House turns down bailout

[Al_U_Card]

Peking duck? :(

 

Remember that "sucking" sound that Ross Perot warned of? Well, its corresponding wallet-emptying sound is fast approaching as the bail-out will concentrate on taking your future earnings and giving them to every investor (domestic AND foreign ) that ever purchased some of that toxic debt. (That many have already written down against taxes to be paid....)

 

They win and you will lose, in perpetuity.

 

Stop them now, while you still have the chance. Market stability comes and goes but you only have one future...

[Al_U_Card]

I wonder why almost the same amount of "cash" didn't help then....

 

 

"Sept. 29 (Bloomberg) -- The Federal Reserve will pump an additional $630 billion into the global financial system, flooding banks with cash to alleviate the worst banking crisis since the Great Depression.

 

The Fed increased its existing currency swaps with foreign central banks by $330 billion to $620 billion to make more dollars available worldwide. The Term Auction Facility, the Fed's emergency loan program, will expand by $300 billion to $450 billion. The European Central Bank, the Bank of England and the Bank of Japan are among the participating authorities.

 

The Fed's expansion of liquidity, the biggest since credit markets seized up last year, came hours before the U.S. House of Representatives rejected a $700 billion bailout for the financial industry. The crisis is reverberating through the global economy, causing stocks to plunge and forcing European governments to rescue four banks over the past two days alone."

[Al_U_Card]

And this from Karl Denninger's blog

 

""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"

 

That's right folks. You are going to have $700 billion - about 25% of the total federal budget - put on your personal credit card (via taxes forever) in order to bail out foreign investors.

 

Oh, and the best part of it is that the underlying assets involved do not even have to be in the United States!

 

Here is the definition of a "troubled asset", right from the bill:

 

"(9) TROUBLED ASSETS.—The term ‘‘troubled assets’’ means— (A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability;

 

and (:( any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."

 

Notice that conspicuously missing from the definition is the requirement that the asset's underlying thing (that is, the property that was mortgaged, etc) lies within the United States. Also note that Treasury must tell Congress if they add "new types" of debt, but that Congress has no right of review or censure.

 

That is, it is perfectly legitimate under the bill for a foreign bank to sell or swap any "crap sandwich" it may hold (irrespective of how or where it originated, so long as a mortgage is the basis for it somewhere) with a bank domiciled in the United States, and said bank may then "PUT" it into the TARP.

 

Note also that Representative Sherman said on Kudlow last night that when this was raised with Secretary Paulson he was told that if Congress tried to restrict the ability of the Secretary to purchase assets "laundered" in this fashion from foreigners, that the bill would be vetoed.

[y66]

From Paul Krugman's blog entry today entitled "Bailout Narratives".

 

There seem to be two prevailing narratives about the bailout plan(s). Both have elements of truth, but are fundamentally wrong.

 

One narrative is that of the Wise Men and the Destructive Yahoos. According to this narrative, men who Understand What Needs to be Done put together a plan to save the world, but they did a bad job of communicating, and a mob of ignorant people stands in their way.

 

The other narrative is that of the Evil Plotters and the Righteous Uprising. According to this narrative, the same people who sold us the Iraq war have tried to bully Congress into adopting a plan that is, in essence, a cynical ripoff — a scheme to transfer vast wealth to the rich and cripple the next administration.

 

As I said, there’s some truth to both narratives. Many of those opposing the bailout are indeed destructive yahoos — read some of the speeches during the House debate. And yes, there were Iraq echoes in the way Paulson tried to ram his original plan through.

 

But both narratives are mostly wrong.

For the rest of the story, click here.

[mike777]

btw Ireland just guaranteed all, I mean all the debt of its top six financial inst.

[ArcLight]

Since I work in the financial industry I am all in favor of the bailout :)

 

 

I do think its rushed and not thought through.

 

 

 

>An actual vise is a tool that is used to clamp something down to a workbench. It's not something pleasant to have one's genitals caught in it.

 

 

A Vise is a type of Squeeze :)

[onoway]

someone just sent this to me I have no idea who said it or where it came from.

 

"Subject: Fw: FW: The Bailout

I like this idea. This idea sounds just crazy enough to possibly work,> so>>

naturally it won't be given serious consideration. How great is our bureaucracy!I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billion that equals> $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads.

Put away money for college - it'll be there.

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs.

Invest in the market - capital drives growth.

Pay for your parent's medical insurance - health care improves.

Enable Deadbeat Dads to come clean - or else.

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!

As for AIG - liquidate it. Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work."

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Ahhh...I feel so much better getting that off my chest."

 

I am just tossing it into the mix as a bit of creative thinking which fell into my email

Imagine the Block Party indeed :)

[Lobowolf]

Among other problems, $85 billion divided by 200 million is $425.00, not $425,000.00

 

I mean, I'll take all four hundred dollar & change checks you wanna send me, but I'll be honest...like all those lottery winners say, it ain't gonna change my life all that much.

[onoway]

:lol:

I never even thought to check the math. When it gets up into billions (esp in somebody else's country), the numbers go into a vague realm of wow that's a lot of money and pretty much get left there. Maybe some of the problems governments have stem from other people also being unable to grasp the reality of how much that actually is,( or just misplacing the odd decimal point in their calculations!)

So much for that idea..it was a nice fantasy while it lasted (and no, I haven't checked your numbers either) :P

[Al_U_Card]

Prolly the "Bush" influence. :lol:

 

At least Ronnie Ray-gun could remember his lines. :lol:

 

Doesn't it scare you to have a Prez that makes Sarah Palin look like a reasonable alternative? :P

[Lobowolf]

At least Ronnie Ray-gun could remember his lines. :lol:

Not bad for a guy who after a term in office lost an entire state in his reelection bid AND the District of Columbia.

[kenberg]

Pam,

In the US, a billion amounts to three dollars plus per person (including children). It's a useful starting point for trying to keep track of the cost of things. Many years ago the humorist Art Buchwald suggested that we deal with the problem of coping with millions, billions, and trillions by measure costs in terms of F-14s. A senator could stand up and say "I'm not voting for any education program that costs three fighters and a wing".

 

I would be interested in hearing of any response you get if you send the arithmetic correction back to your email correspondent. I used to reply with such corrections from time to time. The only effect was that after a while they would stop sending me stuff.

[Lobowolf]

I used to reply with such corrections from time to time. The only effect was that after a while they would stop sending me stuff.

That's the best reason of all to do it. I say you send him one back that says every man, woman, and child could by a 50-gig Ipod, a pair of cheap seats Royals tickets, AND a latte.

[hrothgar]

someone just sent this to me I have no idea who said it or where it came from.

 

"Subject: Fw: FW: The Bailout

I like this idea. This idea sounds just crazy enough to possibly work,> so>>

naturally it won't be given serious consideration. How great is our bureaucracy!I'm against the $85,000,000,000.00 bailout of AIG.

Instead, I'm in favor of giving $85,000,000,000 to America in a We Deserve It Dividend.

To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.

So divide 200 million adults 18+ into $85 billion that equals> $425,000.00.

My plan is to give $425,000 to every person 18+ as a We Deserve It Dividend.

Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes.

That sends $25,500,000,000 right back to Uncle Sam.

But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.

What would you do with $297,500.00 to $595,000.00 in your family?

Pay off your mortgage - housing crisis solved.

Repay college loans - what a great boost to new grads.

Put away money for college - it'll be there.

Save in a bank - create money to loan to entrepreneurs.

Buy a new car - create jobs.

Invest in the market - capital drives growth.

Pay for your parent's medical insurance - health care improves.

Enable Deadbeat Dads to come clean - or else.

Remember this is for every adult U S Citizen 18+ including the folks who lost their jobs at Lehman Brothers and every other company that is cutting back. And of course, for those serving in our Armed Forces.

If we're going to re-distribute wealth let's really do it...instead of trickling out a puny $1000.00 ( "vote buy" ) economic incentive that is being proposed by one of our candidates for President.

If we're going to do an $85 billion bailout, let's bail out every adult U S Citizen 18+!

As for AIG - liquidate it. Sell off its parts.

Let American General go back to being American General.

Sell off the real estate.

Let the private sector bargain hunters cut it up and clean it up.

Here's my rationale. We deserve it and AIG doesn't.

Sure it's a crazy idea that can "never work."

But can you imagine the Coast-To-Coast Block Party!

How do you spell Economic Boom?

I trust my fellow adult Americans to know how to use the $85 Billion We Deserve It Dividend more than I do the geniuses at AIG or in Washington DC.

And remember, The Birk plan only really costs $59.5 Billion because $25.5 Billion is returned instantly in taxes to Uncle Sam. Ahhh...I feel so much better getting that off my chest."

 

I am just tossing it into the mix as a bit of creative thinking which fell into my email

Imagine the Block Party indeed :lol:

MV = PY

[Al_U_Card]

I gather that they say they would need 5-7 trillion to keep this sucker afloat, bailing all the time and accepting that no headway would be made.

 

That number is truly frightening as they would have to borrow that from the Chinese (who could afford it based on their merchandize sales to the soon-to-be-insolvent United States?????

 

Or they could just flood the market with Ameribucks now worth about US$0.17...

[glen]

Nice summary of the W.B. interview on clusterstock (good name as we are clustered stocked):

Warren Buffett Interview

W.B. can certainly cover a lot of ground and make a lot of sense.

[helene_t]

Among other problems, $85 billion divided by 200 million is $425.00, not $425,000.00

In the US that is correct but in the UK a billion might mean 1,000,000,000,000, like it does in Northern Europe.

[PassedOut]

Nice summary of the W.B. interview on clusterstock (good name as we are clustered stocked):

Warren Buffett Interview

W.B. can certainly cover a lot of ground and make a lot of sense.

Thanks! Great link.

[Lobowolf]

Among other problems, $85 billion divided by 200 million is $425.00, not $425,000.00

In the US that is correct but in the UK a billion might mean 1,000,000,000,000, like it does in Northern Europe.

Maybe the American who wrote the article was a recent transplant... (S)he'd be happy to know that the bailout is only 1/10 of 1% the size (s)he's expecting!

[sceptic]

I was watching telly the other day and the news was on about the "GREAT BAIL OUT".

 

Being a man of limited intelect and financial savy, I am curiious why they are saying , if we get the banks back to normal and get credit freely available to all then the confidence will come back into the market, is this a good thing?

 

Are we not just heading out on the good ship Titanic, was not freely available loans and some very unsound financial packages, wot got us in the shite in the first place.

 

I am not in Warren Buffets class, I can't afford to buy the odd bank, knowing when the tax payer has bailed the greedy bastards out, I can make another killing.

 

Does anyone here, think the politicains will be looking after joe public, or just trying to keep thier wealthy mates up in the land of Narnina, hoping for a dose of gratitude.

 

One way or another America has tried to control the world with its financial muscle, they brought the house down, with some pretty piss poor regulations and financial packages, I do not feel confident, that anything will change, except, when this bail out gets the credit market back on its feet, the consequences could well be catastophic, for all but the wealthy in the not to distant future.

 

(btw, I also feel that a lot of other countries have contributed to this mess and do not push blame away from our own load of muppets running out country)

[y66]

Second the recommendation for Glen's WB interview link (a few posts above).

 

Good stuff.

[PassedOut]

One way or another America has tried to control the world with its financial muscle, they brought the house down, with some pretty piss poor regulations and financial packages...

The "voluntary self-regulation" of the largest Wall Street firms in the US was intended to shield those companies from EU regulations. The NYT has an article on the history of the deregulation in 2004 that led to the current mess: Agency’s ’04 Rule Let Banks Pile Up New Debt, and Risk

 

Many events in Washington, on Wall Street and elsewhere around the country have led to what has been called the most serious financial crisis since the 1930s. But decisions made at a brief meeting on April 28, 2004, explain why the problems could spin out of control. The agency’s failure to follow through on those decisions also explains why Washington regulators did not see what was coming.

 

On that bright spring afternoon, the five members of the Securities and Exchange Commission met in a basement hearing room to consider an urgent plea by the big investment banks.

 

They wanted an exemption for their brokerage units from an old regulation that limited the amount of debt they could take on. The exemption would unshackle billions of dollars held in reserve as a cushion against losses on their investments. Those funds could then flow up to the parent company, enabling it to invest in the fast-growing but opaque world of mortgage-backed securities; credit derivatives, a form of insurance for bond holders; and other exotic instruments.

 

The five investment banks led the charge, including Goldman Sachs, which was headed by Henry M. Paulson Jr. Two years later, he left to become Treasury secretary.

 

A lone dissenter — a software consultant and expert on risk management — weighed in from Indiana with a two-page letter to warn the commission that the move was a grave mistake. He never heard back from Washington.

 

One commissioner, Harvey J. Goldschmid, questioned the staff about the consequences of the proposed exemption. It would only be available for the largest firms, he was reassuringly told — those with assets greater than $5 billion.

 

“We’ve said these are the big guys,” Mr. Goldschmid said, provoking nervous laughter, “but that means if anything goes wrong, it’s going to be an awfully big mess.”

So now Paulson gets to clean up the mess caused by the deregulation he had begged for. Still, he made enough money at Goldman Sachs so that he will always live very well.

[blackshoe]

Still, he made enough money at Goldman Sachs so that he will always live very well.

Which is, of course, a terrible crime, not to be borne.

[PassedOut]

The house voted 263 to 171 to pass the senate version of the bailout. All it took was an extra $100 billion in pork.

[Al_U_Card]

Would you know if there were any that voted yes to the first one but no to this one of those 171?