Bailout vote

[Pine Barrens Mafia]

The do nothing bill could be a lot more than $700b in the long run.

 

Could be, but it could be a lot less, too.

[Chef Jim]

Could be, but it could be a lot less, too.

 

It's already been more.

 

The Dow Jones Wilshire 5000 Composite Index recorded a paper loss of $1 trillion across the market for the day, a first.

[Pine Barrens Mafia]

It's already been more.

 

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

[HardyBoy]

It's already been more.

 

I might be completely wrong, but wouldn't stock prices have been at a bubble a bit with investors speculating that the bill would pass, and when it didn't they cut their losses? How much is the market down compared to last week? Sure they are down, but the 1 trillion number may be a bit short term? Again I could be totally wrong.

[molson_golden2002]

So now what...

 

Basically, it appears likely that an attempt will be made later this week to revive some variation of the "Paulson Plan." The real challenge in this zero-sum political game is to fashion something that can pass the House and yet still get through the Senate in fairly short order.

 

One alternative that may emerge is to re-package EESA, in more/less the same form in which it came to the House floor this morning, with several other proposals popular among House Democrats and then simply rely on Democratic votes to get it passed. I have read all of the proposed bills. The original was far overreaching by Paulson, as the media has reported. The second Democratic bill had a lot of bullsh*t add-ons, that made it unworkable. This was the good bill (the one that failed today). Potential add-ons include the mortgage bankruptcy "cramdown" proposal championed in the House by Brad Miller and a second round of "economic stimulus." Of course, then you can forget getting Republicans in the Senate.

 

A last option is to let the consequences of inaction - today's nearly 780 point drop in the Dow and the increasing fallout from the credit market freeze (missed payrolls, etc) - trickle down to "Main Street," and hope that the grassroots uprising that spawned the demise of EESA I will do a 180 in support of EESA II. This, together with the beating the House Republicans already seem to be getting in the media, would, according to this theory, turn a sufficient number of Republicans around to pass essentially the same bill that failed this morning. It's not at all clear, however, that we have enough time to implement the trickle-down approach before the October 15 payroll, which some companies will miss, due to the freeze in the credit markets. Many companies are currently drawing down their credit lines with banks (thereby exacerbating the bank run that beat down financials recently) for the September 30 payrolls. If this is not resolved by the 10/30 payroll....

 

It now appears likely that House Democrats, working together with the Bush Administration and however many Republicans they can peel off, will take another run at this later in the week, although it's too early to tell exactly what form the bill will take or what parliamentary procedure/strategy will be followed. Chances are, however, that the revised proposal will, at its core, look much like the one that went down today in the House. Obviously, market developments over the next few days or so will also be critical, including the international ramifications of today's vote, which haven't really begun to sink in yet.

 

Basically...global financial meltdown. Say hello to Dow 8000 on October 16, absent a rescue. Also, borderline anarchy in the streets. We have enough societal acrimony bubbling just beneath the surface without the match that a couple missed payrolls will ignite.

 

What really pisses me off is that the extreme left and extreme right are basically holding the center hostage here. The center (and Congressional/Administrative leadership) have not done a good job in this by any means, but they arrived with a very workable bill, that was basically checkmated by the ignorant. If the ignorant had any clue that they may just miss payroll on 10/15 and/or 10/30, if this was not passed, then we may have had a very different discussion. Paulson needs to explain the ramifications of this vote and he is afraid to do that.

Maybe the best thing that can happen is the market not to rebound before they get something done. The fall in stocks must have lit a fire under someone's ass. Can't the Democrats just get enough votes together themselves with maybe a few more Republicans?

[molson_golden2002]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

So that the taxpayer isn't burdened with the results of doing nothing

[bills_fan]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

 

 

Simple. If the hurricane hits, it will not discriminate among its victims. Whether John Q. Taxpayer contributed to the problem or not, he will be consumed via the hurricane.

 

If John Q. Taxpayer actually knew/understood the ramifications of this, the bill would have passed unopposed, but for the few that desire total anarchy.

 

The bill may or may not unlock the credit markets, but it will help. That much is undeniable.

[Chef Jim]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

 

Because, unfortunately, your future is going down with it. Yes, we're paying for the !@#$ up of others but if that's what it takes to make sure I can still retire in 10 years so be it. I'm not bailing them out as much as I'm securing my future. And they need to figure a way to make sure someone pays, and pays heavily. But read bill_fan's post above. I really think it's that bad. You may have an issue when your company doesn't have the $$ to pay you. This country works so much on credit that if the credit dries up there won't be any money to pay you. Is it really that bad? I don't know, but I'm seeing somethings I thought I'd never see.

[John Adams]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

 

I am sympathetic. Really I am. But as Tom points out: the problem of the stupid lenders and bad loans affects people like me and companies like mine without bad lenders and bad loans. For example, we have clients who pay us. When they do, we have money to pay our bills (mostly salaries). If those clients need to draw on credit because someone is slow paying them, they do--and that gets us paid and the wheel turns. When the wheel stops turning, because someone can't draw on credit because a bank won't lend anymore because it got !@#$ed on bad loans and has little cash--that !@#$s my client, who then !@#$s me, and then my company has to !@#$ its employees.

 

That's why we need the cash injection, to get the markets (banks!) liquid until home prices stabilize. Then the government can spin off all these mortages back into the marketplace.

[Pine Barrens Mafia]

Because, unfortunately, your future is going down with it. Yes, we're paying for the !@#$ up of others but if that's what it takes to make sure I can still retire in 10 years so be it. I'm not bailing them out as much as I'm securing my future. And they need to figure a way to make sure someone pays, and pays heavily. But read bill_fan's post above. I really think it's that bad. You may have an issue when your company doesn't have the $$ to pay you. This country works so much on credit that if the credit dries up there won't be any money to pay you. Is it really that bad? I don't know, but I'm seeing somethings I thought I'd never see.

 

So then you acknowledge the system itself is rotten to the core? The "bailout" is a bandaid when the entire limb needs to be amputated.

 

Will it hurt? Yes. Will it be disastrous? Possibly. But it's a bullet that has to be bitten.

 

Let's put it this way. Suppose this $700B measure passes and then we find out another $500B is "necessary" to "fix" the problem. What then? And people thought the Federal debt was bad before?

[Chef Jim]

So then you acknowledge the system itself is rotten to the core? The "bailout" is a bandaid when the entire limb needs to be amputated.

 

Will it hurt? Yes. Will it be disastrous? Possibly. But it's a bullet that has to be bitten.

 

Let's put it this way. Suppose this $700B measure passes and then we find out another $500B is "necessary" to "fix" the problem. What then? And people thought the Federal debt was bad before?

 

Wait for it.

[Chef Jim]

So then you acknowledge the system itself is rotten to the core? The "bailout" is a bandaid when the entire limb needs to be amputated.

 

Will it hurt? Yes. Will it be disastrous? Possibly. But it's a bullet that has to be bitten.

 

Let's put it this way. Suppose this $700B measure passes and then we find out another $500B is "necessary" to "fix" the problem. What then? And people thought the Federal debt was bad before?

 

Actually Joe, let me put it to you in a scenario you can relate to. I'm not sure how you get paid on your insurance commissions but our firm get's 120% of the annualized premiums paid. So if a client gives me a check for $100 my firm gets $1200 of which I get 90%. Where do you think the insurance company gets the other $1100? Yeah, they leverage if from someplace else. Well if there's no credit, there's no leverage and no nice fat commission to you. That is what we may be facing.

[X. Benedict]

Actually Joe, let me put it to you in a scenario you can relate to. I'm not sure how you get paid on your insurance commissions but our firm get's 120% of the annualized premiums paid. So if a client gives me a check for $100 my firm gets $1200 of which I get 90%. Where do you think the insurance company gets the other $1100? Yeah, they leverage if from someplace else. Well if there's no credit, there's no leverage and no nice fat commission to you. That is what we may be facing.

 

Selling insurance on an hourly salary would suck.

[Pine Barrens Mafia]

Actually Joe, let me put it to you in a scenario you can relate to. I'm not sure how you get paid on your insurance commissions but our firm get's 120% of the annualized premiums paid. So if a client gives me a check for $100 my firm gets $1200 of which I get 90%. Where do you think the insurance company gets the other $1100? Yeah, they leverage if from someplace else. Well if there's no credit, there's no leverage and no nice fat commission to you. That is what we may be facing.

 

Indeed. Ugly.

 

(BTW, our commissions aren't nearly so generous. )

 

Perhaps I'm one of those people that "desires anarchy." I think it's time the tree of Liberty had its roots quenched with the blood of the politicians in congress, and this may be just the thing to bring about REAL change.

[meazza]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

 

Because for the 100th !@#$ing time, this won't just hurt the irresponsible... of course you're somehow making a bit of money so who cares right?

[Chef Jim]

Selling insurance on an hourly salary would suck.

 

Oh my hourly rate is quite fine thank you. And securities are often times even better.

 

But I have a feeling it may be a bit slow going the next couple of weeks.

[DC Tom]

OK, so it still doesn't answer to the fundamental question of WHY exactly the taxpayer should be burdened with the bad debt of the irresponsible consumers who bought houses they couldn' afford with the loans of an unscrupulous mortgage industry. They sowed the wind, they're reaping the hurricane and NOW they want help?

 

Something's got to give.

 

Plus, you don't seem to twig to the simple fact that Wall Street is in a world of hurt either way. Either we let banks go under...which benefits no one. Or we inject some liquidity into the capital markets by letting banks trade illiquid assets for cash at a substantial discount to the purchase price of those assets, in which case the banks have to write down the losses and are hammered...but at least the credit markets still function, which benefits everyone.

 

You seem to think the only way to change behavior is to inflict lots of pain...and you're right. But YOU seem to have this "all or nothing" belief that if the pain isn't as extreme as possible, then it's business as usual. The likelihood of even $700B sorting everything out and making everything sunshine and rainbows is precisely zero. The best case with that amount of money would be to keep the financial industry solvent for a few years in hopes that it sorts its sh-- out...which will be plenty painful enough.

[meazza]

Indeed. Ugly.

 

(BTW, our commissions aren't nearly so generous. )

 

Perhaps I'm one of those people that "desires anarchy." I think it's time the tree of Liberty had its roots quenched with the blood of the politicians in congress, and this may be just the thing to bring about REAL change.

 

No it won't. The filthy rich will remain filthy rich, while the rest will suffer.

[bills_fan_in_raleigh]

No it won't. The filthy rich will remain filthy rich, while the rest will suffer.

well 1 trillion dollars of value was loss in the market today. I am guessing some of the rich arent so rich anymore

[DC Tom]

Because for the 100th !@#$ing time, this won't just hurt the irresponsible... of course you're somehow making a bit of money so who cares right?

 

The irresponsible get hurt either way. And I'm fine with that. (And I'm arguably one of them since the wife maxed out her credit cards. And I'm still fine with that.)

 

But why the hell should the entire global financial system collapse because of a minority of dumbasses who don't know what a "balloon payment" is?