In brief: the failure of the bailout

[demiurgent]

It's surprisingly simple.

Neither major political party was willing to sacrifice the election to save the nation.

There is nothing more basic than that. Neither party would sacrifice personal power in order to save the economy of the United States of America.

My representative voted Nay. For the first time, I'm considering voting against her in November. I'm certainly calling her office tomorrow to express my deep disappointment in her.

For those who don't want to see the bailout of Wall street firms because gorsh, they's all rich and it's not fair? I hope you really, really enjoy the next ten years.

Comments

[ryuko-midori.livejournal.com]

It will pass. It MUST pass. But it shows the shortsightedness and partisan bs in this, and I am not too terribly happy with it either.

[roniliquidity.livejournal.com]

Eh, I don't know. I agree a bailout is probably necessary but I'm deeply disturbed by the way it's being handled. According to the administration it's so completely vital that it needs to be passed IMMEDIATELY, and there's no time to discuss where the money's going to go, or why they're asking for 14 X the projected cost, or what happens to the surplus. However there's a clause that once the bill is passed there can't be any kind of review or oversight. I'm not reading that people aren't willing to pass a bailout but that the bailout needs some accountability before they pass it. Interestingly enough the corporate friendly politicians that are adamant the bill needs to be passed now now now don't seem to be willing to budge on that point.

I'm no financial whiz kid but I'm uncomfortable handing over 700 Billion dollars without any sort of oversight or review.

[flemco.livejournal.com]

Well, hell, how about a bailout to the car manufacturers? The ones going broke because they spent a decade shoving SUVs down our throats?

[bruceb.livejournal.com]

I agree. If we've learned anything from this administration, it should be "don't act until a large body of relevant information is available for public scrutiny". Businesses petitioning for relief need to explain what their needs are and why they know that.

[taimatsu]

Mmm, I haven't read a lot on this (and I'm not American) but what I *have* read does present the bill as 'here, give us really enormous sums of money with no guarantees about what we'll do with it' which doesn't sound like a good idea at all, for anyone, anywhere. Of course some kind of remedial action is probably necessary, but is this one the right one? I think I'm with you here.

[snowspinner.livejournal.com]

The problem is that credit markets are locked today. And that puts a threat of a massive, cascading system failure of the global economy days away. Days.

Like, this cannot be stressed enough. It is entirely possible that by the election we will be in Great Depression 2. That threat is not an "if this keeps up for another year," it's "Oh fuck, oh fuck, liquidate your investments and buy gold."

The basic problem is this - there's no credit. Nobody can get a loan, because the loan-making institutions lost liquidity. If that persists for very long at all, businesses stop being able to make payroll. Basic goods stop being able to be delivered. Because credit - even very short term credit - is a fundamental part of the global economy. When that's not available, the entire economy seizes up. And what will happen is not a trickle of businesses going under, but a flood. Huge chains of businesses will go under instantly. They will go from turning a profit last month to having no ability to float payroll and going under.

That is the very real danger unless liquidity gets injected into the market.

Now, it's possible the above scenario isn't true. It's entirely possible that if no bailout passes, we'll be fine. But the scenario the bailout is designed to address is that one. And that's why it's a "No, don't wait, get this money into the market now" situation.

[(Anonymous)]

There is nothing more basic than that. Neither party would sacrifice personal power in order to save the economy of the United States of America.

You're wrong and there is nothing simple about it.

The Democrats could have forced this bill through by sheer numbers. However, it does no good if it gives Republicans ammunition to blame the coming economic woes on the Democrats, and potentially cost them control of the House and/or Senate later. Both parties needed to "own" this bill, and the Republicans are acting like a bunch of whiny schoolchildren after many concessions were made to them. This bill would not "save" the economy. The current problems are only the beginning. We are in deep shit. This bill was a band-aid to keep things going while more long-term solutions are created.

Would you have rather the Democrats sacrificed "personal power" for this bill, so that the Republicans could instantly repeal it and go back to the same policies that got us here in two or four years? There needs to be massive reform in the financial and housing markets, and I, for one, do not want the same people who got us into this mess in charge of getting us out of it.

[sonictail.livejournal.com]

*sighs* It looks like hell in a handbasket. I hope you guys get through this.

[flemco.livejournal.com]

Dogg, we have two choices.

- We can get fucked NOW
- We can get fucked LATER, after the big fat cats have squeezed that extra last tenth of a cent from our wallets.

Either way, we get fucked.

I think you know where I stand on that. I have water, food and firearms to last me through any armageddon. You can try to marginalize it with words like "gorsh, they's all rich and it's not fair," but in the end the truth is simple: The CEOs are bailing out with GIGANTIC golden parachutes and leaving the public citizen to rot.

We can go after the fucks after it all burns down, in large mobs of pitchfork and torch bearing citizens, or we can farm it out and hand them scads more dough in hopes that human greed doesn't exist and trickle-down economics might suddenly, after decades, turn the corner and work.

Two words: FUCK and THAT.

Is it true that a lot of people don't know what's in store for them? Hells yeah. But I grew up eating out of garbage cans and going weeks without running water. It's about time we reminded people that the welfare system exists for a reason. Let THEM feel the brunt that I had to deal with for fifteen years of my life through no fault of my own. THEN see how much longer they'll let these gaseous bloatbags of money stand on their necks.

Fuck the bailout. Let 'em swing in the wind.

[edit]
And as just a reminder:
ANYONE who EVER tells you that deep economics, politics or military problems are "surprisingly simple" is either a liar or not looking at the big picture.

[demiurgent.livejournal.com]

Dude, I've already had my bank suddenly bounce a ton of checks and stick me with the fees because it's in collapse, then get sold out from underneath me by the government.

It's all well and good to figure canned goods and firearms will get you through ten years of breadlines. I'd sort of like society not to go to Hell.

I'm entirely okay with CEO golden parachutes being set on fire while they're thrown out of the plane, but if it's a difference between a collapse of the financial infrastructure and a hell of a lot of people suffering and letting a greedy son of bitch get away with it? I'll sacrifice the schadenfreude happily enough.

The big picture, right now, is that revenge, pique, and re-election aren't good enough reasons not to act before it's too late to help as many people as possible.

[tem2.livejournal.com]

Too right. But it was a close call. I was watching the roll call on CSPAN and for a while it looked like it was going to pass. What gets me is the Republicans who claim they were ready to vote Yay until Nancy Pelosi said some mean things about their President. Talk about thin skins!

[zoethe.livejournal.com]

It's not that simple. The bailout, as proposed, really isn't going to help that much. It will buy immediate liquidity, but do nothing to shore up the next wave of bad debt, nor help save neighborhoods from the domino effect of foreclosure. It buys immediate liquidity, but does nothing for long-term stability.

I thought it was incredibly brave to vote against it. It's unpopular for a reason.

[bunny42.livejournal.com]

As demiurgent said, enjoy the next ten years. I know I won't, being on a fixed income, dependent upon the health and well-being of Wall Street. This new bill incorporated, among other things, oversight, additional help for families who may yet lose their homes, and elimination of "golden parachutes." It may not be perfect, but it's a start. I think it was cowardly to vote against it.

[demiurgent.livejournal.com]

It's not brave to vote against something your constituents hate. It's easy to do that, because then you can say "I'm listening to you."

It's brave to say "yeah, I know you don't like this. I don't like it too, but it's not my job to be liked."

If the center falls out, then long term stability isn't an issue. This is at best a firebreak and a start, but it's still a firebreak and a start. Without it, or something really like it, we go from zero to fucked really, really quickly.

[docstrange.livejournal.com]

I agree with you. I want a buy-up not a bailout. What's that mean? A buy-up of questionable assets so the banks can get on with banking, a long holding period, and resale of the assets left standing in X years, at a profit. That is what the "bailout" plan is at heart, and it would probably do the country a lot of good.

What I don't expect is for the gov to hold the assets long enough after they start looking like the bad bits have shaken out. I expect both parties to have their backers start slavering over the unrealized potential, and call for early sale under the rubric of miscellaneous political mantras.

Got to say, our senators did make me kind of proud this time around. Your rep and mine... not so much.

[redneckgaijin.livejournal.com]

My rep was the only Houston-area rep to vote yes- and that, I'm certain, is solely because he's a complete toady to Dubya and Gov. Rick Perry and the Texas Republican machine.

I'm -still- voting against him in November.

[mephron]

One of my big issues with the bailout - and the one I'm glad that it was voted down for - was the amount of power this would have dumped in the hands of the Secretary of the Treasury. There was a great deal of weasel language in it - the kind that goes "and there will be changes to be enumerated later to deal with the penalties/regulations for this situation by the Secretary of the Treasury", and I don't want that kind of naked power grab.

Something needed to be done to head that off, and the bill as written left out too much required how-to information to pass as written.

I work for one of those Wall Street firms - you may have seen them on the news today licking their lips and saying 'Mmm, Wachovia!" - so I have a vested interest in things NOT collapsing. At the same time, I have a vested interest as an American citizen to not support the growth of the Imperial Presidency As It Stands Today.

[(Anonymous)]

Bernanke's out in four months. God only knows who will follow-- and if it's Phil fucking Gramm, he doesn't have the sense of responsibility or the basic economic knowledge to handle this mess in any sane fashion.

[richm90071.livejournal.com]

It's called creative destruction (http://en.wikipedia.org/wiki/Creative_destruction) and it's a necessary, if unpleasant, part of the economic cycle. It can't be put off forever, and the longer you do put it off, the worse it will be when it arrives.

If people who make bad investment decisions are given more money to keep their businesses from failing, how likely is it that they will use that money wisely?

In other words, the bailout might not have really helped the economy anyway (http://www.youtube.com/watch?v=zPHUtFxaJ8M).

I don't expect to enjoy the next ten years, but I wasn't planning to. I've seen this coming since the nineties. If you want to blame somebody, try this guy (http://en.wikipedia.org/wiki/Pointy-Haired_Boss). I've long known that with him running things, what is happening now would happen sooner or later.

[flemco.livejournal.com]

You and I, we see alike.

UMmmm. Nah.

[amigoid.livejournal.com]

At the risk of getting called an idiot, yet again, I'll comment that while I agree that the bailout may be needed, I am not sure these are the bailouts you are looking for (waves jedi hand).

Washington Mutual? They tank, even when they have credit card divisions that make tons of money? Dude, that should tell you they are all full of the stupid, and maybe its a good idea they get bought out.

I haven't seen any of these firms get shuttered, or closed down permanently. They are all getting bought out by other firms that invested more wisely, aren't they?

Selfish greedy bastards that are being asked to help out other selfish greedy bastards that helped pay for them to get elected and enjoy lifetime benefits you and I can not dream of. Stocks fall, everyone dies. Roll up new characters.

And will this save the economy of America?
Or does it save the economy of private businesses, at the cost of the economy of America? Where is the $700 Billion coming from? Who is gonna pay it back? And then who is going to bail out the Social Security program? China?

I am just not convinced that this was the last best solution.
I can bet that the hue and cry that gets raised from regular folks may actually get Bailout Version 2 written up, and passed quicker.

Re: UMmmm. Nah.

[bunny42.livejournal.com]

Nope, it wasn't the "last best solution." But it was a heck of a lot better than the original proposal, and it was A START. This would be fun to watch if it weren't so scary. I hope you're right about the regular folks. From what I've been reading, most of 'em thought it was a good idea. But you can't trust the sources. We'll just have to wait and see.

[peri-renna.livejournal.com]

See, I really don't know how I feel about this.

First: yes, we need to do something - most of the experts agree, and when most of the experts agree, it's crazy not to.

But ... Paulson's plan? The three page grant proposal (http://slacktivist.typepad.com/slacktivist/2008/09/how-not-to-appl.html) saying "gimme $700 000 000 000 or your economy will fall apart (http://slacktivist.typepad.com/slacktivist/2008/09/panic-therefore.html)"? "Why $700 000 000 000? - I dunno, I just wanted to name a big number (http://www.forbes.com/home/2008/09/23/bailout-paulson-congress-biz-beltway-cx_jz_bw_0923bailout.html)"? Why should we think this random panic-mode legislative ejaculation is the best option we can come up with?

(Yeah, the House Republican plan is worse. Still.)

I'll look at how my representative voted, just so I know, but I can't say whether I support this or not. However ominous things look (http://www.threepanelsoul.com/view.php?date=2008-09-22), if we bankrupt the government for nothing, we're making it worse.

[snowspinner.livejournal.com]

Well, the government could already declare bankruptcy if it wanted to. I mean, the sad fact of the matter is, 700 billion is only 25% of our annual expenditures anyway. We can take that hit. Or at least, it's no worse than the hit we've already taken in creating the national debt.

But it's important to note, the $700 billion isn't just getting set fire to. It is buying tangible assets that can be sold at a profit. They just need to be held by someone who can afford to sit on them for a decade.

The list of institutions in the world that can afford to buy up hundreds of billions of dollars of assets and sit on them for a decade is a very, very short list.

[ohnefuehlen.livejournal.com]

All I could think reading about the bailout plan was "PATRIOT ACT".

The exact same logic is being used in its defense. We're in Terrible, Terrible Danger and Must Act Now, so don't dare question how pathetically flimsy this legislation is.

We have no idea where the money's going to go. The plan was three pages long. 870 words to explain how the Treasury intends to spend seven hundred billion dollars. Is that not terrifying?

And then: “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.” Good to know in trying times there's a firm hand on the wheel, eh?

And still, Section 8 of the Act in its entirety: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

The Treasury wanted seven hundred billion dollars. They refused to give a reasonable account of how they would spend it, and refused to be held accountable for how they would spend it. It would have been spent exactly as they pleased and nobody could have questioned or second-guessed it. If you're happy with that, you've got a lot more faith in the Bush administration that I do.

[cmdr-zoom.livejournal.com]

This.

[gwox.livejournal.com]

So. Canada. What think you? Or is that not far enough?

[snowspinner.livejournal.com]

There is no country on the planet that does not have financial institutions that are heavily invested in mortgage backed securities. This is not a US economy collapse, this is a global economy collapse.

[scrubbo.livejournal.com]

House prices will be 50% of what they were in 2007 at best. There will be a lot less credit floating around. Too much credit was the problem. Adding more credit willy-nilly isn't the correct way to go about doing it. Giving the treasury secretary carte blanche to do whatever he wants with 700 billion dollars with no oversight is a ridiculous response.

Every day we try to push back a credit collapse makes it that much worse in the end. If they were pitching this bill as a means for orderly liquidation of the bad debt market instead of a bailout, they might have more popular support.

There's nothing to 'save' right now. Just overpriced assets to liquidate.

The compromise bill was a little better than the original, but it was still a steaming pile. A very small segment of the U.S. population has done this to us. Bankers/Wall streeters/and people who took mortgages they couldn't repay. None of them deserve to keep anything that they have. Halting foreclosures will prolong the problem. Propping up bad banks rewards them for being retards.

The fact is that America has been 'living high' on credit, and that's about to end. Quality of life in the U.S. is going to go down. We can try and do it in an orderly fashion with a non-panicked response, or we can make it worse by trying to respike the punch bowl in a panic, or we can wait paralyzed until the current problems cause a crash. The WORST option is the panicked respiking of the punch bowl, which is what the 'bailout bill' is represented to us as. Give us a blank check and we'll fix it, and housing prices will shoot back up and the stock market will be at 15k in no time!

[gwalla.livejournal.com]

This wasn't a plan. It was a $700 billion hail mary. The Treasury has outright said that that figure isn't based on anything, and they just wanted a really big number.

Of course, by insisting on such a ridiculous amount, they've pretty much doomed any more moderate proposal, because a smaller amount will be perceived as insufficient. And in economics, perception is reality.

For once, the Republicans in Congress actually did something right, IMO. Of course, they did it for the wrong reasons ("Nancy Pelosi said something mean!"), but still.

[flemco.livejournal.com]

Yo, homes.

Hit this post up, if you would. (http://flemco.livejournal.com/2541646.html)