Are you for it, against it, or splitting your time between stuffing your life savings in a mattress and looking for a cozy cave to ride out the coming disaster?
My thoughts a little later in the afternoon (right now I want to eat some lunch)
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Related Posts: Ventura Prediction Thread, Sen. Tim Johnson’s Recovery ‘Exceeding Expectations’, Policy and Politics: Past And Present, CD 3 Open Thread, Election Day Open-thread,
46 Responses to “Bailout Discussion Thread”
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Against, but I’m pretty sure it needs to be done.
Against, because it does not address the core problem.
Wages and benefits have stagnated for the last thirty years. With wages stagnating the only way to keep the economy afloat was to give workers easier and easier credit. This bailout is being done so they can keep the credit spigot open!
the answer is to reverse the war on labor started by Regan 30 years. Doesn’t anyone ask the simple question “Why do Americans have to go into so much debt ust for the simplest of American dreams?” It is not because of living beyond our means or being greedy. It is because real wages have actually gone down, while production and economic growth have gone up!!
Anyway, until we have a real labor movement, we will never have the kind of social justice and economic justice that Democrats crave. it really is all about the worker and labor.
So I say no to this bondoggle, even though my IRA is in the toilet.
Thanks, Alec
I am glad to see it has failed, it deserves to fail. Are we a socialist state, or a capitalist democracy? Today we get at least a pseudo answer to that question.
So now that it’s failed passage, what are the chances the President dissolves Congress over this issue?
Heavily punitive provisions in any financial bailout bill would have to be required. FBI investigations of everyone from the board on down to Executive VPs must be implemented to dissuade any company or board in the future from thinking the federal government and the American taxpayer can be a safety net against making greedy, risky decisions. All company stock that belongs to any of these individuals must immediately be seized and turned over to the US government to help fund the bailout. There should be no notion that a government bailout of this magnitude is ever an option. If there aren’t several indictments of Wall Street officials stemming from this crisis and this bailout, then we will see no change in the downward trend of the American economy, and we’ll find ourselves creating the same bailouts in the near future.
So then what are the chances that any bill at all will be approved? Not enough Dem votes if rich execs are seen as being rewarded or main street isn’t well enough protected, and not enough GOP votes if the gov’t is seen as getting too involved with the market. Again — this is the kind of emergency situation that, historically, has led to legislative bodies being disbanded…
The President cannot dissolve Congress, for any reason, ever. Sean
Nobody likes this plan, but it was the best option available. Its failure is going to translate into serious trouble for the American economy.
I largely lay this at the feet of the House Republicans, who overwhelmingly voted against it and are trying to play politics with the bailout. But 94 Democrats also voted against it, and need to be held accountable.
For those who don’t like it, what would you suggest is the alternative? At some point, we have to decide between punishing those responsible and saving the savings and retirements of the victims. We can’t do both here.
Here’s the results of the role call vote: http://clerk.house.gov/evs/2008/roll674.xml
Sean — we’re talking about Bush here. He’s made up his own rules before and interpreted the Constitution to back up as much. Executive privilege, signing statements, divine appointments, etc. I wouldn’t put it past him and the administration to find some way to bypass Congress. Not that it’s a rational or traditionally legal thing, or something that the vast majority Constitutional academics might have long ago agreed is impossible, but I’ve learned to not take any previously understood, concrete constitutional divisions for granted over the last 8 years.
http://clerk.house.gov/evs/2008/roll674.xml
Against — we need a better bill that provides new substantive regulation of the financial sector without laying three quarters of a trillion dollars at the feet of the firms who caused this mess in the first place.
On the other hand, doing nothing will lead to plenty of short-term pain for a lot of people. On the other, doing something may be worse in terms of expansion of the national debt.
Basically, we’re damned if we do and damned if we don’t right now.
I would be against the bill, but for one thing: The stock market isn’t just an abstract concept, it’s where millions and millions of Americans keep their retirement nest eggs.
MTKA, well said. I feel the same way. Anything goes in the GOP nowadays, and nothing is impossible. Case in point Sarah Palin. Maybe the Dow tanking will bring Wall Street back to sanity, and having their retirement savings dissolve will help victims/voters finally disregard trickle down Reaganomics and it’s proponents as the failure that it surely is and has always been for the American populace. If not, rough times ahead. Eh, rough times ahead either way I figure.
“The President cannot dissolve Congress, for any reason, ever. Sean”
Sean, you’re assuming that this President actually follows The Constitution and laws.
Personally, I don’t put anything past him. I never thought I’d see the day I’d miss Richard Nixon.
So it might finally happen. The costs for decades of irresponsible fiscal management made possible with phony accounting and repeatedly pumping more money in to a system that didn’t need it. This is not something that was created in the last eight years, or 16 or 30. This is caused by decades of idiocy where both parties have prioritized short term shallow fixes over long term unpalatable solutions.
The truth is there is no short term fix for this mess. The bailout was simply another attempt to mask the problem by printing more money. At least if the bailout fails we can start to rebuild rather than dig ourselves further into the same hole being dug for the last 70 years.
It’s pretty fascinating to see how this bill has done weird things to party lines:
ayes:
Kline (MN)
McCollum (MN)
Ellison
Oberstar
noes:
Walz (MN)
Bachmann
Ramstad
Peterson (MN)
KH - Your first paragraph is completely wrong. Gramm-Leach-Bliley Act of 1999 is the proximate cause of the current financial meltdown. It turned the financial regulation calendar back to the 1920s. There was effective regulation of financial and investment institutions until the late 1980s or early 1990s when Alan Greenspan and the Fed started writing their own rules to de-regulate.
Your second paragraph is closer to the mark: it should read that there is no GOOD short-term fix for this mess.
MrTom,
This bubble is bigger and older than you say it is and not one built simply out of loose regulation. It is at it’s core a result of bad monetary policy, many decades of it. To think that this bubble has been cause in less than a decade is simply delusional. And I stand by me statement of there be NO short term fix. The window dressing approach to fiscal management used by both parties might be tried again but it will only continue to mask the problem, extend the age of and worsen the bubble.
I agree with KH on this one.
I also feel bailing out a system that encouraged and rewarded excess and greed does not teach any lessons. We would potentially repeat those same mistakes.
Times ahead might be hard for all of us due to the greed of a few, but this may just force a re-calibration of the way we elect our leaders, and a self-examination of our values.
I feel the sooner we start “rebuilding” America, the better. Maybe we will all learn from our mistakes this time.
There are a couple of ways that the news media is improperly telling the story. One is that the unthinkable has already happened. The commercial paper market has nearly stopped dead in its tracks. Short-term lending to large business by banks isn’t happening. Most often this lending is done for periods of days and weeks, not like a five-year car loan or a 30-year mortgage. Because the commercial paper time horizons are so short, businesses may not be able to purchase inventories or raw materials or maybe even make payroll. This foundation of the economy ran over the cliff and the bill that just failed was trying to catch it before it hit the canyon floor (think Roadrunner and Coyote).
Money market mutual funds should always have a net asset value of $1 - they’re considered liquid, after all. A few money market mutual funds failed in the last week or so because their NAVs dropped below $1. In a healthy financial realm, this simply doesn’t happen. Similar problem, though; but one that’s not in the headlines.
I think one reason there are not more people in favor of the bailout is that it all seems so abstract. With that in mind…
When you think of the impending stock market crash, think one thing: retirement. Millions and millions and millions of Americans rely on the stock market to grow their retirement nest eggs. The decreasing Dow average may seem abstract, but it translates in a very real way into lost wealth, especially for those near retirement age.
Meanwhile, there’s also a credit crisis being caused by banks’ fear of lending. When you think of the credit crisis, think of one thing: jobs. “Commercial paper” is a driving force for our economy; without it, jobs go away as businesses fail.
Apparently it is Pelosi’s fault that the Republicans voted against the bill.
Did Pelosi use her secret mind ray?
Or did she make them SO DARN ANGRY they just went and showed her what THEY could do?
I guess it takes too much courage to simply say “I voted no because I felt I was best for my constituents to do so based on my knowledge of the situation.”
Short term… long term… we are fucked. Some stocks are rising, Campbell Soup, Smith & Wesson, and proably manufacturers of those barrels with suspenders you always see in old movies and cartoons.
The bailout is going to pass 3 days from now once they tweak it and twist a few arms.
I actually agree with Dan… this bill needs to pass but the blood on the floor needs to be mopped up first. Bush is toast… anybody want to argue he will not be considered WORST PRESIDENT EVER? His legacy is set and it is brown and smelly.
House Republicans have protected their ass and will soon be back under control. House Democrats will come to Jesus, once they are guaranteed that the GOP ratfuckers won’t back-out of the deal. This vote was to prevent massive losses with incumbent members by a pissed off electorate that has yet realized the end product of this crisis. (Do you realize that humans taste amazingly like pork? Cannibals called it “Long Pork” and insist it is delicious.)
McCain is utter toast with his leadership of the GOP proved to be a sham and Palin ready to self-destruct on Thursday.
People were finally being public servants instead of partisan hacks. This vote defied party lines.
Congresspeople listened to their constituents. Constituents didn’t like the bailout plan. That may not be such a bad thing.
Now, I think the plan as it was introduced was pretty good. There were some major victories over the weekend on getting the right language in to the plan.
I hope they make the minor modifications and pass it. And I hope those modifications include reversing mark-to-market accounting regulations that really caused this problem to be a crisis rather than just a problem. That is all I personally would add to this legislation, as I understand it.
Apparently, the GOP has forgotten how to whip votes. If you are representing you caucus in negotiations you’d better be able to deliver. Boehner and Blount lose all credibility on this one. I’m sure the GOP wanted to force the Democrats to pass this without a majority of the GOP caucus, sorry no chance on that one.
I don’t think Boehner and Blunt wanted this to pass.
For it. Not precipitously, in increments, with exhaustive measures to protect taxpayers in general, and individuals who may be losing their homes through no fault of their own, and AND, with plenty of measures to reassure everyone that lazy welfare gobbling pigs keep their paws out of the pockets of the bootstrap crowd. I would also like to see a return on the investment, of at least 17-20 Trillion dollars, or whatever it was that Senator Colman was going on about in the Mankato Free Press.
Hard for even the masterfully mendacious Boehner to sell a so-proclaimed “shit sandwich” to congress. Perhaps he should have called it something else.
It is interesting to see how partisan Democrats are trying to contort themselves into a position that can blame both Bush, who supports the bailout and congressional Republicans that voted against it.
It seems that those against the bill seem to Democrats and Republicans most willing to buck their parties. Given the fact that both parties had there hands in creating this mess defying them is probably for the best.
And Venerable Bede, there is no possible way that this bailout can be done at the same time as protecting taxpayers. If it does pass the next factor we will have to face is the reality of inflation. The dollar will sink to lows not imagined causing the price of all items that are part of the global economy to rise quickly, for people using dollars anyway. That might be great for the people who borrowed money to buy houses, cars and televisions as the dollars they pay back will be worth far less than the dollars they borrowed but it will cause more stress in the financial industry and further discourage savings. And savings, along with requiring people to have down payments and income before they get a mortgage, are the one things that would have prevented this mess in the first place. The bailout is a sham, it simply continues to push the problem ahead, causing it to transform and manifest itself in a new and possibly worse way at some point in the future.
America is not going to be able to deal with this crisis as Bush recommended we all deal with 9/11, by “going shopping”.
That mentality is the root cause of this crisis, if you asked me.
I agree with KH. Well Said.
So if Bush is the bad guy, and Ellison voted with Bush, is Ellison the bad guy too?
Or if these rebel Republicans are the bad guy, and Walz voted with them, is Wals a bad guy too?
I am actually relieved and intrigued that this vote had little to do with party. 40% of Democrats and 66% of Republicans voted against it. Hardly a partisan split. I actually think that maybe, just maybe, Congresspeople were voting their constituents wishes. Not being “whipped” into voting a certain way is a good thing, not a bad thing.
“Ellison voted with Bush”
Define that, DantheMan,
What did Bush ask for?
Bush ultimately supported the bill that was on the floor today. So did anyone who voted for it.
If that doesn’t qualify as “voting with”, then the talking point of McCain voting with Bush 90% of the time doesn’t hold water, either.
SO……Bush did not support Paulson’s bill as it was written, he only supported the Democrats version?
KH-“The bailout is a sham, it simply continues to push the problem ahead, causing it to transform and manifest itself in a new and possibly worse way at some point in the future.”
Isn’t that the same argument being used to to rush us INTO bailout legislation? Ooo my head!
I guess if you call the “Democrats version” the one that 40% of Democrats voted against, yes, Bush supported it.
Bush openly supported Paulson’s plan. It is unknown whether Bush would have supported the bill with a majority of house democrats’ support.
Walz statement on bailout vote
From the congressional office:
(Washington, D.C.) – Today, Congressman Tim Walz voted against the revised Wall Street bailout plan released yesterday by Congressional leadership. Walz made the following remarks about the proposed bailout:
“Speaker Pelosi and the Democratic negotiators deserve credit for the progress they made on this bill. This extensive rescue package has many more protections for taxpayers than the 3-page bailout proposal put forth by the White House last week.
“In the last week, I’ve personally called over 100 constituents, bankers and business leaders in southern Minnesota to sound them out about this bailout package. The message I’ve heard from them is clear: despite the many and significant improvements made by Democratic negotiators, this bill still falls short.
“The bill we voted on today passes the buck when it comes to recouping the losses taxpayers might suffer. I also regret that this bill does not do enough to help average homeowners, or provide sufficient oversight of Wall Street.
“Wall Street got us into this mess and I hope that the Congressional leadership will go back to the drawing board and write a bill that holds Wall Street accountable, both through sensible regulation and oversight and by restricting the excessive golden parachutes for CEOs who got themselves in trouble.
“My job is to protect the American taxpayer and this plan doesn’t go far enough in looking out for the middle class. It doesn’t go far enough in holding Wall Street accountable. If Wall Street is going to get our money, we need to have some protections in place, and this plan doesn’t go far enough. Finally, it does not do enough to help address the real cause of our economic crisis: the tidal wave of foreclosures that are hurting families and neighborhoods all around the country.
“I voted against this bill because it wasn’t a good deal for taxpayers. Lawmakers need to go back to the table immediately and come up with a much better deal for taxpayers and the middle class.”
I’m still for it, but a simple top/down, precipitous, lump-sum under-regulated handout approach should be avoided. We need to offer immediate help to homeowners who are having trouble paying their mortgages. Not the speculators who are losing or have lost their second or third homes, not the ones who tapped their equity using ARMs and spent that money to speculate in other markets. Help the truly needy, the “health care crisis people”. This is a bottom/up approach championed by people like, gasp, Dennis Kucinich.
After weeding out those that don’t pass that test, we should be left with just those few loans that won’t require nearly 700B to save. We can take it slow, (especially if there is a moratorium on foreclosures), take our time, and be sure that those we assist are deserving. That should mollify the bootstrap crowd. We can also design that help so it is paid back. Perhaps make it an interest free loan? This bailout of the actual folks who are in trouble, addresses the actual and initial problem we face(d), which is the burst bubble in the housing market and its effect on Wallstreet that trickles down to Mainstreet.
This gets money flowing again to the banks and stops the death spiral and tightening of credit everyone is screaming about needing to do something about now, now, NOW! (That “now” that scare most of the folks who want it so badly is the “before the election” now.)
The other half of the equation is to go back to some form of securities transaction excise tax. The US has used STETs before. Other countries use them now. This is the “Wallstreet bails itself out” thing we are hearing whispered. It should be shouted! The folks who come out against it are going to be the status quo crowd who since 1966 have been allowed to speculate in markets rather than invest in them. If you were happily making lots of money and there was less risk, would you want to suddenly find the game had changed and you now had to find other ways to make that money? I’m borrowing here from, gasp, Thom Hartmann. http://www.commondreams.org/view/2008/09/26
Again, we should completely scrap the legislation in it’s current form. We need a simple two prong approach:
1.) Get money flowing to banks by helping homeowners make their mortgage payments asap.
2.) Help Wallstreet flush the toxic derivatives from its own system by taxing all securities transactions, the good and the bad.
Another entire thread could be based on what to do with that STET revenue after Wallstreet is able to sit up and take nourishment again… The possibilities are endless but sadly, anathema to the status quo crowd. Expect major roadblocks from them.
Venerable Bede,
There is a significant problem with your plan. If you bail out needy home owners, beyond those who were truly defrauded, the people that are paying as significant amount of the cost are those people you have not yet purchased homes. Bailing out people who spent money they didn’t have to buy a home they couldn’t afford will keep the price of homes artificially high. That in turn will hurt those who were smart enough to not buy during a bubble or have not yet reached the age or financial means to buy. It is simply picking the winners and losers based on when somebody purchased a house, favoring those who made risky choices. If we shouldn’t do that for people working in the financial industry we shouldn’t do it for home owners.
The price of housing has to come back down to reality. Otherwise the danger continues to exist. That in itself would help make housing more affordable.
KH, isn’t the decline in housing values going to wreak havoc on those that took out “equity” lines?
KH, I (think) I know what you mean. I bought my home in 2003 when it was more valuable than it is now, on a fixed 30 year. Housing market trends are not being kind to me. My idea would give some folks help I could use too. But it’s less about me and more about, well you know the liberal thing as well as I do. We need a correction, I agree, but one that helps from the bottom up. Not vice versa. Barack made that point crystal clear in LaCrosse today.
What are your thoughts on the STET? I would have thought that would not appeal to you, but you mention it not. Thanks.
I don’t want to sound callous against homeowners, but the financial crisis here involves the banking industry, not homeowners. I know that will come across as being pro-big business, so put whatever liberal labels you will on it.
People not paying their mortgages back will cause foreclosures, which will cause a further bear market in the housing industry. I don’t like that it will have to happen. And I hate the thought of a 5-year old kid having to move because her parents made a bad decision.
But if the banking system freezes, jobs will be lost and growth will stop. That will cause a major recession. A major recession, with the loss of jobs, has much more widespread implications than the housing bear market.
This money needs to unfreeze lending and get banking working again. If that can be done at the micro level, I’ll sign up for it in a heartbeat. But I think much of this money needs to go directly into America’s financial and banking system.
This is not a Republican or Democrat talking point. This is my personal belief as someone who has spent a couple decades seeing first hand how banking impacts small and large businesses (i.e. “jobs”)
I agree that a top down bailout is not smart. Just that a bottom up one really doesn’t change the fundamentals. Those people that purchased homes or took out equity lines will be fine if they are able to continue to make their payments. No different than before. Those that gambled on the market and got interest only, variable rate or other strange loans will pay the price for their speculation. To bail out those that made poor decisions when purchasing a home at the expense of those who have yet to do so might be bottom up but it is directly at the cost of others who are in the same income level as those receiving help. Actually because it inflates housing prices it is more likely to be at the cost of those younger and less economically well off.
The value of your house is meaningless for most people. Since everyone needs a place to live it isn’t as though you can sell it and retire. A home is neither a savings or retirement account and nobody should ever have thought of them as such. They are products that provide shelter. If you borrowed against it while the value was at it’s peak and can make the payments consider yourself lucky. You got a loan you shouldn’t have been able to get.
As for the STET I can’t give you a good answer. My biggest issue with taxes is that they should be transparent and be as close to user fees as they can be. It is interesting though and it has made me curious enough to look in to it further.