of doing this without an equity stake was ridiculous and a nonstarter from the start, but I do think there is a chance it could work.  

                            Here is a good explanation of how the plan is supposed to work.  Its complicated, a little unfair at times, but I think it does have the potential to shore up the sector and put us on firmer footing as we face the next crises.  

                            If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                            by dbratl on Mon Sep 29, 2008 at 09:03:36 AM PDT

                            [ Parent ]

                          •  It won't mitigate any losses except for Paulsons (5+ / 0-)

                            head picked winners and Buffet.  
                            The plan will not help 99% of Americans and will in fact hurt us by robbing us of our much needed tax dollars.

                            These "Masters of the Universe" that created this chaos will ultimately down the road profit in some way off of the very mess they created. It always works that way."

                            http://www.marketoracle.co.uk/...

                            At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

                            by Rachel Griffiths on Mon Sep 29, 2008 at 09:19:39 AM PDT

                            [ Parent ]

                          •  I just posted this . . . (0+ / 0-)

                            here, and I don't want to rewrite it.  

                            I also found this and this helpful as resources.  

                            If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

                            by dbratl on Mon Sep 29, 2008 at 09:25:08 AM PDT

                            [ Parent ]

                •  Buffett is talking his book (nt) (0+ / 0-)
            •  dbratl nails it (2+ / 0-)
              Recommended by:
              dbratl, sherijr

                 We get these declarative statements all the time from the GOP usually aimed at Barack.If youve got a case as to why this is not neccesary,make it.Im not an expert but,I just got off the phone with a PO Republican(now ex) who thinks the Democrats trying to salvage these morgages makes them his new hero.Im with Barack,Krugman,Buffet and Franks.If they think we have to do this to save the country,Im betting on them.

            •  I, for one, say it stinks (12+ / 0-)

              I've commmented like crazy on this for days. It stinks because:

              1. it lays a $700 billion welfare for tycoons at dem's feet, after they put a little lipstick on it.
              1. it doesn't contain an ounce of the reform needed to prevent more of this crap
              1. anyone who expects any respect for oversight from this administration has been living on Mars for 8 years
              1. it fails to put the highest priority on those at the bottom who have been hurt the most
              1. it puts us, the taxpayers, in the position of actually buying worthless paper from a crazed ponzi scheme on steroids

              There's plenty of more reasons this is toxic to us as taxpayers and politically to the Dem's, and for a long, long time.

              See my comment above, and many others, referring both to the diarist's earlier recommendations on how to handle this, and also to Rep Marcy Kaptur's wonderful speech, a speech that, if echoed by the Dem leadership, would have led to a huge sweep in November, and - for a change- for all the right reasons.

              Fear is the mind killer - Frank Herbert, Dune

              by p gorden lippy on Mon Sep 29, 2008 at 07:31:31 AM PDT

              [ Parent ]

              •  I agree with you ... (2+ / 0-)
                Recommended by:
                dbratl, ksingh

                On the other hand this bill promises bi-partisan oversight. Given how mad people are that this is happening, I don't expect to find banks making a profit on any assets. There will be pain all around.

                Further, the President will have to introduce a (securities trading?) tax in 5 years to recoup losses -- that again prevents it from being a complete giveaway.

                The progressive legislation helping real people needs to follow. But we need to build a grassroots movement to make sure that happens. Not simply pile on one piece of ill-thought legislation on another.

                Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

                by Bronxist on Mon Sep 29, 2008 at 07:44:32 AM PDT

                [ Parent ]

              •  rec'd for... (11+ / 0-)

                ...buying worthless paper from a crazed ponzi scheme on steroids

                That's it in a nutshell.

                Two things people don't get in this whole thing:

                1. The assets are worthless.  If they had any value, the banks would simply write them down and continue on their merry way.
                1. $700 billion is a lot of friggin' money, much more than a bankrupt nation can afford to hand to its bankers.

                This is reverse bank robbery.

                •  Yes. not totally worthless though, (1+ / 0-)
                  Recommended by:
                  dbratl

                  They have at least the value of the homes themselves. But if all those homes hit the market to liquidate these bad loans, then the whole market goes kaput. I am against the bailout because I think they can do better to regulate these bad mortgages.

                  But there are tricks many of don't know or understand. Some of these mortgages are owned outside the company.

                  The greatest gift you can contribute to the goal of world peace is to heal.

                  by wavpeac on Mon Sep 29, 2008 at 08:47:18 AM PDT

                  [ Parent ]

            •  How 'bout the attempt (0+ / 0-)

              to place the Treasury outside the constitution, with no releef from the courts allowed. This is unconstitutional on its face, and would only be necessary if the plans were already nefarious.

              Shock Therapy: just say no.

      •  Krugman, Krugman, Krugman, Krugman, Krugman (13+ / 0-)

        That's the lone argument that progressives try to lean on when arguing in favor of this bailout: Krugman supports it--to be specific, he says it's not a good plan but deserves to pass anyway, and Dems can fix it later. (Cause things like that always happen, sure, just like we fixed NAFTA!) Well, newsflash: Krugman isn't God, nor is he a strongly progressive economist. He's a moderately progressive one, and undermines himself in today's column by praising Robert Rubin--one of the very architects of the crisis.

        Sorry, but in justifying a massive, center-right bailout of Wall Street, you need more than tepid support from one economist.

        •  Krugman is an example ... (4+ / 0-)
          Recommended by:
          peggy, NYFM, ksingh, sherijr

          I've laid out in detail why I think this bill is not the AUMF -- provides an oversight board, a go-slow tranche mechanism, transparency, specifically forbids anyone from profiting off the purchases, cuts CEO comp and asks the President to come back with a way to make up losses in 5 years (if there are losses).

          I've read the bill, and I'm no expert, but I can seem to find intelligent things to say for and against it.

          It's not perfect -- but it doesn't stink for a bill that needed to get done so quickly with so many competing interests.

          It is up to you and the diarist to explain why there is no crisis -- on a week when the largest bank failure in US history has happened and many more are on the way.

          This diary, flatulence aside, can be summed up as:

          To the Barricades Comrades! There is no time for thought!

          Are you sure you're not fighting the last battle -- the AUMF?

          Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

          by Bronxist on Mon Sep 29, 2008 at 07:22:01 AM PDT

          [ Parent ]

          •  Ha! This is exactly the problem (18+ / 0-)

            It is up to you and the diarist to explain why there is no crisis

            That's funny, it's up to liberal critics to prove that there isn't a crisis! Ass backwards. Obviously the burden should be on those who are hastily joining with Bush to bailout Wall Street to prove that there is a crisis and, more important, to prove that the "crisis" demands this kind of solution.

            Me, I'm not sure if there's a crisis--most of those I trust, like Dean Baker, are increasingly doubtful--and, in any case, it's something of a semantic argument. I stipulate that something needs to be done--but why a 700 billion dollar bill, swiss-cheesed with loopholes? Why was this done so quickly? Why were there no real public hearings? Why has this become a New Democratc-leadership bill, with the progressives being pushed to the side?

            Is this an economist AUMF? Shit if I know, I hope not, that's a rather high bar to meet. Peter Defazio seems to like the analogy:

            Rep. Peter DeFazio, D-Ore., said he remains an outright "no" vote  "We're building a foundation on a faulty premise. [Treasury Secretary] Paulson sent it himself to Congress and everybody said 'Oh my god, this is an insult,' and then we started work, but we never abandoned his basic premise, which is dumping $700 billion on Wall Street by taking their bad debts," he said. "Paulson created a weapon of mass destruction when he was head of Goldman Sachs along with a bunch of other people, now he says, 'Hey I'm the only guy who knows how to disarm it.' "
            DeFazio said the measure's passage was not a sure thing, but likened it to the 1993 North American Free Trade Agreement debate, which was approved against the odds. "I have seen this game before; NAFTA, Bill Clinton, it was going down until he came up with phony side agreements on labor and the environment...They're going to try and get a bunch of Blue Dogs to hide behind that, and get the New Dems to go along ... They're just trying to get a slightly over a majority of the Caucus and I don't think they're there yet."

            •  If it goes down ... (2+ / 0-)
              Recommended by:
              ksingh, Jacob Bartle

              If the legislation goes down to defeat and the banks don't fail, then I'll breathe easy.

              Your comment is more reasoned than the original diary.

              Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

              by Bronxist on Mon Sep 29, 2008 at 07:46:30 AM PDT

              [ Parent ]

            •  Speaking of Baker (7+ / 0-)

              Yes, just one opinion but a worthy one:

              There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.

              At this point I cannot identify a single good reason to do the bailout.

              The basic argument for the bailout is that the banks are filled with so much bad debt that the banks can't trust each other to repay loans. This creates a situation in which the system of payments breaks down. That would mean that we cannot use our ATMs or credit cards or cash checks.

              That is a very frightening scenario, but this is not where things end. The Federal Reserve Board would surely step in and take over the major money center banks so that the system of payments would begin functioning again. The Fed was prepared to take over the major banks back in the 80s when bad debt to developing countries threatened to make them insolvent. It is inconceivable that it has not made similar preparations in the current crisis.

              In other words, the worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion.

              If we are not worried about this worst case scenario (to be clear, I wouldn't want to see it), then why should we do the bailout?

              There has been a mountain of scare stories and misinformation circulated to push the bailout. Yes, banks have tightened credit. Yes, we are in a recession. But the problem is not a freeze up of the banking system. The problem is the collapse of an $8 trillion housing bubble. (It was remarkable how many so-called experts somehow could not see the housing bubble as it grew to ever more dangerous levels. It is even more remarkable that many of these experts still don't recognize the bubble even as its collapse sinks the economy and the financial system.) The decline in housing prices to date has already cost the economy $4 trillion to $5 trillion in housing equity. This would be expected to lead to a decline in annual consumption on the order of $160 billion to $300 billion.

              Given the loss of housing equity, I have actually been surprised that the downturn has not been sharper. Homeowners had been consuming based on their home equity. Much of that equity has now disappeared with the collapse of the bubble. We would expect that their consumption would fall. We also would expect that banks would be reluctant to lend to people who no longer have any collateral.

              This is the story of the downturn and of course the bailout does almost nothing to counter this drop in demand. At best, it will make capital available to some marginal lenders who would not otherwise receive loans. We should demand more for $700 billion.

              •  Wow, shows you how little a PhD in econ (1+ / 0-)
                Recommended by:
                ksingh

                helps. Frankly, this sounds like a very uninformed, Pollyanna-ish PoV. Maybe he was in a hurry, so chose to pronounce how all is well rather than addressing some of the facts (i.e., the quadrillion dollars of unrequlated derivates that are afloat, and of unknown quality).

                If he knows what he is talking about, this article is too much of a gloss to demonstrate it.

              •  Yes, Dean Baker... (0+ / 0-)

                ...has finally redeemed himself.  That helps a lot.  If only we have enough time...

        •  Well, I wonder why he says that? (0+ / 0-)

          Perhaps Krugman understands what happens if credit markets seize up.  Imagine the US unemployment raising by 1% per month.

          Just a thought.

      •  David Cay Johnston (10+ / 0-)

        who won a Pulitzer with the Time has some detail:

         provisions putting "limits" on executive parachutes and bonuses for bad performance, are about as tough as wet paper since they apply only "for the duration of the period that the [Treasury] Secretary holds an equity position in the financial institution." In plain English, this means "I will gladly delay into the future my bonus in return for the taxpayers paying today the costs of my atrocious judgment."
         Further weakening these provisions is language that will "exclude incentives for executive officers of a financial institution to take unnecessary and excessive risks that threaten the value of the financial institution during the period that the Secretary holds an equity position in the financial institution" while other provisions let banks give bonds instead of equity (an easy drafting error that can be fixed on the House and Senate floor). The real problem here is that none of the affected executive ever took "unnecessary" risks, making this not a limit but a loophole through which billions of dollars can pass. Surely the taxpaying public will not be fooled by such meaningless language - or will it?
        Conflicts of interest (which means profiteering) are likely to abound because the legislation says only that the Treasury Secretary shall issue ""regulations or guidelines." Guideline here is a synonym for meaningless. And if anyone doubts that. Read Gretchen Morgenson's blockbuster story on the front page of the Sunday New York Times about how when government officials decided to bail out the insurance giant AIG they had one private citizen in the room, the CEO of Goldman Sachs, which is owed about $20 billion by AIG.

        Johnston is more optimistic about the taxpayer-protection language. I assume he's talking about the provision calling on the government to recoup losses after five years, but that strikes me as ridiculously unlikely, and in any case, five years is an eternity.

        •  Executive pay ... (1+ / 0-)
          Recommended by:
          ksingh

          I don't care about executive compensation. It is obscene -- but up to the shareholders to decide. If you cut executive pay, you give the shareholders a few more pennies of dividends -- so what's in it for me?

          The second point about conflict of interest is very important. The only way to stop the crooks is through transparency and then making people care enough to scare the congress-critters.

          This bill provides step 1 -- all contracts and obligations incurred to be online within 48 hours. Step 2 of making people care is something we'll have to do as well forward.

          Celebrate women but hate choice? Revere MLK but despise community organizers? Pretend we've won the war but can't withdraw? Republican much?

          by Bronxist on Mon Sep 29, 2008 at 07:51:10 AM PDT

          [ Parent ]

      •  Giving the money to Wall St. covers up the crimes (6+ / 0-)

        There's audio of the Treasury conference call from last night. Five parts on YouTube.
        If it's still up.

        This bill is a total fraud, and everyone involved should be perp walked for defrauding the American taxpayer out of billions of dollars. Including the members of Congress and the media who are telling us we need it to save our homes and our jobs.  Everything they are saying is bull.

        They are complicit in hiding the crimes of Wall St. with taxpayer money. It's astounding. That's why they are ignoring us and ignoring many expert economists to give some money to Main Street. For a successful cover up the money must go directly to Wall Street.

      •  Oh really? (4+ / 0-)
        Recommended by:
        lotlizard, kurt, Snarcalita, Jacob Bartle

        ...do note that the American taxpayer need not lose a single penny from the bailout.

        This is simply not true, if you take into consideration of all the costs involved, including opportunity costs.  As some have noted, even $700b. may not be enough to fix a system that is intertwined around 7 trillion dollars in toxic debt.  Any money spent on sustaining Wall St.'s failed model is simply going to be used to put off judgment day for a while longer.

        Perhaps the biggest cost to taxpayers would be the lost opportunity to actually fix the Moral Hazard problem that has played a major role in the creation of this crisis.  Instead of fixing the moral hazard problem, it would actually confirm the cynical bets of high-risk bankers that the taxpayers can be scared into taking away all of the bad risks they took.

        That is a TREMENDOUS opportunity cost, that will come back to haunt us if we don't let the financial sector of the economy implode.  Better that we spend $1-$2 trillion on protecting the inhabitants of Main Street from the consequence of a banking collapse.  We'd all be far, far better off, in only a year or two.

      •  Who's using rhetoric? (1+ / 0-)
        Recommended by:
        Snarcalita

        I'm ambivalent about the bill, but do note that the American taxpayer need not lose a single penny from the bailout.

        Baseless assertion duly noted.

        But explain why you hate it with specifics ... a populist jeremiad does not substitute for thoughtful analysis.

        You're the one supporting this - let's see your thoughful analysis of why a requirement that he president propose a plan means that an effective plan will be adopted to recover losses for the taxpayer.

      •  Stirling has written prior details, but we even (0+ / 0-)

        have a front page summary which sums up the more egregious items to consider.

        Unfortunately, I don't expect our party to bring anything to the table which actually looks at true reform, rather than helping the current system limp along with little more than more knowing eyeballs watching it all build up to nothing, again.

        I'd enjoy being proven wrong in that impression, months or years from now.

        "So, please stay where you are. Don't move and don't panic. Don't take off your shoes! Jobs is on the way."

        by wader on Mon Sep 29, 2008 at 11:30:44 AM PDT

        [ Parent ]

    •  I think you have fundementally . . . (10+ / 0-)

      . . . mischaracterized this bill and you are doing this community a disservice.  

      The legislation contains precisely the representation you claim it does not.  It gives taxpayers equity in the firms we are billing out, and it allows mortgage holders to climb out from under the onerous IRS provision that would tax them for the underwater portion of their loan upon foreclosure.

      I am not sure what you are arguing for in this situation other than to usher in some fantasy of a total financial meltdown in which some glorious socialist revolution will follow.

      This strikes me as the same sort of recklessness we see from fundamentalists of all stripes.  

      If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

      by dbratl on Mon Sep 29, 2008 at 06:54:28 AM PDT

      [ Parent ]

      •  Have you read this diary yet? (11+ / 0-)

        Daily Kos
        Shocking Secret Treasury Call on the Bailout

        The claim that

        The legislation contains precisely the representation you claim it does not.  It gives taxpayers equity in the firms we are billing out, and it allows mortgage holders to climb out from under the onerous IRS provision that would tax them for the underwater portion of their loan upon foreclosure.

        is directly challenged in it.

        I'd like some folks -- like you and Stirling Newberry, among others -- to weigh in here (and there) on it.

        Is that diary making a valid and verifiable claim, or calling out a viable concern that need be addressed?

        Thanks.

        A corrupted government. Patriots branded as renegades. This is how we roll.

        by GreyHawk on Mon Sep 29, 2008 at 07:12:05 AM PDT

        [ Parent ]

        •  That's a lot to digest . . . (2+ / 0-)
          Recommended by:
          GreyHawk, Jacob Bartle

          . . . and the way the diary is written is troubling.  I was not aware of it, and if the assertions are true it will require consideration.  Unfortunately, it will take me a bit of time to listen to the mp3 link and think about what it means.  

          I'm not dodging your question, I just have a meeting at 10:30.  

          If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

          by dbratl on Mon Sep 29, 2008 at 07:20:56 AM PDT

          [ Parent ]

        •  The charges here are very serious. . . (3+ / 0-)
          Recommended by:
          RebeccaG, GreyHawk, Jacob Bartle

          The Kos Diarist is a little hyperbolic in comparison to the naked capitalism post. I also called the House banking committee, but they are not responding.  

          There is an aspect of Paulson's call that strikes me as him blowing smoke to get the banks on board and that really its going to be a lot tougher on them, but this is impossible to determine without reading the text of the bill.

          I am thinking of posting the bill online and assigning questions.  

          If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

          by dbratl on Mon Sep 29, 2008 at 07:36:34 AM PDT

          [ Parent ]

          •  That could be helpful. (3+ / 0-)
            Recommended by:
            RebeccaG, lotlizard, Jacob Bartle

            Looking at kos's FP piece now after being away for a short while, it appears that the bill has some serious issues and very few repurcussions.

            Troubling.

            A corrupted government. Patriots branded as renegades. This is how we roll.

            by GreyHawk on Mon Sep 29, 2008 at 09:17:49 AM PDT

            [ Parent ]

            •  I thought this was troubling as well . . . (2+ / 0-)
              Recommended by:
              GreyHawk, Jacob Bartle

              Of note, I called the House finance committee for comment on this and they said they didn't have time to "give me information for my blog post".

              No doubt true.  Still, it would be nice to hear what they have to say about this.

              It strikes me that much of this could be window dressing. The provision to go back and tax the financial services industry in five years to pay for this though seems real and like a democratic hedge on Paulson pulling tricks.

              If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

              by dbratl on Mon Sep 29, 2008 at 09:21:18 AM PDT

              [ Parent ]

      •  The bill is necessary (4+ / 0-)
        Recommended by:
        dbratl, max stirner, jds1978, georgia gal

        It pains me to say it.

        This bill goes against what many see as American values. Bailing out the failures of Wall Street at the expense of the taxpayers is not palatable.

        I agree with your argument dbratl.

        The question is the lesser of two evils. This bill, and the possibility of avoiding a great depression, or the markets meltdown worldwide. I'm not an alarmist. This is a very real threat.

        This bill may be costly, but the cost of not passing the bill far surpasses that concern.

        We need to look at the big picture.

        What effect will a depression have on the middle class, let alone the poor? The implications are endless.

        Many of us are old enough to have been told the stories of the Great Depression by our elders. I wouldn't wish those circumstances upon anyone.

        McCain/Palin Unsteady/Unready "08

        by BP in NJ on Mon Sep 29, 2008 at 07:26:12 AM PDT

        [ Parent ]

        •  this particular bill is not necessary (2+ / 0-)
          Recommended by:
          dbratl, BP in NJ

          but it may be the best that would pass. The Republicans were pushing for more deregulation

          It sucks, but more banks have failed this last week than I can remmeber happening

          •  Capital gains tax cuts . . . (3+ / 0-)
            Recommended by:
            ksingh, BP in NJ, georgia gal

            That was the House Republican plan!

            It defies belief.

            If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

            by dbratl on Mon Sep 29, 2008 at 09:22:04 AM PDT

            [ Parent ]

            •  Wow, (0+ / 0-)

              hadn't heard about that detail.

              Deregulation got us into this mess.

              Just got in and now I see the Dow is down 777 points on the day. The Nasdaq and the S&P are down by an even higher percent than the Dow.  

              What a nightmare. Whether you have stocks or not this is bad.

              If this doesn't get turned around the repercussions will permeate through the entire national economy like a ripple across a lake.

              McCain/Palin Unsteady/Unready "08

              by BP in NJ on Mon Sep 29, 2008 at 01:40:49 PM PDT

              [ Parent ]

      •  I think you're naive. n/t (1+ / 0-)
        Recommended by:
        Jacob Bartle

        "History is a tragedy, not a melodrama." - I.F.Stone

        by bigchin on Mon Sep 29, 2008 at 08:12:47 AM PDT

        [ Parent ]

    •  Why keep credit liquid anyway? (6+ / 0-)

      Even if the devastation the administration predicts were to come true, would it be preferable to continue along the path of basing our entire economy on lending? This seems to be the "well we have to keep growing because we have to keep growing" mentality that our nation is now built on.

      Maybe a real contraction of wealth is healthy, but only if we are truly ready to change our behavior to support people through the hardship that will result from it.

      We are not, however. We have already let people die because of their lack of wealth. We cannot change, though we should. This bill will affirm that.

      •  Probably not . . . (4+ / 0-)

        There is some fantasy that we can let the markets collapse and then clean up without a serious understanding of what cleaning up entails.

        It took close to 30 years to recover from the crash of 1929.  Think of that - 30 years.  I will be 68 years old in 30 years.  

        The crash of 1929 led to 25% unemployment, that's a little stale and statistical, but think how many people died early because of the stress of that.  

        the crash led directly to the rise of the Nazi's, Mussolini, and World War II.

        Even if, as many agree, our economic system needs changes, why would you want to hasten an economic catastrophe with unknown consequences, and connections that are opaque to our present perspective?

        I just don't get it?

        If you don't stop lying about me, I'm going to have to start telling the truth about you. Barack Obama

        by dbratl on Mon Sep 29, 2008 at 07:08:28 AM PDT

        [ Parent ]

        •  Oh, good grief. (7+ / 0-)

          Your arguments farther up confused the outcomes of passing/not passing this bailout bill.  But here you're abandoning space-time.

          Per wikipedia's article on Mussolini,

          He became the Prime Minister of Italy in 1922 and began using the title Il Duce by 1925.

          That's before the 1929 Crash.  The financial throes of the Weimar Republic also predated the Crash and stemmed from different factors related to defeat in World War I.

          While another Depression would surely be dire, you aren't doing anyone who weathered that crisis any credit by misrepresenting that history.

          I'm at work and unable to stick around to argue with you, but I hope someone else will step up in my stead.

        •  Have to answer - though late (1+ / 0-)
          Recommended by:
          ArtSchmart

          I am sorry, but like you, I was also born 50 years too late. A true correction that reduces our economy to one based on the real value of resources and labor, instead of arbitrary credit, will severely hurt our ability to gather wealth like our parents did.

          Which is why it won't happen, so don't worry. I worry about my children, who can't vote, but will be 30 in 30 years. Now things are going to REALLY suck for them.

          So should we take the suck - or let them take it? That's the choice.

      •  It might behoove people to live within (0+ / 0-)

        their means.  As least the average person.  It would hurt, but it could be done.  

        Small businesses however, are another matter and they are the largest employers.  If they closed, people would lose their jobs.

        Now, that would be bad.

        Vote like your life depended on it.

        by xysea on Mon Sep 29, 2008 at 07:28:57 AM PDT

        [ Parent ]

      •  Basis of economy-Kucinich's prescription (6+ / 0-)

        to continue along the path of basing our entire economy on lending?

        Kucinich’s Main Street Recovery Plan

        Radical change in the very basis of our economy may be necessary.  How will that come to be if we continue to put bandaids on an unfixable dysfunctional system?  Sometimes the old must die before the new can be born.  See what Kucinich has proposed...

        *Health Care for All: Insurance companies make money not providing health care.  As the co-author of HR 676, a universal, single-payer, not-for-profit health care system, Medicare for All, I understand millions of Americans want health care that is accessible and affordable.

        *Medicare for All will help businesses large and small, create jobs as well as save the jobs of thousands of people including those of doctors, nurses and other healthcare workers who are currently leaving medicine because it is run by the insurance companies. $1 in every 3 dollars of the $2.4 trillion spent annually in America for health care goes to the insurance companies. If we take that money ($800 billion in unproductive wasteful spending) and put it directly into care, we will have enough money to cover everyone. We are already paying for Medicare for all, but not receiving it. HR 676 changes that!

        *Prescription Drug Benefit for Seniors: HR 6800 is the MEDS Act, which provides a fully paid prescription drug benefit, under Medicare, for all seniors. I wrote this bill to help alleviate the economic pressure that comes from the high cost of prescription drugs. We can pay for it by letting the government negotiate drug prices with the pharmaceutical companies as well as by permitting re-importation.

        *Stop the Oil Companies’ Price Gouging: As you know, I was the first one to step up to challenge of the corrupt price gouging and market speculation of the oil companies by proposing  a windfall profits tax, on oil and natural gas companies, with revenues put into tax credits for the purchase of fuel-efficient American-made cars. However, it may be that nationalization is the only way to put an end to the oil companies' sharp practices.

        *Protecting the American Homestead: As Chairman of the Domestic Policy Oversight Subcommittee, I am working to protect your basic right to have a roof over your head, whether as an owner or renter. I have investigated and helped to expose the manipulation of mortgage markets, and I am crafting a new federal policy so that neighborhoods with the highest number of foreclosures get the most help.

        *Jobs for All: Congressman LaTourette and I have co-authored the bi-partisan New Deal-type jobs program, HR 3400, "Rebuilding America's Infrastructure." It will create millions of good-paying new jobs rebuilding our roads, bridges, water systems and sewer systems.

        *American Manufacturing Policy: I am drafting the American Manufacturing Policy Act, which for the first time, will state that the maintenance of U.S. steel, automotive, and aerospace industries are vital to our national economic security and must be maintained through  integrated public-private cooperation, new trade policies, and investment.

        *Works Green Administration: I am also drafting plans for a green New Deal  jobs program, in which the government creates millions of jobs by incentivizing the design, engineering, manufacturing, distribution and maintenance of millions of wind and solar micro-technologies for millions of homes and businesses, dramatically lowering energy costs and reducing our dependence on oil.

        *Fair Trade: The U.S. has lost millions of good-paying jobs, and more jobs have been out-sourced. As you know, I have helped to lead the way in opposition to trade giveaways. I strongly urge repeal of NAFTA.  We must include workers' rights, human rights and environmental quality principles in all trade pacts. We must also protect the Great Lakes' water resources from the reach of multi-national corporations.

        *Education for All: I know families need help with the rising cost of day care. That is why I introduced HR 4060, a universal pre-kindergarten program to ensure that all children ages 3-5 have access to full-day, quality day care.

        *Protecting Pensions:  I am working to change bankruptcy laws so pensioners' claims will be first, ahead of banks, and that corporate executives who misuse workers' pension funds are subject to criminal penalties. I want to fully fund the Pension Benefit Guarantee Board.

        *Social Security: From my first moments in Congress, I have exposed Wall Street's efforts to privatize Social Security and attacked it in the Democratic Caucus when it was being proposed. Can you imagine where seniors would be today if Social Security had been turned over to the stock market? Social Security is solid through 2032 without any changes.

        *Protect Bank Deposits: I will work to make sure the Federal Deposit Insurance Corporation (FDIC) has sufficient funds to provide for insurance of deposits up to $200,000 at all banks and savings and loans. This is an urgent matter since so many banks are said to be vulnerable.
        *Protect Investors: Bring back strong regulation to Wall Street. As Chairman of the Domestic Policy Subcommittee, I challenged the Wall Street hedge fund speculators as a threat to small investors. I intend to keep active watch over the machinations on Wall Street.
        *Strength through Peace: You'll remember when I led the effort against the ill-conceived Iraq war, which has now cost more than 4,100 US soldiers' lives, cost U.S. taxpayers between $3 trillion and $5 trillion, and resulted in the deaths of more than a million Iraqis.  We must bring our troops home and end the war. We must engage in diplomacy. We must reduce the military budget, and we must stop outrageous cost overruns by the likes of Halliburton.

        *Safety in America: I am proud of my work for peace. In July 2001, I introduced a bill, which today is HR 808, that for the first time creates a comprehensive plan to deal with the issues of violence in American society, particularly domestic violence, spousal abuse, child abuse, gang violence, gun violence, racial violence, and violence against gays by establishing a Cabinet-level Department of Peace and Restorative Justice. This proposal has sparked a national movement and when implemented will save tax payers millions of dollars.

        *Monetary Policy: It is long past the time that we looked at the implications of our debt based monetary system, the privatization of money created by the 1913 Federal Reserve Act, the banks fractional reserve system and our debt-based economic system. Unless we have dramatic reform of monetary policy, the entire economic system will continue to accelerate wealth upwards. I am currently working on drafting legislation for an 'American Monetary Act' to address these and other issues in order to protect the economic wellbeing of America.

        And what rough beast, its hour come round at last, Slouches towards Bethlehem to be born?

        by In her own Voice on Mon Sep 29, 2008 at 08:13:01 AM PDT

        [ Parent ]

    •  This is econ. without rigor or logic . . (4+ / 0-)

      I feel your passion but you cannot make up for your ignorance about the credit market with 'thousands of words' like 'potentate'.  

      Part of the cause of the great depression was INACTION by those who believed action was unnecessary.

      American bankers AND consumers have living beyond their means for decades, dining out on credit cards then paying for the meal at 20% interest.  We all now have to pay.  Sorry. . . .  

      Sometimes everyone has to east shit.

  •  No bailout. (29+ / 0-)

    Nationalize or let it burn.

    Today, 9/28/08, 4174 Americans, and untold Iraqis are dead, tens of thousands more maimed. Bush lied, how soon before your family pays the price for that?

    by boilerman10 on Mon Sep 29, 2008 at 06:34:48 AM PDT

  •  We've been through this so many times (41+ / 0-)

    in the past, hanging on to hope until the very last minute, making those phone calls and sending those e-mails, and in each instance where the result was critical to the continued health of this nation, our so-called representatives have let us down.  I don't expect a different result today; the bail-out will go forward.

    Things are going to get a lot worse before they get worse. ~ Lily Tomlin

    by vigilant meerkat on Mon Sep 29, 2008 at 06:36:40 AM PDT

  •  Is there a "how" to stop it now? (10+ / 0-)

    Because I don't see it.

    If China and others are telling our leadership they are cutting off all loans if we don't do as they say on this bailout, and that cutoff effectively shuts down government and things like war funding, do we really believe they are going to do anything but accede?

    Sigh.  I don't believe I can alter this outcome one bit, and accordingly I'm just steeling myself for what comes, again.

    Our Moment is... (ding!) Now.

    by Leftcandid on Mon Sep 29, 2008 at 06:45:31 AM PDT

  •  Poll: how are your reps/senators voting? (6+ / 0-)

    I called Sensenbrenner (5th district WI, Republican, Milwaukee suburbs), his staff immediately said "congressman will be voting against."

    Beware of all enterprises that require new clothes -- Thoreau

    by cityvitalsigns on Mon Sep 29, 2008 at 06:46:48 AM PDT

  •  I respecfully disagree (19+ / 0-)

    for one simple reason.  The credit markets are freezing.  If they stay frozen for much longer, several days longer, you will see 5% of the nation's business being simply shut down.  

    And you will have your instant depression.

    You can watch the credit markets.  Just look at the weekly bonds, or the LIBOR.  

  •  It's amazing that a diary (9+ / 0-)

    as wonderful as this, with only seven comments (as of this writing) and perhaps a couple dozen rec's, has made the list. (I sense FP assistance!)

    I think bailout money should go to the borrowers.  Yes, they screwed up (so did the lenders).  If we give THEM some assistance in paying their mortgages until they can re-fi or sell, then we don't have the defaults.  I'd rather the assistance TRICKLE UP.

    Bravo - good diary.

    Join us in the Grieving Room on Monday evenings to discuss mourning and loss.

    by Dem in the heart of Texas on Mon Sep 29, 2008 at 06:48:21 AM PDT

  •  Pokemon Cards and Beanie Babies (17+ / 0-)

    This is such a grand sweeping treatise that I hesitate to post my Pokemon analogy again.

    But I think it speaks so clearly to people who are overwhelmed by the complexity of the crisis, that I will dare to post this again.

    This morning I was trying to describe the problem with the bailout to my sister.

    She kept talking about the "mortgage crisis" and people who bought houses that they couldn't afford.

    I tried to explain that the problem on Wall Street really didn't have anything to do with individual mortgages.

    After a lengthy conversation, she said: "Oh! You mean this is like buying a Pokemon card for $100 right before the fad ended! The guy who got the $100 is thrilled that he got out in time and the guy who got stuck with the card wants the government to buy it from him!"

    Pokemon cards.
    Beanie babies.

    Great analogies, huh?

    Just say NO. We the people will NOT buy their worthless Pokemon cards and Beanie Babies.

    "Let us not look back to the past with anger, nor towards the future with fear, but look around with awareness." James Thurber

    by annan on Mon Sep 29, 2008 at 06:49:38 AM PDT

    •  your sister's complaint about the people (12+ / 0-)

      who bought more house than they can afford conveniently missed the fact that they were being heavily pushed into those homes/mortgages by banks trying to meet the demand for more mortgages to chop and sell.  Blame goes to both sides, as well as to our government, which sat on its hands and let it happen without regulation.

      Join us in the Grieving Room on Monday evenings to discuss mourning and loss.

      by Dem in the heart of Texas on Mon Sep 29, 2008 at 06:51:57 AM PDT

      [ Parent ]

      •  I agree. (5+ / 0-)

        And that was what I was trying to explain.

        However, I think a lot of the anger on the street about the "bailout" is coming from people who somehow think the bailout is designed to let overextended homeowners off the hook.

        This whole thing is really twisted and Sterling Newberry is right. This is being sold using fear, while the actual recipients of the taxpayer's largesse are hiding in the dark. I wanted her to be able to grasp just who those recipients actually are: the guys who bought the last Pokemons card and are now in serious financial trouble.

        "Let us not look back to the past with anger, nor towards the future with fear, but look around with awareness." James Thurber

        by annan on Mon Sep 29, 2008 at 06:59:05 AM PDT

        [ Parent ]

      •  Besides the simple fact that the availablity of (1+ / 0-)
        Recommended by:
        Dem in the heart of Texas

        all those mortgages raised the housing market above what most people could technically afford in many areas - both in the purchase and rental markets (in part because some landlords were attempting to pay off mortgages using the rent money).

        Incomplete list of McNames in profile. Personal favorites include McSogynist, McNopoly, and McThuselah, and McWorse.

        by Cassandra Waites on Mon Sep 29, 2008 at 07:14:00 AM PDT

        [ Parent ]

      •  We really need to quit giving this red herring (3+ / 0-)

        legs. There were many more speculators that were involved in this stuff that families that were not qualified and dived in anyway.

        The real issue is in order for the consumption economy to continue we had to inflate the available consumers of mortgates and the prices of houses and that by definition meant relaxing requirements and selling houses to people who were less than qualified.

        While subprime is an issue that affects a small portion of the mortgages out there, the real issue that the prices of houses are declining and even qualified buyers are walking away from them becuase the are upside down...

        What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

        by laughingriver on Mon Sep 29, 2008 at 07:30:50 AM PDT

        [ Parent ]

      •  Many people were pre qualified for their loans (1+ / 0-)
        Recommended by:
        Dem in the heart of Texas

        and told how much they could afford.  They were also encouraged to buy as much as they could afford because it was the best investment possible.

        Like car dealers, the hidden hand, was over the red term on the clip board that says read the back of the page first.

  •  Haven't we been screwed enough? (15+ / 0-)

    The American people are always there to pick up the pieces of failed policies and politics, but when was the last time a political party made a commitment to the people and kept it? I have been patiently waiting for our country to enter the 21st century.  Waiting for health care, education improvement and college affordability.  The needs of the people always seem to be on hold while we bail out the big dogs and their massive fails.

  •  Looks like they said yes already! (7+ / 0-)

    We will truly regret this crap.  The taxpayers will see billions disappear into a black hole.

  •  Questions: (3+ / 0-)
    Recommended by:
    mrblifil, lotlizard, kurt
    1. If the govt is buying mortgages, doesn't it have an interest in keeping real estate prices high by providing easy money, which got us in the place that we are now?
    1. Or if the govt is not buying mortgages, are they buying the derivatives, or the credit default swaps?
    1. Who wants to cash in? You write:

    It's profits and protections go largely to holders of bonds overseas, princes both private and public, royalty of foreign kingdoms, holders of debt contracted without public knowledge or assent. It's costs fall entirely on us.

  •  But we're hostages -- we have to go for it anyway (2+ / 0-)
    Recommended by:
    alkatt, Grass

    Under duress, certainly.

    But can YOU predict what will happen if we don't, President Hoover?

    Happy little moron, Lucky little man.
    I wish I was a moron, MY GOD, Perhaps I am!
    -Spike Milligan

    by polecat on Mon Sep 29, 2008 at 06:53:45 AM PDT

  •  I DON'T want to be an equity holder (4+ / 0-)
    Recommended by:
    Disillusioned, corvo, lotlizard, kurt

    in the market.  That's why I don't like the plan.  I'm not a trader, and didn't choose to be one, and now I'm forced to be one.  I don't want to assume any of this kind of risk.  SO, this plan, which gives the "average US taxpayer an equity position" makes me nervous.  

    Beware of all enterprises that require new clothes -- Thoreau

    by cityvitalsigns on Mon Sep 29, 2008 at 06:58:23 AM PDT

  •  It is a little late for citizens to complain (4+ / 0-)

    Major debt and borrowing has been going on for three decades. When this bailout is paid off, it will probably cost no more than the additional debt we add to the federal level every half year.

    As Bonddad keeps reminding us, every two years our federal government adds another $1 Trillion of debt. Now we are going to complain. Give me a break.

    John McCain has become Karl Rove's lapdog!

    by phild1976 on Mon Sep 29, 2008 at 06:58:48 AM PDT

  •  Called up Pallone (1+ / 0-)
    Recommended by:
    kurt

    I think they are still debating it.  He isn't sure what he is going to do.  I gave his staffer an ear full.

  •  We ARE faced with financial catastrophe (5+ / 0-)

    We are not yet faced with financial catastrophe, but this bill represents constitutional catastrophe.

    Sorry to be selfish here. If credit freezes this week and my husband's company cannot make payroll, it will be my family's financial catastrophe. I feel that we are being held hostage, and some people are saying "no" to paying the ransom.

    ...there's a rose in the fisted glove and the eagle flies with the dove - Stephen Stills

    by NuttyProf on Mon Sep 29, 2008 at 07:01:38 AM PDT

    •  What makes you think (7+ / 0-)

      This bailout is going to solve that?

      I'm not part of a redneck agenda - Green Day
      Neither is California High Speed Rail

      by eugene on Mon Sep 29, 2008 at 07:06:55 AM PDT

      [ Parent ]

      •  With the bailout there is a chance (0+ / 0-)

        we can solve this crisis.

        Without it, well, do you think the banksters will just go bankrupt quietly and without incident?

        •  This Profits from this Bailout (9+ / 0-)

          will be found right next to Saddam's WMD program. The people who are saying this bail out will work, last tried to tell us that Iraq would pay for itself, and that the housing bubble didn't matter.

          They are basically trying to sell us a used war.

          •  For there to be no profits (0+ / 0-)

            the underlying assets will have to become worthless -- i.e. housing becomes worthless and/or people stop paying their mortgages. Will this happen?  

            Your program seems to be 'Let them eat cake.'

            Implicit in this is your assumption that it won't be that bad, as you assume out of hand that Bernanke et al are wrong wrong wrong in their dire predictions.  

            You're gambling that it won't be that bad.

            •  You're new here, aren't you ? (3+ / 0-)
              Recommended by:
              Deward Hastings, lotlizard, kurt

              ... you aren't a very good troll.  I would not say that you are worthless, but I would say that your schtick isn't selling well this morning.

              Bush and the Vichy Democrats gamble that we won't notice that they're attempting to cripple the next administration financially while blackmailing the American public today.   Look at who wants this bill the most.   Easiest way to condemn the thing.

              Newberry says the results of the supposed cure are  even worse than the current problem.  That is not the same thing as let them eat cake or gambling on the outcome.  What a bizarre comparison.

              "Toads of Glory, slugs of joy... as he trotted down the path before a dragon ate him"-Alex Hall/ Stop McClintock

              by AmericanRiverCanyon on Mon Sep 29, 2008 at 08:45:34 AM PDT

              [ Parent ]

        •  Wrong, the bailout will not help our only chance (5+ / 0-)

          it to let the market work itself out and have ALL finanices or lack of be viewed in the LIGHT.
          That is the only way to unfreeze credit and restore trust!

          The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

          We are being told that this plan will help the economy by keeping the spigots of consumer credit flowing. However, to really address the fundamental problems, those spigots must be tightened. Since we have already borrowed and spent ourselves into bankruptcy, the last thing we need is for consumers to borrow more.

          Our leaders maintain that without this bailout consumers will not be able to borrow money to buy cars. So what is wrong with that? We already have plenty of cars, and if we are broke, why do we need to buy more? Instead, we need drive our old cars longer, pay off our underwater auto loans, and produce more cars for export. It is also argued that without access to credit parents will not be able to borrow money to send their kids to school. That's fine by me as it will force Universities to reduce tuitions to levels families can actually afford. They will either have to cut out all of that bureaucratic fat, or go out of business for lack of customers.

          In the end it is impossible for the American economy to be rebuilt on a sounder foundation of savings and production without a lot of economic pain. Government efforts to reinforce the shaky foundation of borrowing and consuming will result in the entire structure falling down around us.

          http://www.safehaven.com/...

          At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

          by Rachel Griffiths on Mon Sep 29, 2008 at 07:38:46 AM PDT

          [ Parent ]

          •  Peter Schiff, son of noted tax evader (1+ / 0-)
            Recommended by:
            bigchin

            Irvin Schiff.

            In several pages he tells us to put on the hairshirts while we eat our cake.

          •  Excuse typos I am PISSED and DISGUSTED (1+ / 0-)
            Recommended by:
            Disillusioned

            F*ucking greedy people stealing our tax dollars after their greedy practices have destroyed our economy.  Now they will take what little cash is left cash our nation has left($700 Billion)that should be used  for roads and school and cheese lines...and let's not forget your investments will be worth nothing and no money to borrow.
            Life as we know it in America is about to change and for the worse.  God help us

            At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

            by Rachel Griffiths on Mon Sep 29, 2008 at 08:04:51 AM PDT

            [ Parent ]

      •  The Bailout WILL NOT Solve it! (3+ / 0-)
        Recommended by:
        eugene, lotlizard, kurt

        Only enrich the rich.
        Your husbands company willnot be able to make payroll anyway.  The bailout will not STOP tthe fiancial crisis.  However $700 Billion just might keep a lot of Americans from freezing and starving.

        At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

        by Rachel Griffiths on Mon Sep 29, 2008 at 07:34:47 AM PDT

        [ Parent ]

    •  You should have enough reserves to ... (0+ / 0-)

      make payroll for a period of at least a month without tapping into a credit line. I understand that things are tight but any company should have reserves in place to get them through periodic economic issues that arise.

      What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

      by laughingriver on Mon Sep 29, 2008 at 07:25:54 AM PDT

      [ Parent ]

    •  The question is why. (1+ / 0-)
      Recommended by:
      AmericanRiverCanyon

      The answer is that the FF rate is too far below the rate of inflation, and banks have a liquidity preference so they can buy other failed banks.

      This bailout makes both of these problems worse.

  •  Not sure if I agree or disagree (4+ / 0-)

    but a great diary.

    The main problem is that NO ONE has adequately explained the problem, why this is the solution, and how much it will really cost.

    The problem is really, really, really bad- we are told. Your credit cards and ATMS won't work if we don't do this. - Why not? I want to know. This is the mushroom cloud on the horizon argument, and not much credibility there.

    However, perhaps, the leaders are really acting like adults and trying to be responsible. One in particular- Barney Frank. Barney Frank is leading the negotiations. I trust him to do the right thing (probably as much as I would trust anyone who is a politician). He wants to get this done, so I assume he is either being completely snowed by the administration, or this really does need to get done. Barney Frank must be as skeptical of the Bushies as anyone on earth. Yet, he is on board.

    While I wish these was a temporary solution to tide this over until January, doesn't seem that this is the plan.

    Stop the bill, pass it, I still don't know.

  •  Damn that's some good writin, mister. (2+ / 0-)
    Recommended by:
    bigchin, hulagirl

    Icing on your thoughts.

  •  We Must Have a Bailout (2+ / 0-)
    Recommended by:
    Disillusioned, ggwoman55

    At this point.  Our president told the world last Wednesday that the American economy would collapse if we did not get one.  No bailout and there is a risk of self-fulfilling prophecy.

    That being said, it is hard for me to imagine that this will do much good.

    Hypo, the big European bank, was rescued by the German government and German banks to the tune of $650 billion overnight.

    If it took $650 to rescue just one of scores of banks this size on the globe, the $700 billion is just a drop in the bucket.

    Much larger, more visionary action is required to restore the health of the financial system.

    You can call me "Lord Bink Forester de Rothschild."

    by bink on Mon Sep 29, 2008 at 07:04:48 AM PDT

  •  Already a credit crisis for Main Street (2+ / 0-)
    Recommended by:
    polecat, Time Waits for no Woman

    This is written as if there's no credit crisis or that it will not affect us - the citizens.  The fact is there is a credit crunch and otherwise successful small businesses are NOW feeling it and are in danger of failing or at the least not growing.  That's jobs lost, spending down, more jobs lost, even less consumer spending, and so on.

    It's possible this $700 B won't fix the credit crunch, but the alternative is clearly an economic disaster, not for the Wall St. crowd - they've already made their millions - but for Main Street. The fundamental question is not whether you agree with the legislation, but is whether you want to risk an economic disaster.

    The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. Bertrand Russell

    by accumbens on Mon Sep 29, 2008 at 07:06:21 AM PDT

    •  Doesn't the Fed loan money? (1+ / 0-)
      Recommended by:
      kurt

      Someone explain this to me.  Isn't it the job of the Fed to pump liquidity into the system?  If it's just a credit problem, why aren't they doing it?

      •  They had to hit Treasury up for $50 billion (1+ / 0-)
        Recommended by:
        corvo

        last week. Fortunately it was loaned out at the 0.02% three-month rates.

      •  Yes, but usually just short-term and (1+ / 0-)
        Recommended by:
        lotlizard

        mainly to banks.

        The problem is not liquidity - in fact, there's probably too big a supply of dollars.  The problem, as I understand it, is the willingness of financial institutions to provide credit - they are afraid to lend because (1) nobody knows whether or to what extent the other guy is holding toxic paper they bought with borrowed (i.e., overleveraged) money; and (2) nobody knows to what extent that paper includes assets (mainly mortgages) that are non-performing (i.e, foreclosed, in arrears, etc.), which weakens the balance sheet of those holding it and consequently increases the chance they may fail and not be able to pay off the borrowed money.  

        The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt. Bertrand Russell

        by accumbens on Mon Sep 29, 2008 at 08:03:06 AM PDT

        [ Parent ]

    •  Most of us do not believe (2+ / 0-)
      Recommended by:
      lotlizard, kurt

      that dumping billions on Wall Street will do anything as far as small business credit lines.  Better to just do that directly ala Jerome a Paris if it's necessary.

  •  Just one note of wariness and (0+ / 0-)

    hope.  This could become a significant distraction in the closing phase of the election cycle.  Disappointment, hope fatigue, knocking the wind of our sails just a bit -- when it's just a bit that leads McCain right now.  It could let him back in the race.

    Remember the long-term surplus outlook when Clinton left office, something it took years to hammer out.  Bush reversed that course and trashed it completely by the summer of '00.

    The same thing can happen with this bailout deal.  Scrap it next year if need be, after Obama is in office.  If McCain gets in, then it's a done deal and will not be reversed.

    =====
    In a time of universal deceit, telling the truth becomes a revolutionary act.
    -- George Orwell

    by USexpat Ukraine on Mon Sep 29, 2008 at 07:06:40 AM PDT

  •  reassuring that bill includes (2+ / 0-)
    Recommended by:
    SecondComing, notrouble

    congressional oversight. Giving away the 4th amendment was so overrated.

    If we cannot elect this man, we don't deserve him.

    by lisastar on Mon Sep 29, 2008 at 07:07:51 AM PDT

  •  this is the hand that was dealt to us (1+ / 0-)
    Recommended by:
    Time Waits for no Woman

    If our neighbors house is on fire we need to put it out lest our house burns too and it doesn't matter if our neighbor started the fire to get the insurance $ to pay for the morgagage because the debt was higher than the value of the house. I think with Obama's basic principals of stop giving people reasons to burn their houses the bailout helps the neighbors. China has already told its banks to freeze loaning $'s to american banks and then retracted that, probably not helpful in these times. I think the best we can hope for is a week of letting the market tumble and let companies and warren buffet buy what they can, then pass the bailout.I would like to see what countries will do with their petro dollars declining, how will they value the oil if the dollar is in shambles.

    •  Our neighbor's house isn't on fire ... (5+ / 0-)

      our neighbor threw a few bricks through a few of his own widows on a couple of his many mansions.  He has more mansions than we have homes.  

      Is it 90% of the wealth in this country is held by 1% of the population?  So, if we're doing the neighbor analogy, then we live in plywood and cardboard shacks next to mansions.  

      We're being asked to replace all their windows because they got drunk and started chucking bricks and hit a couple of their own.  No one called out for a bailout when their bricks hit our hovels.  In this analogy that would be when housing prices rose beyond their reasonable prices and wise people stopped flipping or buying and just waited.  It could also be when rents were high and real estate agents were playing a con game with clients-- convincing them to buy an overpriced home with a bad mortgage.

      As Eugene has pointed out above, this was all tried and didn't save the economy or the people.  The reason it won't work, as it didn't work then, is because it doesn't address the problem facing the country.  Pouring money into wall st is a sure way to make sure it doesn't get to rest of the economy or benefit "we" the people.  

      Wall St has no problem, their invisible hand is supposed to be choking their criminals among themselves right now, we're interceding on the criminal's behalf leaving any non-criminal on wall st left to say, "I need to be more crooked, as there is no risk and only reward regardless of which party is in power".  They made enough money to survive for generations.  The country, as in the rest of us, will suffer as we did in the 30's.  The only thing that will help is a massive job program and community investment.  

      WPA,TVA, UNIONS, vigorous renewed commitment to anti-trust laws, and green-economy jobs.  When has wall st put a solar panel on a house?  Let's get our priorities straight: no actual work is down by wall st by anyone in a suit.  IF we're going to bailout Wall St, had the money directly to the guys in the maintanance uniforms.  We'll see the economy boom and real estate prices even out.

      My political compass: Economic: -7.38 Social: -5.79

      by musicalhair on Mon Sep 29, 2008 at 07:32:33 AM PDT

      [ Parent ]

      •  thank you for your comment (0+ / 0-)

        Actually our neighbors deck was on fire while we and our neighbors were partying, in our modest hovels, lets just say we grabbed the hose. I fully understand we are in a feudal capitalist system in which I and my neighbors, wether they know it or not, are in service to the powers that be. Having said that I would think about the wash, lather, rinse and repeat solution only when my "hovel", which is just fine thank you ( live simply so that others may simply live) is gone and I am told to eat cake. But I have yet to hear the let them eat cake mantra therefore my response is to participate in the community as if it is a community. If what we do now, the bailout, will help us in the short term I am for it. Until we have Senator Obama as our president we can do nothing. The retooling of our economy will not take place, I believe, until after Obama is president and then we will be able to restore or create our community.

        •  another analogy, this one's good! (2+ / 0-)
          Recommended by:
          lotlizard, kurt

          Until we have Senator Obama as our president we can do nothing.

          I couldn't agree more.  But if we can do nothing, then we should do nothing.  Kinda "zen" or "taoist" but still universally true.

          I hope this solution benefits the "rest of us".  I don't trust Bush or Paulson to benefit anyone but Bush and his loyalists.  They will blow off anything congress requires of them once they get the cash and Obama will be left to clean up this mess and the mess we're giving Paulson to make now.

          I don't trust the administration.  I don't trust Wall St nor their cheerleaders.

          Oh, oh, here's one.

          Our neighbor the crack dealer's house caught fire.  We have to save not our homes from the fire if it spreads but his stash of crack or he'll have nothing to sell and the big evil drug lords in china (OK, I broke the analogy, but I was caught between what would have been Columbians in my analogy and my PC leanings saying I don't want to characterize columbians as drug dealers) will come and shoot our whole village.

          My political compass: Economic: -7.38 Social: -5.79

          by musicalhair on Mon Sep 29, 2008 at 08:45:31 AM PDT

          [ Parent ]

          •  hmmm not living in mr. rogers neighboorhood? (0+ / 0-)

            I don't trust the crack dealer in the neighborhood and the current gubmint, needless to say the crack will get soaking wet and the neighbor has who to turn to in time of need? since we all are relieved that the neighbors house burned - but ours is still standing- the neighboor has left for china to esplain the mess, and what will the reaction be, given the global economy, I will wait and see. Doing nothing is akin to going shopping.

            •  this bailout is not saving any house, nor is it (1+ / 0-)
              Recommended by:
              lotlizard

              getting rid of the crack dealers.  All the culprits and the mechanisms they used are still in place.  This bail is us running into the burning crack house and slavaging the crack in the hopes that it will not be worthless, for the sake of the crack dealer and his overseas patrons.

              Not to mention the fact that we're trusting a Bush crony to do the salvaging.  We have 8 years of that and it has gone quite ... predicatably, as this will too.

              My political compass: Economic: -7.38 Social: -5.79

              by musicalhair on Mon Sep 29, 2008 at 10:00:05 AM PDT

              [ Parent ]

              •  okay (0+ / 0-)

                I'll play, we do not have the $ for this bailout which means we also do not have the $ for "main street" . In essence we have no crack to save. But we will desparetly make more crack causing it to dilute and the value of the $ drops, not good for all those countries forced to use dollars to buy and sell oil, propping up the dollar may mean they forgive our debt, so in this game of russian roullette anything is possible. Also we are not trusting a bush crony we are living with whether we like it or not what he does. And yes we have had 8 years of box office hits out of hollywood, some serious coin exchanged hands from ours to theirs. 8 years of eating at mcdonalds, once again some serious coin, 8 years of cruises, spa's,disneyland and disneyworld,desighner clothes, perfumes, shoes, jewlery,etc. shop till you drop because that is what keeps the economy going, give up the coin and when out of coin borrow it. so people say but I didn't do that, I didn't participate at all in this economy and if I did I didn't know what I was doing. And now people are mad as hell that the wealthy and the system is set up this way? Just my thoughts.

                •  wow you lost me ... (0+ / 0-)

                  but basically how is this-- for now failed-- bill not trusting the biggest crook to save the day?

                  Ultimately we were given a minor tweaking on bush and paulson's wish list as a bill.  The oversight was nothing more than paulson having to explain his actions, and a third party judging if we got ripped off or not.  Can't we see how that will go?

                  I don't see any reasonable way to support this bill unless I knew Paulson and Bush and Cheney personally.  That is how is was written, and that has been their track record.

                  I'd love to play dueling analogies with you but I couldn't follow your last one, so you called my bluff sir in the analogy game.  But unless you can convince me that the crooks are suddenly the good guys, we're at an impass.

                  Here's one last stab at an analogy:

                  The Yankees got duped by bad scouting and signed the entire Japanese male population aged 10-12 to 5 year contracts.  The oldest anyone of them will be at the end of the contract will be 17, and not at all capable of playing major league baseball.  So, we have to suffer through years of bad baseball.  Or, we can all buy season tickets and suffer through it together.  I'd rather spend those summers pulling weeds in my yard than suffer through bad baseball.  But we have to bail out George and his pals.

                  I still like my crack house analogy.

                  My political compass: Economic: -7.38 Social: -5.79

                  by musicalhair on Mon Sep 29, 2008 at 03:04:02 PM PDT

                  [ Parent ]

  •  We've allowed this criminal president... (4+ / 0-)

    and weak, inept Congress to hijack our financial future. I hear many say here this was somehow, pre-ordained.

    ONly because people like you have given up your voices to cheerlead for one candidate, who also happens to support this bill.

    Dailykos has transformed from a blog that helps to steer the course of the country with bold, inovative applications and strategies, to one that appears helpless in the face of the greatest hoax perpetuated on the American people.

    You stopped being an issues blog to become a cheerleading blog, and the price you will pay is that your voices are lost, and being outshone by the corporate lobbyists who support this bill, exactly the opposite of the Obama platform.

    Obama speaks ridding American politics of the effects of corporate lobbyists, yet he is falling prey to a bill that reflects those lobbyists concerns, needs and intersts exactly. Congratulations for helping to hand over the treasury to the corporations. Job complete. and well done.    

  •  Accountability (3+ / 0-)
    Recommended by:
    musicalhair, lotlizard, kurt

    The only way to get accountability under any bill, whether to bail out Wall Street or protect the people hunkered down on Main Street, is to impeach Bush and Cheney.

    These thieves have cleaned out the Treasury with their no-bid contracts and their crony capitalism, and now, when it looks like they won't be in power much longer, they try to run up a huge bill on the National Credit Card before they leave office.

    What's 700 billion dollars?  It's 70 billion dollars donated back into the coffers of the Republican Party in the form of tickets to $10,000 a plate fund raising dinners, $50,000 fees for speaking engagements to the out of office elite, and $2,500 campaign contributions from Sal who works in the mail room.  

    There's a good arguement to be made that this bill is causing the credit freeze, since banks are waiting to see whether or not they will get free money before they go into the market and pay for it.

    •  This is the Republican's Golden Parachute (2+ / 0-)
      Recommended by:
      corvo, kurt

      When the boss screws up as badly as Bush has screwed up, the board fires him.  Looks like Bush and the horse he rode in on are going to get the ax pretty soon.  So they are arranging a nice severance package to make their landing a little softer.

  •  I disagree - credit markets are seizing up (11+ / 0-)

    Anyone who tries to claim that the credit markets are not in tremendous crisis just isn't paying attention.

    •  That's what happens when political bloggers (0+ / 0-)

      try to write diaries about genuine financial issues through a political lens and no economic expertise.

      Strategy '08: Obama vs. the other guy

      by dansac on Mon Sep 29, 2008 at 07:16:55 AM PDT

      [ Parent ]

      •  Uh, Stirling is well versed in Economics... (8+ / 0-)

        And his diary is dead on.

        This bill will kill the dollar and just put off this situation for a short period of time, if at all, and then it'll be much worse...

        What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

        by laughingriver on Mon Sep 29, 2008 at 07:23:00 AM PDT

        [ Parent ]

        •  The US Economy is in EXTRAORDINARY debt (0+ / 0-)

          Agree or disagree with Bernanke, fine.  That's not my point - my point is that the credit markets are going haywire.  It's largely because Wall Street is fishing for a bailout, and I don't disagree with that point.  But our credit market is really screwed up, and inserting liquidity should help.  We need to recoup our losses and take profits on any gains, but I think the bill does that effectively.

          •  Your right... (4+ / 0-)

            However this bill just shifts the debt from the private sector to the public sector.

            There is no funding for this bill. In affect what this does is trade out private sector mortgage debt for public sector treasuries.

            So given the line we've crossed the real issue is who in the world will ever buy private sector mortgage debt again?

            And remember we literally have over 700 billion dollars of trade deficit debt that has to get recycled into something and to date the mortgage/real estate market is the only thing larger enough to absorb all of those dollars.

            The market for mortgage backed securities, CDS's and CDO's has evaporated, not because we can't make it liquid, but because there will not be any buyers or sellers outside of the government.

            In a month all of our foreign friends are going to have 60 something billion dollars to spend and nothing whatsoever to purchase with those dollars.

            This bill does nothing at all to resolve the underlying issue and is just a band-aid to the real issue...

            What we do for ourselves dies with us, what we do for others and the world remains and is immortal. (Albert Pine)

            by laughingriver on Mon Sep 29, 2008 at 07:48:16 AM PDT

            [ Parent ]

            •  better in the public sector (0+ / 0-)

              then at least "we the people" have some say over how to eliminate it.

              I still think we need to have higher taxes or fees on financial services industry, just to make sure they don't get off free.  But we need to do something about it.

          •  And then (0+ / 0-)

            we can unfreeze the credit markets from the bottom up.  Freeze consumer interest rates at maybe 5 or 6% so people can pay off their debt and put money back into the economy.

      •  Exactly - thank you (1+ / 0-)
        Recommended by:
        3goldens

        I have a therapy client who is literally losing his mind because he's an economist working in a credit default swap advisory.  He is coming in and telling me about the problems.  They're real.  He has no incentive to make this up - he's literally sick over it.

  •  The money is already gone (3+ / 0-)

    The Federal Reserve has loaned so much money out to banks that the Treasury must start buying securities otherwise the banks can never repay the Fed.

    There is a real chance that the Fed will end up in the same financial condition as Wachovia.

    What did you do with the cash Joe?

    by roguetrader2000 on Mon Sep 29, 2008 at 07:13:55 AM PDT

  •  But Is Economic Collapse Any Better? (3+ / 0-)
    Recommended by:
    Cardinal96, Dave in RI, Matisyahu

    Yes, the bill is a fucked-up way to reward those hucksters who played fast and loose with imaginaery money.  But if the financial system goes belly up it is a lot more than having Pan Am go out of business.

    Are you willing to tell me that companies from McDonald's to FedEx to General Foods aren't almost as highly leveraged as the financials?  What happens to the American economy as liquidity drains from every corporate balance sheet - balance sheets with precious little margin for error to begin with?

    Are you willing to take that chance in order to say,
    "I told you so!" ??

  •  I strongly disagree with this diary (11+ / 0-)

    This is a cause and effect diary, and an entirely political one.  The reasoning I see is that because we've seen this process of shock, fear, and lies from the administration, therefore this time it MUST be the same type of bullshit.  

    Unfortunately, although it sounds like it make sense, it doesn't hold up.  Just because this administration has cried wolf before doesn't necessarily mean this time the crisis isn't real.  

    This time the difference is the reality of the crisis is being confirmed by many other sources, including those unsympathetic to this administration.

    Nowhere in this diary did I see any discussion of the economic hardship not passing this bill (and doing so quickly) may cause people on main street and the ripple effects through the global economy that can really cause harm to everyone.

    No, this, like so many diaries on this site (especially those written by Kos), is NOT written through a financial lens, the dispassionate, objective lens of financial analysis by someone with years of experience.

    Instead it is written in a political lens.  This issue, as shitty as it is, is real and has real world consequences.  

    I will only say this: I personally disagree and say yes to the bill and am proud of the Democratic leadership for building in the provisions that weren't there at first.

    But regardless if you support the bill or don't, please do your own research, talk to people you trust with real experience in this field, and STOP looking at it through a political lens.  We're all political creatures, no one more so than myself, but deciding whether or not to support this bill can't be a political issue.  And do NOT be influenced by political bloggers.  They are not the experts you should be turning to.

    •  Real issue but why not examine other fixes? (2+ / 0-)
      Recommended by:
      propitious2, kurt

      That's my problem with this.  We bit on Paulson and aren't considering other approaches.  James Galbraith has an approach that appears to be much more acceptable to the public, way more balance.

      Stop panicing!  Take some time and do this right.

    •  Amen (1+ / 0-)
      Recommended by:
      STPickrell

      The reasoning I see is that because we've seen this process of shock, fear, and lies from the administration, therefore this time it MUST be the same type of bullshit.

      Amen.  Because the bill had a "Bush idea" at its nucleus, it's inherently bad, and thus we must go for three months of gridlock while the credit market freezes up, jobs are lost, but DAMMIT WE DID THE RIGHT THING WE DIDN'T LET THE REPUGS GET THEIR WAY GRRRR.

      I don't like the position we're in.  But if we're going to get political, we might be better served to remember whose policies got us here in the first place.  It's an imperfect solution to an unbelievably awful situation, but we can bicker about how to put the fire out or try to do something.

      The Obama/Biden Inaugural -- the exact moment when the world goes from gray to colorful.

      by alkatt on Mon Sep 29, 2008 at 07:35:28 AM PDT

      [ Parent ]

    •  Poppycock (0+ / 0-)

      Of course this is political - who gets what.  And it's not about whether or not your technocrats support this administration.

      Here's a straight-talking political economist that does not write for the New York Times, which has broadly supported this "administration":

      http://www.counterpunch.org/...  

  •  Dean Baker (3+ / 0-)
    Recommended by:
    lotlizard, kurt, cityvitalsigns


    There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.

    http://tpmcafe.talkingpointsmemo.com...

    I think, personally, that we've heard this sob story from the White House before.

    I am calling my reps, and I hope everyone here does the same.

  •  After this giant POS passes banks will be back (4+ / 0-)

    with their hats in hand asking for another $700B. Not one politician on either side has mentioned that unlimited credit-based consumption is not sustainable. They'd rather put a band-aid on the market, crush the dollar, and call it a fix.

  •  Another fine, thought-provoking essay (5+ / 0-)

    Glad for the chance to read your work here again.

    I also suggest a companion piece - Bill Moyers' discussion with Andrew J. Bacevich, originally aired last month, and rebroadcast last Friday.

    You can see it here.

  •  I'm not smart enough to voice an opinion (3+ / 0-)

    on what should be done.  I love your writing though....beautiful words wrt the people. Nice going Stirling.

    McCain/Palin: Lie Traffickers

    by ccmask on Mon Sep 29, 2008 at 07:19:38 AM PDT

    •  You don't have to be "smart" (0+ / 0-)

      Don't let technocrats intimidate you - look at the basic political issue hidden in their analyses - who gets what?

      Voltaire's Bastards have really screwed up this time.

      http://www.amazon.com/...

      •  They don't intimidate me. (0+ / 0-)

        I only understand the basics and therefore, I can't have an opinion on what would be best at this time.  I agree that the politics are fueling this and of course, in the back of my mind, I don't trust Bush.  Its like his goodbye sham to the Merikans.  

        McCain/Palin: Lie Traffickers

        by ccmask on Mon Sep 29, 2008 at 03:20:33 PM PDT

        [ Parent ]

        •  I meant that for me, too (0+ / 0-)

          Just a general statement about our tendency to be intimidated by expert opinion.  The politics I'm speaking about is not partisan, though that's there, too.  I mean the basic political problem of who gets what.  The banks, etc. shouldn't get paid to fix the problems they caused.  There must be a way to solve the problem of restoring the credit system without rewarding the banks.  

  •  Bailout will NOT Help, Tar Pit Operation at Work (4+ / 0-)
    Recommended by:
    jlynne, lotlizard, bigchin, protectspice

    Call COngress NO NO NO Bailout...save our $700 billion for the people, we will need it!

    Teker kirilinca yol gosteren cok olur"   "Many will point the right way after the wheel is broken" - Turkish Proverb

    The JPM takeout of WAMU is significant and once again illustrates the "Tar Pit Operation". Here are the details, and indicate (on its face) that no FDIC funds were involved.

    1. Carrion is stuck in the Pit.
    1. Saber Tooth (Friend of Hankenstein-FOH ) takes the Carrion in a government orchestrated "rescue" or "hand off". Carrion shareholders and debt holders are completely wiped out. The FDIC gets brownie points for not taking a hit (or a small one), and can then point to the anti moral hazard lesson "to be learned".
    1. The assets and trashed securities of the Carrion are taken for a song.
    1. A portion of the low cost basis trashed securities FOH (JPM in this instance) has taken are then marked up and profitably sold to the US Treasury’s deal making Leviathan.

    The next step to look for is the Leviathan arrangement with Congress to emerge. They may now need a Black Friday or Monday demonstration to act, but act they will. A few more big banks will likely fail over the weekend providing the political cover. As part of the "compromise" Hankenstein’s Leviathan will come as a tranche deal (say $200 billion at first) whereby Hankenstein initially gets a "trial stash" to work with.  Once Hankenstein gets the first tranche he works a smoke and mirrors razzle dazzle whereby fixed "prices" are established.

    Since Fannie Mae and Freddie Mac have been seized as well, look for those and failed banks to be the center of the action. Securities Leviathan buys will also be flipped for small profits, and within weeks this will be revealed to the Public as part of a new found transparency propaganda machine. Leviathan will win brownie points for its early "wins" for the Taxpayers.

    Unfortunately more "failures" will emerge as the Tar Pit fills up. Hankenstein will ask for and receive more tranches from Congress, and his role as  middle man (wholesaler) to facilitate the monster asset handoff to FOHs will accelerate as will the hidden cost to the taxpayer. Hundreds of billions of assets are wholesaled in back door razzle dazzle transactions before January 20, 2009. Then Hank’s Boyz rip up and take the bathroom toilets off the walls, and a steaming sack of turds is left at the front door of the White House as a welcome present to the next President.

    http://wallstreetexaminer.com/...

    At the core of the human spirit there is a voice stronger than violence and fear - S. dianna ortiz

    by Rachel Griffiths on Mon Sep 29, 2008 at 07:21:46 AM PDT

  •  It Is, As Usual, The Desire For A Quick Fix (7+ / 0-)

    This act reeks of fear, but its excuse is that it will save us from a financial mushroom cloud

    From a populace which has a collective case of ADHD and wants nothing more than for someone to tell them that 'everything is okay, now get back out there and shop'.

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Mon Sep 29, 2008 at 07:25:05 AM PDT

  •  And what happens if we don't? (0+ / 0-)

    The consequences will affect Main Street, not Wall Street.

    Now, as for myself, I would withdraw my savings and probably say goodbye to my retirement.  I own my car and my home is privately financed through a relative.  I would probably be pretty okay.

    I haven't lived on credit it ages and the one card I have I could pay off right this minute - balance in full.

    But what about others who aren't like me?

    Vote like your life depended on it.

    by xysea on Mon Sep 29, 2008 at 07:27:44 AM PDT

  •  People who're opposing this bailout (8+ / 0-)

    are akin to second-class passengers on the Titanic cheering on the iceberg, because the first-class passengers will 'get what they deserve.'

    I'd rather see a few thousand richies get some money they don't deserve than several million middle class get unemployment they don't deserve.

    •  OMFG the shrill fear mongering that is (7+ / 0-)

      going on from those that support this give away.  Are you people being paid?  

      Shriek like a stuffed pig all you want.

      Rushing this through without reflection and careful consideration of alternatives is not a solution.

      All right, everybody be cool, this is a robbery! -GW Bush

      by audiored on Mon Sep 29, 2008 at 07:35:52 AM PDT

      [ Parent ]

    •  no, we're the ones that are not ... (2+ / 0-)
      Recommended by:
      lotlizard, kurt

      on the boat and realize it.

      This bailout will not help us or the economy or anything except the people Paulson (a Bush crony btw) hands the money too.  We have 4 months till someone is in the white house that might be able to solve what ever problem this ends up being-- which is still undefined.  Instead we trust the most corrupt douce bag.  How do you think this will work out?

      My political compass: Economic: -7.38 Social: -5.79

      by musicalhair on Mon Sep 29, 2008 at 07:48:15 AM PDT

      [ Parent ]

      •  So your business/job does not rely (0+ / 0-)

        on credit, either of your own or your customers'?

        Do you live in a special area which will be wholly unaffected by credit issues?

        Like it or not, we are all on the same boat, and it has hit an iceberg or is unavoidably near it.

        We can argue about the best way to approach it and/or mitigate the damage.

        But we cannot pretend there is no iceberg.

        Several Kossacks have posted diaries about how their credit is being denied/taken away, and the real-world consequences of this action.

        •  this bailout will help no one but wall st ... (4+ / 0-)
          Recommended by:
          lotlizard, propitious2, Kingsmeg, kurt

          Paulson is a bush minion and will behave as all other bush minions have.  He'll take the money and fip all of us the bird with one hand and hand out the cast to bush loyalists with the other.

          He will spit in the face of oversight as all other Bushies have down, if congress darkens his door with questions.

          He and Bush will do this for four months, head out like the bandits they are, and we'll be left to: 1) figure what the problem is (as it is still unfolding, and has been for a long time) and 2) pay for a set of solutions a la the New Deal if it is as bad as they say it is.

          My political compass: Economic: -7.38 Social: -5.79

          by musicalhair on Mon Sep 29, 2008 at 08:30:14 AM PDT

          [ Parent ]

          •  None of us (2+ / 0-)
            Recommended by:
            musicalhair, propitious2

            will even know where the money went.  It will vanish into thin air, leaving Obama with a ruined economy, full-on recession, and a $12 Trillion debt.

            The people with the money will be in Dubai or Paraguay, laughing.

            Mark Twain -Let me make the superstitions of a nation and I care not who makes its laws or its songs either.

            by Kingsmeg on Mon Sep 29, 2008 at 11:01:20 AM PDT

            [ Parent ]

  •  our problems are so much greater that the fukin (3+ / 0-)

    bailout bill.  Puhleeze!  Here we go again.  So much energy, so many fancy words wasted.  

    You don't cure a cold by refusing to treat the symptoms.  

    Often the symptoms just exacerbate the primary disease and it improves the chances that the patient improves to treat the symptoms.

  •  ok, let's assume this is a bad plan (0+ / 0-)

    What's the solution?!!!

    •  That's Easy (4+ / 0-)
      Recommended by:
      mediaprisoner, kurt, bigchin, Loose Fur

      1.) Job creation
      2.) Wealth creation
      3.) An end to the practice of removing the risk taker from the risk
      4.) Reinstate the uptick rule

      I could go on, but this I think is a good start.

      <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

      by superscalar on Mon Sep 29, 2008 at 08:23:55 AM PDT

      [ Parent ]

      •  Can't imagine why none of our leaders have (0+ / 0-)

        thought of those!

        "No way, no how, no McCain." Hillary Clinton

        by keeplaughing on Mon Sep 29, 2008 at 09:11:22 AM PDT

        [ Parent ]

      •  HOW do you create jobs and wealth? (0+ / 0-)

        Get specific.  

        •  get money to a broader base of individuals (0+ / 0-)

          the people at the top, who are getting bailed out, are doing very, very well right now.  the reason all these securities are going bad is because, at the heart of it all, the average working prole is broke and can't keep afloat in adverse economic conditions.

          building nationwide high speed rail, for instance, would go a long way to making jobs and building wealth because it would (a) be a gigantic public works project that would use money here in The States and (b) it would create avenues for additional economic activity.

          the reason so many people are broke right now is tied partially to the fact that our most lucrative export is debt, and we effectively have the shell of an economy.  we use finance instead of productivity as a means of wealth creation.  that must stop.

          Hey, wait a minute, there's one guy holding both puppets!

          by mediaprisoner on Mon Sep 29, 2008 at 11:32:30 AM PDT

          [ Parent ]

  •  It is Shock Doctrine people (9+ / 0-)

    Whether or not Stirling has it completely pegged this thing stinks to high heaven.  I don't have the answers but I DO NOT BELIEVE anything ushered forth from the bowels of this administration in the manner in which this is being brought forth can shine in the light.  I don't know much but I know they never ever have the interests of the people in mind.  I truly believe we are at the crossroads of democracy or facism.

    Time waits for no one, the treasure is great spend it wisely.

    by mojavefog on Mon Sep 29, 2008 at 07:32:06 AM PDT

  •  I'm going to add basically footnotes here (23+ / 0-)

    First, there is no fear premium. If there were, we would see a spread in LIBOR between overnight loans, that the Fed has been reimbursing in the event of a bank's collapse - to the tune of 135 billion in the case of Lehman - and whatever point the Fed stops backing those loans. We see no such spread. All of the unwillingness to lend can be explained by the lack of reserves in banks, and by the spread between the Fed Funds rate and inflation.

    The bankers want higher interest rates, our choice is to raise interest rates and worsen the downturn, which is the Volcker move, or lower the inflation rate by other means. This is what say, John Kenneth Galbraith would advise. It is doable.

    What banks want to be is liquid so that they can buy each other up.

    The argument that there are no dollars available is wrong. if there were a true dollar drought, then oil would have rolled off the table, not to 90 dollars a barrel, but down into the 70's. Wall Street would have crashed by now. Private equity firms are raising capital quite nicely, and hedge funds have flooded money market funds.

    Roubini calls this a disgrace. Or as the old line goes: "They say that one useless man is a disgrace, two constitute a law firm, and that three, or more, useless men constitute a Congress."

    Stiglitz calls it a shell game.

    "There is, however, an alternative explanation for Wall Street's celebration: the banks realized that they were about to get a free ride at taxpayers' expense. No private firm was willing to buy these toxic mortgages at what the seller thought was a reasonable price; they finally had found a sucker who would take them off their hands--called the American taxpayer."

    A nationalization is already happening in the UK. Notice they don't seem to need a bail out, though their mortgage boom was as bad as ours was. This is working far better than arbitrary and capricious picking of survivors.

    Even conservative economists say the plan could backfire.

    The people supporting this plan, like Larry Summers, are calling it regrettable. The question is, does it need to be done right now, before the election? The answer is no. There is ample time to defeat this monster, and buffer the system for a few months, and come back in January and debate the real plan. If it is a necessary evil, then let us do only that evil which is truly necessary. A republic rests on giving the government the minimum, not the maximum, power needed to accomplish an end.

    This is not a done deal. The votes are not there, and the opposition is across the political spectrum.

    David Sirota has lined up 5 key talking points.

    •  I think I found a new tagline (1+ / 0-)
      Recommended by:
      99 Percent Pure

      "They say that one useless man is a disgrace, two constitute a law firm, and that three, or more, useless men constitute a Congress."

      (-8.50, -7.54):
      "Reality must take precedence over public relations, for Nature can not be fooled."
      -Richard Feynman

      by Tin hat mafia on Mon Sep 29, 2008 at 10:02:22 AM PDT

      [ Parent ]

  •  Mark Haines Asked The Question This Morning (7+ / 0-)

    (A) DE MINIMIS.—The Secretary shall establish de minimis exceptions to the requirements of this subsection, based on the size of the cumulative transactions of troubled assets purchased from any one financial institution for the duration of the program, at not more than $100,000,000.

    What does this mean?

    Nobody had an answer. I am not an attorney, and would appreciate any informed opinions as to the what this language means.

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Mon Sep 29, 2008 at 07:40:34 AM PDT

  •  The part missing here is... (4+ / 0-)
    Recommended by:
    propitious2, Tanya, kurt, ggwoman55

    ...that we're waiting for the House Republicans to bail out the American people.  We need Democrats to step up and show some mettle on this issue.  I feel queasy throwing my support behind the conservatives.

  •  Meh. I don't buy. (3+ / 0-)
    Recommended by:
    JT88, keeplaughing, Dauphin

    It's not that simple.  No one is happy.  It's the final crushing blow of the criminal negligence of republicans from Reagan to Bush.  But I still think something needs to be done.

    The readiness is all

    by mrchumchum on Mon Sep 29, 2008 at 07:48:44 AM PDT

    •  I Think That Everybody Agrees (4+ / 0-)
      Recommended by:
      mediaprisoner, lotlizard, Tanya, kurt

      That something needs to be done, the disagreement is over what that something is.

      The logical disconnect is that those who are advocating this 'bailout' implicitly assume both that this is the right thing to do, and that it will solve the problem.

      <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

      by superscalar on Mon Sep 29, 2008 at 08:27:23 AM PDT

      [ Parent ]

      •  Sure, but I believe the bill actually does (2+ / 0-)
        Recommended by:
        JT88, Dauphin

        have urgency and for that reason and because of the nature of the Congress we have, we are not going to get anything better.  Many people are advocating doing nothing and I just think that's too coarse of an opinion.  There is some logic to what they are trying to do.

        The readiness is all

        by mrchumchum on Mon Sep 29, 2008 at 08:30:55 AM PDT

        [ Parent ]

        •  I Disagree (4+ / 0-)
          Recommended by:
          mediaprisoner, lotlizard, kurt, Snarcalita

          Everything I have learned about this issue and this 'bailout' screams to me that it not only will not solve the problem, but in fact will make it worse.

          The problem in a nutshell is too much debt, too much leverage, too much disconnected risk, and home values which have been inflated so as to fuel continued consumption.

          This 'bailout' addresses none of those issues, and whether the Treasury is allowed to purchase assets from perfectly solvent institutions for more than what they are worth or not, the issues above will remain.

          <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

          by superscalar on Mon Sep 29, 2008 at 08:38:18 AM PDT

          [ Parent ]

          •  But I think those problems you cite are long-term (1+ / 0-)
            Recommended by:
            JT88

            problems.  This is about solving a short-term situation.  It's not just about buying these assets, it's about getting them back into the market place by providing a floor to their value.  It's not the $700 billion, it's the restoring of confidence of investors.

            The readiness is all

            by mrchumchum on Mon Sep 29, 2008 at 08:42:43 AM PDT

            [ Parent ]

            •  Again, I Disagree (3+ / 0-)
              Recommended by:
              mediaprisoner, lotlizard, kurt

              It's not the $700 billion, it's the restoring of confidence of investors

              I believe it is entirely about keeping the asset bubble inflated just a little while longer.

              <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

              by superscalar on Mon Sep 29, 2008 at 08:47:50 AM PDT

              [ Parent ]

              •  So, are you saying that whatever price (1+ / 0-)
                Recommended by:
                JT88

                the government purchases them at will be over valued?  They have some value.

                The readiness is all

                by mrchumchum on Mon Sep 29, 2008 at 08:54:02 AM PDT

                [ Parent ]

                •  The Government HAS To Pay More (5+ / 0-)

                  Than their current mark value, or there is no incentive for the institution to sell them. If all the government is going to pay for the asset is its current mark value, why would the institution sell the asset?

                  That the government will pay more for the asset than its current mark value is a fundamental part of the plan.

                  <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                  by superscalar on Mon Sep 29, 2008 at 08:59:14 AM PDT

                  [ Parent ]

                  •  Right, I'm sorry I'm fumbling a little here, (0+ / 0-)

                    but I'm saying that they are not "actually" worth zero which is what they are close to now.  So I guess you're saying that they are "actually" worth zero?  Or whatever they are worth now?

                    The readiness is all

                    by mrchumchum on Mon Sep 29, 2008 at 09:03:41 AM PDT

                    [ Parent ]

                    •  No, I'm Saying That Treasury (1+ / 0-)
                      Recommended by:
                      mediaprisoner

                      Will pay more for them then their marked value at the same time they are (in the case of MBS's) rapidly losing value and people are walking away from their mortgages.

                      For the case of non-collateralized debt e.g. credit card debt, student loan debt, etc. there is in fact nothing with which to gauge their current value.

                      <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                      by superscalar on Mon Sep 29, 2008 at 09:11:40 AM PDT

                      [ Parent ]

                      •  Aren't we talking about MBS's here? (0+ / 0-)

                        Yes people are foreclosing but there is some floor to the value of these securities.  I'm confused.  Just because their stock price is plummeting doesn't mean that there isn't real value there.  My understanding is the government is just trying to provide some stability to the market.

                        The readiness is all

                        by mrchumchum on Mon Sep 29, 2008 at 09:21:35 AM PDT

                        [ Parent ]

                        •  not "stock price" but market price - or whatever (0+ / 0-)

                          the term is.

                          The readiness is all

                          by mrchumchum on Mon Sep 29, 2008 at 09:28:10 AM PDT

                          [ Parent ]

                        •  The Current Value (1+ / 0-)
                          Recommended by:
                          mediaprisoner

                          doesn't mean that there isn't real value there

                          Is the mark to market value. With all respect I believe there are some holes in your understanding of what is going on here.

                          Aren't we talking about MBS's here

                          Not necessarily, we may be talking about 'other asset classes', which Paulson has already alluded to as being non-collateralized debt such as credit card debt.

                          <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

                          by superscalar on Mon Sep 29, 2008 at 09:47:15 AM PDT

                          [ Parent ]

        •  have you been watchig the credit markets this (2+ / 0-)
          Recommended by:
          mediaprisoner, Loose Fur

          morning. They are getting tighter, not loser.

          To sin by silence when they should protest makes cowards of men~~ Abraham Lincoln

          by Tanya on Mon Sep 29, 2008 at 08:39:47 AM PDT

          [ Parent ]

  •  There has to be a better way, (2+ / 0-)
    Recommended by:
    kurt, lilsky

    or at least consider alternatives.  This is the Paulson manifesto, just with more fluff.  I'll consider alternatives - if this bill passes with no further discussion, I will work to unseat every legislator, Democrat or Republican, who votes for it.

    "If one would give me six lines written by the hand of the most honest man, I would find something in them to have him hanged." Cardinal Richelieu

    by SaltWaterCroc on Mon Sep 29, 2008 at 08:35:16 AM PDT

  •  Time for for a tax strike. n/t (0+ / 0-)
  •  Very Well Done! (2+ / 0-)
    Recommended by:
    kurt, Loose Fur

    Barbara Boxer's Voice Mail Box is full (sent another email). Diane Feinstein's phones are giving busy signals. Diane Watson's website is crashed.

    The lines couldn't be more starkly drawn: the people vs. the Wall Street financiers. Where are our representatives!!!

  •  What is to be done? (3+ / 0-)
    Recommended by:
    RebeccaG, kurt, In her own Voice

    You know, I have a somewhat superficial understanding of what's gotten us into this mess (though I figured there were problems on the horizon a few years ago) and of the proposed solution.

    I'd be willing to "trust the experts" more if it weren't the same kind of experts who were part of the problem in the first place.  Some commenters have said that this isn't a political issue; I disagree somewhat.  This is a political issue to the extent that this bailout isn't just about dollars and cents but also about who gets the resources, who gets to make the decisions, and who benefits.  It's about power, and that is a political issue.

    I understand that it's no solution to do nothing, but I worry that this is a case of taking poison to stop an infection.  The infection gets killed off, but ultimately so does the patient.  Why not make some provisions to cushion the turbulence from the bottom up while at the same time work on a better long-term solution?

    Procrastination: Hard work often pays off after time, but laziness always pays off now.

    by Linnaeus on Mon Sep 29, 2008 at 08:46:09 AM PDT

  •  Rep. Paul Ryan R-Wisconsion (0+ / 0-)

    11:51 ET

    "I think the White House has bumble this thing.

    They have brought this thing up to a crescendo, to a crisis, so that all eyes of the world markets are here on Congress.

    It's a heavy load to bury (oops).

    It's a heavy load to bear."

    <div style="font-size:10px;text-align:center;background-color:#ffd;color:#f33">If the terriers and bariffs are torn down, this economy will grow - G. Bush

    by superscalar on Mon Sep 29, 2008 at 08:55:07 AM PDT

  •  fate of the union (2+ / 0-)
    Recommended by:
    Time Waits for no Woman, Palicro

    first off, you sound like as big a fearmonger as you claim the white house/fed are.  that being said, the outpouring of concern about the original bill seems to have been heard - this bill contains caps on executive salary and bonuses [personally, i wanted to lead the mob to put CEO heads on spikes], re-working of mortgages so that people could stay in their homes, and especially [to me], an equity stake in these "investment" vehicles should they turn a profit for the banks.  anyone who is vested in the stock market would recognize the need to make prudent investments and hold for the long term and ride out the peaks and valleys.  that is, with the exception of the many at the top who gamble and trade everyday.  but to have the core of the market crater just doesn't serve anyone.  not sure what the position is on naked short selling at this point, but i say, this is not a pure power grab that smacks of evil.  it's the way business get corrected.  the patriot act and the eavesdropping - the general giving in of the american public to fear - concerns me much more than this.  this  bill does not subsume the constitution.  for sure, it underscores the atmosphere of corruption that exists both in wall st. and the capitol.  that has to change.  this bill has oversight written into it.  i believe a sea change is occurring - people are getting wary of sweeping legislature, but really, people have to take personal responsibility for not living on credit cards, which has lead to the mindset that they can have anything they want, now, with no sacrifices.  we have a pathetic president who has modeled the worst and laziest in human behavior, but like innocent children who grow up with abusive parents, sooner or later they must grow up.  
    act like an adult, realize most of life is grey, and settle down.

  •  You go, SN (0+ / 0-)

    Now that's the speech I would have liked Pelosi to give!

    Well? Shall we go? Yes, let's go. Defeat John McCain.

    by whenwego on Mon Sep 29, 2008 at 09:28:50 AM PDT

  •  Lose the fear (0+ / 0-)

    No one knows the future and this proposal is not cast in stone. It will help in the short run.

    The fate of the union? Really?

    I hope you are working hard on the campaign to elect Obama instead of pushing conservative agendas.

    "John, you like to pretend the war began in 2007, when American fortunes turned for the better." Obama, Sept. 27, '08

    by lascaux on Mon Sep 29, 2008 at 09:49:33 AM PDT

  •  It is quite simple (1+ / 0-)
    Recommended by:
    propitious2

    No money for universal healthcare but you DO have hundreds of billions to give to robber barons on Wall Street AND 10s of billions to throw away in Iraq every month?  I don't THINK so!

    Give up universal healthcare, then, if there is any money left over and after taking care of pressing DOMESTIC needs, then we will see about handing out money to Wall Street and for the splendid little war in Iraq.

    No healthcare, no bailout.  Period.

    Reichstag fire is to Hitler as 9/11 is to Bush

    by praedor on Mon Sep 29, 2008 at 09:50:01 AM PDT

  •  no bailouts for companies n/t (0+ / 0-)
  •  Failure of Trust (2+ / 0-)
    Recommended by:
    propitious2, Kingsmeg

    There was a time we could trust our President if he said "there's a crisis and we need to take immediate action".  There was a time we could trust Congress to verify the validity of the alleged crisis and to use due deliberation before making a fully informed decision.  That all ended with the 2002 AUMF--when it was soon proven that there was no crisis, and that the decisions that were made in haste and based on lies are still costing us our treasure and the blood of our troops.  

    How can we trust our Congress to make the right decisions when they are allowing this prevaracting president to again cry "Crisis" and push them into making a hasty decision based on the "facts" as he & the people who created the "crisis" present them?  How can we trust a Congress that has been manipulated time and again to give up our Constitutional liberties to be wise enough to make sure they aren't being manipulated to give up yet more of our treasures unnecessarily?

    •  This is an administration that has (2+ / 0-)
      Recommended by:
      propitious2, kurious

      not will, or might, but has - shrink-wrapped billions in $100 bills to pallets and distributed them without any accounting, because... they didn't want anyone to know what they did with the money.

      If this bill passes, no one outside of the circle of corruption will ever know where the money went.  It will seemingly vanish into thin air, into the pockets of the very people who created the crisis.

      Mark Twain -Let me make the superstitions of a nation and I care not who makes its laws or its songs either.

      by Kingsmeg on Mon Sep 29, 2008 at 10:52:33 AM PDT

      [ Parent ]

  •  Will the truth come out,,,,,Finally?? (1+ / 0-)
    Recommended by:
    propitious2

    Attorney General Michael Mukasey appointed a prosecutor Monday to pursue possible criminal charges against Republicans who were involved in the controversial firings of U.S. attorneys.
    CNN, WaPo, Wall St. all are covering this online.

    Mike From Manch

  •  What Bush Has Wrought (1+ / 0-)
    Recommended by:
    propitious2

    Let me start off by saying I don't know if this is a god plan or not.  I think I tend to be in favor of the plan, but I do not have any of the certainty on either side that seems to pervade many of the diaries and comments.

    But what is an underlying theme here is that the hand wringing and rending of garments ovewr this bill and crisis is a direct result of 8 years of lying and consitutional shredding of the current adminsitration.

    Like the boy who cried wolf, he lied to us and manipulated events to such a degree that when there is actually a wolf at the door (or may be at the door), skepticism runs extremely high. I suppose there are four ways this could turn out, we resond to the wolf cry and do something that kills the wolf, we do nothing and there is no wolf, we do nothing and there is a wolf that eats the boy, we rush out to confront the wolf and we all get eaten.

    They that can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety. -Benjamin Franklin

    by Gangster Octopus on Mon Sep 29, 2008 at 10:06:35 AM PDT

  •  Too bad we'll lose (1+ / 0-)
    Recommended by:
    mediaprisoner

    Democrats sell us out again.

    Bring on Parliament - Cause Congress and two party systems blow.

    The privileged man, whether he be privileged politically or economically, is a man depraved in intellect and heart. -- Mikhail Bakunin

    by angry liberaltarian on Mon Sep 29, 2008 at 10:18:55 AM PDT

  •  Great post. (1+ / 0-)
    Recommended by:
    drmah

    The fearful rush to bailout is just like the fearful rush to war.

    They keep on playing the fear card.

    And they keep on getting away with it.

    So far.

    yes I know its spelled wrong but I can't figure out how to change it: triptych triptych triptych.

    by tryptich2 on Mon Sep 29, 2008 at 10:28:57 AM PDT

  •  I agree. (1+ / 0-)
    Recommended by:
    propitious2

    Great diary.

  •  Pelosi kept the doors locked last night... (4+ / 0-)

    so that not all Congressmen/women could get in to represent their views and to participate.  This happened with Democrats and Republicans alike.

    One Congressman of Texas said this was known by the inside baseball term, 'martial law.'

    SO this bailout bill was put together by the powerbrokers---all of whom have ties to or major investments in Wall Street or both.

    It's not democracy, and it's not capitalism either.

    The Congress thinks: for a citizen to have financial trouble means they 1)can't file bankruptcy and 2)they can fail flat on their back.  But 3)WS and the banks, get to come to the trough and feed until they are full.

    Unless we stand up to Congress, things will never ever change.  Pelosi is conflicted due to her AIG holdings via her husband.  I'm sure there are a ton of Congressmen/women who are financially 'into' the banks and WJ so deeply they will never ever vote policy for America---but for themselves.

  •  This bill is the epitome of Democrat pork barrel (1+ / 0-)
    Recommended by:
    mediaprisoner

    I'm not against spending money, I'm just against pissing it away into the wind.  We have a large, complex economic problem, which will require more effort to put together than whatever was accomplished by McCain "suspending" his campaign for a day and flying to Washington.  This is a bad bill, and passing it as it stands would snatch defeat from the jaws of victory for Democrats.

    Main Street before Wall Street! NO DEAL is better than a bad deal.

    by Subversive on Mon Sep 29, 2008 at 10:47:03 AM PDT

  •  Seems like they're short of (0+ / 0-)

    votes.

    Good.  Hope it stays that way.

    yes I know its spelled wrong but I can't figure out how to change it: triptych triptych triptych.

    by tryptich2 on Mon Sep 29, 2008 at 11:15:25 AM PDT

  •  Those that got fat can pay to fix what they broke (2+ / 0-)
    Recommended by:
    propitious2, drmah

    and until I see some CEO fat cat feet held to the fire and relief for citizens then no- HELL NO!

  •  I wish that I could thank you personally for your (2+ / 0-)
    Recommended by:
    tryptich2, propitious2

    Very well written thoughts, but this post will have to do.

    Thank you, sir.

    To a Democrat, "democracy" means "free elections." To a Republican, "free markets."

    by XOVER on Mon Sep 29, 2008 at 11:29:06 AM PDT

  •  Please don't let this scroll off so soon today.nt (0+ / 0-)
  •  Once again my fellow liberals (2+ / 0-)
    Recommended by:
    bubbanomics, crabbytom in md

    prove they know next to nothing about economics or financial matters.

  •  Yahoo, mob rule. Let's storm the Bastille! (1+ / 0-)
    Recommended by:
    bubbanomics

    But first take a look at your retirement account, and hope that the state can borrow money to pay the police and firefighters.

  •  This is a spectacular diary. (3+ / 0-)

    This bill is the definition of rearranging the deck chairs on the Titanic.. if the deck chairs had a price tag of $10 billion each from you and all your descendants, and had to be bought directly from the CEOs who already had boarded the last lifeboat.

    They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety. - Benjamin Franklin, Feb 17, 1755.

    by Wayward Son on Mon Sep 29, 2008 at 11:53:00 AM PDT

  •  An Excellent Diary (5+ / 0-)

    One of the joys in participating in the old Blogging of the President site was the singular wisdom of Stirling Newberry.

    Here, in a much larger context of bloggers and audience, the wisdom of Stirling Newberry stands out once again.

    My gut sense is that the narrow defeat of the bailout was merely setting the stage for negotiations of who will "put up the votes" at considerable political risk and who will cast the politically safe vote of "no."

    But this excellent diary gives a strong rationale for the "no" votes staying where they are and the "yes" votes joing them.

    IMPROVING GOVERNMENT FOR THE AVERAGE CITIZEN

    by State Rep Mark Cohen Dem PA on Mon Sep 29, 2008 at 12:04:27 PM PDT

  •  The Bush Crime Family n/t (0+ / 0-)

    "Arrogance is the new stupid."

    by 5 Oclock Shadow on Mon Sep 29, 2008 at 12:17:37 PM PDT

  •  spoken like someone whose entire fortune is NOT (0+ / 0-)

    tied to this bailout.
    but on paper, this all makes total sense.

  •  My mom, who is 82 years old and not (3+ / 0-)

    a 'Kossack' just called me at work to tell she thinks your diary is marvelous, and speaks for her.

    This is one of the best diaries I've ever read here, and expresses how I feel, too.

    Great diary Stirling, just a great job.

  •  I have kids to feed (2+ / 0-)
    Recommended by:
    propitious2, sully18

    and I spent the last ten years of my life working my ass off so my sons could go to college. I did not borrow what I could not payback. I am not part of the problem.

    But I tell you, I am not in the mood to take a stand if it means I and my kids are going to lose all we have, ie, the ability for me to provide for them so that my daughter can graduate high school and for my sons to return to college next semester. I did not finish High school, I clean homes for a living and I have nothing to fall back on.
    To come this far was a miracle for us, and to lose what little we earned because NOW america has decided to wake the fuck up is the ultimate injustice to me.

    Damn George Bush and the republicans, damn them all to hell.

    The Republicans: The Party That Wrecked America.

    by donailin on Mon Sep 29, 2008 at 12:32:20 PM PDT

  •  Great diary (2+ / 0-)
    Recommended by:
    tryptich2, propitious2

    There is no God higher than truth.
                   
                     Mahatma Gandhi
    Thank you.
                   

    Democracy is not dead;it merely smells funny

    by sully18 on Mon Sep 29, 2008 at 12:32:32 PM PDT

  •  We're screwed, (0+ / 0-)

    but rather than tell us we're screwed, Bush and his allies would rather drag it out a few more months and have Obama break the news to us.

    We cannot borrow our way out of debt. Period. I'm tired of being told that it's not that simple. Yes, it is that simple. It's time to pay the bill. The only laws that should be passed on this issue are ones that reregulate the financial industry and tax the living hell out of the rich. We can take a little time and do it right.

    Get back to work, everyone, if you can find work. Don't plan on retiring. Better for us to pay for our own sins than to have them paid back by our grandchildren.

    "It is often pleasant to stone a martyr, no matter how much we admire him"...John Barth

    by Giles Goat Boy on Mon Sep 29, 2008 at 12:58:48 PM PDT

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