by hilzoy
I don’t think our Congress has faced a more important decision than whether or not to pass the bailout bill in decades, perhaps longer. (Summary here; CBO analysis here.) To state what is beyond obvious: it is incredibly important to set aside our preconceptions, whatever they may be, and really think hard about whether to support this bill or not. If you’re easily alarmed by predictions of disaster, think long and hard about how long it will take to pay this off. If you’re inclined to think that experts telling you that you need to fork over large sums of money are necessarily wrong, go back and listen to the audio clips near the end of my last post. Look at the graphs and the pictures. Think hard.
The costs of being wrong, in either direction, are staggering. This is not a time to leap to conclusions.
It is also, in my judgment, not a time for those of us who are not professional economists to imagine that we can sort things out without expert advice. I have read some bloggers who have no background in economics or finance, who are nonetheless sure that there is/is not a crisis, or that the bill under discussion obviously is/is not necessary. We’re lucky enough to live at a time when experts provide good analysis very quickly. We should use it.
(Note: of course I’m not suggesting that anyone mindlessly defer to experts. I just think that questions like: what is likely to happen if we don’t pass this? are more likely to be answered correctly by people who knew what the TED spread was before a few months ago. It’s a judgment call, and one that requires a fair amount of sophisticated knowledge. I am of course trying to understand it as best I can. But I am not under the illusion that I could arrive at a view I feel real confidence in on my own. I feel sort of the way I might if I had to decide between two courses of action, each of which might turn out horribly, and which was right depended on the solution to some completely novel problem in theoretical physics. I might end up solving that problem all by myself, despite the fact that I last took physics in high school, but I’d be a fool to count on it, and an even bigger fool if I simply assumed that the totally awesome solution I just thought of was necessarily right.)
In considering the opinions of experts, it is of course important to restrict oneself to their opinions on the present bill. Thus, the Chicago economists’ letter is not relevant at present: it concerned the plan Paulson proposed, which is now dead.
The problem, of course, is that the experts are divided. For instance: Paul Krugman (and again), Brad DeLong (as of Saturday, but the outlines were clear then, and he has not taken it back), Lawrence Summers (ditto), and Mark Thoma think it should be passed, though none of them seems particularly enthusiastic. Nouriel Roubini is against it, and while Dean Baker hasn’t expressed an opinion on this particular draft, if his earlier comments are any guide, I imagine he’ll oppose it.
For my part, I support it. There are a lot of people who I respect who are genuinely worried that we might be on the brink of a serious depression, and who think this would help avert or mitigate it. But I hate this.
It also seems to me to be really important to keep my anger focussed where it should be: partly on the people whose deals got us into this mess, but much more importantly, on the legislators who failed to do their jobs, or who allowed themselves to be seduced by idiotic economic theories which were, as it happened, in the interests of powerful lobbies.
We’re obviously going to have to pass some serious regulation to prevent this from happening again. I’m happy to postpone that: I think the next Congress is likely to do a better job in any case. They are also likely to pass some real assistance to homeowners; again, while I’d rather this happen now, since people need help now, I think the next Congress is likely to do a better job.
We will also have to have some serious deficit spending. Regulation might prevent the next disaster, but it will not help with this one. I’m normally a deficit hawk, but I have absolutely no problem with the idea of rebuilding a whole lot of infrastructure if it helps us head off the problems that are surely coming.
Which is all to say: I support the bailout, but I do not imagine for a moment that it will do more than mitigate the damage, or that we will work our way out of it without a whole lot more work, and a whole lot more pain.
Hopefully, this is not a cultural disaster in which all of current social contracts come up for renegotiation. Of course, one might wonder whether such a set of circumstances could ever have come into being if what we expected in the way of social contracts even, in fact, existed at all.
Thanks for being sane on this, Hilzoy. So much of the liberal blogosphere seems to have gone completely bonkers about this, and largely in a really knee-jerk, “we hate big corporations” kind of way.
I think it’s quite possible to support this bill reluctantly and still hate big finance people with a white hot intensity….
I’d like to echo gwangung and just add that my hatred for big corporations–particularly those deemed “too big to fail”–is not knee jerk. It is considered, thought-out, and frankly, reasonable given the circumstances. In my opinion, the people who are bonkers are the ones who are refusing to question the basic premises of the system that brought us to this point in time.
FWIW, I’m against it, simply because:
1. It’s a big, expensive project that involves Congress inventing a lot of money that the US doesn’t actually have.
2. It’s being run by the Bush administration.
I don’t know economics: I just know that, given the past 8 years, left up to the Bush administration, I would expect this project to go horridly wrong.
More than that: I would expect this project to go horridly wrong in a way that would benefit the Bush administration/major Republican donors/the McCain-Palin campaign.
If they go through the $250 billion in the next four months, that’s a pretty valid concern….
Dear Hilzoy, it is perfectly true that the financial system of the United States is in a very bad way and it is probable that the country is headed for a depression in consequence.
Giving an enormous amount of money to very rich people who have a track record of using it for unproductive purposes which happen to benefit them, and to harm others — that does not look like a method of heading off a depression.
The U.S. Congress has utterly failed to regulate the other malfeasances of the Bush Administration. Can you think of a single reason why they are going to succeed with this one?
Oh, and by the way. Those people who are unhappy because some people on the left hate big corporations? Those big corporations are the forces responsible for the entire problem, dear friends. It is not only proper to blame them, it is essential. The refusal to blame them is the clearest possible indication that the current plan is intended to undermine the people of the United States in order to rescue a tiny plutocracy.
One simple change that would do much to minimize future disasters caused by overly clever rich people trying to get super-rich would be to revive really steep tax rates for really high incomes. If you’re a CEO and your marginal tax rate is 90%, more of your status, satisfaction, etc. will come from your position (head of Acme Products! All hail!) and less from your bank account (only $100,000 of your second million in income gets to that Swiss bank account, poor thing).
This is not an argument that we should reluctantly tax rich folks because of the useful things we can do with the money; this is an argument that we should eagerly tax rich folks because it will cut down on the damnfool things they’ll do to become obscenely rich.
I think we should spend that money on useful and necessary things; but we’d still be better off extracting the cash from the rich even if we loaded it onto leaky ships and sank it into the Mariana Trench.
gwangung: If they go through the $250 billion in the next four months, that’s a pretty valid concern….
Getaway money if the impossible happens and Obama wins with such a majority that there’s no way McCain can be handed the White House in January.
Not that Obama plans to seriously investigate or prosecute the crimes of the Bush administration, but there’s just a chance that it might happen anyway if you remove the active obstruction at the top.
I’m not sure I seriously believe that, but I certainly, seriously believe that there’s no way the Bush administration ought to be handed another crapload of money and told “here, fix what you broke”.
I’m generally for it. The arguments against it are arguments of principle (generally), not arguments against its efficacy. It is the arguments against its efficacy (and there are a few out there) that scare the begeezers out of me.
Krugman is rallying the troops. I was wondering if I could bring myself to vote for Barack HuSame Obama… but the thought of Phil Gramm as Treasury Secretary is truly horrifying.
Granted in advance: the decision to launch an aggressive war against another country is far worse than the decision to “fix” an economic crisis by funneling large amounts of money to the people responsible for it.
But all the sensible, prudent people saying that after all something did need to be done about Iraq, and yes, this might not be absolutely the right thing to do but we should listen to the experts and the experts were saying this needed to happen…
They were wrong.
All the hotheaded, idealistic, cynical, leftist, visionary, principled people who opposed the war on Iraq from the start?
We were right.
I was intrigued about the “popularity” of the leading people involved in the proposed bailout bill so I did a face-off at my Word Face-Off blog: Paulson, Bernanle, Pelosi, Reid, Frank, Boehner, McConnell, Baucus… even Bush, Obama and McCain. The resulting trend graphs are very interesting.
As an economist – and a Bayesian at that, the very line “is/is not” a crisis is more than a bit problematic. A better way to frame the question would be “What is the probability of a financial meltdown without the passage of the bill?” Alternately, how does that probability change with the passage? Or one more, how have Paulson’s actions changed that probability over, say, the last six months? That is, should you trust him to come up with a solution?
Different economists would answer the first question very differently but I doubt that few would place that probability at greater than 50%. I suspect that even Paulson may not place the probability that high. Personally, I’m down in the 5 to 10% range. Still a big number but a number that suggests – given the costs of being wrong either way – that it’s important to take the time to get things right. Perhaps as importantly, we have the time to get things done right.
The administration used fear to push a panicked vote for authorization to attack Iraq. I would hope that everyone in Congress would recognize the current setup looks distressingly similar.
Thanks for the voice of sanity. The Liberal blogosphere is so sure this is wrong. I am no economist, but common sense tells me these banks are connected in ways they even don’t know. if they tank they are taking with them hundreds of thousands of jobs, middle class investments in stock market, and their tangled web in every industry. Hence I support the bailout.
Did you just compare Economics with Theoretical Physics? Okay, let’s be honest, Economics has a lot less in the way of successful predictive results than Physics. A lot, lot less.
I think this is part of the problem here, we’re being asked to make this decision on the basis of what experts tell us, but this isn’t a field where experts have been shown to be much more reliable than people with average common sense.
Is there a disaster coming? Probably. But it’s amazing we needed Paulson to say so, and to cite vague and incredibly convoluted reasons. You’d think just looking at the level of federal debt, the size of the deficit, the amount of consumer debt, and the fact that we are fighting two land wars in Asia while waiting for the Baby Boomers to retire would be enough. Common sense says that couldn’t go on forever.
But apparently none of that is a problem. The real problem is too vague and convoluted to be understood by anyone but experts.
Will the bailout plan work? Honestly, I think the experts are guessing just as much as we are. About all we’ve got to go on is other countries in the past with banking problems, and what they did, and what happened next.
Thank you! It drives me nuts to hear commenters and bloggers blithely give their opinion. The arrogance and recklessness from both ends of the political spectrum has served to muddy the situation even more. I think you have it exactly right. A banker I spoke with said Bear Sterns was supposed to be the firewall. When that went down there was no room left for failure. I don’t know if that is true but I can understand what that means. We need to be calm and rational instead of falling back into our respective ideologies.
Well, the guys who were right all along (Roubini and Baker) do not want this bailout, and the guys who a year ago didn’t think this could happen (Krugman and DeLong), think it should pass. I’m going to use a highly esoteric evaluation method that consists of not listening to guys who were wrong and say this bailout shouldn’t pass, and the Dems are committing hari-kari by passing it.
But all the sensible, prudent people saying that after all something did need to be done about Iraq, and yes, this might not be absolutely the right thing to do but we should listen to the experts and the experts were saying this needed to happen…
They were wrong.
All the hotheaded, idealistic, cynical, leftist, visionary, principled people who opposed the war on Iraq from the start?
We were right.
Jes, the two situations aren’t even remotely comparable. In the case of the war, the hotheaded idealistic cynical leftist people of principle were backed up by the experts who actually knew the facts on the ground: your Jean Coles, your Scott Ritters, et cetera. The “sober practical individuals” backing the war were either self-interested in seeing a war or were ignorant of the facts on the ground. (Or were Thomas Friedman, who occupies a special seat of his own.)
This time around, the sober practical individuals backing the bailout aren’t particularly self-interested for the most part (at least not the ones worth listening to – I’m talking your Paul Krugmans and your Brad DeLongs, not your Henry Paulsens) and definitely aren’t ignorant of the facts on the ground.
Dean Baker and Nouriel Rabini have both made compelling cases against the bailout; Krugman and DeLong have made strong cases for it. Base support for bailout or no bailout on the cases they make, not on a gut feeling that you’re right – the gut feeling is how the war in Iraq got started in the first place.
So much of the liberal blogosphere seems to have gone completely bonkers about this, and largely in a really knee-jerk, “we hate big corporations” kind of way.
I’m not against federal action to insure that the credit markets continue to function.
I am against tax money being used to insure that financial speculators don’t lose money.
Are those two things impossible to tease apart?
I’m not anti-corporation. I work for a corporation, and hold equity in corporations. I think corporations are an excellent vehicle for taking on commercial enterprises that are bigger than a breadbasket.
I am against *people* who use their position in corporations to engage in reckless and anti-social behavior. I’d like to see them in jail.
What I am really, really, really against are the folks in government who have failed to safeguard the public interest.
Look, the problem here is not corporations. The problem is greedy, reckless *people* who want to make themselves obscenely wealthy by playing stupid games with other people’s money.
If there is a way to stabilize the capital markets without giving them a dime of my money, I’m all for it.
If not, then we’ll all do what we have to do, and we will, once again, suck it up and move on.
But there is nothing “bonkers” or “knee-jerk” about the anger that folks feel. We’re being screwed, and that right well.
It really ought to piss you off.
Thanks –
Well said, mightygodking. “Don’t listen to prudent-seeming people!” isn’t a good takeaway message from Iraq, though I’m sure it leads to a much more exciting life.
I’m excited that I’ll probably get to buy a bank on the cheap through my government. The details of the AIG bailout are really encouraging, as far as how things will turn out for the taxpayer. Paulson was given a free hand there, and he gave us a really good deal — 11.5% interest on anything they borrow, 8.5% interest on anything they don’t up to 85B, and 80% of the company.
“I think it’s quite possible to support this bill reluctantly and still hate big finance people with a white hot intensity….”
Yep. As I said somewhere, I am trying — and it does take effort — to keep my eyes on the ball. And the ball, as far as I’m concerned, is what happens to ordinary people.
Jes: If it were just like Iraq, I would be against it, as I was against Iraq.
As to Krugman: he certainly called the housing bubble. (E.g. here and here.)
I’m not very good at economics, but I’m not stupid either and economics isn’t hard science. So before anybody speaks in favour of just giving 700 billion away (btw, why not 300 billion, or a trillion, who’s to know?) I would at least expect them to make a strong case against Roubini’s case that:
the claim by the Fed and Treasury that spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification.
But hey, it’s not my money.
I’m talking your Paul Krugmans and your Brad DeLongs
Yes: and neither of them support the bailout. Brad Delong supports “temporary Swedish-style nationalization”, and Paul Krugman calls the current plan an “ugly compromise”.
My basic point is: you can’t trust the Bush administration. By this time we are – or ought to be – all experts in the facts on the ground.
Anyone who is basing any part of their belief that the bailout ought to happen on the Bush administration acting for the good of the country, has probably been living in a little Republican bubble in Alaska for the past 8 years, or else is running a fever that causes a level of delusion.
We can assume that the Bush administration will do whatever they think is best for their own, and secondarily whatever will ensure that McCain is in the White House in January and/or the Democrats do not control Congress.
We cannot afford to assume that the bailout will be administered competently or that the intent behind it is to alleviate the damage that a financial crisis will do to the majority of people in the US or around the world.
Base support for bailout or no bailout on the cases they make, not on a gut feeling that you’re right – the gut feeling is how the war in Iraq got started in the first place.
Oh, come off it. Now you’re just being silly. I don’t have a “gut feeling I’m right” – I have a considered and knowledgable view of the Bush administration and the kind of people they appoint and the kind of policies they approve. In 2002 and 2003, the Bush administration didn’t justify their leading the US into war based on a “gut feeling” – they just lied, and lied, and lied again, and lied some more, and are still lying.
Lesley: “It drives me nuts to hear commenters and bloggers blithely give their opinion. The arrogance and recklessness from both ends of the political spectrum has served to muddy the situation even more.”
So you’d prefer we just come up with a blank check every time Paulson asks for one?
Thank God for the netroots outrage, for the Main Street disgust, for the closest thing to a middle-class revolt we’ve had in a long time.
If there had been this kind of angry introspection before most Dems put up very little fight before Bush took us into Iraq, maybe that situation would have turned out differently. I doubt it; but maybe.
P.S. Pelosi wants us to call the bailout a “buy-in.”
My problem with this bill is that I’ve been following all this as well as can be expected by a non-banker and I still can’t understand what exactly this is supposed to do.
Essentially, the solution is that the treasury will buy up assets above market value (otherwise, this whole thing is useless), and sit on them for an unspecified period of time until they become more marketable and will then sell them. I’m fairly sure that a lot of these assets have a current fair market value of $0 and an expected future value of $0 and everybody knows this. Most of the last couple of years has been extended efforts by holders of these securities and obligations to make sure that price discovery didn’t happen.
As far as I understand it, the problem is that there is a large risk that short term credit will seize up due to counterparty concerns: all the banks have no trust in each other to pony up. If that’s the case, why don’t we solve this problem directly? We The People have these spanking new Fannie Mae and Freddie Mac things we bought a couple of weeks ago that buy and guarantee conforming mortgages: can’t we add conforming commercial debt to their charter and put the money there, and strengthen FDIC and SIPC to take care of bankruptcies?
I’m guessing that solving the actual problem means a lot of banks, with their equity and debt, will get wiped out. However, if we stop the credit seize-up, life will go on with the surviving banks. The actual proposal on the table seems to save the banks and hope that that saves the credit market.
Experts aren’t stupid, but they are often conflicted. They will be talking their books, since that’s what they’re paid to do. A lot of these people should have been screaming their heads off years ago about the same securities that are now imploding, but didn’t say a word. Also, the death of the current Wall Street ecosystem may be like the end of the universe from where they sit, but the rest of us may weather this a lot better than they personally do.
If it were just like Iraq, I would be against it, as I was against Iraq.
Well, it’s not an aggressive war on a nation that can’t do the US any harm.
It’s only like Iraq in that it’s a colossally expensive mistake that a lot of people are arguing the prudent thing to do is to support it because it has to happen now, even though there doesn’t appear to be a single independent expert found to give this “plan” wholehearted approval… and it’s also like the Iraq war in that none of the supporters have discussed how the Bush administration are going to be prevented from wrecking it in their usual style, or how the Bush/McSame administrations will benefit from it electorally.
I actually don’t blame the financiers too heavily. You have to consider their institutional incentives: many knew that things were getting out of control, but if any of them were to forgo the massive profits that others were seeing then they would quickly be out of a job. You were constantly faced with the choice of gambling that the crash wouldn’t come this quarter or this year, or else giving up the gig.
I blame the overseers of the markets a lot more: they didn’t apply rules that would keep the game within reasonably sane constraints, the individual players where each playing as competitively as the rules allowed in order not to get benched.
Obviously it’s not as simple as that. But what is one banker to do in, say, 2005? Stand up and say for the good of the country he wasn’t accepting these assets any more, and then watch as those assets are gobbled up anyway by the other players who probably made a hat of money for the next year or two?
You know, it’s also worth considering that if the bailout is reasonably effective and the depth of the expecting recession is relatively moderate, then perhaps the wealth lost during the hangover might be substantially less than the wealth created during the binge. In other words, it’s not at all inconceivable that when we do the arithmetic 10 years from now, it will all have been worth it. I’m not saying that’s what will happen, I’m just saying that a LOT of wealth has been created in recent years, and the people in charge seem pretty savvy to avoid the mistakes made in the early 1930s.
Everybody seems to want to jump on Bernanke and Paulson, but I can’t see a great deal to fault them. The bailout is a bold attempt to act big and act early, thereby escaping much of pain caused by dithering after 1929 and in Japan during the 1990s. It’s not like they personally caused the crisis, and you could not have expected them to ask congress for a 700 gigabuck outlay BEFORE banks started imploding, they would have been laughed out of the room.
Besides, as financial meltdowns go, while it’s probably the biggest in absolute terms, the predicted bailout is a relatively small chunk of GDP compared to the average in these situations.
Just saw this, very funny – and scary.
I actually don’t blame the financiers too heavily. You have to consider their institutional incentives: many knew that things were getting out of control, but if any of them were to forgo the massive profits that others were seeing then they would quickly be out of a job.
This is a key point, and what the deregulate-everything crowd just does not get. It’s exactly the same reason we ban steroids in sports: if we didn’t, an honest athlete would have the choice of not taking steroids and being completely uncompetitive and out of the sport, or taking steroids, being competitive, but ruining his health.
However, the CEOs certainly didn’t come out against these securities, at least not in public. Since most of these guys are massively overconfident in their own abilities, my guess is that they saw the problems just fine but thought they were smart and fast enough to dump all the crap on someone else by the time the music stopped. Oops.
My problem with this bill is that I’ve been following all this as well as can be expected by a non-banker and I still can’t understand what exactly this is supposed to do.
Essentially, the solution is that the treasury will buy up assets above market value (otherwise, this whole thing is useless), and sit on them for an unspecified period of time until they become more marketable and will then sell them. I’m fairly sure that a lot of these assets have a current fair market value of $0 and an expected future value of $0 and everybody knows this
My understanding is as follows:
The crisis at the moment is a lack of liquidity. Banks and other financial institutions lend money to each other all the time, all day long, sometimes borrowing huge sums of cash and giving it back before the close of business the same day. Now, however, everybody is afraid that they are going to lend a big wad of dough to the Super Permanent New York Bank of Invincibility, and the bank will implode before paying them back. Thus everybody is asking for enormous interest on their loans, thus nobody is borrowing or lending. But because nobody is borrowing or lending, the prophecies of doom are almost self-fulfilling because banks go bust when they otherwise would not have if they could just have borrowed money like they normally do.
The root problem is a lot of lousy assets out there, but while much of this stuff might well end up being practically worthless, their current worthless evaluation is the result of a total lack of demand, because no one is borrowing money to buy them. You could have a diamond as big as a grape, but if no customers exist for it, then it’s practical value is zero.
The bailout thus proposes to recapitalise the banks by giving them hard cash for these assets, in theory instantly boosting reciprocal confidence and get the money moving through the pipes again. These assets are NOT worth zero – in the future they may well end up being quite valuable once the system is back on its feet and the natural buyers of such assets are able to start buying assets again. Some will be duff, some will be very profitable for the government, no one seems to think this is $700B down the drain. Talk of eventual profit is optimistic, but not inconceivable and the historical precedents are supposedly quite good. Moreover, the sooner the bailout occurs, the better for the economy and the higher the value of these assets will prove to be.
The government has to buy them now not because no one else is gullible enough, but because no one else has the money and the financial security to do so. The Federal government dwarfs any bank in sheer financial muscle, and is thus the lender and buyer of last resort in the event of an emergency.
While certain banks will go bust regardless, the hope is that banks that are in danger purely because of a temporary by very grave period of illiquidity can be saved.
In keeping with ericblair’s comments, what really gets me is — not so much bailing out all of these financial institutes if it is going to prevent another Great Depression — but the idea that in order to get them whole again we, the taxpayers, have to buy their assets at well below market value. Or we’re buying assets that we are simply guessing at their value.
The whole thing seems unscientific and a crapshoot.
But because it’s being done by people much smarter and richer than me and ericblair, we are told even though it’s medicine that tastes bad we need it.
ericblair: yeah. I am fascinated to see McCain blame this on greed. Last time I checked, the general idea behind capitalism, was that greed, properly channeled, drives innovation and efficiency.
Our present administration, along with Alan Greenspan et al, decided to forget the ‘properly channeled’ part. I suppose it’s to be expected that given a choice between remembering it — aka giving up on the idea of deregulation as a e-all and end- all –and blaming “greed”, they would blame greed. But that’s like blaming competitiveness for problems in sports.
Not (to be clear) that I don’t think they are, in fact, greedy, and not that I am not well and truly pissed at the lot of them. Also, not as though I don’t find a lot of their priorities not just wrong, but inexplicable. (There’s a reason I’m not on Wall Street…)
I just think it’s funny when conservatives decide that the problem with the markets is greed. That’s all.
ericblair: The thing about mortgage backed securities is that no matter how spurious the loans were, they are backed with houses, and although houses are falling in value, for them to be entirely worthless is a hard situation to imagine.
But even so, a rather important provision that Dodd-Frank added is that if the securities turn out to REALLY be worth less than the government pays for it then we get shares of stock instead and it just becomes a good old fashioned buyout of the respective companies.
The whole thing seems unscientific and a crapshoot.
I don’t think it’s unscientific at all. In fact a bailout is SOP for a financial meltdown, because as much as people like to warn against ‘moral hazard’, the reality is that no conscionable government can watch its capital markets evaporate. Bankers may grate, but without them none of us would have jobs, and though we wish it wasn’t the case and say that it’s not the cash, the harsh reality is that a banker is simply more important – economically speaking – than a factory worker.
There’s certainly a lot of known unknowns etc., but I think that NOT bailing out the financial sector as a point of principle would be to gamble the entire country to prove a very questionable theory. You would be risking calamitous depression now so that future generations of bankers *might* be more careful. Which is obviously silly, and based on the whole anti-regulatory ideology that doesn’t want to stop bankers from getting too silly simply by not letting them, instead of allowing the economy to implode a few times until they learn their lessons.
That’s basically what the whole anti-regulatory, anti-bailout ideology of the House Republicans comes down to – pure fantasy. They think the absence of government is utopia, when actually the absence of government is just Russia in the 1990s.
“I don’t think our Congress has faced a more important decision than whether or not to pass the bailout bill in decades, perhaps longer.”
Should be: “I don’t think our Congress has faced a more important decision in decades, perhaps longer, than whether or not to pass the bailout bill.”
We’re not discussing whether or not to pass the bailout bill decades from now.
The root problem is a lot of lousy assets out there, but while much of this stuff might well end up being practically worthless, their current worthless evaluation is the result of a total lack of demand, because no one is borrowing money to buy them. You could have a diamond as big as a grape, but if no customers exist for it, then it’s practical value is zero.
Interesting discussion. However, if it really is a liquidity crisis only as you say, why shouldn’t the current efforts by the central banks to “flood the system” be the correct way to solve the problem? Why do we need to buy the securities, since there’s hundreds of billions of dollars more money/credit in the system today to buy this stuff on the market?
I’m far less sure of the worth of these securities, since they’re based on mortgages whose risks were seriously misrepresented by the homeowners and mortgage brokers, plus their performance was based on some seriously flawed mathematical models that assumes that a lot of default events were independent instead of systematic. Even if they are worth something, there’s enough uncertainty due to the flaws and misrepresentations that make these look like pigs in a poke and have a market value reflecting that.
If H. can basically repeat a thread, I can repeat a comment:
hilzoy: It is also, in my judgment, not a time for those of us who are not professional economists to imagine that we can sort things out without expert advice.
Tell it to Congress. They chose not to take testimony from any professional economists about these proposals.
Those principles Obama laid out last weekend? There are only gestures toward them. The negotiations won almost nothing substantive. This bill is the naked class war of the Paulson proposal with a few fig leaves.
No.
And I’m not opposed on principle, pace byrningman, but opposed because this bill may not resolve the credit freeze, certainly will not do anything to solve the underlying problems (either in terms of regulation to prevent more bubbling-up or in relief to reduce the toxicity of mortgages at the bottom of the betting pile), and is being paid for by the wrong people.
If there had been this kind of angry introspection before most Dems put up very little fight before Bush took us into Iraq
Um, there was. It made no difference at all.
I’ve got the big fear that the Bush Administration doesn’t really care what’s on that written piece of paper and will do as it will.
And be incompetent at it, as usual.
My wish is to get something that will hold things together until a real plan is formed by the incoming administration.
Nell: I don’t want to re-argue Iraq. But I don’t recall the public being nearly as angry and confused and desperate about Bush taking us to war than they are now about the Fed taking our money.
Nell: “This bill is the naked class war of the Paulson proposal with a few fig leaves.”
Two dubious legacies of the Bush Administration:
Iraq.
Class warfare, featuring the brutal beatdown of working America.
Considering that they had only one rather than eight years of Bush-Cheney looting-as-governance to go on, a remarkably high percentage of the public — a good third — were angry and desperate.
Another sixth were confused and uneasy.
But the corrupt political class, then as now, had already made the decision to go along.
Ithink that the public in general is far less jhappy aboutthis bill than they were about invading Iraq. In fact I think that the publicn in general supported, in deed wallowed in jingoism, befoe, during and immediatlely after the invasion.
Rank and file Deomcrats are different, a sub fropup of the public and a subgroup that often has a different reaction to major events than the wider public. Before, during and after the invasion many many rank and file Deomcrats were very disgusted–with Bush and with Democrats in Congress. In fact I think that’s why Hillary didn’t get the nomination.
On this issue, well as a rank and file Democrat my feelings are very mixed. I’d be a lot happier if there was a big well publicized effort underway to restore the regulations that are need to prevent this form happening again. I’d also be happier if the problem was being clearly labelled as one caused by Republican deregulation. Put the regulations back, blame the deregulators: that’s ending the party. But just a bailout, even with strings? That’s just giving the drunk some hot coffee while we wait for the next party. So I’m pissed.
Something to remember: the alternatives for Iraq were much simpler: invade or not invade.
That’s not the case here; the alternatives are more in number and the issues way more complex (at least from what I can tell). And, hard to admit as it is, we ARE going to have to call upon the same yo-yos who got us into this mess to do some of the work to help alleviate it.
Ah, that crystallizes my thought exactly.
[W]hat is one banker to do in, say, 2005? Stand up and say for the good of the country he wasn’t accepting these assets any more, and then watch as those assets are gobbled up anyway by the other players who probably made a hat of money for the next year or two?
Perhaps, rather than putting every ounce of their effort into creating the crisis we now face, they could have used the untold millions they spent lobbying Congress to press for sensible regulations.
gwangung: we ARE going to have to call upon the same yo-yos who got us into this mess to do some of the work to help alleviate it.
Granted. But what we’re actually doing is giving virtually all the decision-making power to one of the people who, as chairman of Goldman Sachs, got us into this mess (and then got Goldman out of a lot of it by taking over AIG), who failed to put any of the brakes on and continually insisted things were fine while the situation careened out of control.
My reaction to this post was immediate, and I was going to compose a post, but then I read what TJ said, and all I can say is ditto.
Well, the guys who were right all along (Roubini and Baker) do not want this bailout, and the guys who a year ago didn’t think this could happen (Krugman and DeLong), think it should pass. I’m going to use a highly esoteric evaluation method that consists of not listening to guys who were wrong and say this bailout shouldn’t pass, and the Dems are committing hari-kari by passing it.
hilzoy, I’m sorry, but not even the most panicked of the economists from whose authority you are choosing to argue is predicting anything remotely resembling another “Great Depression.”
I have yet to see a robust explanation of how a not-awful bailout actually fixes something rather than merely covering some (enough?) exposed assets. I have yet to see any explanation of why the only way to mitigate side effects of a “seizure” in the credit markets is to fork over umpty billion dollars right this minute. Krugman et al aren’t saying even that much in so many words — they just think the immediate liquidity is preferable to the alternatives and aren’t saying anything about post facto options.
Let’s face it. We don’t have any (non-military) industrial sector worth talking about now, whereas in the twenties capital-intensive manufacturing was practically the whole economy. We also tend to forget that the depression-era wreckage of the ag sector was not just a problem with capital. There was the small matter of a long and severe drought as well.
In the absence of any (non-military) industries that require large amounts of capital and rotating credit to function it’s not clear why fewer but larger concentrations of liquidity are preferable to smaller but more numerous concentrations of liquidity. Is the average citizen really going to benefit more from the protection of a hundred existing banks rather than from the creation of a thousand new credit unions?
There are other ways to prevent credit from drying up besides redistributing wealth from future taxpayers to professional moneylenders. There are other ways to create jobs besides pumping more cash into the money supply.
So thanks, but no thanks. We’re gonna be in a world of hurt pretty soon regardless, and spending umpty billion dollars to prop up an overleveraged financial sector isn’t going to change that.
Bankers may grate, but without them none of us would have jobs
This is actually not true. Many forms of employment don’t require any capitalization at all.
Swap “bankers” and “us”, however, and you’re onto something.
the harsh reality is that a banker is simply more important – economically speaking – than a factory worker.
Well, sez you.
First of all, in terms of, for instance, the manufacturing sector, where “factory workers” actually work, the analogue to the “banker” would not be the line worker, but something like a director of production. Someone who makes executive decisions about how resources should be deployed, to maximize their value.
I’d say the overall economic value created by a manufacturing director would compare quite well to that created by an investment banker in enterprises of comparable size and capitalization. My two cents.
So, nothing personal, but IMO your point here is bogus.
Thanks –
As with the Iraq decision, while recognizing that the impetus for the deregulated debacle came from the right, I’m seethingly furious with the Democrats who allowed this bubble to continue, made no real effort to re-regulate, and who when the crunch came in the form of this outrageous proposal failed to negotiate any real protections for taxpayers, much less the people at the sharp end of the foreclosure-recession-bankruptcy stick.
I’m looking at you, Barney Frank. And Chris Dodd. And all the other members of the banking and finance committees who’ve been bought.
ericblair: The thing about mortgage backed securities is that no matter how spurious the loans were, they are backed with houses, and although houses are falling in value, for them to be entirely worthless is a hard situation to imagine.
No time to comment in detail on the bill (I’m still getting caught up reading about it), but this comment quoted above is simply wrong, and it is very important to understand why.
The mortgage pools which were bundled into MBS were seperated into tiers of anticipated likely failure rates, called tranches, and this process was in many cases repeated at multiple levels. What that means in practice is that for an MBS which is not based on senior tranches, the value of that security is very much like being a creditor who is last in line during a bankruptcy process.
All of the money which can be extracted from the underlying set of mortgages will be used to pay off the senior tranches first and to do so completely, while the junior tranches will be left to see if there is anything left for them before the cash runs out. If the monetary stream runs dry before the junior tranches are paid, they can sustain up to 100% losses even if the default rate of the underlying mortgages is much closer to 0 than it is to 100%.
It is precisely the MBS which are based on junior tranches which the investment banks will be selling to the Treasury first, and then progressively more senior ones as they get deeper into their dodgy paper, as the unloading process continues.
This means that the first batch of paper sold to the Treasury by each investment bank will be completely and utterly worthless, and subsequent batches will only be worth something if they dig deep enough into their MBS pile to start selling us paper based on senior tranches – which they have little incentive to do because those securities are known by everybody on the Street to have value and will be liquid as a result.
So just because the actual houses continue to hold their value does not mean that the securities based on them will have any value at all.
As a wild off the cuff guess, I’d estimate that if we purchase $700 billion in MBS over the next 6 months, the Treasury will be lucky indeed to recoup $100 billion from that mess of paper.
Well, the guys who were right all along (Roubini and Baker) do not want this bailout, and the guys who a year ago didn’t think this could happen (Krugman and DeLong), think it should pass.
They want it to pass, alright, but let’s please not forget this minor detail:
Both think it’s a bad plan and that it will probably not help resolve the crisis.
ThatLeftTurnInABQ: That’s what makes the equity warrant provision Dodd inserted so critical (in fact, my support for the bill hinged entirely on that sole provision).
If they sell us stuff that’s all junior tranches and charge us like it’s senior, the difference comes out of their company. It’s heavy incentive not to try that.
Also, it appears Treasury is going to purchase the assets by reverse-auction — yet another incentive not to jack up the price.
Some companies — those most desperate for cash — will undoubtably gouge. And we’ll end up with equity or senior debt in their company, and they will be among the last to be bailed out.
Equity warrants and reverse auctions push the incentives away from “Dump the worst crap on the government for the highest price I can think of” to “Sell as little as possible to survive, as close to what I predict it’s actual worth will be in a year or two”.
Without them — IE, Paulson’s original plan (unless part of the “I can do what I want, how I want” was him planning equity warrants and the like, which I doubt) — you have a massive wealth transfer. With them, you have something that’s not much different than any ordinary bailout, and a lot fairer to taxpayers.
As I said — without Dodd’s provision for equity warrants, I would be against this bill. If it turns out the compromise (and I THINk it requires warrants, but am not 100%) does not require warrants in virtually all cases, I will be against the bill.
Warrants are insurance for taxpayers against getting sold brass for the price of gold.
“In the case of the war, the hotheaded idealistic cynical leftist people of principle were backed up by the experts who actually knew the facts on the ground: your Jean Coles, your Scott Ritters, et cetera.”
Who is Jean Cole?
I assumed that was a typo for Juan Cole.
Gary, he’s the French counterpart of the English John Cole and the Spanish Juan Cole. There’s an international fraternity of them, including Giovanni Cole and Ivan Cole and Hans Cole and Sean Cole and João Cole.
Johann Cole and Yiannis Kole as well.
Morat20,
That was my position on the bill as well – “no equity, no deal”.
What scares me is that the articles I’m reading now are very confusing on whether the warrants as specified in the final version of the bill actually have any teeth in them or not, and there are already some indications that the practical effects of the bill may differ significantly from what the formal language of the bill would seem to indicatea – that some of the language in the bill may a fig leaf for concealing some very ugly and disturbing things which are not fit for public consumption.
It seems like this is one of those “the devil is in the details” areas where we may think we are getting equity warrants which are actually worth something but in the end not so much.
In the face of this much confusion, I really don’t know what is the best course of action, but if Roubini is calling this bill a monstrosity, that for me is a dealbreaker since Roubini has been closer to correct in predicting the course of events than anyone else thus far.
It really comes down to trust here – and at this point I don’t trust anybody except the harshest critics of the administration and Wall St. who are either dead set against this bill (Roubini) or are telling us it is a crappy deal but the best we can get out a politically toxic environment right now (Krugman).
And to repeat a point I made in a prior thread – I think this is our one and only shot to recapitalizing the banks with borrowed money. If we blow this chance (with a bad bill which fails to solve the problem) then I don’t think we will have another chance to borrow money from abroad – the Treasury will have to scrape up the cash via massive tax increases, not by selling more T-bills.
Though it may be a few years before Giovanni Cole really gets his blog going.
It’s a judgment call, and one that requires a fair amount of sophisticated knowledge. I am of course trying to understand it as best I can. But I am not under the illusion that I could arrive at a view I feel real confidence in on my own.
That’s all true, and I’m torn between acknowledging my lack of expertise and my gut sense that I’m being taken for a ride on this.
One rule of thumb I can apply, though, is that when there’s a major, major deal like this happening, I ought to hear screams of pain from both sides of the question. So far, I’m only hearing them from the “Main Street” side. That makes me lean to wanting to extract more from the lowlifes who created and enabled the untransparent mess we’re in — e.g., nationalization, voting shares in bailed out companies, tax surcharges on the very wealthy, etc.
Morat20: [If it] does not require warrants in virtually all cases, I will be against the bill.
Thomas Nephew: when there’s a major, major deal like this happening, I ought to hear screams of pain from both sides of the question. So far, I’m only hearing them from the “Main Street” side.
The speed with which the House is determine to pass this makes it unlikely that we will get straight answers to questions about the toothlessness of many of the provisions. Therefore it’s worth reading the analyses that have already been done:
Reports from the conference call Treasury held with about 600 people in the the industry (no media, no public invited; if it weren’t for financial bloggers, we wouldn’t know what was said).
‘Analysis of the Bailout: What’s In it, Anyway?’ from Clusterstock
Didn’t see TLTIAbq’s comment; the links in my comment are from the ‘Naked Capitalism’ post he links. And I’d echo his excellent point, with the reminder that the best that can happen here (and it’s very unlikely) is that this bailout eases the solvency fears that have created the credit seize-up enough to buy time for real regulation.
If it doesn’t, then the progressive taxation that should happen to fund universal health care and clean energy investment will go to further propping-up of the financial sector.
Heaven forfend anyone touch that sacred military budget…
“It is also, in my judgment, not a time for those of us who are not professional economists to imagine that we can sort things out without expert advice.”
Your faith in economists and the study of economics is misplaced. For example, Long Term Capital Mgt was comprised of the very best and brightest economists (including nobel prize winners) and they went bust and almost brought down the entire financial system.
I am fairly certain that someday this “bailout” will be seen in the same light leeches as cure by medical doctors.
We’re gonna be in a world of hurt pretty soon regardless, and spending umpty billion dollars to prop up an overleveraged financial sector isn’t going to change that.
But that’s the point of the bailout, helping the banks deleverage in a safe way.
Krugman: “Mr. Gramm hasn’t had an official role in the McCain campaign since he pronounced America a “nation of whiners,” but he’s still considered a likely choice as Treasury secretary.”
Any blogger with an audience has a moral imperative to mention this as often as possible.
ThatLeftTurninABQ: Ah, I was aware of the magic of tranches but for some reason I didn’t put two and two together that the diveeing up of payouts applied both when mortgages were paid off properly and when they were foreclosed on.
Russel,
me: Bankers may grate, but without them none of us would have jobs
This is actually not true. Many forms of employment don’t require any capitalization at all.
First of all, in terms of, for instance, the manufacturing sector, where “factory workers” actually work, the analogue to the “banker” would not be the line worker, but something like a director of production. Someone who makes executive decisions about how resources should be deployed, to maximize their value.
I’d say the overall economic value created by a manufacturing director would compare quite well to that created by an investment banker in enterprises of comparable size and capitalization. My two cents.
So, nothing personal, but IMO your point here is bogus.
I just think that’s an emotional response rather than a cold look at realities. No modern business exists without capitalization, you have to go to the developing world to find segments of the economy that subsist with credit markets – and subsist is the right word.
The line worker-manager metaphor is the wrong metaphor, because my point is that without bankers not only would the line worker not have a job, the manager wouldn’t either, and the factory wouldn’t exist.
Also, I’m sure not who was arguing that no American industries these days need credit, but that’s just mad. You’d be hard pushed to find an industry that doesn’t depend on credit. From the old car firms that are so in hole that they issue huge new bonds every year, to the shiny new dotcoms and biotech firms launched on a Powerpoint presentation and a huge wad of capital, the entire US economy is a big debt sandwich, and right now there’s not enough to go around.
I haven’t read the final bill yet, and I haven’t read the arguments for or against it (except right here in this thread). But I hope when I do read them, they explain how the bailout plan protects itself from the demonstrated incompetence / malfeasance of the Bush administration in its last days.
And:
The political problem is that people less thoughtful than you are really angry and are looking for someone to blame, and right now it looks all too easy for them to blame the Democrats who are taking credit for a $700 billion bailout. That’s going to make it harder to get a better Congress.
… Evidence that I hadn’t read it: I didn’t know the $700 billion had been cut in half. That might help with the politics.
But that’s the point of the bailout, helping the banks deleverage in a safe way.
But it is quite clear that there are other ways to do this (see Sweden for examples, the IMF paper referenced by Yves for even more examples).
My best estimate is that there is a real crisis but we are being railroaded into a bad solution which likely to be ineffective at doing much other than providing large benefits to the people who are telling us we have to act now.
In other words: OMG the boat has just hit an iceberg. Quick! Launch the lifeboats – and make sure the bankers and brokers get in first.
If Roubini and Krugman are both correct, Roubini about the more purely financial aspects and Krugman about the political aspects (this is the best we can do in dealing with a potential emergency right before and election), which to me seems about right, then I think the best mitigation we can get would be to scale down the size of the funds being committed immediately and give Congress stronger control over commitment of additional funding.
One part of the private conference call which Yves posted (and which Nell also linked to) that is especially telling is this:
[note: the boldface is my emphasis]
Do you get that? This whole business of “well Congress can stop the flow of money if it doesn’t approve” will require a Presidential veto override within 15 days or less.
How many veto overrides have we had recently?
How many do you think we can get in the face of finanical panic?
0 is what I’d estimate. In other words the tranching of this outlay is nothing but a cynical figleaf.
… Evidence that I hadn’t read it: I didn’t know the $700 billion had been cut in half. That might help with the politics.
Erik,
see my post at 1:14pm. There is a bait-and-switch manuever going on here.
Also, the point which Yves raised at the very beginning of her post is huge to me. The mere fact that that conference call was for analysts only stinks to high heaven. If it weren’t for the econobloggers nobody in the wider public would even know about this.
We are entering RICO territory here with the way the details of this bill and what they really mean are being dealt with.
without bankers not only would the line worker not have a job, the manager wouldn’t either, and the factory wouldn’t exist.
And vice versa – this whole line of argument is absurd.
Bailout going down in the house? Amazing.
The House of Representatives (where the people go to fuck themselves) is voting DOWN the rescue plan.
The market is now down 600 points.
Banks and mortgage companies in Europe are going belly-up by the hour.
Good luck to all of you.
The jackasses over at Redstate are bragging about their effing guns.
They are going to need them.
Looks dead.
“I assumed that was a typo for Juan Cole.”
Ah, thanks. For some reason he didn’t come to (my) mind.
I tried to keep track of who said what, but life’s too short….
So, to the general point of “Hate the Bankers”:
I too work for a major, very well-known financial company (mutual funds and brokerage). It is also about the most cautious company in the business, and so has NO primary exposure, and almost no secondary exposure, to this crapola. And the point is, it is possible to be very, very succesful and very, very profitable in these businesses and DO IT THE RIGHT F-ING WAY!! Notice that Citi, for instance, is a huge buyer in all of this (absorbing Wachovia today); you haven’t heard a breath of a whisper about problems at Fidelity, Schwab, Citi, Goldman, or many other firms. They could have chosen to dive in with both feet. They didn’t. And yes, I know that except for Goldman they aren’t “Investment Banks” per se. But there are lots of ways to invest in crap without underwriting it. You could insure it, for instance (Hello AIG!!).
So, yes, hate the bankers. By all means. They took unconscionable risks, and believed in the permanence of bubbles, both the worst mortal sins in their businesses, at their level, all for super big bonuses. As someone (probably more than one someone) said up above: its time to let the grownups run things.
As for executive comp: no-one likes that the limits are only going forward, but it would have been a hell of a series of court cases to try to abrogate exisitng employement contracts.
We are very close to the President of the United States declaring financial martial law.
If they sell us stuff that’s all junior tranches and charge us like it’s senior, the difference comes out of their company.
I’m getting a bit shell-shocked from spending so much time in the tranches. Can I transfer out of the infantry?
Thus endeth the campaign of Senator John McCain.
It appears to have failed in the house. I guess we’ll see if the whole economy grinds to halt, or if the Dow just goes back to 2005 levels and we do something else about credit on Main Street.
Bailout goes down on initial vote in House:
Democratic 141-94
Republican 66-132 (now 65-133; probably more vote-switching ahead as GOP gears up to run on fake-populist “we killed the Wall Street giveaway”).
The politics of it have a very Lucy and the football feel.
This bill stank on the merits, and to go in the
The merits of this bill are few enough, and moving in the Republicans’ direction is
moving in the Republicans’ direction is extremely unpleasant to contemplate.
JT: “The market is now down 600 points.”
I have a co-worker — he’s only 10 years from retirement and is heavily invested; I am 20 years away and probably have no more than $1,000 in my 401K — who is doing DOW play-by-play.
“Down 700.”
“Now 425.”
It seems ironic that the House Republicans — the party of Wall Street, or so I thought — seems intent on bringing this bill, and the economy, down.
P.S. Has John McCain re-suspended his campaign yet?
Can’t the President appoint Warren Buffet as a “special advisor” to Congress?
I don’t think there is an American alive who would object to that.
Just had a crazy thought: The McCain camp may wind up using the DOW’s fall and the continued Bailout bruising as an excuse yet to call off the VP debate.
Something that caught my untrained eye about the plan (pp. 45,46,48):
The Secretary may not purchase, or make any commitment to purchase, any troubled asset under the authority of this Act, unless the Secretary receives from the financial institution from which such assets are to be purchased a warrant giving the right to the Secretary to receive nonvoting common stock or preferred stock in such financial institution, as the Secretary determines appropriate; or […]
SUFFICIENCY.—The financial institution shall guarantee to the Secretary that it has authorized shares of nonvoting stock available to fulfill its obligations under this subsection.
On the face of it, I think I’d prefer voting “oh no you don’t” stock to nonvoting “nothing I can do about it” stock, but maybe there’s some up-is-down meaning to this I don’t understand. Anyone else bothered by this?
“Just had a crazy thought: The McCain camp may wind up using the DOW’s fall and the continued Bailout bruising as an excuse yet to call off the VP debate.”
Does Palin know about the economy? She is from a state where they pay people to be residents.
And the point is, it is possible to be very, very succesful and very, very profitable in these businesses and DO IT THE RIGHT F-ING WAY!!
Good point, I always cringe when avoidable economic crises are treated like natural disasters and the concept of corporate ethics is hastily thrown out of the window.
Does Palin know about the economy? “She is from a state where they pay people to be residents (and keep an eye on Russia for the safety and protection of all of us, by God).”
I have two observations.
(1) Is this it for the Republican party and Wall St?
(2) The House Repubs are on some steps somewhere trying to blame this all on Pelosi’s speech. They are holding up a copy of her speech and how it poisoned the well with partisanship yada yada. And I’m thinking to myself: what wimps, what absolute wimps. Last week, McCain suspended his campaign because this was some kind of national emergency, and this week the Republicans are telling me they couldn’t do the right thing to save the country because of some speech???
I have two observations.
(1) Is this it for the Republican party and Wall St?
(2) The House Repubs are on some steps somewhere trying to blame this all on Pelosi’s speech. They are holding up a copy of her speech and how it poisoned the well with partisanship yada yada. And I’m thinking to myself: what wimps, what absolute wimps. Last week, McCain suspended his campaign because this was some kind of national emergency, and this week the Republicans are telling me they couldn’t do the right thing to save the country because of some speech???
If Pelosi can not get something as vitally important as this bill passed then what the ‘ef good is she as Speaker? With a Democratic majority in the House this should have been a slam dunk.
Politicians are just too stupid to be allowed the responsibility of anything beyond smiling for the occasional photo op.
efgoldman: you haven’t heard a breath of a whisper about problems at Fidelity, Schwab, Citi, Goldman, or many other firms.
There’s more than a breath of a whisper of problems at Citi, which may be absorbing Wachovia in order to make itself “too big to fail”, i.e. to avoid Lehmanization. They may be, along with UBS, one of the institutions most anxious for the bailout to proceed in order to unload their trashiest paper. A commenter at Calculated Risk describes the merger as “two drunks leaning on each other for support”.
Given the scale of credit default swap business, and the lack of required reporting — much less regulation — no one willing to say actually knows how much exposure some institutions have. The NYT story Saturday made it clear that Goldman was AIG’s largest trading partner and had some $20 bil exposure — and that no one knew or was admitting that until their exec talked to Paulson to urge the AIG takeover.
The chance to get some clarity on the value of the assets is a potential plus of some bailout action. But the record of the current Secretary of the Treasury does not inspire confidence that he’d be aiming for clarity versus papering-over.
If Pelosi can not get something as vitally important as this bill passed then what the ‘ef good is she as Speaker? With a Democratic majority in the House this should have been a slam dunk.
Slam dunk? Why? This was a watered down, compromise piece of legislation meant to appeal to the GOP. But more Republicans voted against it than Democrats!
If the Republicans are not going to support it, then the Democrats should not offer a compromise bill designed to appeal to GOP lawmakers. The Dems should craft an actual Democratic bill and then pass it with just Democrats.
That would be a slam dunk.
With a Democratic majority in the House this should have been a slam dunk.
Ken, for it to have been a slam dunk among Democrats the bill needed to have a lot more in the way of teeth wrt equity warrants, oversight by non-Treasury Secretary persons, relief for mortgage-payers, and smaller amounts of money disbursed before elected officials have a chance to evaluate and put on the brakes.
And if it had had those things, the bill might have passed on straight partisan lines; at a minimum it would be easier to defend. How would you have responded? Against the bill, is my bet.
Marcy Kaptur for President.
Easier to defend on its merits, maybe, but I’m not sure the details affect the politics that much. Any bill will be portrayed by its opponents as a bailout for Wall Street at the expense of working people, and I don’t know how you counter that in a soundbite or a 30-second ad.
With the Dow down 625 at last look, I wonder if privatization of Social Security will be tabled for a while.
I don’t know how you counter that in a soundbite or a 30-second ad.
Announcer:
September 29th, 2008. Dow Jones down 700, S&P down 100.
That’s 7% of your retirement, gone in an afternoon, because the House Republicans would rather grandstand than take steps to help our economy regain its footing.
Most of us are Democrats here, so I don’t expect anybody to like him, but Mitt Romney, who knows a thing or two about making money, would be looking pretty good to me if I were a Republican.
Let’s put it this way: I trust him with my money well before I’d want to put it in the hands of McCain and Palin.
So…what next?
Just Say No: imagine, a $1-trillion dollar bailout without even a hint at wrongdoing or malfeasance. Many of the fat cats who circulate from board to board and from job to job, also happen to be members of the Trilateral Commission and or the Bilderberg Group. When someone takes your money and steals your car, it makes an impression. When they’re committed globalists, it leaves a lasting impression. Many elected officials even belong to the cabals. When Bill Clinton eased banking restrictions, he dished out $8-billion dollars for community reinvestment loans. When the financing schemes fell through, as is their wont whenever 30-million Mexican nationals buy inflated properties and default, it left banks in the lurch. Hillary Clinton counted on the loan giveaways to buy votes. Interestingly enough, had Hillary secured the nomination; she, instead of Barack Obama would preside over the bailout. So, where is that $8-bilion plus dollars? The Global Initiative people (code speak for car thieves) took my money; they stole my car. If you or I did half the things these people have done, we’d be serving consecutive life sentences. Let the bubble burst. Gentlemen, I want my money back: http://theseedsof9-11.com
Not if it’s sold as nationalization or, if necessary, half a baby step short of it, with a progressive tax on the very rich to fund it (Sanders). “Putting adults in charge, not the GOP *or* Wall Street — and the people who made this mess will pay for it ” has an attractive ring to it.
The Dem leadership needs to stop worrying about the GOP crazies and get its *own* members behind it, then they can pass something *and* have something worth passing. If this is truly the next Great Depression we’re trying to avoid, then it will follow — politically, too — that the solution ought to be the next New Deal.
(my 3:40 was responding to KCinDC at 3:19: Easier to defend on its merits, maybe, but I’m not sure the details affect the politics that much. Any bill will be portrayed by its opponents as a bailout for Wall Street at the expense of working people, and I don’t know how you counter that in a soundbite or a 30-second ad.)
So…what next?
Go back to the drawing board and draft something along the lines of the Swedish solution. Put in enough sweetener for Main St. (mortgage cramdowns) that if necessary the Dems can pass it on a straight party line vote and be proud to tell everyone that they did, and tell the GOP to sign up or go hang. If they (the GOP) block it in the Senate or Bush vetos the bill, run them out of town as a bunch of 21st cen. Hooverites.
If the bill passes and the banks don’t want to play, they obviously were lying about the systemic risk (as they see it) or were trying to hold us hostage (= financial terrorism). If they decide to play hardball that way, threaten to draft a new bill nationalizing them and then breaking them up into little pieces which aren’t too big to fail and selling the shards back out to the market once they’ve been cut down to size.
If you want it boiled down to bumper sticker slogans then:
“Main St. before Wall St.”
+
“No equity, no deal”
+
“Too big to fail = too big to exist”
@gwangung:
What’s next is renegotiation. House not in session tomorrow (Rosh Hashanah), back in session Wednesday.
My preference would be to go in the direction of a bill that Dems could pass by themselves, but Nancy Pelosi and Barney Frank are probably planning which figleaves to remove from the current bill.
Bad move; I can’t imagine trusting the Republican leadership to deliver votes at this point. The incentives are for them to have Dems pass it and run against it. So there’s a political as well as merits reason for Dems to move to a real Plan B. But is there time?
The process of getting a bill drafted seems to have been one hell of a lot more collegial in the Senate than the House. Partly that’s a structural difference, but not entirely; Marcy Kaptur is right to roast the leadership on the way members, particularly members with something to contribute, were shut out. Might be a lot easier to build Plan B if they hadn’t had such a closed process…
Barney Frank on the House Republicans’ whine that they voted against the bill because Nancy Pelosi hurt their feelings.
Eric Martin, are you really this clueless?
Does politics really mean more to you than does the economy itself?
We are doomed because of the politicians who cannot put the needs of the country above partisan interests.
I talked to Loretta Sanchez’s office today. She voted against the bill. Her reasons were stupid. We are faced total economic calamity and she voted against this bill because some exectutives might actually make a few bucks.
These are the kind of democrats you defend against sending us into the abyss? Please, spare me.
If a Speaker cannot turn such a weak minded representative as Sanchez (who I once gave money) at a time like this then what good is having that person as Speaker?
I’m impressed with the capsulizing political skills of TLTIAbq and T.N.
Confident, calm, combativity is what’s needed, not the pre-emptive cringing that we’ve been sold as “leadership”.
Well, I know what I’d LIKE to see (something along the Swedish plan with more equity, more oversight and smaller scale would be nice), but what’s likely to happen? Are Pelosi and Frank going to do the right thing, or are they going to do the lazy thing?
Hear, hear.
Nate Silver points out what should have been thumbsuckingly obvious from the get go:
So let’s see if I got this straight: Congresspeople who are directly exposed to the howling lynch mob with pitchforks and torches voted to save their hides.
Gee, ya think?
Next up: water is wet (film at 11).
ken: Does politics really mean more to you than does the economy itself?
You’ve got crust, ken, I’ll give you that.
Commenter mds at Unqualified Offerings says it better than I could:
I’d certainly like a more progressive bill, but can anyone explain exactly whose votes such a bill would gain that would more than make up for the votes it would lose relative to what happened today? Wishing we had more and (especially) better Democrats doesn’t create them.
What Nell said.
@ken: One more point and I’ll leave it alone.
This bill is the Republican administration’s bill, urged on by the Republican president and supported, however tepidly, by the Republican presidential nominee. It has had only only one significant alteration, and that to protect taxpayers (equity warrants) — in a weaker form than could or should have been proposed, to satisfy Wall Street and the banks. Bernanke met with the Republican caucus for several hours last night, emerging with what he thought was the support of enough members to go forward.
But the temptation to stick Democrats with this swindle cooked up by their own administration proved irresistible.
exactly whose votes such a bill would gain that would more than make up for the votes it would lose relative to what happened today?
I see about thirty more solid votes for a decent Plan B, maybe another fifteen more if some of the conservative/moderate freshman members could be rallied to it on the basis of genuine Main Street benefits.
But the temptation to stick Democrats with this swindle cooked up by their own administration proved irresistible.
In fairness to the GOP delegation, if there was duplicity involved (IMHO probably yes) it was at the leadership level. I think the GOP house rank and file are in all likelihood either bitterly opposed to the bill or sincerely and genuinely terrified of the howling mob of outraged taxpayers. If you haven’t been listening to AM talk radio the last couple of days you really should – it sounds like something from the early stages of the French Revolution.
Getting any bill passed in this climate is going to required a huge effort at public education (which simply hasn’t happened yet) to explain to people why the plan in question is both necessary and desirable and has a chance of working. “Just because I said so” isn’t going to fly – there isn’t enough trust in govt. left for that (something about crying
WMD“Wolf” too many times).In some ways this impasse is another piece of collateral damage from the Iraq war. A government that destroys public trust is likely to find itself in precisely this sort of pickle at some point.
In some ways this impasse is another piece of collateral damage from the Iraq war. A government that destroys public trust is likely to find itself in precisely this sort of pickle at some point.
For many of the people posting here, I suspect you’re right. But for the Republican base, the people listening to talk radio, do you really think this conclusion holds? I thought that a third of the country still believes that Hussein was involved in 9/11 and that he did have nuclear weapons that were smuggled to Syria. I’d guess that many of those people are concentrated amongst talk radio listeners in the Republican base. So why do you think the Iraq War undermined them?
Or are you saying that congressional Republicans themselves (and not their voters) are the ones who are soured because of the war?
Meant to link to the roll call vote of Dems to back that up. I see 27-28 progressive Dems who voted no but would back a more Main Street bill. Definitely there are another 15-20 movable, mostly first-term dawgs. Not enough if there were complete Republican solidity, I guess.
Dang, we have some dead wood to move out.
Apparently John McCain believes that Senator Obama is the leader of the House Republicans and is therefore responsible for the Republicans scuttling the program. Boehner, of course, blames the Democratic leadership for trying to encourage people to do what a Republican president wants. Up is down indeed.
I expect the WSJ opinion section (also known to me as the funny pages) to decry the irresponsible behavior of the Democrats in half a dozen articles tomorrow.
ARgh, screwed up the link. Roll call of Dems.
Time to go do something else
Eric and Nell, This is pathetic.
It is all about politics to you guys. Yeah the President is a Republican, BFD. The economy is collapsing but the President is a Republican. Well so what? The economy is STILL collapsing. Get it? We have a problem. That part seems to escape you guys who cannot see beyond the politics of the situation.
And guess what? The Speaker is a Democrat with a large Democratic majority. So yeah, the responsibility of getting such an important piece of legislation passed lays with the Democratic leadership starting with the Speaker.
Son, you don’t have a clue on how politics work. I’d ease up, if I were you.
Democrats don’t have to do anything until House Republicans begin to do a little to help their paymasters.
It is all about politics to you guys. Yeah the President is a Republican, BFD. The economy is collapsing but the President is a Republican. Well so what? The economy is STILL collapsing. Get it? We have a problem. That part seems to escape you guys who cannot see beyond the politics of the situation.
Ken: What on earth does this mean? 60% of Republicans in the House voted against. 30 percent of Democrats.
Get a grip man. You’re republican roots are showing through your fake democratic bleach job.
for the Republican base, the people listening to talk radio, do you really think this conclusion holds? I thought that a third of the country still believes that Hussein was involved in 9/11 and that he did have nuclear weapons that were smuggled to Syria. I’d guess that many of those people are concentrated amongst talk radio listeners in the Republican base. So why do you think the Iraq War undermined them?
I think the war + Katrina + everything else has contributed to a general climate of thinking that everybody in govt. is a lying crooked swine, without sweating the small details of who voted for what and when and why.
This especially applies to the economy because unlike our fiascos overseas or in the arcane of govt. (like the US Attorneys scandal) the evidence is just undeniable – many people are feeling the impact at least on small scale, and hardly anyone is buying this “recession, what recession?” BS.
A lot of the cognitive dissonance defense mechanism arguments that I’ve encountered from Republican voters and right leaning Independents over the years (as the toll from the Bush admin. has piled up) have taken the form of “well, they’re ALL politicians – you can tell they’re lying when their lips move”, in other words trying to spread the blame around for GOP inspired disasters to smear both parties equally rather than try to argue that the pile of manure isn’t actually there or doesn’t smell.
The net result of people making these arguments is that I think there is a generalized feeling that the wheels have come off on our system of government and it seems to be shared on both the right and the left, albeit for very different reasons. It is hard to find somebody who has confidence in the ability of our democracy to get anything right any more, and such people are far more likely to be found on the left (in anticipation of Democratic victories this fall I think) than on the right in my experience.
Nell, the problem is the number of votes that would be lost by making the bill more progressive. You’d have make it a lot more progressive in order to have much chance of winning the politics by telling the howling lynch mob that it isn’t really a Wall Street bailout, so I’d imagine the number of votes lost would be very large. Then there’s the problem of getting it past a filibuster and getting it signed by Bush.
If it’s true that something has to be done now, then I don’t see how the something can realistically be very progressive. Unfortunately.
ken, we’re done here. It’s Republicans who pulled a political stunt today (an echo of the stunt pulled by McCain on Thursday).
I opposed this bill on the merits; see my blog, see my comments on this and other threads.
There is a problem that government intervention is needed to help resolve: There is a credit freeze-up created by anxieties about insolvency due to highly leveraged bets on mortgages that are being defaulted on (due to a combination of hinky lending vetting and recessionary effects).
This proposal is neither effective nor fair, and puts way too much money and power in the hands of people who’ve been minimizing the problem and failing at their regulatory jobs. It has been foisted on Congress suddenly, with a metaphorical gun held to all our heads.
To the extent that anyone is obligated to rise above political pressures and vote for it on the basis that evan a deeply flawed bill is better than not acting this minute, Democrats and Republicans are equally so obligated. Republicans failed this test, all the more dramatically because their administration and their leaders are the ones who came up with the ultimatum.
John McCain has spectacularly failed this test.
Ken, any bill the Dems could pass single-handed would be such that either:
1)Dubya would veto it; or
2)Cheney would die of apoplexy.
Take your pick of catastrophes.
–TP
Here’s what happened put into lyrical terms:
so Abraham (the Dems) duitifully showed up on Highway 61 with offspring in tow and ready for sacrifice, but when they got there they didn’t find God waiting, just the GOP leadership sharpening its knives.
Three thoughts relating to the political side of this crisis:
1) How on Earth is it remotely acceptable for McCain and the House Reps to publicly blame Pelosi’s comments for their vote? Regardless of one’s position, nobody denies it is a massively massively important matter, and yet they readily admit they just voted opposite to the person they don’t like???? Will the bill pass easily tomorrow of cunning Nancy Pelosi suddenly says, “oh I’m against the bill now”, so that all the republicans will trample each other in their rush to approve the bailout?
2) McCain is putting his foot in it every single day because he is claiming to be in control of a very dynamic situation in which in fact he has played very little part. Now, as events swing back and forth, he is constantly over-correcting his previous excesses. Today’s example: with the press declaring the bill was in the bag, he hits the airwaves to claim credit for it. He’s probably still pontificating when the whole thing goes south thanks to his own party, you know, the people he suspended his campaign to confab with. Now it’s all Nancy Pelosi’s fault, he tells us.
3. People have criticised Obama for being coy on the plan for most of last week. Yet for an issue this important and this complex, I don’t see anything wrong with guardedly supporting moving forward with Plan A while constantly gathering further data. Once decided that Plan A was the least worst option, he started putting his weight behind it. In fact, there’s a word for that kind of behaviour…oh yes – leadership.
@KCinDC: You are sadly correct.
I think the war + Katrina + everything else has contributed to a general climate of thinking that everybody in govt. is a lying crooked swine, without sweating the small details of who voted for what and when and why.
Which, not at all ironically — though, ironically, probably coincidentally — is exactly what “small government” types like Grover Norquist wanted: to cripple the very legitimacy of government itself, the easier to dismantle it.
byrningman, Nell, KC, and ThatLeftTurn: you guys have been on fire lately. Many thanks for much wise commentary.
Sen. McCain just commented on the bailout-bill failure.
Shorter version:
“It’s Obama and the Democrats’ fault – but now’s not the time to cast blame!”
(only slightly condensed. Seriously.)
Plus: Sen. McCain looked awful: tired and/or overmedicated. Far from the animated (if creepy) McCain crowing over the bailout “victory” this morning.
Sen. McCain just commented on the bailout-bill failure.
Shorter version:
“It’s Obama and the Democrats’ fault – but now’s not the time to cast blame!”
(only slightly condensed. Seriously.)
Plus: Sen. McCain looked awful: tired and/or overmedicated. Far from the animated (if creepy) McCain crowing over the bailout “victory” this morning.
What Turbulence said.
I’m not getting much work done today, and my savings are evaporating, but at least I’m getting compliments for my blog comments. Thanks.
Think where I could go if I actually knew what I was talking about.
If it’s true that something has to be done now, then I don’t see how the something can realistically be very progressive. Unfortunately.
Not necessarily. I think two little words might reframe things quite well:
“Millionaire’s Tax.”
10% for 10 years. After much gnashing of teeth, settle for 5-7 years. (Senator Sanders wants 10% for 5 years, and calculated that could pay for a substantial part of the $700B price tag estimated at the time.)
Many thanks for much wise commentary.
Hey Turb, you’re part of the team too, ya know. You’re our safety net of skepticism while we try stunts on the high wire and the trapeeze act. We couldn’t do it without you there to catch us when we fall.
Nell: “It’s Republicans who pulled a political stunt today”
They kind of foreshadowed it with all their chest-pumping populism all weekend.
—
Nell: “John McCain has spectacularly failed this test.”
I suspect this, and his debate performance, points to why he is behind, 50-42, in today’s Gallup Tracking.
A good wrap-up on this whole complicated mess.
Thanks, Turb.
As often as Barney Frank makes me grind my teeth, he makes me laugh. He was excellent in responding during a leadership press conference to the bogus Boehner-McCain whine about how Nancy Pelosi’s floor speech cost the bill the crucial twelve votes.
“Remarkable. They’re admitting to something even I would have been unwilling to impute to them: taking hurt feelings out on the country. The Minority Leader stood with us, saying that there is a grave crisis and we have to come together for the country. Yet now he says that there were a dozen members of his party ready to do the right thing, but because their feelings were hurt they decided to take it out on the country, and make all the rest of us pay.”
As today’s news from this story makes clear, this is a glob crisis:
“In Europe, financial institutions were also ailing, with the governments of Belgium, the Netherlands and Luxembourg launching a $16.4 billion rescue of Fortis, the Belgian-Dutch bank.
“The U.K. government said it is nationalizing Bradford & Bingley after investors and lenders lost confidence in the mortgage lender, with its stock market listing canceled shortly before the markets opened.
“Also, the Icelandic government said it bought a 75% stake in Glitnir HF, the country’s third-largest lender, while a consortium of German financial institutions bailed out real-estate firm Hypo Real Estate.”
Where’s Palin and her foreign expertise when you need it — I’m sure Russia’s markets are down, too?
Eric, all Pelosi needed was thirteen votes out of the 94 dems that voted against the bill. It was her responsibility as leader to get those votes.
The seething loathing I have for politicians at a time like this is hard to express. This is not about politics, it about our economic survival.
It seems that you and Nell and most of the other folks here just cannot concieve the size of the problems we face. Because you do not understand it you think it is still politics as usual. I don’t know what will convince you and Nell that this is no time for political one-upmanship.
I have offered a run down before of some of the actions taken over the course of this year. Any one of these actions alone would have been enough, in normal times, to keep the pundit blogs going hot with heavy analysis for years to come. Each one of these is worth a book, or at least a dissertation.
If this series of events doesn’t convince you that we are on the brink of a peril so great that extreme an immediate action is required then I think you are just completely out of it:
1) Fed arranges bailout of Bear Stearns and gaurantees up to 39 billion of losses.
2) Fed opens up fed window to nineteen primary dealers. There are now only seventeen left. (Does anyone here even a clue what a primary dealer does?)
3) Fed begins special term lending facility and starts accepting lower quality collateral, including stock.
4) Working in conjuction with central bankers around the word the Fed has flooded the markets with over 600 billion dollars.
5) Treasury borrowed 200 billion in special bill to re-fund the Fed.
6) Treasury took over Fannie Mae and Freddie Mac.
7) Treasury started buying MBS directly. Five billion was first purchase and more have been made but other news has dwarfed this program.
8) Treasury loans AIG 85 billion dollars and takes 80% ownership interest. AIG is the worlds largest insurance company.
9) Treasury tries to arrange purchase of Lehman but ends up having BAC buying MER instead.
10) Credit totally freezes up.
11) Treasury gaurantees the trillions of dollars in Money Market funds. Good for three months but with extension.
12) SEC bans short selling of around a thousand financial and related stocks.
13) Paulson asks for up to 700 billion dollars to invest in mortgage related securities getting them off the books of banks and other lenders.
14) Oh, and the Fed has reduced the overnight lending rate between banks, also known as the fed funds rate to 2%
15) Markets worldwide are collapsing.
What more do you need?
Many of the above items are far more radical than what the US did with LTCM, and that was a HUGE event. We are in such dire straights and the steps taken are so radical and so dramatic that I suspect most people just cannot grasp it. It is too far outside their experience to give credence to what is happening right in front of their eyes.
shorter Barney Frank:
“I’m rubber, you’re glue…”
The guy on Marketplace just said more Democrats voted no than Republicans! Has NPR outsourced the programto Fox?
So what if DUbya voetos? If its a good bill and the dead duck vetoes it, how is that bad for Democrats or the country?
I wish the Deomcrats would write a good bill and put it out there so everyone could see what Democrats stand for. If the R’s refused it or Dubya vetoed it then the country would knw what they stand for,too.
Unfortunately don’t hava a lot of faith n the Congressional Dems to think that way. Even withthe R’s in disarray and Dubya discredited in everyone’s eyes Pelosi and Reid are likely tothink just as the commenter upthread said: why try since it won’t get passed.
Because trying in and of itself makes a statement, that’s why! Just as selling out one’s values in order to get a bill passed makes a statement. It’s a question of which staement the deom leaders want to make about Deomcrats.
I wonder if things were this political during the Great Depression.
From bedtime’s good wrapup:
In my dreams, every rep that Cheney called replied with a hearty “Go f*ck yourself”.
And yes, ken, that was a partisan comment.
Thanks –
The seething loathing I have for politicians at a time like this is hard to express. This is not about politics, it about our economic survival.
Then why, fake Democrat, do you only express your loathing for Democratic politicians, at a time like this. Again: 60% of Republicans voted against this bill. 60%. Yet you focus on the 33% of Democrats. Fake. Democrat.
It seems that you and Nell and most of the other folks here just cannot concieve the size of the problems we face. Because you do not understand it you think it is still politics as usual. I don’t know what will convince you and Nell that this is no time for political one-upmanship.
No, it’s time for a good bill. And if Nancy can’t get Dems to support a GOP-friendly bill, and the GOP won’t support a GOP-friendly bill, then she should go with a Dem-friendly bill that Dems will support. It’s up to the GOP whether they want this to be bi-partisan, and they have voted.
What more do you need?
Me? Last time I checked, I didn’t get a vote. “I” don’t need anything more. Or less.
60% of the Republican caucus voted against this bill, and you want to chide Nancy Pelosi, Nell and Me?
Sounds like a fake Democrat’s response to me.
I wonder if things were this political during the Great Depression.
Well, there apparently was an attempt by conservative financial interests to overthrow FDR in a military coup.
Does that count?
Thanks –
Eric, you are still playing politics. What will it take for you to deal with reality and leave your political idealogy aside?
Can you not see what is happening? I gave you a brief rundown. Are you so overwhelmed that it just doesn’t register with you? Ignoring the reality or burying your head in the sand will not change the reality of what we face.
And Eric, Pelosi is the Speaker. She only needed a handul of votes. It is her responsibility to see that legislation vital to our nation is passed.
It is dishonest of you pass the buck elsewhere when Pelosi not only had the responsibility but also the ability to pass the deal.
Nah, it’s a moron’s response. Or a Republican. Think they’re the same, blaming the side that came through, and not the side that turned coat.
So, are we gonna see a second try at passing this bill? Or will we try something like a case by case nationalization of businesses?
DNFTT.
Where’s Palin and her foreign expertise when you need it — I’m sure Russia’s markets are down, too?
Russia’s market collapsed back in…August if I recall. She must have been looking at Canada at the time…
Thanks, Turbulence, btw.
“…also happen to be members of the Trilateral Commission and or the Bilderberg Group.”
Oh lord.
“He’s probably still pontificating when the whole thing goes south thanks to his own party, you know, the people he suspended his campaign to confab with.”
My favorite parts are these: McCain “suspends his campaign” (there’s no sign of this whatever) because he has to fly to Washington immediately to help a deal pass; he stays in NYC to be interviewed by Katie Couric; then he flies to Washington, and after he says nothing at the White House meeting, he holes up the next day at his Washington apt., and spends the day on the phone — something he, of course, could have done without being in Washington.
Today he declares he’s “not a guy who phones it in.”
(Anyone who wants links for any of this, ask.)
My contribution to the whole bailout discussion, btw, is to keep my mouth shut when I know I don’t know enough to contribute anything useful.
“Does that count?”
Not to mention the Bonus Army, and Douglas MacArthur’s use of tanks under Major Patton to attack the encampment.
Wasn’t someone talking the other day about how the U.S. government is legitimate because it never uses force or violence against political opponents?
Now, please excuse me; I have a black helicopter waiting.
Hi,
Great thread – it’s refreshing to read so many thoughtful and insightful posts!!
I’m with an online business TV network called yourBusinessChannel – we’re looking to collect opinion on Obama and McCain’s performances as persuasive communicators during the debate on Friday.
Ask yourself – politics aside, who would you buy a used car off?
We’re looking for comments and contributions from people who have been following the 2008 campaign closely, who can offer really valuable insights. Clearly, there are many such people commenting on this thread, and elsewhere blogosphere).
A bit about us – yourBusinessChannel produces short internet business TV shows providing advice to business people and entrepreneurs on all aspects of business. Our shows feature advice and insights from a pool of the world’s leading business experts.
We’re interested in the 2008 presidential race because of what it tells us about the power of persuasion, and how to give a really amazing presentations.
Yesterday we posted this three minute summary of the first presidential debate:
http://www.youtube.com/watch?v=KD2DqHqK2Cw
We are currently producing a series which focuses on how to be really persuasive when making business and sales presentations.
Obama and McCain have very different styles, and it’s fascinating to watch what works with the public and what doesn’t. Clearly there are lessons here for businesspeople who have to prepare presentations in their professional lives.
I’ve been reading the comments thread on this blog and I’ve been impressed with the level of discussion here – so I’d love any or all of you to reply to this post with your views and opinions…
I want to know – in your opinion – which candidate:
– Had the most persuasive tone of voice?
– Made best use of body language?
– Seemed genuinely passionate about their message?
– Used humour to good effect?
– Showed total mastery of policy details?
– Rebutted his opponent most convincingly, and dealt best with criticism?
– Was relaxed and confident in making off the cuff comments?
– Avoided major faux pas and screw-ups?
– Came across as a real human being, not a robot regurgitating talking points?
…and why do you think so?
I’m looking forward to hearing your comments!!
cheers,
Steve Kerr
http://www.yourBusinessChannel.com
133 out of 199 House Republicans voted NO on this bill and its failure to pass is the fault of Nancy Pelosi and the Democrats.
Swift Boat logic.
Nell, KCinDC linked to the video of Barney Frank above a few hours ago.
But you left out one of my favorite moments:
gwangung: It looks like Paulson’s going to give it another try.
ken: First, I’m not sure she had the ability. And if she didn’t have the ability, she didn’t have the responsibility. The Dems said they got every vote they could.
Second, it’s a prisoner’s dilemma, and some people are sick of letting the Republicans free-ride. Politicians love to vote NO on bills that pass. There is no accountability for them. And if this bill passes and succeeds, then there will be *no visible consequences*, meaning it will be hard to take credit for. Of course, if it passes and fails to have the intended effect, then Heaven Help You. If you keep letting the part of no discipline get away with this, you’re going to keep having situations like this. We talk about not setting up perverse incentives and moral hazard on Wall St. The same is true of politics.
If you bailout the Republican party, if you let them free-ride, you are just going to keep having disasters of governance like this in the future.
My favorite parts are these: McCain “suspends his campaign” (there’s no sign of this whatever) because he has to fly to Washington immediately to help a deal pass; he stays in NYC to be interviewed by Katie Couric; then he flies to Washington, and after he says nothing at the White House meeting, he holes up the next day at his Washington apt., and spends the day on the phone — something he, of course, could have done without being in Washington.
I know, it’s all too much.
First the economy is sound. Then he remembers that in fact he has been warning of imminent economic doom for two years. Then he says a guy no one else thinks should be fired, and who has played no obvious role in this crisis, should be fired (I guess that’s mavericky at least). Then he has to cancel all his appointments and drop the other stuff he was planning on doing in order to deal right now with the problem he already knew about two years ago. Then he does random stuff for a day. Then he shows up in Washington, and as far as anyone can tell, doesn’t say anything to anybody about the problem he has yelling about for two years only no one would listen to him, and which is now the greatest crisis the country has faced in decades, except for the Russia-Georgia spat which was the greatest crisis since the Cold War, except the Iraq War which was the greatest crisis since 9/11 which was so great a crisis it trascended time itself, or something. Then after saving the day, the deal flopped. Then he showed up at the debate that was totally trivial in light of the greatest crisis since etc., and told us all that the crisis was all about earmarks. Then he put the deal together singlehandedly before it turned out that there was no deal again. Now is not the time to cast blame, but just in case we couldn’t wait for time to not be trascended by crisis anymore to find out who really is to blame, it’s Obama to blame.
He’s so darn mavericky.
*party of no discipline
“Eric, you are still playing politics. What will it take for you to deal with reality and leave your political idealogy aside?”
Fortunately, ken is here to reproduce the Republican talking points all Republican supporters are echoing today, and demonstrate how Not To Play Politics, by repeating by rote that It’s All The Fault Of The Democrats, and completely ignore the fact that 133 Republicans voted against the bailout, while only 65 Republicans voted for it.
Far more Republicans voted against it than Democrats voted against it: 133 Republicans, and only 95 Democrats.
Far more Democrats voted for the bill than Republicans voted for it: 140 Democrats voted for the bill, more than twice the number of Republicans: 65.
But ken is here to rise above politics by blaming Democrats, Democrats, Democrats. And only Democrats.
Number of words ken — who is here to not play politics! — has regarding the Republican failure of both the leadership and rank?
0.
Do as ken says, not as Ken does, is his lesson.
“Can you not see what is happening?”
We can, ken. Thanks for asking.
I’m just waiting for you to explain how affirmative action is to blame for all this.
[WTF that Typepad now won’t let me post two links?]
By the way, while everyone is preoccupied with the bailout, etc., it’s worth paying attention to the fact that a special prosecutor has been appointed in the firing of the U.S. attorneys case, following the release of the [SHEESH!]
DOJ report.
wonkie: wish the Deomcrats would write a good bill and put it out there so everyone could see what Democrats stand for … because trying itself makes a statement.
Thanks for that, wonkie. I do too. It’s also smart politics to have a concrete idea of what you stand for and would want. Without it you can never persuade anyone to your side, you’re always just trimming at the edges of the other side’s initiatives. It can also be used as a credible threat to bring the opposition around when you’re negotiating.
Timing made that a real challenge in this case, but it could still have been done if the leadership had invited the progressive caucus to draw up a Plan A at the same time that they were putting together a Plan B to try to pull in Republican votes.
Gary, can you make yourself useful?
Research the below items and polish them up a bit. Also see if I left anything out.
1) Fed arranges bailout of Bear Stearns and gaurantees up to 39 billion of losses.
2) Fed opens up fed window to nineteen primary dealers. There are now only seventeen left. (Does anyone here even a clue what a primary dealer does?)
3) Fed begins special term lending facility and starts accepting lower quality collateral, including stock.
4) Working in conjuction with central bankers around the word the Fed has flooded the markets with over 600 billion dollars.
5) Treasury borrowed 200 billion in special bill to re-fund the Fed.
6) Treasury took over Fannie Mae and Freddie Mac.
7) Treasury started buying MBS directly. Five billion was first purchase and more have been made but other news has dwarfed this program.
8) Treasury loans AIG 85 billion dollars and takes 80% ownership interest. AIG is the worlds largest insurance company.
9) Treasury tries to arrange purchase of Lehman but ends up having BAC buying MER instead.
10) Credit totally freezes up.
11) Treasury gaurantees the trillions of dollars in Money Market funds. Good for three months but with extension.
12) SEC bans short selling of around a thousand financial and related stocks.
13) Paulson asks for up to 700 billion dollars to invest in mortgage related securities getting them off the books of banks and other lenders.
14) Oh, and the Fed has reduced the overnight lending rate between banks, also known as the fed funds rate to 2%
15) Markets worldwide are collapsing.
Thanks. But really you should be thanking me. When you finish your assignment you might just get a glimpse how real and how big the problem facing America is. If then you still think this is all about politics, then we’ll talk and I’ll be able to straighten you out. Until then I would just be wasting my time engaging in a discussion with you.
byrningman @ 7:08 — Thanks for the laugh of the year (maybe even of the century). In the midst of all this serious business I didn’t want to let such a gem go by without a note of appreciation.
🙂
If then you still think this is all about politics, then we’ll talk and I’ll be able to straighten you out. Until then I would just be wasting my time engaging in a discussion with you.
Oh no! ken, you haven’t told us how much better Hillary would have handled this than Obama did?!? How will we ever manage?
“If then you still think this is all about politics, then we’ll talk and I’ll be able to straighten you out. Until then I would just be wasting my time engaging in a discussion with you.”
No, you’ll just write me long, repetitive, responses. Actually engaging in a discussion where you explain yourself isn’t your thing.
How about you first complete your “assignment,” ken, by going back to this comment of yours, and this one, and answering these questions — since we’re handing out assignments, and you were asked first, second, third, fourth, and fifth, and you’ve yet to explain yourself:
“I can never forgive him for useing racism against the Clintons.”
How did Barack Obama do that?
“But I also will no longer support afirmative action, preferential admission policies and other programs designed to assist minorities gain access to good job opportunities.”
What does Barack Obama have to do with this?
“But we also know that when somone like him does not get accepted it is because they made room for a minority applicant with lower GPA. Skin color made all the difference.”
How, exactly, do you know this? Please be specific.
“jes, Your comment about me is typical racism.”
Can you please define what you mean by “racism”?
Thanks.
You first. Have you answered Gary’s questions? The questions that several other people have wanted to see answers to?
It’s only polite.
ken: Until then [you] would just be wasting [everybody’s] time engaging in a discussion with [me].
Fixed.
More substantively, what about the Fed’s move to pump $630 billion into the world economy? Eases pressure on a bail out? Or inflationary mistake?
Today he declares he’s “not a guy who phones it in.”
LOL. That’s so mavericky of him!
ken: calling people dishonest violates the posting rules.
Let’s look at Gary’s list. Nobody here seems to be arguing that Wall Street is going to hell, damage self-inflicted. Almost every point deals with institutions that catastrophically screwed up and the Fed trying to help out the institutions that catastrophically screwed up.
Then we get “10) Credit totally freezes up.” Can you back this up? Nobody’s cut consumer credit lines for lack of liquidity that I’m aware: you can still get 0% financing at the auto dealers, my credit card lines haven’t been reduced, and so on. Probably HELOC lines have been cut, but that’s due to the lack of collateral due to lower housing prices, not liquidity.
Some sniffing around small business people hasn’t seen anyone’s credit lines get cut for no reason: some people’s lines are being cut because of reduced earnings and so on, but this again isn’t related to a lack of liquidity.
We might see problems tomorrow with commercial paper turning over; the Fed is lending commercial banks cash for 84-day periods, but they waited a hell of a long time to start doing this so it might not percolate through the system fast enough.
So is the problem really there (I’m quite willing to be convinced it is), and if so, how is this plan supposed to fix this particular problem efficiently? Wouldn’t more Fed loans be a better idea if it’s a liquidity issue?
“ken: calling people dishonest violates the posting rules.”
LOL, ok. If you think so.
But how many times have you called a certain person dishonest? You do it at least once a day. Perhaps you should try to set a better example.
“Let’s look at Gary’s list.”
That’s ken.
Russell: “In my dreams, every rep that Cheney called replied with a hearty ‘Go f*ck yourself.'”
After a very, very bad day — I just got home — thanks to Russell, I had my first good laugh. (BTW, I really did think that was a good wrap-up. For my money, The Washington Post is the best paper out there.)
And then Byrningham gave me my second good laugh: “Russia’s market collapsed back in . . . August if I recall. She must have been looking at Canada at the time . . .”
And while the country may be going broke, YBCsteve is right: This is a very good thread — even Ken couldn’t ruin it.
ericblair:
I want some of what you are drinking if you mixed ken up with Gary:-)
McCain, straight talking.
This conclusion from that “wrap-up” author’s link I posted is scary:
“It’s possible despite weeks of warnings, and a stock market that is cratering as we speak, that a lot of members (of the House) still aren’t taking any of this seriously enough.”
Is it too early to ask what preparations one should make to help best make it through a Depression?
If it’s anything like the aftermath of 9-11, the government will be telling us to store up on lots of duct tape. You can never have too much duct tape.
Forget what ericblair is drinking — after reading Gary’s link — I want whatever McCain is having: He’s truly lost it!
Bedtime, if YBCsteve was right, it was by accident. I’d imagine he writes that bit about “thoughtful and insightful posts!!” on all the threads he sticks his sp*m in.
(Really, this filter is ridiculous. How many sp*m comments actually use the word “sp*m”?)
I want some of what you are drinking if you mixed ken up with Gary:-)
Just picked a bad week to stop sniffing glue. Carry on.
If it’s anything like the aftermath of 9-11, the government will be telling us to store up on lots of duct tape. You can never have too much duct tape.
It does hold the universe together…
Rachel Maddow just covered the “phone it in” bit as well as McCain’s premature declaration of victory.
ericblair, that is my list. I gave it to Gary for him to research, polish up a bit and see if I left anything out. Each item on it is worthy of a complete dissertation and many will be the topics of books some day.
That each of these has taken place in such a short period of time is mind boggling. It is so stunning that the mind cannot comprehend the enormity of what is happening. So people, like Gary and others, still think that the old rules apply.
The purpose of the list, and it is in no way complete, is to demonstrate the seriosness of the financial crisis facing this nation. So far you may have escaped any personal fiancial discomfort. If so, a lot of that is because of the actions taken already by Bernanke and Paulson.
I am certain however that you, like all of us, will not escape unscathed. The only issue is how much damage will we suffer before it is all over. Just today the American people lost one trillion dollars in stock market value funding our retirment accounts. That will hurt. Not now but it will hurt later.
But with all that said, we are still in grave danger. Paulson has offered a plan that is a comprehensive solution. It has been explained like this:
The mortgage securities still on the books of banks are clogging up the system. They must be removed for the free flow of capital to be restored to the overall system. The Treasury is the only institution with the resources and the time to buy and hold these securites without having to take any write downs on them. Over time the government should actually make money on their investment. In any case, the financing cost is minimul as the Treas can borrow at 4% and buy assets that pay 6% and hold on to them until the economy recovers and sell most of them at a profit.
And the risk of doing nothing is the certainty of a disaster worse than any of us can fathom.
KC:
Sorry about that. Skimming fast when I first got home, I only read his first line. You’d think I would have noticed this: “Ask yourself – politics aside, who would you buy a used car off?”
BTW, I don’t want to ever read “McCain” and “premature” in the same sentence again. Very scary image.
Oops — ken is back. I think that’s my cue to go upstairs and see who’s winning the Ravens-Steelers game.
Good night, everybody.
Prediction: Tuesday after the market closes, the government seizes a medium-sized bank, announces that the FDIC fund takes a $30B hit, cutting it by more than half. Unchanged bill is brought up for a vote again on Wednesday morning and passes.
btfb: It’s a good ol’ smashmouth defense game. Old-school in the best way.
Michael Cain: I don’t know about “medium-sized”, but my money’s on National City Corp folding next…
gwangung: More substantively, what about the Fed’s move to pump $630 billion into the world economy? Eases pressure on a bail out? Or inflationary mistake?
—
That’s number four on the list for Gary to research.
A quick answer to your questions though is no and no. It can be drained just as quickly.
But it is additional evidence that we face a problem of such enormity that such totally unprecedented actions are taken without a lot of comment. In any normal situation this would be front page news for weeks and provide endless fodder for economic pundits to debate.
ara said >>> ken: First, I’m not sure she had the ability. And if she didn’t have the ability, she didn’t have the responsibility. The Dems said they got every vote they could.
Second, it’s a prisoner’s dilemma, and some people are sick of letting the Republicans free-ride.
————
I disagree that Polosi did not have the responsibility. She is Speaker. Responsibility for legislation comes with the office. She may not have had the ability, hence my question wondering if she is qualified to be Speaker.
And to your second point. This issue is beyond politics. She should have pressed for passage and left the politics out.
“Bedtime, if YBCsteve was right, it was by accident. I’d imagine he writes that bit about ‘thoughtful and insightful posts!!’ on all the threads he sticks his sp*m in.”
I don’t see, via Google, any other iterations of that comment anywhere; where have you found it that you say it’s s p a m?
“And the risk of doing nothing is the certainty of a disaster worse than any of us can fathom.”
So, Ken, what’s up with going on and on about how Nancy Pelosi and the Democrats are to blame and-we-mustn’t-politicize-this? With:
And:
And:
But we mustn’t politicize!
You forgot to tell us about what a loyal Democrat you were, and how it pains you to blame the Democrats, and not the Republicans who actually majority voted against the bailout: how come?
Are you familiar with the term “credibility,” ken? You might look into it.
Also “coherency.” And “consistency.” The alliteration should help you remember, even if you have trouble spelling the big words.
Ken,
If it’s such a big crisis, why have you said nothing about the fact that 67% of Republicans in the House voted against it?
Why are Republicans playing politics as usual?
Why are you focusing on the much smaller number of Democrats that voted against it?
Anyway, that’s the last I’ll say. Going forward, I’m going to try to stick to the policy of not feeding the troll. If there’s one thing that Ken has demonstrated it’s that he will not have a good faith discussion.
It’s my own fault for forgetting a lesson that I have already learned. Or perhaps it’s my naive faith in humanity. Probably both.
Oh, just for fun: “So people, like Gary and others, still think that the old rules apply.”
I will give you a shiny nickel, ken, if you can link to the comment I made which substantiates this claim.
Of course, you can’t. Funny, that.
Good for giggles, even.
ken: funny, funny, funny man:
Res ipsa loquitur.
Ken was getting laughed at when he called me a “troll” several times, since the claim is absurd. What makes it accurate about ken is that he does not respond to substantive points and questions made to him, but instead expects everyone to ignore the childish excuses he gives for not responding.
133 Republicans voted against the bailout, while only 65 Republicans voted for it. Does ken have a word to say about the responsibility of the House Minority Leader, whose caucus voted two to one against the bailout?
Of course not.
Was ken criticizing Denny Hastert or John Boehner or Tom DeLay when they didn’t get enough Democratic votes to pass a bill?
I’m sure he can provide cites to his doing so.
And I am Marie of Roumania.
And ken, if he can’t respond to these questions, or explain his views on racism and affirmative action, is a troll.
So far you may have escaped any personal fiancial discomfort. If so, a lot of that is because of the actions taken already by Bernanke and Paulson.
Sure, my stock funds are taking a hit. I moved a majority of my money to govvie funds after the SEC banned short selling, since I took that as a bad sign. Still, I expect to get hurt and a lot of people are getting hurt.
Yes, the Fed did take action to mitigate this. I’m aware of that. They also managed to take this action without the $700B bill being passed.
And yes, the stock market lost a lot of value today, but are you seriously suggesting that the purpose of this is to prop up the stock market by government fiat? That’s a really dangerous path to go down, I think.
Again, what credit is locking up where? I’ve heard this over and over again with absolutely no detail. I’m quite prepared to believe this but nobody seems to want to explain it with any detail at all.
Gary, I confess that I have no evidence that YBCsteve’s comment was posted elsewhere, but it was an off-topic comment by a previously unknown commenter advertising a website. If YBCsteve is reading this comment thread rather than posting a drive-by, I guess we’ll hear from him soon enough.
ericblair, the stock market is, as you should know, a proxy for the state of the overall economy. So yeah, as the government helps the economy it helps the stock market as well. That goes without saying, and is one of the reasons why the stock market has always done better with a Democrat in charge.
You seem confusing the actions taken by the government so far however as directed towards stock market values. NO NO and NO. It has been entirely directed at protecting the credit market, which does effect the equity market, but as a secondary effect.
You have not been personaly effected yet with credit cancellations because the Fed and Treas and FDIC have taken necessary action in time to head off the worst of it from trickling down, so to speak.
But banks are not lending to each other. Even though the funds rate is a mere 2% they are still not lending, even overnight. So you see the Fed flooding the credit markets with over 600 billion dollars as a stop gap measure. You see the Fed open the discount window to primary dealers because no one else would lend to investment banks. You see credit default costs soar on financials from BankAmerica to GMAC to Catfinance so people stop lending to them as well. Eventually without a healthy credit market the whole financial structure collapses and we are out on the streets living in a box.
And what is clogging up the credit market is the glut of so called ‘toxic’ mortgages on their books.
So instead of continuing with the ad hoc solutions engaged in by the Fed and Treas if we can remove these mortgages from the balance sheets of the bankers then credit can flow freely between them once again.
I hope that answers your question, at least in part.
ken: I was assuming you knew the rule was: no incivility to other commenters. McCain doesn’t comment here, to the best of my knowledge.
I would also have reacted differently had you backed up what you said.
Ask yourself – politics aside, who would you buy a used car off?
bedtimeforbonzo.
Speaking of whom:
thanks to Russell, I had my first good laugh.
Dude, the pleasure is all mine. Glad I could put a smile on your face.
Gary, can you make yourself useful?
Research the below items and polish them up a bit. Also see if I left anything out.
If I’m not mistaken, Gary gets paid for doing research.
I’m sure if you ask nicely he’ll consider taking you on as a client, but you better make sure you can afford his rates before you start loading up his in-box.
Thanks –
Eric, We have a Democratic Congress. That means we have the responsibility to get needed legislation passed.
In the house we have more than enough members to pass needed legislation without any votes from the other side. But on this legislation all we needed was just nineteen more votes out of the nintyfour democrats who voted no. We had enough republicans who already voted yes to give the bill the needed bi-partisan cover.
I don’t see how in any reasonable way this can be blamed on Republicans. Sure it would have been nice to have more Republican votes. But at the end of the day it is still a Democratic Congress.
Eric, DNFTT.
russell, so far I am not impressed by Gary’s research skills. He seems woefully ignorant of events that occurred during the primaries for example.
A few minutes using his vaunted research skills, if he actually has them and is not just faking it, would provide him with a much needed education. He keeps pestering me for help but my conviction is that with someone like Gary, if they don’t come accross the information on their own they will never correct their erronous beliefs.
I’ve given him a couple of opportunities to prove himself by researching a topic and so far all I’ve got back is a bad attitude.
That said, it appears he has bamboozled a few people into thinking he is something more than a troll.
In the house we have more than enough members to pass needed legislation without any votes from the other side.
Who is this “we” you speak of?
I don’t see how in any reasonable way this can be blamed on Republicans.
I don’t see how in any reasonable way you are on the level.
Thanks –
russell, so far I am not impressed by Gary’s research skills.
ken, in my very humble opinion, and based purely on your relative contributions here, Gary can cite more factual information from memory, in detail, than you are ever likely to stumble across in your lifetime.
As always, I could be wrong. I’m just extrapolating from your contributions here, versus his.
If you ask nicely, and cut a nice check, perhaps he will do your homework for you. Otherwise, I guess you’re on your own.
Thanks –
Darn. I have to hold onto my nickel.
I.
Am.
So.
Surprised.
ken: I was assuming you knew the rule was: no incivility to other commenters.
These things are permissible:
. Republicans are racists.
. Republicans are homophobes.
. Republicans are torturers.
. Republicans are liars.
. Republicans are trolls.
. Republicans are vile.
. Republicans are evil.
ken, You could probably look this up in various comment threads if you had the time. I observe that Democrats, and Obama supporters in particular, say these things outright all the time, and not just about McCain or Palin. Well, I think that Democrats and liberals simply hate America, and you can find the very same commenters saying things that support my observations in the same comments that castigate Republicans, who after all, are also Americans. Does this mean it is acceptable to speak in generalities about liberal commenters? I think so, but frankly it is not going to promote any argument that you have.
Certainly there are cases where a specific commenter still believes that Dan Rather’s GWB TANG documents were legitimate, or for still believing that conservatives should apologize to Jack Murtha for criticizing him when Murtha called the Marines in Haditha “cold blooded murderers, but I’m looking at generalities, not specifics. ken, there are some things that you cannot say on blogs that are run by members of MoveOn.Org. You are going to have to get used to that fact, is my advice.
He seems woefully ignorant of events that occurred during the primaries for example.
Wow…just…wow. Gary might be a lot of things, but woefully ignorant of events during the nomination struggle would not be one of them. Your attempt to brand him as a troll has been amusing in a sad and pathetic way.
Can we please get better trolls?
Hi, DacwC, it’s nice to have you back.
I maen tht sincerely.
I also think tht a plitical party that used its power to deregulate, thus creating the current crisis, poliitcizes government agencies, lies to get us into a war, cheats in elections, covers up the seual harassment of pages and then covers up the cover up opf theharassment, gets in bed figuatively with every lobbyist in town (and literally if you are talking about the people involved in granting natural gas leases) etc eetc etc, well your list of descriptors seems pretty accurate to me.
I wouldn’t give a Republican politician some much as a drop of water if he/she was dying of thrist.
Repulican rank and file citizens on the other hand out side of their voting behavior are just as likely to be nice as anyone else .
DaveC for example can be a great guy sometimes, and can be very funny.
I have a comment stuck in the s p a m trap asking for a better class of troll before Turbulence did. But some needs are obvious.
Of course, DaveC is not telling the truth.
Such comments do, in fact, earn warnings when they’re brought to the attention of management.
And I’ve rebuked plenty of people plenty of times for saying such things.
DaveC is, simply, speaking untruths.
So much for his trying to be better, and earn credibility.
But it’s in the scorpion’s nature.
Wonkie, why on earth is it nice to have DaveC back? Fortunately he’s probably not back but just doing another of his drive-by insults, perhaps because some incident with a co-worker or neighborhood excited his hatred of liberals and he came here for safe targets as usual. DaveC may have had some good qualities in the past, or on some other blog, but here and now he’s a troll (something he’s essentially admitted) who drops by every once in a while to accuse us of hating America. There’s nothing nice about that.
Maybe the ginormous credit market failure is a paradigm shift.
See, I keep going back and forth on the bailout, because SFAICT the bailout – of any size, targeted to any group – does nothing to change the underlying economic model that made the collapse not only possible, but inevitable: Constant growth, fed by constant credit-floats, in all sectors of the economy by all the actors in that economy.
Why is deficit spending by the government a bad thing, but deficit spending by individuals, companies, and entire industries a good thing? How much is the never-ending need for constant economic growth connected to other problems we’re facing, like energy depletion and global climate change?
I do understand the dangers: even our food supply depends on economies of scale which in turn depend on a constant credit float… to run the mechanized farms and food processing plants, to finance the transportation that brings the food from giant mechanized producers to the grocery store (and so on).
But what I can’t stop thinking to myself is that even a giga-bailout is like taking aspirin for heart disease. It might make you feel better, might even keep the heart going for a while longer – but aspirin doesn’t even treat the disease, much less make it go away.
The best the bailout can do is reset the clock enough for our credit-financed economy keep going for a while longer. But It doesn’t address the underlying structural problem, which is simply that a credit-based economy demands that its components live beyond their means in a continuous, and escalating, fashion. What happens the next time a finance bubble goes off like a bomb? We bail the credit markets out again? And again, and again, and again? For ever-increasing amounts of money – which, BTW, is itself ‘on credit,’ since the Treasury sure doesn’t have $700B, or $350B, or even $150B extra lying around.
So – although knowing this sounds incredibly callous and brutal, and being perfectly well aware that it also means not just pain but outright agony for many people (including myself, very likely) – I wonder if it wouldn’t be better, in the long run, to let the crash happen… and go back to a more reality-based economy.
” I wonder if it wouldn’t be better, in the long run, to let the crash happen… and go back to a more reality-based economy.”
CaseyL,
No, it would not be better to crash the economy and go back to a ‘reality-based economy’.
Firstly, there is no reality based substitute for credit. There is just not enough gold in the world to allow for an economy to grow enough to keep up with growing demographics let alone growing the expectations of an educated population for material comfort.
And secondly, allowing the crash to happen does not discharge the national debt. We still owe it but paying it become more onerous the poorer we get.
ken said
I wish to subscribe to your newsletter.
Elite Failure on the Bail-out
By Fester: The basic argument for the bail-out bill has been ‘OOOHHH, SCARY… MUST GRANT UNLIMITED POWERS NOW! (maye with window dressing.) And yes, the TED spread and other credit market measures have been extremely scary, but this is not
I’m a conflicted guy.
I like Gary Farber and I like DaveC.
The former has understandably called me on some of my vicious rhetoric regarding the Republican Party, and I’m pretty sure the latter finds some of my vicious rhetoric regarding the Republican Party, well, hateful.
So, let me make my position clear by revising Dave’s list and hoping Gary can handle it. 😉
The Republican PARTY is racist.
The Republican PARTY is homophobic.
The Republican PARTY is pro-torture.
The Republican PARTY is a liar.
The Republican PARTY is a troll.
The Republican PARTY is vile.
The Republican PARTY is evil.
That the Republican Party persists in this objective behavior despite the good influences of Von and Sebastian and DaveC and my mother and lots of other fine people who wander in and out of its precincts is ……
…… all the more reason why I hate the Republican PARTY.
Someone recently asked here whether the 1930s during the FDR era was as “political” as the current dark days.
I remember my sweet grandmother in the 1960s sitting at the Thanksgiving table taking it all in …. until someone would invariably drop FDR’s name into the mix. She would glower and look as if she wanted to lean to the side and spit a huge bolus of political venom on to the dining room carpet.
She hated FDR every minute of every day of her 97 years, including when she cashed her Social Security checks.
So, I HATE the Republican Party and I’m not sorry about it.
I’m going to have a spittoon at the ready for the rest of my days.
Thullen, you’re a prince.
“So, let me make my position clear by revising Dave’s list and hoping Gary can handle it.”
I’d have to go with something awkwardly less pithy, such as “elements of the….”
Something that makes completely clear that large swathes of the ordinary voters of that Party, and a fair number of the lesser officials (and even some in Congress), are not [the concluding adjectives or nouns].
Your grandmother was wrong, John, so mirroring her isn’t right, no matter that simplifying feels good.
And lastly, ObWi just isn’t the right place for such accusations. It can’t simultaneously be a place where such cries are let pass, and one where it makes sense to wonder why we don’t have a larger percentage of sane Republicans/conservatives/libertarians contributing any more.
Sorry.
But there are, it turns out, other blogs where such statements are appropriate. Just as, in turn, there is Redstate.
I don’t know how this can be, but both Eric and Gary are absolutely right.
I kind of agree.
John Thullen is a prince. (Which means he’s a wuss!)
And now I do my Captain Kirk imitation: John Thullen is always wrong!
(It’s only a Captain Kirk imitation; not to be confused with the real world, which John expertly models with every comment.)
John Thullen is a prince. (Which means he’s a wuss!)
And now I do my Captain Kirk imitation: John Thullen is always wrong!
(It’s only a Captain Kirk imitation; not to be confused with the real world, which John expertly models with every comment.)
“russell, so far I am not impressed by Gary’s research skills.”
This comment really just sits there begging for analogies to keep it company.
Why did I welcome DaveC back? Well I probably shouldn’t have since I sort of implied that I have some kind of official status and I don’t. It was a persnal welcome.
As to the reason: DaveC used to be a regular here, if fact such a regular that he was one of the posters on the sister site, TIO. He used to be funny and warm and argumentative but in a likeable way.
Then he got gtrollish. At first I thought “Well he’s a troll,but he’s our troll.”
Then I though that his decent into such bitterness was sad.
So I don’t know why he keeps coming back but i hope it is because in his heart of hearts he wannts communication with us, the folks he used to banter with in the past.
So that’s why i said welcome back and I meant it.
So I don’t know why he keeps coming back but i hope it is because in his heart of hearts he wannts communication with us, the folks he used to banter with in the past.
I have been actually pretty nasty even in the distant past, wonkie, but it was part of a mix of things, because I used to follow threads at work in my spare time, and go off on different tangents. Now, that I’m in a different situation, even though it’s a pretty normal job I cannot do the web peeking, I even can’t talk about what I do at work with my coworkers, except on a “need to know” basis. So the best I can do is occasionally fire one across the bow from time to time early in the morning or around bedtime. ObWi’s a pretty partisan place lately, and I’ll put my two cents in occasionally to say something like the “Sarah Palin charged for rape kits” story was wrong, etc., but can’t commit to any conversations.
ken is a-ok as the current target, he appears to be pretty patient and is responding to various questions. Perhaps von will post again from time to time when he is feeling up to it.
Hey DaveC!
I can’t post much of a response here cuz dinner si about to hit that table but i’m glad you are doing OK and I hope your family is well too. Bye for now
“but he’s our troll”
We used to have a troll under a bridge where I lived as a kid who came out snarling every morning as we walked to the bus stop (where I lost my marble).
We learned to throw him cookies. It encouraged him but you could tell his heart really wasn’t in the snarling any more.
Later, he got a different job under a different bridge and we didn’t see him much after that.
Alternatively, there was the cowardly lion who chewed his tail in the “The Wizard of Oz”. Dorothy took care of that with a quick slap on the nose.
I’d enjoy reading DaveC, Iraqi expert, explain who are the good guys here that he’s rooting for.