October 02, 2008
Emergency Economic Stabilization Act of 2008
The title of this article (above) is the name of the Bill which passed the Senate last night. It is voluminous and the time between its issuance from the Banking Committee to its vote on the floor likely precluded most Senators from having time to read it themselves. But rest assured their staffers did. Visit and support the Sunlight Foundation for the full text of the Bill. Or, read this article, for an overview of what is happening, the rest of us can understand.
First, it should be understood that the House Bill to be voted on as early as Friday, will have differences. But those differences will be minor or irrelevant to an understanding of what is really taking place here, between those in the know who want to kill this Rescue plan, and those in the know who want to pass it.
Notice the absence in the Title of the Bill of any reference to the words bailout or rescue. The skeptics of this bill tried to unsell it to the public almost immediately as a Bail Out of Wall Street. Its original 2.5 page White House proposal could easily be viewed as just what the skeptics called it. However, it has transformed from a bailout written by Henry Paulson, former Goldman-Sach's executive worth 10's of millions of dollars, to a bill designed more to rescue our economy from entering an even deeper, but near certain, economic recession.
An economic recession is marked by job layoffs, rising unemployment, a slowing or negative growth in our nation's economic activity overall, and harder, more anxious financial times for non-wealthy American workers and their families, over a period of 6 months or more. This Bill may not avert recession, but it is hoped by its champions that it will prevent a recession from affecting even more workers and their families, as well as businesses.
The Stabilization Act attempts first and foremost, to address the problem of financial institutions hoarding their money and refusing to lend it to other financial institutions and you and I, Mr. & Mrs. Consumer. The reason for this sharp decrease in money being loaned and borrowed is really rather simple, and I will use a homeowner worker as an example.
Mr. Jack's old car just died. The cost to repair it: $3000.00. The car is only worth $200 for salvage if he junks it. If he repairs it, he will have a car worth $700, but which he paid $3000 to repair. Mr. Jack views this situation as throwing good money after bad, and decides to get a loan to buy a much newer used car for $10,000 which will last 4 or 5 years before needing major repairs. Mr. Jack bought his home 2 years ago for $210,000, and he still owes $208,500 on the mortgage.
Mr. Jack goes to his local bank and asks for a loan to buy another car. The Bank asks Mr. Jack, how much his net income is each month. He replies, $1400 per month. They then ask how much he owes on his home, and he replies $208,500. They ask what amount he paid for his home, he replies, $210,000. The banker then checks his index sheets and sees that home valuations in Mr. Jack's area have fallen 20%, on average, in just the last year.
Now Mr. Jack, if he were to try to sell his home today, would not be able to sell it for what he paid for it. But, how much less than what he paid for it, might he get for the house? There lies the problem with our financial institutions at this point. No one knows how much he could get for the house, or even if he could sell it at all at a "reasonable" price.
The 20% estimate of home prices having devalued in the last 24 months, is just that, a rough estimate. Mr. Jack's home may not sell until he lowered the price to $105,000, half its original cost. No one knows. Normally, property assessors have vast amounts of data on recently purchased homes to compare a particular house to, in estimating what its current market value should be. But, these aren't normal times. Housing values are falling and no one knows where they will bottom out and stabilize.
Therefore, Mr. Jack's bank asks Mr. Jack if he has any other collateral to put up for the loan? He says yes, he has his gold wedding band which has risen 500 % in value since he bought it. But, since he bought it for only $110, it is now worth only $550 and Mr. Jack's bank turns Mr. Jack down for the car loan, because the car will depreciate faster than he would be able to pay off the loan, his ring doesn't cover the difference, and he owes more than his house is worth. Additionally the bank knows a recession is possible ahead, in which case Mr. Jack may become unemployed, making the bank's potential for collecting their loaned money plus interest from Mr. Jack, doubtful at best.
In many ways, Mr. Jack's situation is identical to our current large financial institutions and indeed, financial institutions around the world. They have loaned money out to others and accepted mortgages as collateral on those loans. A sizable portion of those mortgage loans were for the full, or near full market value of the home as appraised 1 to 5 years ago. But the value of those properties have dropped considerably, and are still dropping.
These are now referred to as 'Toxic Debt' or 'Toxic Mortgage Backed Securities', in which the amount of the mortgage paper, or promissory note to repay, is greater than what the property is actually now worth. How much more, is very difficult to determine due to property values still dropping, and in many cases the amount of the mortgage IOU could be as much as 50% more than the actual value of the property itself, if the property could be sold today.
Now, the majority of the mortgages these financial institutions (lenders) have on their books as assets (IOU's from home and other property owners), are less than what the properties are actually worth. In other words, these are non-toxic mortgage backed IOU's which, if the borrower defaulted on payments, the financial institution could foreclose, (repossess) and sell the property to recover the amount of their loan and make a bit of profit in the bargain. But in order for these 'banks' to make new loans, they have to borrow money, (IOU's aren't money in hand), and in order to borrow money, they have to open their books of IOU's to show their lender that their previous loans are good for what the IOU's say they are good for.
Too many of these financial institutions, when they open their books to a potential lender, expose the fact that they are holding a lot of 'toxic debt' and therefore, other banks are refusing to lend them money. If banks and other financial institutions don't lend each other money, they can't lend you, or I, or Mr. Jack any more money, either. This is called a credit crunch, or, in our case, crisis. The money between top tier lenders to lesser lenders, gets hard to acquire and more expensive as interest rates for borrowing going up. Interest rates go up when the risk of lending goes up.
Corporate lending interest rates have been climbing steeply, recently by as much as 250 to 300% or, 2% to as high as 6 and 7%. The cost of lending money is rapidly growing. And that is going to reduce how many people are able to borrow and buy things. As more people cannot afford to borrow money and buy things, stores and manufacturers sell less, lose profits, and start laying off workers. As more workers are laid off, there are even less people able to buy things, causing business profits to drop further or not make a profit at all, which in turn leads to even more layoffs, or worse, bankruptcy for the company or corporation. That is a recession.
These are precisely the effects which this Emergency Economic Stabilization Act of 2008, is designed to minimize and lessen. There are many folks in the population and in professional trade magazines writing that this "Rescue Bill" should not go forward; that this is a financial bubble which should be allowed to burst, taking nation's into recession, which occur quickly, and eventually bottom out; stabilize, and thereafter grow again on a much sounder financial footing. This projection of what would happen is accurate and true.
Critics of such a proposal to let the markets self-correct, argue such a remedy will destroy the financial lives of millions and millions of newly unemployed workers and their families. That is also accurate and true. They argue that most people would rather keep their job and home, even if they can't buy as much for the next few years, than to lose their jobs and homes, and have to spend their savings trying to keep the family afloat for a year or two awaiting the economy's recovery to the point that they can find a job again.
So, the debate really boils down to 1) those arguing for a deep but short recession, and economic recovery a year or three later, and 2) those arguing for a prolonged, slow growth, belt tightening period, in which millions of people see themselves get poorer in consumer terms, but, keep their jobs and homes in this slow economic growth period which could last for several to many years before wages increase and begin catching up with inflation again.
MoneyWeek for example, whose target audience is investors, champions the self-correcting option because the sooner the economy tanks and recovers, the sooner investors can get back to making significant gains on their equity investments again and not have to do other work for a living.
On the other hand, government representatives know that reelection is not likely if headlines for a year or two are full of stories of rising unemployment and growing throngs of homeless persons due to dramatically rising home foreclosures, which would result from allowing the markets to self-correct without government intervention. Therefore, on behalf of their constituents, politicians are trying to chart a course that minimizes these effects on their voters and families.
And that pretty well covers the overview of what is taking place in Congress and our economy, and why it is, there are two camps of thought on how we should handle this crisis. The details of financial markets are extremely complex. But, understanding the overview of what is happening and who is on which side of the solution fence, is really very easy and simple to grasp.
So, which camp do you feel more comfortable in? The fast and furious self-correction investing camp, or the less severe pain and longer recovery camp?
Those in the middle of the Middle Class are likely to find themselves straddling both camps, as they have significant long term retirement investments they would like to see grow again as soon as possible, but, they are also employed workers with jobs and homes and dependents at stake, and don't want to risk their jobs and savings to date, in a market-self correcting option.
I want to know how Jack got a loan for a $210,000 house with an income of $1400, and apparently no down payment.
While that isn’t quite a NINJA loan, someone committed fraud somewhere.
Jack needs to find a functioning $700 car.
I’m selling an old Jeep Cherokee for about that amount. It runs great, but looks like hell. Tell Jack to give me a call.:)
Other than that, the prognostication abilities of economists, unfortunately is not that clear. Spiraling down (deflating a bubble) isn’t quite that easy. If you over tighten credit, it can destabilize the economy and produce deep recessions or even depressions. Psychology plays a role. Buying your way out of that mess gets much more expensive and the damage done to people’s lives is much greater than a nice easy slow growth period.
Posted by: googlumpugus at October 2, 2008 07:17 AMDavid
I gotta take a break from decorating my house in preparation for tonight’s debate to post my two cents here on the bailout.
I have already decorated the house with Sarah posters, and these moose antlers that I am wearing are a tad on the heavy side. (Geez I wish she had shot something smaller…like a sparrow or a bat) Anyway, a six pack American, and as a businessman who depends on bank money to stay in business,here is what the skinny is:
Baloney to this bill. “Nuts” as that WWII general said.
Let them eat warrants, I say. No way Jose. Nope. Forget it. Nice try. Back to the drawing board please.
Get the 26 BILION back in Wall Street bonuses from last year. Throw all the corrupt mortgage brokers in jail. Throw Barney Frank in jail.
And to get the money back, add 1/4 of 1 percent surcharge on every single trade going forward. That extra 100 billion ,earned every year,is all that is needed.
Stretch out the time that banks can have these toxic assets on their books to free up cash and be done with it.
If McCain has any gonads, he would see the light.I would welcome a flip flop on this.
Anyway, as they say up here in Barney land: “Go Sarah Go! Beat old Blow hard Joe!”
Posted by: Sicilain Eagle at October 2, 2008 07:19 AMgooglumpus, you appear to have missed the point of the entire article. I apologize, I tried to write as simply as possible. The devil is not in the details of this article, but, in the overview.
Posted by: David R. Remer at October 2, 2008 07:44 AMSicilian Eagle, you actually have some good ideas of what needs to happen going forward. Problem is, none of them could be enacted in THIS congress in time to prevent the credit crisis from tanking the economy.
First, take care of the crisis. Then take care of what caused it after the crisis has been minimized. There is an order to lawmaking that asserts itself whether we want it to or not.
Posted by: David R. Remer at October 2, 2008 07:48 AMJust for reference, below are the stated purposes of the Senate Bill, contained within the bill itself:
The purposes of this Act are—Posted by: David R. Remer at October 2, 2008 07:51 AM(1) to immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States; and
(2) to ensure that such authority and such facilities are used in a manner that—
(A) protects home values, college funds, retirement accounts, and life savings;
(B) preserves homeownership and promotes jobs and economic growth;
(C) maximizes overall returns to the taxpayers of the United States; and
(D) provides public accountability for the exercise of such authority.
You apparently missed my smiley.
Posted by: googlumpugus at October 2, 2008 07:59 AMEagle,
Is Barney just a bonus for being a fag, or is there some other reason you single him out?
Posted by: googlumpugus at October 2, 2008 08:01 AMGoog,
You’ll have to excuse Mr. Remer. An eloquent and excellent blogger he may be, but I think he may have had part of his sense of humor shot off in some war or another. Lightheartedness goes right over his head more often than not, I’m sad to say. The rest of us got the joke, and that’s what’s important.
David,
Other than your possible need of a good Monty Python marathon, a superb article, one of your best. Best of all, and rare as diamonds on this site, it was completely non-partisan. You have done an amazing job at showing the unfortunate truth: that there is no good, safe, calm solution to this crisis, and the only ones that Washington will ever come up with will always benefit Wall Street more than Main Street, to use a beaten-to-death phrase. Politicians need two things to survive: money and popular support. The former, used smartly, can guarantee the latter, and thus it will always be foremost in their minds.
L
Posted by: leatherankh at October 2, 2008 08:39 AMI have now cursorily read through the entire Bill. This does not mean I understand all its provisions nor legal technical issues and cross references.
That said, the Bill has much to be lauded and to instill confidence on the part of voters and tax payers.
First, there is a provision to ensure that the tax payers do not suffer any losses under this bill. The provisions provide for recovery of cost of the bill from the sale of assets purchased, and to the extent there is a shortfall, the financial industry shall be obligated to pay the Treasury the difference.
Second, there are provisions to ensure that no Executives of institutions selling toxic debts to the the government, can receive golden parachutes so long as the Treasury holds a single toxic debt from that institution, and it attempts to prevent annual compensation of the top 5 income execs from being excessive according to provisions which were not readily apparent from a read of the Bill.
Third, there are many provisions for oversight and accountability over Treasury Secretary and his agents in the management of this program and its transactions including reporting to Congressional oversight committees and the establishment of an inspector general, nominated by the President with the advice and consent of the Senate, qualified to oversee the Bill’s implementation and with full investigatory power. In addition, there is a provision mandating compliance and cooperation with any FBI investigations.
Tax payers while lending the government the money to enact this Bill are assured of recovering that loan back into the federal general revenues and such funds may not be authorized for any other purpose than to reduce the federal deficit and national debt. Tax payers will be made whole, and will not in the end, see their net future taxes increased by the implementation of this Rescue Bill.
The plan has a 5 year cut off date and cannot continue in perpetuity.
I am a whole lot more comfortable with this Bill than the 2.5 page proposal initially drafted by the White House.
Posted by: David R. Remer at October 2, 2008 08:45 AMgoo, sorry I missed it, but you would be cranky too after reading the entire Senate Bill in one sitting. Thanks, though!
Leatherankh, thank you for the praise. This article took more work than many of my others. I appreciate it when my time and effort is appreciated by others.
Posted by: David R. Remer at October 2, 2008 08:49 AMThe passage of the Emergency Economic Stabilization Act of 2008 bill by the Senate last night was most revealing.
So too was John McCain’s interview on Morning Joe’s.
When asked directly by Mika Brzezinski on why he voted yea in favor of the bill if it was loaded with “pork barrel” spending, he eluded the question.
Here’s why John McCain eluded the question.
The “pork barrel spending” in the bill is in truth “legalized bribes” to buy senators’ votes that opposed the bill, and both presidential candidates voted for it.
Shameful.
If any ordinary citizen bribes a public official, he faces incarceration.
If legislators bribe each other, they get a pass.
David
Thank you for so aptly explaining what I understand but generally am unable to say with any great degree of coherency. Once again you and I are on the same page. I still hold reservations but have come to the realization that regardless of legislation there will be a suffering period that likely will get worse before it gets better. I worry that we will get comfortable enough that the voters of this country will not hold our legislators to the task of following up on the causes and needed reforms to avert this problem in the future. I do think that there have been acts of criminal financial negligence at the upper levels of our financial system. I still can not understand why Paulson and maybe even Bernackie have not been asked to step down. The idea that we can allow those responsible for allowing this to happen to continue to oversee these institutions is imo negligent.
I have one other thought on this matter. I am wondering what happens if once these banks have their cash infusions, decide to horde that money. There is no way to guarantee that they will loan money to those in need. Where does that leave the borrower? Will it create jobs or just help to maintain a level? Will it not give the financial institutions and the wealthy more leverage in controlling the direction of markets and influence on the rights, wages and benefits of workers? We may be easing a painful time but I fear the workers will be the big losers in the end.
Posted by: RickIL at October 2, 2008 09:39 AMDR
“Third, there are many provisions for oversight and accountability over Treasury Secretary and his agents in the management of this program and its transactions including reporting to Congressional oversight committees and the establishment of an inspector general, nominated by the President with the advice and consent of the Senate, qualified to oversee the Bill’s implementation and with full investigatory power. In addition, there is a provision mandating compliance and cooperation with any FBI investigations.”
The problem I have is this very point. It’s like putting the fox in the henhouse to watch the chickens. We absolutly cannot trust any politician to oversee anything. None of them. It has been stated over and over again, why we are in this perdicament and the left only knows to blame bush. The truth of this crisis has been on the web, the TV, and radio to the point where the american people are starting to understand. And when that happened, the talking points turned to “we have time for blame later, let’s fix the problem first”. That is code talk for, “once this is fixed the people will forget everything else”. Now, before you go off, I believe both sides are saying this. The dems are trying to protect their own and theri power, and the repub are trying to protect their club (meaning the combined gang in congress).
This latest bill is typical of anything government does, it is full of pork. Why would our elected leaders fill a bill, that is supposed to rescue the economy, with pork and unrelated spending?
This bill is junk and will not fix anything. Mark my word, they will be back for more money. Most of you screamed “the sky is falling” when congress was about to pass homeland security bills, “We are about to loose our rights”. And yet you believe it’s ok to hand our free economy and capitalism to the government on a platter.
This is a bad bill. When bills are shot through congress with the word “crisis” attached, it gives them a chance to take away freedoms.
Posted by: Oldguy at October 2, 2008 09:48 AMNice Job David , Thank you for your hard work and efforts and helping the cause on this much needed rescue plan i don’t understand why their are so many sceptics on this bill i think many out their don’t understand the complexity of the situation we are not hermetically sealed what effects us effects the whole world and vice versa , I thought it was time to get passed the ideology and rancor, i see ole Lou dobbs was leading the charge against it and many others on TV and radio,we could argue till eternity of how and why we got in the mess i think the timing was right, your analogy was clear and precise and on layman’s terms.
Posted by: Rodney Brown at October 2, 2008 10:07 AMDavid,
No prob, and thanks for the summary of the Bill. I would be cranky. Sometimes I’m just odd rather than funny, especially when I get up at 4:00 am.
I still want to know where Mr.Jack got his loan….I’m looking for one. Maybe I should contact my congressman. ;/
Posted by: googlumpugus at October 2, 2008 11:56 AMOldguy,
While I would have preferred shares in the banks AND warrants, so that we both share in any profits and are protected for losses, and less pork, we can’t always get everything we want.
This still has to make it through the House.
It does something, it averts a credit meltdown, for now. I agree they’ll be back for more.
Posted by: googlumpugus at October 2, 2008 12:01 PMMr. Jack makes $1400 a month. He has a $210,000 mortgage. That right there is the root cause of the problem. Folks that can’t afford the payments have been getting mortgages. They haven’t been able to make the payments and foreclosures have risen. As more and more foreclosed homes go on the market the value of real estate goes down. Ya know that old supply and demand thing. Pesky little bugger aint it?
The mortgages companies have sunk their own ship by making these bad loans and now they want the taxpayers to bail them out. Let them sink. Throw the executives in prison and let them rot.
If our politicians really want to help the consumers like their pretending too they need to give the taxpayers the $700,000,000,000,000. That’s something like $141,000 per taxpayer compared to how many millions in the pockets of a few crooks.
Better yet, instead of the taxpayer footing the bill, make the executives that caused the problem spend their own money to bailout their corporations.
This 2nd attempt at a bail-out BILL (banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf):
- (01) will not solve much, and will only delay the inevitable a few months;
- (02) will fail because the problem is much bigger than $700 Billion -to- $850 Billion; the National debt and nation-wide debt is too big ($53 Trillion to $66 Trillion) and making it bigger will make it worse; already, we can’t even pay the $429 Billion in annual interest on the National Debt (which just jumped from $9.7 Trillion to over $10 Trillion in the last few days) without borrowing and printing more money; where will the money come from when it doesn’t even exist yet?
- (03) will make the inevitable worse;
- (04) will create more government borrowing which will simply create more competition for loans, compounding the credit crunch; printing more money will create more inflation; face it, there is no easy solution and panic decisions and bail-outs will simply make things worse;
- (05) is morally offensive;
- (06) won’t stop significant number of foreclosures that started before year 2005;
- (07) will screw tax payers (again, as usual; especially younger voters who will be paying for it for the rest of their life);
- (08) is possibly unconstitutional;
- (09) will punish responsible banks and Americans;
- (10) will increase debt;
- (11) will increase inflaton;
- (12) will risk crashing the U.S. Dollar, which will be worse with so many people now in cash positions;
- (13) will put the fox in the hen house; has too few checks-and-balances; fraud will be just as rampant as before, if not worse;
- (14) bails-out foreign banks too;
- (15) disrupts and delays the natural self-corrections that are inevitable;
- (16) will only delay Americans’ lesson and ironically make their lesson more painful;
- (17) is un-American and defies what most Americans want;
Congress is out of control, aside from being asleep at the switch. Congress, the Treasury, the Federal Reserve, and the Executive branch don’t even deserve a 9% approval rating.
But sadly, incumbent politicians in Congress are still very likely to enjoy 85%-to-90% re-election rates in 33 days on 4-NOV-2008.
Sadly, voters’ will most likely fail to match their voting habits with their rhetoric and supposed disdain for Congress, because too many votes love THEIR party more than their country.
If Congress really wanted to help, why not stop these 10+ abuses that led us to where we are today?
But NNNOOOoooooo … that would make too much sense … something Congress can’t have any truck with.
At any rate, the voters have the government that they elect, and re-elect, and re-elect, and re-elect, until that finally becomes too painful.
Posted by: d.a.n at October 2, 2008 01:47 PMRodney Brown, The problem is too big now, and there are no easy fixes. These bail-outs will only make things worse, and heap more debt onto future generations, and risk crashing the U.S. Dollar.
After all, no one can answer one simple question. Where will the money come from?
A lot of people are currently in cash. Bernanke is warning of hyperinflation. If we crash the U.S. Dollar, the problem we have now will be miniscule to crashing the U.S. Dollar.
Posted by: d.a.n at October 2, 2008 01:50 PMOf course there’s going to be pain and misery.
Sure, some will now be straddling the fence as their pain level increases.
And that pain now is what is pushing some people toward the bail-out and the abandonment of principles.
Since when did the solution for massive debt, borrowing, money-printing, and spending become more of the same?
It simply does not make sense.
I think the fear-mongering is working to make a lot of people abandon common-sense.
Also, most (if not all) in Congress is only worried about getting re-elected; NOT doing what is right.
There is absolutely NOTHING that shows that this bail-out will provide any long-term relief.
Do the math.
The debt is too big, which is why NO ONE can say where the money will come to pay merely the INTEREST on $53 Trillion -to- $66 Trillion of nation-wide debt, when that money does not yet exist? Borrowing and creating more money out of thin air will erode the U.S. dollar more. Already, a 1950 U.S. Dollar is now worth less than 11 cents (or less, if using the pre-1983 inflation measurement method, in which current inflation today is actually 15.6% instead of 5.4% !).
Also, Treasury Secretary Henry Paulson, the architect of this bail-out plan, was formerly the head of Goldman Sachs, and one of the firms responsible for this mess and a direct beneficiary of the bailout. Also, the people managing the bailout will be Wall Street firms and will likely receive billions of tax dollars in fees. Cha Ching!
Abandoning common-sense principles now will only grow the problem bigger. The bail-out will only buy only a few months more, before they are back asking for more money. And remember, there will be massive interest on that $700 Billion -to- $850 Billion bail-out.
At any rate, the voters have the government that they elect, and re-elect, and re-elect, and re-elect, until that finally becomes too painful.
Check out some of this pork-barrel inserted in this bail-out BILL H.R. 1424:
- SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
- (a) IN GENERAL.—Paragraph (2) of section 4161(b) is amended by redesignating subparagraph (B) as sub301 paragraph (C) and by inserting after subparagraph (A) the following new subparagraph:
- ‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.—Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly—
- ‘‘(i) measures 5/16 of an inch or less in diameter, and
- ‘‘(ii) is not suitable for use with a bow described in paragraph (1)(A).’’.
- (b) EFFECTIVE DATE.—The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act.
d.a.n, Ron Brown, and others, at the heart of your chief complaints is the political system in the U.S.
This bill is not, and does not, try to address the failures of our political system. And the reason is obvious. To address those, we need a Constitutional Convention, which severely restricts political parties and special interest lobbyist behaviors. In addition, the Convention is needed to make lying and deception to the public from public office or from campaigning for public office, a CRIME punishable by Jail Time and forfeiture of office achieved by such criminal behavior.
But, this bill will very likely prevent millions of American families from suffering more and sooner, and that, in my book, makes it worth passing.
Ron Brown and d.a.n, d.a.n is right, as is this article, that this Bill will not eliminate the suffering that is coming from debt mismanagement and profligate spending on the next generation’s charge card. Ergo, the motive and incentive to rectify those issues will not diminish with the passage of this Bill. So passing this bill will not permit everyone to go back to sleep at the switch. It will prevent American families from suffering as much and sooner as not passing the Bill.
Taxpayers will not be charged any of the money borrowed to fund this Stabilization Act’s programs. In 5 years, what portions of the 7 Trillion 350 Billion borrowed are not recovered in the sales of the toxic assets, will be recovered from the financial industry corporations in premiums to make the tax payer whole.
Posted by: David R. Remer at October 2, 2008 02:49 PM“If McCain has any gonads, he would see the light.I would welcome a flip flop on this. Anyway, as they say up here in Barney land: “Go Sarah Go! Beat old Blow hard Joe!”
Posted by: Sicilain Eagle at October 2, 2008 07:19 AM
Amen to that Sicilain. David Remer writes: “Problem is, none of them could be enacted in THIS congress in time to prevent the credit crisis from tanking the economy.”
David is wearing his seer’s hat again or has drank deeply from the Wall Street crisis trough.
David also writes: “Tax payers while lending the government the money to enact this Bill are assured of recovering that loan back into the federal general revenues and such funds may not be authorized for any other purpose than to reduce the federal deficit and national debt. Tax payers will be made whole, and will not in the end, see their net future taxes increased by the implementation of this Rescue Bill.”
I appreciate David taking the time to read the bill and I’ll go along with his summary. The primary problem I have with David’s assessment of no taxpayer money at risk is that he must assume the plan works. Frankly, I don’t believe a plan, with what some describe as containing $150 billion in pork, is the best we can do and I have no confidence at all that this will be the end of the request for more taxpayer money.
David forgets that this bill uses this administrations figure of $700 billion as sufficient to accomplish the goal. Since when did David trust this administration to be truthful about anything? Would David care to provide the outside economic experts who agree that $700b - $150b (for pork) = $550 billion is too much, too little, or just right?
And, David appears to rely upon congressional oversight that will work in this singular case when it did not work in avoiding the problem in the first case. My friend, I call that magical thinking.
Thanks to Steve Johnson for his contribution by saying; “If any ordinary citizen bribes a public official, he faces incarceration. If legislators bribe each other, they get a pass.”
And finally, David writes, “The Stabilization Act attempts first and foremost, to address the problem of financial institutions hoarding their money and refusing to lend it to other financial institutions and you and I, Mr. & Mrs. Consumer.”
David, I know and you agree that some banks have money and are not being threatened as they didn’t participate in the greed and stupidity that now haunts the banks that did. I get offers every week from sound, well managed banks wanting me to use their money to pay off other debts at 2.9% guaranteed until my balance on the loan is paid off. Banks with money are anxious to lend it to those they deem low risk, whether individual consumer, business, or other bank. Good banks are receiving billions in deposits from those who have left the market and these banks need to lend the money.
I know there is plenty of money in banks around the world and in privately held funds that will be available to bail out the bad banks at a certain price, either before or after these banks declare bankruptcy. The world is awash in money just looking for a good investment.
Why does this bill allow the very same bankers and Wall Street firms who got us into this problem to remain in charge of their firms? Why would we have any faith in these folks? And, why would we expect these very same people to use taxpayer money more judiciously than they have used their own?
Posted by: Jim M at October 2, 2008 02:52 PM
Let’s all give a rousing cheer and punch these politicians meal tickets. They have chosen to put the collapse off until March. What a relief.
Rodney Brown, thanks. I used to respect Lou Dobbs until about a year ago when I realized he was playing on the public’s fears to boost his ratings and salary. He abandoned principle for wealth.
If he championed the people’s welfare, he would be advocating for, or at least be honest about, the short term beneficial effects this Bill will have on saving American families from even more financial losses that we are all going to suffer in the long term as a result of the doubling of the national debt and wasted Congressional spending these last 8 years.
But instead he lies about this still being a bail out of wealthy Wall Street fat cats, which it no longer is. Lou Dobbs is in this for Lou Dobbs and his failures to be honest which would hurt his fear ratings, is growing more obvious with the passing of each issue he takes up.
Posted by: David R. Remer at October 2, 2008 02:56 PMOldGuy, I hear you, and agree that putting politicians and their appointees in charge of overseeing politicians and their appointees is often a case of putting the fox in charge of the hen house.
But, that is a political reform issue, having little to do with this Bill and the shorter term benefits it will provide for working American families.
The Bill has to pass, or millions of Americans are going discover in less than a year what real economic and financial suffering is. D.a.n, is right, there is more real suffering down the road increasing over the next 10 years as entitlement spending breaks and benefit cuts have to be made to restore solvency to our future. But, if given a choice between being shot in the head today or 6 years from now, I will go with 6 years from now, every time.
Simple ethical compassion for our fellow Americans mandates that we pass this Bill. It is wrong to make people suffer unnecessarily and for no fault of their own.
Posted by: David R. Remer at October 2, 2008 03:03 PMCongress ..What Were You Thinking?
You destroyed our country. You cannot repair the damage now! It is Too, Too, Too late.
If you gave the people on wall street, who are licking their lips on the anticipation of filling their pockets, 50 trillion dollars, it won’t help. I personally hope none of you can sleep at night, knowing what you have done. Especially all the old-old-old ones that have been they’re over 20 years.
DEREGULATION - DEREGULATION – DEREGULATION
When you deregulated Mergers – You told the lobbyist and American business community, move overseas, move your tax base there, keep the foreign cheap labor, Get rid of your American labor and break the unions. You should also merge enough so you are too big to fail. That way you can always count on a government bail out as a last resort. Your plan worked perfectly. We hope you are proud!
We lost
Our good paying jobs.
Our pensions.
Our 401 contributions.
Our middle class.
Our Insurance.
Our homes.
Our freedom and security
Our hope.
Our tax base – except government and wall street workers. They still make good money.
We just can’t find the words to tell you how grateful we are.
CONGRESS, we will touch bases with you again in about 6 months, as soon as the bail out money is gone.
We are GOING DOWN no matter you do.
Welcome to the Americans people world. Now you can suffer with us!
THANK YOU CONGRESS!!!!!!!!!!!
PS. After you all vote on the Bail Out, could you please post on the web, how each one of you voted This way we can see who we need to give an attitude adjustment in the coming ELECTION
David R. Remer wrote: This bill is not, and does not, try to address the failures of our political system. And the reason is obvious. To address those, we need a Constitutional Convention, which severely restricts political parties and special interest lobbyist behaviors.Agreed, but that won’t happen until enough voters begin to care more about their country than THEIR party, and stop repeatedly rewarding corrupt politicians with perpetual 85%-to-90% re-election rates. That must come first. Congress will not allow an Artilce V Convention, and have already violated Article V since 1901 (over 100 years), as evidenced by the 136 BALANCED BUDGET/General Call for an Article V Convention applications by more than 38 states (only 34 are required).
David R. Remer wrote: d.a.n, Ron Brown, and others, at the heart of your chief complaints is the political system in the U.S.Yes, sort of, but not completely.
The political system include voters, who are culpable too.
But I also have over a dozen sound reasons for opposing this bail-out BILL H.R. 1424, all of which is because this bail-out will only delay the pain a little longer and make things worse later.
We will be right back here in 6 months (or less) and they will be asking for another $700+ Billion, because the nation-wide debt of $53 Trillion -to- $66 Trillion is 75 times bigger!
Anyone care to take bets that they won’t be back in 6 months or less asking for billions more?
Also, the U.S. can not even pay the current interest alone on the $10.03 Trillion National Debt ($429 Billion in year 2007), because they borrowed and printed all the needed for that, as they have been doing for over a decade:
- 2007: $429,977,998,108 ($430.0 Billion in 2007 dollars)
- 2006: $405,872,109,316 ($420.6 Billion in 2007 dollars)
- 2005: $352,350,252,508 ($376.9 Billion in 2007 dollars)
- 2004: $321,566,323,971 ($355.6 Billion in 2007 dollars)
- 2003: $318,148,529,152 ($358.5 Billion in 2007 dollars)
- 2002: $332,536,958,599 ($383.3 Billion in 2007 dollars)
- 2001: $359,507,635,242 ($420.9 Billion in 2007 dollars)
- 2000: $361,997,734,302 ($435.9 Billion in 2007 dollars)
- 1999: $353,511,471,723 ($440.0 Billion in 2007 dollars)
- 1998: $363,823,722,920 ($462.8 Billion in 2007 dollars)
- 1997: $355,795,834,215 ($459.6 Billion in 2007 dollars)
The math reveals a debt problem that can not possibly help resolve this problem, and delaying it will only make it worse, because it will make the next bail-out easier, and the next one after that easier, and before long, we will crash the U.S. Dollar and the problem today will be many times worse. Crash the U.S. currency, and all the people that fled to cash positions will be screwed royally. Inflation today is already out-of-control, because by pre-1983 inflation measurment methods, inflation today is actually 15.6% (not the puny and totally unbelievable 5.4%).
David R. Remer wrote: This bill is not, and does not, try to address the failures of our political system.Of course not, and that has nothing to do with:
- (1) the moral question of heaping more huge debt onto future generations;
- risking more inflation, which is already too high;
- privatizing debt and socializing debt;
- risking the savings of everyone in cash positions;
- the millions of foreclosures still on the way;
- the idea that greed is suddenly gone;
- the debt is far too large;
- bailing out foreign banks too;
David R. Remer wrote: And the reason is obvious. To address those, we need a Constitutional Convention, which severely restricts political parties and special interest lobbyist behaviors. In addition, the Convention is needed to make lying and deception to the public from public office or from campaigning for public office, a CRIME punishable by Jail Time and forfeiture of office achieved by such criminal behavior.I agree that Aritlce V of the Constitution should be obeyed, but that is a separate issue that most certainly isn’t going to be addressed any time soon.
David R. Remer wrote: But, this bill will very likely prevent millions of American families from suffering more and sooner, and that, in my book, makes it worth passing.I disagree. It will only help temporarily, and then things will be much worse in a few months, because:
- the debt is far to large,
- and this $700+ Billion bail-out is a mere 1.3% of the nation-wide debt,
- there were 6 million foreclosures since 2005 and there will be 6 million more foreclosures in the next 4 years,
- and much of the money will not reach the people being foreclosed upon,
- and the money-printing necessary to make all this happen increases risk by risking the crash of the U.S. currency.
David R. Remer wrote: Ron Brown and d.a.n, d.a.n is right, as is this article, that this Bill will not eliminate the suffering that is coming from debt mismanagement and profligate spending on the next generation’s charge card. Ergo, the motive and incentive to rectify those issues will not diminish with the passage of this Bill.That alone is sufficient reason not to do it. It’s not fair to future generations.
David R. Remer wrote: So passing this bill will not permit everyone to go back to sleep at the switch.It doesn’t matter much now. It’s too late, but that doesn’t mean it can’t get worse, which is what will happen if they crash the U.S. Dollar. Besides, greed, corruption, and incompetence would not suddenly disappear with the passage of this pork-laden bail-out BILL, or the ones that most certainly will follow it in only a few months. Cha Ching!
David R. Remer wrote: It will prevent American families from suffering as much and sooner as not passing the Bill.Only temporarily. Only 6-to-12 months (if not much less). It won’t only fail, but it will magnify all problems later. Do we want to lose a big toe now, or three or more toes on both feet later?
David R. Remer wrote: Taxpayers will not be charged any of the money borrowed to fund this Stabilization Act’s programs. In 5 years, what portions of the 7 Trillion 350 Billion borrowed are not recovered in the sales of the toxic assets, will be recovered from the financial industry corporations in premiums to make the tax payer whole.No! Tell me you don’t really believe that tax payers will recover that debt? I’ll wager that doesn’t happen, because there is too much debt. That’s why this problem is so difficult. There are no easy solutions. The danger is making it worse by growing the debt larger and crashing the U.S. Dollar. It’s doubtful the tax payers will recover even half of it, and in the mean time, the interest on all of this debt will trump everything, because it’s already so large now, the money for it is being borrowed and created out of thin air. Posted by: d.a.n at October 2, 2008 03:38 PM
Those who voted against this bill in the Senate last night:
Allard (R)
Barasso (R)
Brownback (R)
Bunning (R)
Cantwell (D)
Cochran (R)
Crapo (R)
DeMint (R)
Dole (R)
Dorgan (D)
Enzi (R)
Feingold (D)
Inhofe (R)
Johnson (D)
Landrieu (D)
Nelson (FL) (D)
Roberts (R)
Sanders (I)
Sessions (R)
Shelby (R)
Stabenow (D)
Tester (D)
Vitter (R)
Wicker (R)
Wyden (D)
Kennedy(D) did not vote due to brain tumor/anyuerism
The rest voted for the bill.
Posted by: googlumpugus at October 2, 2008 03:40 PMRon Brown Said, “make the executives that caused the problem spend their own money to bailout their corporations” Yes and them some ! d.a.n., I was for the fence and against the ethanol bill and admire your steadfast courage and devotion and I’m not really a huge government type i believe the plan was necessary though the amount of foreclosed and empty boarded up houses in California and Florida and Nevada and so on is frighteningly scary and Ron, i believe most of those folks are gone now the values were way overinflated a hell of a lot of deception and greed was going on from everyone then, the values in California are about at 2002 -2003 levels and still falling whole neighborhoods look like Goog described hoovervilles and i believe this plan will loosen credit so people can buy up these empty places and help the folks who are “able “to afford to stay in their houses and selling the empty ones will do volumes to help stabilize the falling prices and help the economy
Posted by: Rodney Brown at October 2, 2008 04:05 PMJoe Bill Jones, how very lazy and easy to just throw up one’s hands, declare all is lost, and walk away thinking one has done something constructive about the problems.
Sorry, I just cannot walk through the back door exit from responsibility, with you.
Same for d.a.n. If all is lost, there is no point in lifting a finger to even try to mitigate the harm and losses. How very convenient. All “the sky is falling” talk and no work to shore it up, doesn’t address a crisis.
One of the great dangers of the internet is that people can talk up their thoughts and feel like they accomplished something by declaring there is nothing anyone can do.
If enough people go that route, then the self-fulfilling prophecy is insured. We shall see if this is one of those turning points, when America gives up instead of meeting its dire challenges as it has so many times in the past. But, I refuse to be part of the doom self-fulfilling prophecy. My daughter’s future is on the line here, and I have emailed my representatives demanding they pass this Bill and much more afterward in the way of stepping down so competent folks can take their place.
I wonder how many other doomers have taken that 5 minutes of absolute minimum effort to address the problem rather than key in defeatist navel reflection here at WatchBlog? Far too many I suspect.
You want reform, write your representatives. That is the VERY LEAST one can do to become part of the solution instead fulfilling the failure.
Posted by: David R. Remer at October 2, 2008 04:13 PMI have been trying to catch a little news on TV and radio today while preparing my boat for a fishing trip. I think someone is blowing smoke at us. I don’t think there is a crisis, I think everyone is sitting back and waiting to see how much money they can scam from the taxpayers.
It seems there is money to loan to qualifying borrowers. Calls were coming in on a radio show today, from all over the country, from people who were contacting their banks and the banks said there was money to loan. The best call was a loan officer from a bank in Bradenton, FL. She said her job was to loan 1 million dollars a month. The loans had to meet Fannie and Freddie qualifications and the money was coming from Fannie and Freddie. Go figure.
I also heard the plan that the senate approved was for $850 billion instead of $700. There is so much pork included, it raised the bill $150 billion. Now the dems in the house are already trying to add more pork. I wonder if the dems have the nerve to pass this joke of a bill by themselves. On the other, Pelosi seems to not be pushing very hard to pass this bill.
I say again, this will not fix the problem, and in a month it will be another crisis. Let the systems fail and let Freddie and Fannie be split up and sold. They hold 70% of mortgages in this country.
Posted by: Oldguy at October 2, 2008 04:36 PMDavid, and all those people (including me) who criticized you for being a doom and gloomer. Now you sound positively hopeful!!!:)
Posted by: googlumpugus at October 2, 2008 04:53 PMOldGuy said: “I have been trying to catch a little news on TV and radio today while preparing my boat for a fishing trip. I think someone is blowing smoke at us. I don’t think there is a crisis,”
I suggest you catch more business news and less rays on your boat. It is getting very dire, worse than even the lawmakers thought, after taking care of the initial run on money market funds which prompted all this emergency action.
Posted by: David R. Remer at October 2, 2008 05:01 PMgoo, I criticize no one for acknowledging problems and potential crises. But declaring doom and gloom without proffering solutions or at least standing ready to act when one is offered, is simply a lazy and easy cop out.
Hope is what keeps motivation to act alive. Without that, there is no action to avert doom and gloom.
But, hope has to predicated on action with at least a modicum of chance of succeeding in improving the situation. Thus, those who remain eternally hopeful averting their eyes from crisis with nothing more than the argument that it’s all been OK so far, are equally culpable for aiding abetting doom and gloom self-fulfilling prophecies.
goo, one more thought. The reforms which folks have been railing about for decades and years, are shared by more folks than ever in our society. I lived through the 1960’s as a teen and young adult and watched a new way of thinking sweep through a large segment of our population, and that created enormous positive outcomes, though not all were so positive.
I am seeing the same thing again happening now. Voters and citizens have abandoned confidence in their government and politicians. VOID is experiencing a run on Vote Out Incumbent window and bumper stickers like never before. We just had to order 500 more last week. There is a sea change occurring here in the mindset of voters and that is, as far as I can see, justification for hope and action.
David,
I am retired and my retired (banker) neighbor convinced me to move our investments into CD’s about 6 months ago. He knew what was coming.
My biggest problem was making sure I could get gas for the boat. It is fueled up and so is my truck and as of tomorrow morning I may be out of touch for 9 days, unless I can find a hot spot.
I will have cable where we are staying, so I can keep up to date with Fox News:)
Posted by: Oldguy at October 2, 2008 05:15 PMAfternoon Comment:
I was fascinated today at the House Rule Committee meeting. A proposed amendment to the bill that would authorize what Paulson said is the maximum that the Treasury can spend of 50 billion a month four 4 months…200 billion total..is the most locigial solution.
However, Barney Frank (for a poster that intimated that I do not like Barney because he is gay…..wrong…I hate his politics, not his sexuality) and his cabal have this one stacked. It won’t be amended.
On that basis, the Mighty Eagle will now make his predictions:
1. This bill won’t see the light of day as written from the House.
2. The market will get belted,but we will all survive.
3. In a week, another bill with 50 billion a month for 4 months with a look see provisionfor the rest will ultimately prevail.
On another note:
1.Biden will step on his tongue.
2. Sarah has memorized the names of 4 Supreme Cases now.
3.If I am lucky, someday she will autograph the Eagle’s t-shirt.
(sigh)
How many ornaments is this Christmas tree going to have on it to obstruct our view of the main stem? How about a tax bill to pay for it?
Posted by: ohrealy at October 2, 2008 06:36 PMI just got through to my congressman, who voted against the 1st bill, and I told him I was against the bill. He promised to vote no again.
Don’t try to contact your congressmen via email. The system is almost shut down. Evidently someone is writing.
Posted by: Oldguy at October 2, 2008 06:47 PMCRISIS…WHAT CRISIS? Some legislators take our supposed financial meltdown so seriously that they agreed to vote on a bail-out for just $150 billion in additional swill for the porkers. Idiots…they could have held out for $500 billion.
I am going fishing with oldguy if I can find him. I am going to need an alibi when the hangings begin.
Posted by: Jim M at October 2, 2008 07:06 PMJim M, your comment is loaded with propaganda spoon fed to you by those who want to see the economy tank, and as fast as possible, so a healthy predictable high growth investing environment can be brought back.
Much of what you refer to as pork, is actually economic growth stimulus in the form of tax cuts and subsidies in industries. Which puts Republicans in a real quandary, since they are for tax cuts but against government favoritism, which tax cuts are.
I too did not want extraneous provisions added to this Bill. But, it is the price of compromise to bring enough House Republicans on board. Some of the very provisions you are railing against are the very same provisions that will get some House Republicans to vote for the Stabilization Bill.
Your position appears to be quite a Catch-22 as a Republican supporter. And How about that McCain who ABSOLUTELY PROMISED NO NEW EARMARKS, and then turns around and votes for EARMARK tax cuts and industry stimulus in this Bill?
What is a Republican to Do?
Posted by: David R. Remer at October 2, 2008 07:36 PMOldGuy, the latest news from Roy Blunt is that Congress persons are now receiving about 50% calls for this bill to pass and 50% against. Meaning 25 to 30% of Americans have gone from opposition to support of rescuing their jobs, savings, and homes from a deepening recession.
Once again, I think your information base is on the wrong side of the awareness trend.
Posted by: David R. Remer at October 2, 2008 07:43 PMSicilian Eagle, and as usual, your prognostications will be wrong. WB is littered with your wrong prognostications dating back quite a ways, now. Though you did get a few right, I am sure, but, I would have to research that. :-)
Posted by: David R. Remer at October 2, 2008 07:59 PM4 whole supreme court cases??? wow I dont think she can do it, I say 3 tops and 2 most likely but cliff noted. lol
Great post Mr. Remer I found it very informative and was also pleased at the nonpartisan way it was presented.
Posted by: NapaJohn at October 2, 2008 08:22 PMThank you NapaJohn. Appreciate the positive feedback.
Posted by: David R. Remer at October 2, 2008 11:44 PMDavid R. Remer wrote: Sorry, I just cannot walk through the back door exit from responsibility, with you. Same for d.a.n.Hmmmmmm … what else would you call a 180 degree turnabout?
David R. Remer wrote: If all is lost, there is no point in lifting a finger to even try to mitigate the harm and losses.False.
Not all is lost.
No one said all was lost.
In fact, I and others have proposed numerous alternatives, such as stopping these 10 abuses FIRST !
There are many ways to mitigate damages.
Yes, something needs to be done.
There’s no doubt about that.
But what does Congress do intead?
Instead, Congress does the only thing it knows to do, and adds 300 pages and over $100 Billion more in pork-barrel and earmarks to sweeten up the already defeated BILL H.R. 3997! ! ! Cha Ching!
David R. Remer wrote: How very convenient.Yes. How convenient. The 1st BILL wasn’t porky enough, so they loaded it up with some more pork.
David R. Remer wrote: All “the sky is falling” talk and no work to shore it up, doesn’t address a crisis.No one said the sky is falling yet.
There will be some pain.
But the sky WILL be falling if more debt, borrowing, money-printing, pork-barrel, spending, and waste crashes the U.S. Dollar.
Then it won’t matter how much money they print, borrow, spend, or waste.
Think about that.
As for “shoring it up”, since when did more debt, borrowing, money-printing, pork-barrel, spending, and waste become the solution for more massive debt, borrowing, money-printing, pork-barrel, spending, and waste? Sorry, but that logic doesn’t make a bit of sense. I’ve heard many say the tax payers will make money on this, and that is load of crap. Besides, government is NOT supposed to be doing this. David, you yourself initially said it was not constitutional. Why the 180 degree reverse? If some of these bad debts still have some worth, then let the free market buy them. That is not the duty of the federal government, nor the tax payers.
Again, there is a LOT that can be done now to mitigate damages, but there are NO quick fixes for the many decades so fiscal and moral bankruptcy. This pork-laden bail-out BILL is not going to shore up anything. It will make everything worse, and abandons fundamental principles, and creates more debt, borrowing, money-printing, and spending. That makes ZERO sense. I haven’t seen any credible argument yet that this BILL will solve such a massive debt problem.
Your many past articles on excessive spending, borrowing, money-printing, and waste are in complete contradiction with your position today on this pork-laden BILL H.R. 1424, which is socializing debt and dumping it on the tax payers.
David R. Remer wrote: One of the great dangers of the internet is that people can talk up their thoughts and feel like they accomplished something by declaring there is nothing anyone can do.The internet has always contained the truth, lies, and everything in-between.
And NO ONE said there is nothing anyone can do.
No one.
Again, there are many things that can be done.
But a 180 degree turn-about, and abandoning sound principles, and trying to solve massive debt, borrowing, money-printing, spending, and waste with more massive debt, borrowing, money-printing, spending, and waste is absolutely ridiculous, and makes ZERO sense. Especially when $700+ Billion is only the beginning of a serious of huge bail-outs. Do you seriously think this first $700+ Billion bail-out will be the last?
It is a complete 180 degree turn-about and an abandonment of fundamental principles to rail against fiscal irresponsibility, massive debt, money-printing, borrowing, spending, and the constitutionality of socializing debt, and then now defend it.
This 2nd BILL is worse than the 1st, with over $100 Billion of additional pork-barrel, not to mention a tax break for wooden arrows:
- SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
- (a) IN GENERAL.—Paragraph (2) of section 4161(b) is amended by redesignating subparagraph (B) as sub301 paragraph (C) and by inserting after subparagraph (A) the following new subparagraph:
- ‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.—Subparagraph (A) shall not apply to any shaft consisting of all natural wood with no laminations or artificial means of enhancing the spine of such shaft (whether sold separately or incorporated as part of a finished or unfinished product) of a type used in the manufacture of any arrow which after its assembly—
- ‘‘(i) measures 5/16 of an inch or less in diameter, and
- ‘‘(ii) is not suitable for use with a bow described in paragraph (1)(A).’’.
- (b) EFFECTIVE DATE.—The amendments made by this section shall apply to shafts first sold after the date of enactment of this Act.
David R. Remer wrote: If enough people go that route, then the self-fulfilling prophecy is insured.False.
Many opposed to more massive debt, borrowing, money-printing, spending, and waste is because it will make things worse.
And again, there are numerous better solutions than more massive debt, borrowing, money-printing, spending, and waste.
But those alternatives will not be given a chance at the speed at which this panic BILL is being ram-rodded through Congress.
Anyway, wanting to pursue better alternatives does NOT equate to choosing a route of failure or self-fulfulling prophecy.
Besides, don’t you think tax payers should have a voice in the socialization of massive debt (and privatization of profts)?
If enough people FINALLY choose fiscal responsibility, instead of MORE-OF-THE-SAME, then we might finally get on the road to recovery.
This bail-out BILL H.R. 1424 is simply more of the same, and it will simply get more of the same; more debt, borrowing, money-printing, spending, and waste (as evidenced by the pork-barrel and earmarks already making its way into the BILL).
David R. Remer wrote: We shall see if this is one of those turning points, when America gives up instead of meeting its dire challenges as it has so many times in the past.Gives up?
Giving up in my opinion is choosing more fiscal and moral irresponsibility and supporting this huge pork-laden BILL with more fiscal and moral bankruptcy.
That’s what I call giving up.
That is, unless we woke up in a parallel universe where more massive debt, money-printing, borrowing, spending, and waste leads to prosperity! ? !
However, in this universe, more rampant debt, borrowing, money-printing, spending, pork-barrel, and waste never was, and never will be the solution to a huge debt problem.
Especially when the debt is already so huge, that the U.S. has already been borrowing and printing money to merely pay the annual $429 Billion in interest on the $10.03 Trillion National debt.
That inescapable fact decimates any argument that more debt, borrowing, money-printing, spending, pork-barrel and waste will solve the problem of debt, borrowing, money-printing, spending, pork-barrel, and waste.
David R. Remer wrote: But, I refuse to be part of the doom self-fulfilling prophecy.David, Your comments in the past appeared as a prudent warning. They rarely (if ever) appeared to be “doom’s dayish”.
They never seemed part of a “doom self-fulfilling prophecy”.
They were realistic.
I was with you up until today.
But now your comments are a complete 180 degrees in the other direction.
Your comments now seem to indicate that the solution to massive debt, borrowing, money-printing, pork-barrel, spending, and waste is more massive debt, borrowing, money-printing, pork-barrel, spending, and wast.
That simply makes no sense.
Your own comments in the past theorized a point in which the debt was so huge, all of it could never be repaid.
You were right.
We are now there.
That doesn’t mean we now have to cave-in to more of the same.
On the contrary.
We should reject more of the same.
So it is confusing that your comments are now a complete 180 degrees in the opposite direction.
David R. Remer wrote: My daughter’s future is on the line here, …I have children too. A son and daughter-in-law with a child on the way.
Lots of us do.
But how does that justify a complete 180 degree turn-about and abandonment of the belief that we should stop the massive debt, money-printing, borrowing, spending, pork-barrel, and waste?
Sure, the going will get tough for many of us, but this huge bail-out BILL H.R. 1424 will only delay things a few months and make things worse later.
It is a mathematical certainty.
You already admitted a while back that it was an upside-down debt pyramd.
So what makes you think more massive debt, borrowing, money-printing, pork-barrel, spending, and waste will save it?
The bail-out will buy a few months at best, and heap more debt on your children.
You’ve said so yourself over and over and over … that we are robbing the future of our children.
What changed?
Short term thinking and panic?
Short term thinking and short-sightedness is part of the reason we are where we are today.
Now is not the time to abandon principles.
What you wrote in the past was correct and moral.
Now is the time to address core problems, and stop abuses that got us here; not abandon principles and throw more money down a black hole.
Becasue that is what is it (a black hole).
Another analogy is trying to put out a fire by throwing gasoline on it.
Reforms are needed FIRST.
It’s amazing that panic voters are falling for the fear-mongering and missing this opportunity to demand real reforms.
Instead, many voters are caving-in and hoping the federal government will bail them out.
Well, it aint gonna happen.
This bail-out will simply grow a massive debt problem into a more massive debt problem.
David R. Remer wrote: … and I have emailed my representatives demanding they pass this Bill and much more afterward in the way of stepping down so competent folks can take their place.I have FAXed and E-Mailed my Congress persons too, and warned them that I will memorialize all of those on a multitude of web-pages that support this socialization of debt.
In fact, for all interested, here is a complete list of FAX numbers to all Congress persons.
FAX them and tell them to stop the rampant borrowing, money-printing, pork-barrel, socialization of debt, spending, and growing the debt from nightmare proportions to hellish proportions!
David R. Remer wrote: I wonder how many other doomers have taken that 5 minutes of absolute minimum effort to address the problem rather than key in defeatist navel reflection here at WatchBlog? Far too many I suspect.I have reflected on the problem for years.
It wasn’t hard to see this coming.
I’ve been predicting it for over a year.
And now we have a choice.
Fix it, or make it worse.
Stop these 10 major abuses hammering most Americans.
These abuses are costing most Americans trillions per year.
How is socializing bad debt helping the tax payers as a whole?
Who is really being helped by the socialization of the bad debt?
Ask yourself those questions.
David R. Remer wrote: You want reform, write your representatives. That is the VERY LEAST one can do to become part of the solution instead fulfilling the failure.I have.
But not in support of the bail-out BILL H.R. 1424 which is for more massive debt, borrowing, money-printing, pork-barrel, spending, and waste that is supposed to somehow miraculously solve the problem of massive debt, borrowing, money-printing, spending, pork-barrel, and waste.
At any rate, I’d like someone to please explain how more massive debt, borrowing, money-printing, pork-barrel, spending, and waste will solve the problem of massive debt, borrowing, money-printing, pork-barrel, spending, and waste. Seems like a classic oxymoron to me.
Here are just a few of many reasons why this bail-out BILL H.R. 1424 is bad for America:
- (01) NO CHECKS and BALANCES: There are insufficient checks-and-balances. This bail-out would mask imbalances in credit markets and in the U.S. economic public policy. The plan props up irresponsible, crooked, and reckless, failed banks by buying “troubled assets” instead of focusing on real solutions and principles. It would fail to go after government-sponsored culprits such as Fannie Mae and Freddie Mac, and perpetuate unsustainable policies that caused the problem in the first place.
- (02) FOX IN THE HEN HOUSE: It is a blatant, greedy power grab. The bail-out raises Constitutional concerns by dramatically expanding the power of the current and future Treasury Secretaries, giving the government agency power to directly purchase assets from for-profit financial and non-financial firms. A huge problem in this country is too many people trying to make money by playing with money, instead of creating real value. It’s not working. Treasury Secretary Henry Paulson, the architect of this bail-out plan, was formerly the head of Goldman Sachs, one of the firms responsible for the mess and a direct beneficiary of the bailout. Also, the people managing the bailout will be Wall Street firms and will likely receive billions of tax dollars in fees. Cha Ching!
- (03) THE DEBT IS ALREADY TOO BIG: The $700 billion bailout figure is as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. It amounts to $2,295 for every man, woman, and child in America. For the average household of 2.61 persons, that’s $8793 per household. Of course, the people that got us into this problem and didn’t see it coming are also the ones telling you it won’t cost you much, and you may even make a profit. And I’ve got some beach-front property for sale in Arizona. Yeah, right. Also, if Congress is going to borrow all of that $700 Billion, how will that free up credit markets? And if the Federal Reserve is going to print most (or all) of that money, how will we pay the interest on the debt when we can’t even pay the current level of interest on the National Debt? That is, the government has been borrowing and printing new money to merely pay the interest on the National Debt for years. The National Debt and nation-wide debt is already too large.
- (04) IT WILL BAILOUT FOREIGNERS: The plan includes taxpayer purchases of distressed assets from foreign banks. Americans are losing their homes by the millions, and the federal government is going to take your tax dollars and purchse distressed assets from foreign banks. Cha Ching! If voters fall for this, then the voters really do deserve the government that they elect, and re-elect, and re-elect, and re-elect.
- (05) IT PUNISHES RESPONSIBLE AMERICANS: The plan punishes responsible Americans and banks by keeping reckless, insolvent investment banks in business. There are still many good banks and responsible Americans who have little to no debt, and this bail-out is primarily a bailout of poorly run financial institutions. Badly-run competitors should fail. Funny how the free-market zealots are suddenly looking for a bail-out. What a bunch of hypocrits.
- (06) BY WALL STREET, FOR WALL STREET: The idea that taxpayers will make money on the bailout is not credible. There are other buyers for the troubled assets. Merrill Lynch sold its entire portfolio of mortgage backed securities in July. If a profit is truly possible, then allow private speculators to buy these troubled assets.
- (08) $700 Billion isn’t enough to accomplish the goal. Look at this list of 186 banks (bankimplode.com/list/troubledbanks.htm) with negative or small net assets. Now consider the 6 million foreclosures since 2005. Foreclosures are not going to instantly stop now. There will most likely be millions of more foreclosures. If there are 6 million more foreclosures, 6 Million x $159,000 median home price = $954 Billion , which is already 254 Billion more than the $700 Billion , and there are already 18.6 Million vacant housing units on the market now.
- (09) WHERE WILL THE MONEY COME FROM?: Where will the money come from to merely continue to pay the interest on the current National Debt and the nation-wide debt, much less the money to reduce the principal debt and keep the principal from growing ever larger, when that money does not exist yet, and 80% of all Americans owns only 16%-to-17% of all wealth in the U.S.?
- (10) MORALLY OFFENSIVE: The bail-out violates basic, long-held, and widely accepted principles of American capitalism and honest governance by creating a system of “private profits and socialized losses”, which transfers money from taxpayers directly to the banks. Free market capitalism only functions if individuals and corporations are held accountable and are allowed to both succeed and profit, and also to sustain losses and even fail. Also, the people managing the bailout will be Wall Street firms and will likely receive billions of tax dollars in fees. Cha Ching! Most polls show most Americans are against a bail-out, or whatever imaginative name someone wants to give to this plan to funnel billions to the people that created the problem. Everyone and their dog will be lining up for a bail-out, including auto-makers and airlines.
- (11) TOO RISKY: Growing the National Debt and nation-wide debt any bigger is risky, because even if the federal government was able to borrow all of the money (instead of printing new money), it would raise the National Debt and the interest on the National Debt, which the federal government is already unable to pay ($429 Billion in year 2007, which the federal government borrowed and printed out of thin air to pay). Growing the debt and the money-supply risks crashing the U.S. Dollar, which has already been falling significantly for over 5 years, and consistently every consecutive year since year 1956 (One-Simple-Idea.com/InflationRates1780-2007.jpg).
And if this bail-out BILL H.R. 1424 passes, it will get more painful a few months from now, because the debt problem will simply be bigger than it is now.
And if another bail-out BILL passes, the debt problem will simply be bigger than it was, and so on, and so on, and so on.
Sort of like a rate in a cage with a cocaine dispenser.
It can’t stop because it is addicted like Americans are addicted to credit, borrowing, money-printing, spending, pork-barrel, and waste.
At any rate, the voters have the government that they elect, and re-elect, and re-elect, and re-elect, until that finally becomes too painful.
CORRECTION: Especially when $700+ Billion is only the beginning of a serious series of huge bail-outs.
This is of the best in posts, Mr. Remer. I agree with leatherankh
Best of all, and rare as diamonds on this site, it was completely non-partisan.I was waiting for the zingers but they didn’t exist.
I’d like to use simplicity to make a point.
There are many people who are going to transfer their investment from “me and the bank” to the government.
This bill says the government will assume responsibility and then sell the property to recoup the loss and reimburse the “taxpayers” after the value of that property rises again.
I think the homeowner should keep ownership and the agreement for the morgage should be recalculated using the “bottom”.
i.e.
the amount of the mortgage IOU could be as much as 50% more than the actual value of the property itself
We should declare a bottom to this free fall and use it as the base for our solution.
Jack’s purchase price of his property was 1000$ and his interest rate was 1% with a 110$ monthly payment. The value of his house is now worth 500$ and his interest rate is 10% and his monthly payment is 200$!
Jack’s loan would be recalculated using the declared bottom value of the house (500$) at an interest rate that is optimal and equal and sufficient. The resulting difference/loss between the previous agreement and this new agreement using the bottom value is bore by the financial industry.
…our current large financial institutions and indeed, financial institutions around the world. They have loaned money out to others and accepted mortgages as collateral on those loans. A sizable portion of those mortgage loans were for the full, or near full market value of the home as appraised 1 to 5 years ago. But the value of those properties have dropped considerably, and are still dropping.
It was the financial institutions colaborating among themselves that created this paper market. It was the financial institutions who did not regulate themselves and should bear the cost of the deflated market value. Why shouldn’t they? It was of their own making.
Jack bought into an agreement in good faith, completely isolated from this extranious market. His investment should not be taken from him and transfered to the government only to have the same system dictate it’s eventual worth. Jack’s morgage should be recalculated with figures that stablize the situation and the consequences of that recalculation should be placed squarely on the financial industry’s plate.
These are now referred to as ‘Toxic Debt’ or ‘Toxic Mortgage Backed Securities’, in which the amount of the mortgage paper or promissory note to repay, is greater than what the property is actually now worth.
The value of this “Toxic Debt” is what should be extracted from the financial industry’s big wigs, those who are responsible, and from the financial system as a whole. Just like Speaker Pelosi said, the free ride is over.
The American People should assume the corporation is a tool to be used for the public good and it’s charter can be revoked by the people when that good has been betrayed. The American people have the right to define the conduct of a corporation. The Federal Reserve is a corporation and it’s conduct can and should be defined by the American People.
The effort and understanding put into Mr. Remer’s post is exceptional and a very important first step. The American People have stepped up and made a difference in the HOR. But the speed and frenzy surrounding this “we gotta do something!” D.C. mentality is rendering it’s value moot.
This sudden impression of urgency must only show a lack of competence in the government and the industry as a whole and nothing else. The “plan/solution/bailout/rescue” shouldn’t be bulldozed past the American People by those same incompetent entities. A solution can wait if it is the right one.
I’m not saying my solution is “the” solution. My solution is incomplete, and lacks substance, but so does the bill being presented by our current government. It isn’t being defined and presented as a first step to a larger plan. It’s a quick fix that only suspends the problem.
It is times like these the American People have to step in and do what is in their best interests. A quick fix should be the declaration of a “Bottom” to stop the so called hemoraging that is taking place, or soon to take place, or can take place, most likely might take place.
That bottom would allow the distinction between the homeowner’s equity and agreement and the financial industry’s waste and excess.
Confiscation of that waste and excess would strengthen the dollar and help reduce the debt in general.
David R. Remer wrote: Mr. Jack’s old car just died. The cost to repair it: $3000.00. The car is only worth $200 for salvage if he junks it. If he repairs it, he will have a car worth $700, but which he paid $3000 to repair. Mr. Jack views this situation as throwing good money after bad, and decides to get a loan to buy a much newer used car for $10,000 which will last 4 or 5 years before needing major repairs. Mr. Jack bought his home 2 years ago for $210,000, and he still owes $208,500 on the mortgage. … Mr. Jack goes to his local bank and asks for a loan to buy another car. The Bank asks Mr. Jack, how much his net income is each month. He replies, $1400 per month. They then ask how much he owes on his home, and he replies $208,500. They ask what amount he paid for his home, he replies, $210,000. The banker then checks his index sheets and sees that home valuations in Mr. Jack’s area have fallen 20%, on average, in just the last year. … Mr. Jack’s home may not sell until he lowered the price to $105,000, half its original cost. … Mr. Jack’s bank turns Mr. Jack down for the car loan, because the car will depreciate faster than he would be able to pay off the loan, his ring doesn’t cover the difference, and he owes more than his house is worth. Additionally the bank knows a recession is possible ahead, in which case Mr. Jack may become unemployed, making the bank’s potential for collecting their loaned money plus interest from Mr. Jack, doubtful at best.
Mr. Jack is an idiot.
Mr. Jack should not have bought a $210,000 home if he can’t afford a $10,000 car, and only makes $1,400 per month (e.g. $16,800 per year)!
Mr. Jack should have known that $210,000 was an inflated price, if the house is now only worth $105,000 (since the inflation of homes was very noticeable in some regions).
Mr. Jack will have to buy a used car that costs less, or buy a bicycle.
Regarding all of this toxic debt that the government will buy and heap the cost onto tax payers:
- How responsible and wise is this buying of toxic debt using tax payers money?
- How wise is it to buy up a lot of toxic debt and dump it on the voters?
- Why won’t anyone else buy the toxic debt?
- Is it because the toxic debts (and derivatives) are nearly (if not completely) worthless?
- Is it because there is no market, because most Americans are already tapped-out, and deep in debt (i.e. $53.87 Trillion to $66.67 Trillion)?
- If there is no market for these toxic debts and derivatives, and the banks and corporations currently holding those debts don’t know what they are worth, how can the tax-payers know what they are worth?
- Also, not all of the debt is bad mortgage loans. If there is no market now, when will there be a market? Months? Years?
- Will these properties retain their value for the years to come, before there finally is a market for these properties. After all, properties need maintenance and care. Houses can fall into significant disrepair in only a year. Also, many of these foreclosures have been vandalized and stripped of copper wiring, appliances, plumbing, etc.)?
- Like the antique business, something is worth only as much as someone else is willing to pay for it.
- How realistic is it to say tax payers will make money on this mess? If you believe that, I’ve got some beach front property for sale in Arizona.
Any way, the money to buy these toxic loans has to come from somewhere.
In this case, if the bail-out BILL H.R. 1424 passes, it will come from the tax payers.
Sorry Mr. Jack. But you now have more debt than before, and you have no choice in it.
The government will either borrow the money, and/or create it out of thin air (there are already hundreds of billions of dollars created out thin air already each year).
When the government borrows money, it will be competing with Americans and businesses trying to find credit too, which is already scarce.
That’s not a good situation.
When the govermment and Federal Reserve print new money, it erodes the U.S. Dollar and increases inflation.
That’s not a good situation either.
Especially now, when it is already 5.4% (or 15.6% by the pre-1983 inflation measurement method).
Again, those assets are only worth as much as someone is willing to pay for them.
Those assets are not liquid if there are no buyers.
There are millions of foreclosures per year, and millions more to come.
- Year 2008: 2.0 million between 1-JAN-2008 and Aug-2008
- Year 2007: 2.0 million between 1-JAN-2007 and 31-DEC-2007
- Year 2006: 1.2 million between 1-JAN-2006 and 31-DEC-2006
- Year 2005: 846,000 between 1-JAN-2005 and 31-DEC-2005
- TOTAL FORECLOSURES = 6.26 Million JAN-2005 to AUG-2008
__________________________________________________________
Many of the wealthy have been buying foreclosures at discount prices, but they can’t be expected to buy all of the millions of foreclosures per year.
It will take many years to sell these properties, which will continue to fall into disrepair, and fall in value.
And there will be more greed, fraud, waste, and pilfering with this bail-out BILL.
Treasury Secretary Henry Paulson, formerly the head of Goldman Sachs, one of the firms responsible for this mess, a direct beneficiary of this bailout, and the people managing this bail-out, will be Wall Street firms, who will likely receive billions of tax dollars in fees. Cha Ching!
In my opinion, the best thing to do is to push all of the debt back to those that created and invested in those bad debts.
That will spread the losses to millions of Americans and foreigners, but that’s too bad.
There will be jobs lost.
There will be savings lost.
That’s unfortunate.
Yes, it will be painful, but socializing the debt is morally offensive.
There are many things the government could have done, and could do now to improve the situation, such as eliminating these 10 abuses.
However, did any of those things make it into the bail-out BILL ?
At any rate, the voters have the government that they elect, and re-elect, and re-elect, and re-elect, until that finally becomes too painful.
It should also be noted that the greedy banks jacked-up the Adjustable Rate Mortgage interest rates on many people, which more than doubled some peoples’ monthly payments.
How greedy is that?
Even when the debtors tried to renegotiate a new interest rate, many banks refused to do so.
Therefore, people essentially said #~@& it! The bank can have their house back. So the debtor walked away from the house, or waited for the foreclosure to become final.
Greedy banks lured people in with low interest rate Adjustable Rate Mortgage loans, and then raped them with interest rates that increased their monthly payments beyond their ability to pay, and then refused to refinance the loans.
And those greedy banks also packaged up those toxic debts, and peddled them all over the planet (literally).
That’s fraud, at the very least.
And now, Treasury Secretary Henry Paulson, formerly the head of Goldman Sachs, one of the firms responsible for this mess, a direct beneficiary of this bailout, and the people managing this bail-out, will be Wall Street firms, who will likely receive billions of tax dollars in fees. Cha Ching!
We the tax payers, are going to bail-out the greedy tax payers, and possibly, idiots like Mr. Jack, who should have known better.
Yes, I know there are innocent victims, and credit is hard to find now, and there will be pain, layoffs, etc.
But a bail-out is not the solution, because throwing gasoline on a fire is not the way to out the fire out.
d.a.n, Mr. Jack did what any red blooded American consumer does, take the best buy for the money. If he could get a $210,000 on a 40 year note on $1400 net income, it would be unAmerican to deny him.
That at least has been the mindset and education level, as you allude to. I have for decades said that no one should graduate from H.S. with a basic finance class with a B or better grade.
Mr. Jack btw was a completely pulled out of the air scenario, a figment of my imagination with numbers yanked from space to make a point. I never thought Mr. Jack would become such a polarizing figure in this article. :-)
I have created a MONSTER!!!
David R. Remer wrote: I never thought Mr. Jack would become such a polarizing figure in this article. :-) I have created a MONSTER!!! [i.e. Mr. Jack]More like a punching bag.
I can bash Mr. Jack, and call him an idiot without getting banned !
WHHOOOoohhhoooo !
Yes, I knew that was coming next. : )
Mr. Jack is fictional.
However, the fact is, this problem we have today is because there are too many Americans that are EXACTLY like Mr. Jack, as evidenced by your comment above:
David R. Remer wrote: d.a.n, Mr. Jack did what any red blooded American consumer does, take the best buy for the money. If he could get a $210,000 on a 40 year note on $1400 net income, it would be unAmerican to deny him.
… and …
David R. Remer wrote: That at least has been the mindset and education level, as you allude to. I have for decades said that no one should graduate from H.S. with a basic finance class with a B or better grade.
Well, I’m not sure ignorance can be legislated out of existence or even reduced, but not only was Mr. Jack an idiot, but there was rampant greed by the banks and mortgage corporations.
That’s where existing laws should be enforced.
There was widespread fraud.
Some crooks need to go to jail.
But that is EXACTLY what the greedy banks did, and then bundled up all of that toxic debt, and sold around the world - a dangerous situation that increases the risk of a run on the U.S. Dollar, since trillions of the toxic debt is held by foreign investors too. Ironically, this bail-out is also bailing out foreign investors more than it is helping millions of Americans avoid foreclosure, of which there will most likely be another 6 million foreclosures between now and Aug-2011 (as there were 6.2 Million foreclosures between JAN-2005 and AUG-2008).
Too many Americans are just like Mr. Jack, and need to get a bicycle instead (used bikes are very cheap).
That will kill five birds with one stone:
- (1) avoid more debt;
- (2) create less CO2 and air pollution;
- (3) reduce our addiction to oil;
- (4) help people to learn to live with less borrowing;
- (5) shed a few pounds of fat;
Again, I’m not trying to trivialize the painful consequences (unemployment, scarce credit, impact on savings, retirements, stocks, etc.).
I’m just saying that the first thing Congress should do is do NO MORE HARM, and trying to put out a fire by throwing gasoline on it ain’t gonna work, but will merely delay the inevitable and make the problem bigger.
When an individual consumer keeps getting new credit cards to pay off massive debt from other credit cards, it is similar to check kiting, which is is illegal.
Apparently, though, that is EXACTLY what the federal government is doing with the bail-out, but when the federal government does it, it’s billed as Serious Public Policy. Ha!
Dumping $700 Billion of money onto the National Credit Card, when our government already has to borrow and print the money to merely pay the interest ($429 Billion in year 2007) on the National Debt is beyond absurd. It is absolutely INSANE ! ! ! I’m still waiting for somebody to provide a credible explanation for this insanity, and Mr. Jack obviously doesn’t know jack.
This supposedly prudent bailout BILL H.R. 1424 will force taxpayers to borrow and/or create $700+ billion of new money out of thin air to pay off the bad debt of Wall Street banks.
Yet, nobody has yet been able to explain how adding $700+ Billon to the already nightmarish $10.2 Trillion National Debt would do anything other than undermine the plan’s underlying objective.
Harvard’s Ken Rogoff, a Former Federal Rerserve and IMF official, insists that the prospect of this bailout is, unto itself, taking a manageable problem and making it into a more intense crisis, and says that credit is frozen primarily because banks want to avoid dealing with other banks that might drive a hard bargain, and instead would rather wait for free money from the government. Without the prospect of that free money, Rogoff suggests that credit would probably begin to loosen up.
Dean Baker of the Center on Economic and Policy Research says that spending so much cash so quickly on such a poorly conceived plan could have the effect of making it impossible to fund economic stimulus that is the real way out of this mess. “Suppose the Paulson plan goes through,” he writes. “It is virtually certain that the economy will weaken further and the number of foreclosures and people without jobs will continue to rise. This is the fallout from a collapsing housing bubble…When families respond to their loss of home equity by cutting back their consumption it will deepen the recession. In this context it might prove very important to have the resources needed to provide a substantial stimulus. [and] there is no doubt that this bailout will make further stimulus much more difficult to sell politically.”
There is the idea of simply taking the $700+ Billion and simply give it to struggling homeowners to help them pay off part of their mortgages. If the root problem is people not being able to make their mortgages payments, and the resulting defaults are then devaluing banks’ mortgage-backed assets, then simply helping people pay their mortgage payments would preserve the value of the mortgage-backed assets and recharge the market with liquidity. That would be a bottom-up solution helping the mass public, rather than yet another trickle-down scheme helping mostly only the greedy banks and crooks.
Lastly, there are many other things Congress can and should do to address the core problems and abuses that got us here, of which easy credit was one of those core problems.
But instead, Congress adds another 300 pages and $100+ Billion of pork-barrel, corporate welfare, and waste, to sweeten up a BILL that was already defeated.
If the bail-out BILL H.R. 1424 passes, a series of more bail-outs are most likely to follow.
A series of bail-outs will probably crash the U.S. Dollar, which has already plummeted a long way for several years (One-Simple-Idea.com/USD_Falling.htm).
The belief that the U.S. Dollar can’t crash is why it will probably happen.
The government is obviously addicted to debt, borrowing, and money-printing, and it can’t stop.
Before the U.S. Dollar crashes due to a series of hopeless bail-outs, it may be wise to buy gold, land, foreign currencies, and anything that will retain some value, since the U.S. Dollar could become completely worthless. It will be like what happened in Argentina, in which within a few months, you could barely buy a newspaper for the number of Pesos that previously would have bought a villa (i.e. a house).
That’s not empty doom-and-gloom.
That’s a mathematical certainty.
Keep up these bail-outs, borrowing, growing the debt, spending, money-printing, pork-barrel, and waste, and the U.S. Dollar will crash.
And perhaps it is inevitable anyway, since all pyramid schemes are doomed to collapse eventully?
For anyone who doesn’t believe it, then simply try to answer this one simple question:
- Where will the money come from to pay only the interest on the $10.03 Trillion National and the $53.87 Trillion-to-$66.67 Trillion nation-wide-debt, much less the money to reduce the principal, when that money does not yet exist? Especially when 80% of the U.S. Population owns only a mere 16%-to-17% of all wealth in the U.S.?
Is it mere fear-mongering and dooms-dayish to ask that question?
It seems Henry Paulson and Ben Bernanke should be able to answer that simple question while they are telling us that we are facing anothter Great Depression if we don’t give them $700 Billion.
Where is any credible argument(s) to support staying on this insane path of growing the unsustainable, upside-down debt-pyramid larger?
Quote,”Another factor influencing Republicans, House GOP leaders said, was news that the state governments of California and Florida have reported having trouble accessing credit” Hmmm Maybe they watch watchblog ;}
Posted by: Rodney Brown at October 3, 2008 12:19 PMIf the root problem is people not being able to make their mortgages payments, and the resulting defaults are then devaluing banks’ mortgage-backed assets, then simply helping people pay their mortgage payments would preserve the value of the mortgage-backed assets and recharge the market with liquidity.Thank you, d.a.n That’s what I was talking about. Posted by: Weary Willie at October 3, 2008 02:07 PM
All this is now moot, as I said. The HOR passed this bill by over 90 votes. George Bush will sign this bill with the drool seeping from the corner of his mouth.
“That rubbish they talk about the credit crunch Capitalism is dead. America has gone socialist. US leadership has collapsed. Europe has shown the way. Oh yes?”
Source: http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4870410.ece
I found this opinion piece from the London Times quite interesting and a little different take on our financial crisis.
Posted by: Jim M at October 3, 2008 03:54 PMSteven LaTourette pointed out some other needed bailouts included in the bill.
192 mill for rum
81 for hollywood
200 mil for wooden arrows
The HOR Democratics were beaming with glee when they showed off the bill. How happy they were that this bill was passed. Not one ounce of concern was showing. Just smiling faces and jokes.
The episode was sickening.
If Hank Paulson is wrong, we can only pray
http://www.timesonline.co.uk/tol/comment/columnists/gerard_baker/article4842926.ece
Another interesting viewpoint from the Times.
Posted by: Jim M at October 3, 2008 04:05 PM“The HOR Democratics were beaming with glee when they showed off the bill. How happy they were that this bill was passed. Not one ounce of concern was showing. Just smiling faces and jokes.
The episode was sickening.”
Posted by: Weary Willie at October 3, 2008 04:05 PM
Right on Weary Willie, didn’t Nero fiddle while Rome was burning? In the midst of what has been called our greatest financial crisis since the depression our legislative friends found time to load up this bill with pork. Of course their smiling…they have just suckered the American public again. This $700b will be spent quicker than a kids weekly allowance and these spoiled brats will be back to the public well for more before Christmas.
I am ashamed of our government today. For those of you who believe in God, let us pray for a miracle.
Posted by: Jim M at October 3, 2008 04:30 PMJim and Weary, those smiles were all about Republicans having handed them the keys to the kingdom. Smarted like hell for Republicans to have to sign on to this Bill, but, that was a box Republicans put themselves into. No wonder the Democrats were beaming. Biden drove home the reasons they are beaming in the debate with Palin. Republicans elected GW Bush, not once, but twice, and now can’t even begin to put enough distance between themselves and their president, and his Rescue Bills. OUCH!!!! Republicans own this mess, and literally called Democrats on cue to ride in like White Knights to save the day.
Sorry, if I have no empathy for such wrong headed and extremely poor choices made by Republicans for so many years. It is laughable for them to ask anyone to trust them now.
Posted by: David R. Remer at October 3, 2008 04:45 PMOh, and did you notice how that pork spending bribery brought SO many more Republicans to vote for this Bill. Pretty clever, eh, to appeal to Republican’s appetite for wasteful spending which they just can’t quite refuse, exposing their hypocrisy for all to see.
It was a brilliant master stroke, by the Senate. Just another example of poor judgment in the House deferring to the Senate to solve what the House Republicans would not.
Posted by: David R. Remer at October 3, 2008 04:48 PMd.a.n, Republicans would not have any of that Democratic bottom up approach of underwriting homeowners instead of financial institutions. As Democrats introduced those measures in the previous version, Republicans would not sign on to pass it.
The bottom up approach is what Democrats would have drafted if it was up to them. But, it was never up to them until the Republicans handed them the keys to the kingdom by defeating the rescue first iteration of the Rescue Plan and deferring to the Senate.
This Bill was initially drafted by Republicans as an entirely TOP DOWN approach, and there was not time and no sound logic in defeating the measure and damaging the economy further in protest, so, Democrats sought to modify instead of combat the White House which said it would veto if Democrats added too much to it.
Then it was Republicans who committed the mistake Democrats wouldn’t, they defeated the rescue measure taking ownership of all the negative impacts that would ensue from failure to pass this rescue plan, whether perceived, or real.
These Republicans have been out of their element as town mayors and small business owners for over a decade, and they don’t appear to have learned a thing from the many years of failures and experience with making very bad judgment calls.
Posted by: David R. Remer at October 3, 2008 04:56 PMSo sad for you David, but not surprising, that this crisis merely represents a grab for political gain and power. I wonder what it must be like to have ones entire life experience depend upon such artificial joy.
Celebrate if you must David, I will be in mourning for an America whose founding principles, ethics and morality are vanishing.
Posted by: Jim M at October 3, 2008 05:02 PMIt’s not Democratics or Republicans for me anymore. It’s government as a whole. It’s failing us and we stand by and let it happen. Stand by and point fingers and call each other names. It’s like the husband and the wife bickering with each other about who to call while the burglar walks off with the contents of the house.
Posted by: Weary Willie at October 3, 2008 05:23 PMJim M, mourn instead your election choices which have destroyed your Party and undermined America’s strength. I have worked to remove these incompetents from office for many years. You’re damned right I am going to celebrate. And as do, I will continue my efforts to remove even more incompetents from the other inept Party, the Democratic Party.
Thank you though for proving your comments uninformed, yet again. This blind spot in your comments which views anyone opposed to Republican incompetence as a MUST BE Democratic Supporter instead of a champion of a sound and great America, is where your comments often go wrong.
It is not about Dems vs. Reps., it is about US and our America. Proof of my equal opportunity criticism of ALL Parties is in the archives here dating back many years. But, if it makes you feel better to view me as a partisan Democrat, it is no problem for me. My reputation and positions are on record all over the internet dating back years.
Posted by: David R. Remer at October 3, 2008 05:30 PMDavid R. Remer wrote: d.a.n, Republicans would not have any of that Democratic bottom up approach of underwriting homeowners instead of financial institutions. As Democrats introduced those measures in the previous version, Republicans would not sign on to pass it.Of course not.
Unfortunately, Congress consists of two ridiculous extremes, and the majority of Americans in the middle allow it by repeatedly rewarding both with 85%-to-90% re-election rates.
That is, I do not agree with the extremes of either.
The DEMs want to socialize debt via trickle-up, and the Republicans want to socialize debt via trickle-down.
Both are flawed and un-American, but the Republicans trickle-down method exhibits the most greed and selfishness.
But the fact is, incumbent politicians in BOTH parties are so corrupt, incompetent, and irresponsible, it really makes no difference.
It is little different than trying to decide which gangrenous leg to amputate first.
I’m am against the socialization of any kind for this toxic debt, for which there will be no market to buy the majority of it for many years.
The socialization of this massive debt is not only a fundamental violation of long held principles, but it will make things worse by risking the collapse of the U.S. Dollar.
The best thing to do is push all of this debt back to the banks that created it.
Of the 8000+ of banks nation-wide, the majority (such as Wells Fargo) are still sound (unless they are cooking their books too).
David R. Remer wrote: The bottom up approach is what Democrats would have drafted if it was up to them. But, it was never up to them until the Republicans handed them the keys to the kingdom by defeating the rescue first iteration of the Rescue Plan and deferring to the Senate.The trickle-up has a better chance of stopping foreclosures than a trickle-down.
However, I’m not keen on either bail-out method, because BOTH socialize debt, punish responsible banks and Americans, and increases inflation, and risks a run on the U.S. Dollar. The only reason the U.S. Dollar has been recently been climbing is because other currencies have inflation of their own.
David R. Remer wrote: This Bill was initially drafted by Republicans as an entirely TOP DOWN approach, and there was not time and no sound logic in defeating the measure and damaging the economy further in protest, so, Democrats sought to modify instead of combat the White House which said it would veto if Democrats added too much to it.True. Before, we had a crap sandwich. Now we have a crap sandwich with a little relish to make it less revolting.
David R. Remer wrote: Then it was Republicans who committed the mistake Democrats wouldn’t, they defeated the rescue measure taking ownership of all the negative impacts that would ensue from failure to pass this rescue plan, whether perceived, or real.Well, I was glad to see the 1st BILL H.R. 3997 fail. However, as suspected, the 2nd BILL H.R. 1424 is still crap, with more pork-barrel, because there will still be insufficient transparency and oversight, and greed and corruption in Congress has not suddenly disappeared.
David R. Remer wrote: These Republicans have been out of their element as town mayors and small business owners for over a decade, and they don’t appear to have learned a thing from the many years of failures and experience with making very bad judgment calls.I won’t argue that.
However, what the Democrats offer isn’t much better, because it still boils down between a choice of:
- (a)severely corrupt, and
- (b)more severely corrupt.
And to make matters worse, too many voters continue to reward the majority in BOTH with 85%-to-90% re-election rates.
Thus, this is the situtation we have today
We’re crappin’ in our own nest.
The only caveat is that some of us (voters) are gettin’ crapped on the most, while voters simultaneously and repeatedly reward the incumbent politicians for crappin’ on the voters.
Not too smart, eh?
Not too smart for politicians either, because eventually, the branch it all rests upon could finally collapse.
At any rate, the voters have the government that they elect, and re-elect, and re-elect, and re-elect, until that finally becomes too painful.
David Remer admonishes me by saying; “This blind spot in your comments which views anyone opposed to Republican incompetence as a MUST BE Democratic Supporter instead of a champion of a sound and great America, is where your comments often go wrong.”
Unfortunately for David, I have said many times that I am a conservative who has voted for candidates of both major parties, not a Republican. David also doesn’t understand my criticism is of liberals and their philosophy. Since he objects so much to my writing…he would most likely, by logical extension, be one.
I would love to read David’s definition of what a “sound and great America” would look like to him. Can he perhaps point back to some time in our countries history that was to his liking and which deserved his “championship”. Or perhaps he has the “ism” of some other country in mind.
Posted by: Jim M at October 3, 2008 07:32 PMCan’t refute the comments so you go after the author of them, eh, Jim M. You may not be a Republican but, you sure use their tactics like one.
Kinda stepped in it on the polling issue didn’t you? Noticed you didn’t respond to having yet another wrong and invalid comment pointed out. Ah, well.
Posted by: David R. Remer at October 3, 2008 11:20 PMWell the House passed the Senate version of the bailout. Now our great grandyoungins are another $700,000,000,000 in debt. And they aint even been born yet. Sure hope Congress and the President are proud of themselves.
When are folks gonna start taking on some of pain themselves instead of passing it off to future generations?
I heard one politician say that they’re trying to save Main Street. Only they spell it W-a-l-l S-t-r-e-e-t. That’s the only ‘Main Street’ our politicians know.
Well at least we know that Congress and the President can work in a bipartisan manner. Why aint they been doing it all along?
Get ready for more inflation, now that the federal government and Federal Reserve have decided that they have chosen inflation, borrowing, money-printing, and debt, over fiscal responsibility.
We have a credit crunch, and government, if they want to borrow all or part of the $700 Billion, is going to now be competing for credit with businesses already having trouble borrowing.
If it isn’t borrowed, it will have to be created out of thin air.
Borrowing means interest.
And even money-printing can come with interest too.
At any rate, we will have more debt and more inflation.
We’ve had already had positive inflation for every consecutive year since year 1956 (for 52 years), but it’s going to get worse now, with the infusion of $700+ Billion (whether borrowed and/or created out of thin air).
- ____INFLATION RATE (5.37% by today’s measurement method)____
- 6.00%|——————————
- 5.50%|—————————-x 5.37%
- 5.00%|—————————x-
- 4.50%|————————-x—
- 4.00%|———————xxx—-
- 3.50%|——————-x———
- 3.00%|——-x———x———-
- 2.50%|—x-x-xxxx x————
- 2.00%|-x-x———x————-
- 1.50%|x—————————-
- 1.00%|——————————
- 0.50%|——————————
- 0.00%|_____________________YEAR
- ______2___2___2___2____2
- ______0___0___0___0____0
- ______0___0___0___0____0
- ______6___7___7___8____8
- _____SEP_JAN_JUN_JAN__JUL
- CPI (Consumer Price Index)=100 for year 1967)
- 700 | - - - - - - - - - - - x (=665: JAN-2008)
- 650 | - - - - - - - - - - -x
- 600 | - - - - - - - - - - -x
- 550 | - - - - - - - - - - -x
- 500 | - - - - - - - - - - x
- 450 | - - - - - - - - - - x
- 400 | - - - - - - - - - - x
- 350 | - - - - - - - - - -x
- 300 | - - - - - - - - - x
- 250 | - - - - - - - - - x
- 200 | - - - - - - - - -x
- 150 | - - - - - - - - -x
- 100 | - - - - - - - -x
- 050 |xxxxxxxxxxx
- 000 + - - - - - - - - - - - - - - YEAR
- _____1 1 1 1 1 1 1 1 1 1 22
- _____8 8 8 8 8 9 9 9 9 9 00
- _____0 2 4 6 8 0 2 4 6 8 00
- _____0 0 0 0 0 0 0 0 0 0 07
Inflation is now at an 18 year high (6.11% in DEC-1990), and the inflation measurement method was changed in 1998 and 1983.
Therefore, inflation today is really 9.8% based on the pre-1998 inflation measurement method, and 15.6% based on the pre-1983 measurement method.
Thus, inflation today is actually at a 51 year high (17.65% in JUN-1947).
See what 15.6% inflation does to $100 in only 4 years:
- INFLATION=1.00%__2.00%__3.00%___4.00%__5.00%___5.37%___6.00%__7.00%___8.00%__9.80%__15.60%
- YEAR___$100.00_ $100.00_$100.00_ $100.00_$100.00_$100.00_ $100.00_$100.00_$100.00_ $100.00_$100.00
- 01 _____ $99.00 _ $98.00 _ $97.00 _ $96.00 _ $95.00 _ $94.63 _ $94.00 _ $93.00 _ $92.00 _ $90.20 _ $84.40
- 02 _____ $98.01 _ $96.04 _ $94.09 _ $92.16 _ $90.25 _ $89.55 _ $88.36 _ $86.49 _ $84.64 _ $81.36 _ $71.23
- 03 _____ $97.03 _ $94.12 _ $91.27 _ $88.47 _ $85.74 _ $84.74 _ $83.06 _ $80.44 _ $77.87 _ $73.39 _ $60.12
- 04 _____ $96.06 _ $92.24 _ $88.53 _ $84.93 _ $81.45 _ $80.19 _ $78.07 _ $74.81 _ $71.64 _ $66.20 _ $50.74
- 05 _____ $95.10 _ $90.39 _ $85.87 _ $81.54 _ $77.38 _ $75.88 _ $73.39 _ $69.57 _ $65.91 _ $59.71 _ $42.83
- 06 _____ $94.15 _ $88.58 _ $83.30 _ $78.28 _ $73.51 _ $71.81 _ $68.99 _ $64.70 _ $60.64 _ $53.86 _ $36.15
- 07 _____ $93.21 _ $86.81 _ $80.80 _ $75.14 _ $69.83 _ $67.95 _ $64.85 _ $60.17 _ $55.78 _ $48.58 _ $30.51
- 08 _____ $92.27 _ $85.08 _ $78.37 _ $72.14 _ $66.34 _ $64.30 _ $60.96 _ $55.96 _ $51.32 _ $43.82 _ $25.75
- 09 _____ $91.35 _ $83.37 _ $76.02 _ $69.25 _ $63.02 _ $60.85 _ $57.30 _ $52.04 _ $47.22 _ $39.52 _ $21.73
- 10 _____ $90.44 _ $81.71 _ $73.74 _ $66.48 _ $59.87 _ $57.58 _ $53.86 _ $48.40 _ $43.44 _ $35.65 _ $18.34
- 20 _____ $81.79 _ $66.76 _ $54.38 _ $44.20 _ $35.85 _ $33.16 _ $29.01 _ $23.42 _ $18.87 _ $12.71 _ $ 3.36
- 30 _____ $73.97 _ $54.55 _ $40.10 _ $29.39 _ $21.46 _ $19.09 _ $15.63 _ $11.34 __ $ 8.20 _ $ 4.53 _ $ 0.62
Inflation of other international currencies will help mask inflation of the U.S. Dollar, but that won’t change the fact that the currency is eroding fast.
For example, at the current supposed inflation rate of 5.37%, $100 becomes $80.19 in only 4 years.
However, at the pre-1998 inflation measurment method, with inflation of 9.8%, $100 becomes $71.64 in only 4 years.
And at the pre-1983 inflation measurement method, with inflation of 15.6%, $100 becomes $50.74 in only 4 years.
And inflation has already increased (based on current measurement methods) from 2.08% to 5.37%:
- YEAR ____ INFLATION RATE
- 1/1/2007__ 2.08%
- 2/1/2007__ 2.42%
- 3/1/2007__ 2.78%
- 4/1/2007__ 2.57%
- 5/1/2007__ 2.69%
- 6/1/2007__ 2.69%
- 7/1/2007__ 2.36%
- 8/1/2007__ 1.97%
- 9/1/2007__ 2.76%
- 10/1/2007__ 3.54%
- 11/1/2007__ 4.31%
- 12/1/2007__ 4.08%
- 1/1/2008__ 4.28%
- 2/1/2008__ 4.03%
- 3/1/2008__ 3.98%
- 4/1/2008__ 3.94%
- 5/1/2008__ 4.18%
- 6/1/2008__ 5.02%
- 7/1/2008__ 5.60%
- 8/1/2008__ 5.37%
That’s why some people are predicting a run on the U.S. Dollar.
“I would love to read David’s definition of what a “sound and great America” would look like to him. Can he perhaps point back to some time in our countries history that was to his liking and which deserved his “championship”. Or perhaps he has the “ism” of some other country in mind.”
My simple question addressed to David remains unanswered. I expected as much as liberals are fond of making grand statements with no backup. As Mr. Obama has famously stated…”Words, just words”.
Posted by: Jim M at October 4, 2008 01:22 PMJust a comment about the people who bought on the high end, not the folks who refinanced there places to the hilt like a cash cow and ATM card to buy a $60,000 gas guzzling SUV and a $60,000 pool because they felt like they earned it or deserved it and were living off the equity i think those folks are gone now, how about the folks who refinanced their places to pay for their children’s education and start up small businesses how is this addressed the Realtors and mortgage companies were coming in with there charts and Rosy scenarios about how it was going to stay up in price, and can some of these people get their mortgages reduced or wrote down they are still paying their mortgages on a overinflated price as much as $ 300,000 and more, or lost the equity in falling prices, I know this is complex but not everyone was greedy think about it you refinanced to put your child in college or start up a business and are upside down $300,000 and still are making those huge overinflated payments i would think many are going to throw the towel in i seen it on my street in California, how is that going to help our economy when the honest folks throw in the Towel..
Posted by: Rodney Brown at October 4, 2008 01:35 PMRodney Brown, Someone that is upside down $300,000 on a home loan has some serious explaining to do.
They bought way too high, and/or bit off more than they could chew, bought to much house, too much car, too many cars, too many toys, too many things, and/or got an Adustable Rate Mortgage (ARM), which I thought most people knew were suicide loans. I remember warnings way back in the late 1980s and early 1990s about ARMs.
There was a housing bubble, and it wasn’t hard to see that most of these homes are ridiculously over-priced. If people bought them anyway, that’s a gamble they assumed.
Now, there are some people that truly fell on hard times, had a serious illness in their family, a death, and huge medical bills, and/or lost their jobs (but high unemployment started mostly at the beginning of this year), or were genuine victims of fraud.
However, the majority of this toxic debt (over 10,000 foreclosures per day) is most likely due to irresponsible borrowing, irresponsible lending, some predatory lending to some ignorant people that didn’t know what they were getting into, and a LOT of out-right fraud and cooking the books.
There are ways for people who have truly fallen on hard times to get help and assisitance. But I don’t think the socialization of this toxic debt is fair to the majority of Americans who have still made good on their debts.
The majority of the 8000+ banks in the U.S. are still in good shape because they didn’t participate in these bad loans and fancy financial instruments. Yet, socializing the debt punishes those banks and people.
Posted by: d.a.n at October 4, 2008 03:46 PMd.a.n said: “There are ways for people who have truly fallen on hard times to get help and assisitance. But I don’t think the socialization of this toxic debt is fair to the majority of Americans who have still made good on their debts.”
It isn’t fair. It cannot be made fair. But, it is the only way a fast interdiction with sufficient funds can be accomplished to prevent a very rapid unraveling of the financial system and the the economic one.
We are going into recession. Hastening it by inaction or delay, and deepening it means vastly MORE Unfairness for vastly more people.
Nothing will ever make this fair. But, voters can insure their children do not face a similar fate in their futures by voting out incumbents in large numbers in November and teaching their children why this is a responsible and mature act of patriotism, loyalty to country and Constitution, and plain old common horse sense in terms of self-protection from the hands of corrupt or incompetent politicians.
Posted by: David R. Remer at October 4, 2008 04:03 PMFlash!
STOCKHOLM, Sweden (AP) — Governments across Europe scrambled to save failing banks on Sunday, working largely on their own a day after leaders of the continent’s four biggest economies called for tighter regulation and coordinated response to the global meltdown.
German Chancellor Angela Merkel said she would let a bank collapse disrupt the economy.
In Berlin, the German government held crisis talks after the collapse of a $48.4 billion bailout of Hypo Real Estate AG, the country’s second biggest property lender.
German Chancellor Angela Merkel said that Europe’s biggest economy would “not allow the distress of one financial institution to distress the entire system.”
The country’s Finance Minister Peer Steinbrueck later said it would guarantee all private savings accounts.
Merkel said no citizen should fear for the safety of their savings.
In Iceland — particularly hard-hit by the credit crunch — government officials and banking chiefs were discussing a possible rescue plan for the country’s overstretched commercial banks.
Belgian Prime Minister Yves Leterme said he aimed to find a new owner for troubled bank Fortis NV to restore confidence in the company before the opening of markets on Monday. Will the U.S. bailout work?
The bank’s Dutch operations were nationalized amid fears they could go insolvent.
British treasury chief Alistair Darling said that he was ready to take “pretty big steps that we wouldn’t take in ordinary times” to help the country in weather the credit crunch.
Darling told the BBC that the government, which has provided billions of pounds (dollars) in support to the banking sector, that it was “important to take generalized action as well as being ready to take particular action if you get a particular problem with an individual bank.”
Don’t Miss
Europe stops short of huge financial bailout
Judge blocks Wells Fargo-Wachovia deal
In the past year the British government has acted to nationalize struggling mortgage lenders Northern Rock and Bradford & Bingley.
On Saturday, the leaders of Germany, France, Britain and Italy met to discuss the growing meltdown which has leapfrogged across the Atlantic from the U.S. to Europe, but shied away from the massive $700 billion bailout passed by the U.S. Congress a day earlier that President Bush signed into law. Watch more on the U.S. financial bailout »
While Europe’s four largest economies pledged to coordinate national responses to help banks in distress, their failure to agree an EU-wide plan showcased the divisions in Europe on how to deal with the crisis.
France had suggested a multibillion-dollar EU-wide government bailout plan, but backed off after Germany said banks must find their own way out.
That was telling, given crisis talks aimed at keeping Hypo Real Estate afloat. The firm said Saturday that the rescue plan had fallen apart after private lenders withdrew support, a key element to the proposal that had already been approved by the EU earlier this week.
It was not known if the government, which planned to inject nearly $37.35 billion would raise its stake in the bailout package.
In Iceland — one of the countries most heavily exposed to the credit squeeze — government officials and banking chiefs were discussing a possible rescue plan for the country’s overstretched commercial banks.
Icelandic banks expanded rapidly after deregulation of the domestic financial market in the 1990s and now have combined foreign liabilities in excess of $138.34 billion — dwarfing the tiny country’s gross domestic product of $19.37 billion. Watch the U.S. debt clock fail to keep up »
The government last week took over Iceland’s third-largest bank, Glitnir, a decision that prompted major credit ratings agencies to downgrade both Iceland’s four major banks and its government credit rating.
Looming large was a growing sense that the Federal Reserve and Europe’s major central banks were ready to institute emergency cuts to their benchmark interest rates this week.
None of the banks, including the European Central Bank and Bank of England, have commented on potential rate hikes or cuts. But analysts believe the Bank of England, which meets this Thursday, will likely lower its rate from 5 percent. The ECB left its rate unchanged at 4.25 percent on Thursday, but opened the door to a rate cut.
Robert Brusca, chief economist at the New York-based Fact and Opinion Economics, said that if the ECB does issue such a cut it would a be a sign “that they’re really, really scared.”
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David R. Remer wrote:I disagree. I believe it will make things worse. It may delay a bit of pain, but it will make it worse later.It isn’t fair. It cannot be made fair. But, it is the only way a fast interdiction with sufficient funds can be accomplished to prevent a very rapid unraveling of the financial system and the the economic one.
- d.a.n said: “There are ways for people who have truly fallen on hard times to get help and assisitance. But I don’t think the socialization of this toxic debt is fair to the majority of Americans who have still made good on their debts.”
David R. Remer wrote: We are going into recession.Yes, and it was not hard to see coming.
David R. Remer wrote: Hastening it by inaction or delay, and deepening it means vastly MORE Unfairness for vastly more people.I disagree. What will hasten and magnify the pain and misery is creating more massive debt, borrowing, money-printing, pork-barrel, rampant spending, and waste.
Principles did not suddenly become irrelevant, unless we woke up in a different universe last week.
There are things that can be done, but Congress isn’t doing any of those things (e.g. stopping these 10 abuses that led to these 17 consequences).
David R. Remer wrote: Nothing will ever make this fair.No. Not going backward.
But it could be more fair going forward, and we should not be heaping more massive debt of nightmare proportions on the tax payers and future generations.
Besides, the debt pyramid problem is already out of control.
The federal government is already borrowing and printing the money each year to merely pay the interest on the $10.2 Trillion National Debt, which is now growing so fast, I can’t keep up with it.
And there was $12.8 Trillion borrowed from Social Security, leaving it pay-as-you-go, with a 77 Million baby-boomer bubble approaching.
The nation-wide debt is already $54 Trillion to $67 Trillion.
Making it bigger with another $700 Billion is not the solution.
The debt pyramid is going to collapse sooner than later if they keep pushing their luck with more debt, borrowing, money-printing, spending and waste.
The math simply does not allow for a case that more debt, borrowing, money-printing, spending and waste will make things better.
The logic simply does not work.
We can avoid the pain now, or pay for it later with more extreme pain. There will be a higher price later for more debt, borrowing, money-printing, spending and waste.
The logic that we “must do something” is sound.
There is no shortage of solutions.
Unfortunately, Congress is where good solutions and ideas go to die.
The logic that “we must solve this credit crunch and debt problem by creating more debt, borrowing, money-printing, spending and waste” is insane.
That’s been the problem all along.
Just create more debt, and money out of thin air to solve problems.
Well, that can’t last forever, can it?
And where will all of this money come from to merely pay the interest on the debt, much less reduce the principal debt, when that money does not yet exist?
Since no one appears able to answer that simple question, I predict the U.S. is about to learn an ever more severe lesson.
Socializing so much toxic debt will risk worse consequences, and risk a run on the U.S. Dollar, and then we will be many times worse off.
David R. Remer wrote: But, voters can insure their children do not face a similar fate in their futures by voting out incumbents in large numbers in November and teaching their children why this is a responsible and mature act of patriotism, loyalty to country and Constitution, and plain old common horse sense in terms of self-protection from the hands of corrupt or incompetent politicians.That I agree with 100%.
At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful (see example here)).
Posted by: d.a.n at October 5, 2008 02:40 PMRodney, which highlights what is about to happen to our exports, one of the stronger economic fundamentals until now. As the world’s economies retrench, our exports will contract along with the current contraction in consumer spending.
I would not now be surprised if our doctored unemployment stats exceed 8.5% by the end of winter. Which translates to many millions more Americans losing their jobs.
Economic stimulus packages would have been a no brainer were it not for the near doubling of our national debt these Bush administration and Republican Congress years. Now we must live with the constraints of the opportunity cost of that debt our politicians chose to pay for earmarks, the Iraq invasion, the Medicare Rx drug plan, and abject neglect of fiscal responsibility.
Had we raised taxes in 2004, 5, and 6 when the economy was growing, the debt would not have climbed nearly so fast, and economic stimulus spending bills would not meet with so much contention at this point in time.
This is what Republicans like McCain and Bush just don’t get. It is appropriate to cut taxes on the wealthy and corporations IF the economy is suffering from a lack of liquidity for capital formation and expansion, but, just as necessary to raise taxes on those same wealthy persons and corporations and cut taxes for middle and poor class consumers when the economy is suffering from contracting demand by consumers. This is essential to maintaining balanced budgets in the long run, and avoiding this massive increase in national debt in good and bad times, which we have witnessed since the GOP took control in 2001.
I agree David, It’s basic Economics 101, they should have raised taxes in the boom years it just makes good economic sense it pays down the debt and it lessons the pain on the rainy days so we don’t have to take such extreme measures as we do, also when deficit spending and credit spending is out of control the debts and burdens on us grow as d.a.n always eloquently describes, if our government can’t get it’s fiscal house in order how do they expect the consumers to, it has a huge psychological effect the last straw for me with bush was last December when he was asked about Christmas he responded go shopping and the credit cards were ringing up more debt.
Posted by: Rodney Brown at October 5, 2008 04:23 PMSometimes folks who appear to be of normal intelligence say very stupid things. Those who support increasing taxes on corporations qualify as really misguided and uninformed.
Is there anyone on this blog who still believes that corporations pay taxes? Is there Anyone who doesn’t believe corporations merely pass their taxes on to the consumer? Is there Anyone who doesn’t know that the U.S. has the second highest corporate tax rate in the developed world?
And, can anyone explain the correlation between our current financial mess and low corporate taxes? Maybe I missed the news explaining that preposterous link.
Is our current financial crisis related to the sub-prime mortgage market or not? If yes, how in the world does one make the giant leap that by increasing corporate taxes this problem will be solved.
Our financial markets have been brought to their knees by the total failure of congress to act appropriately, in the past, now, and most likely in the future. We are seeing unemployment rise as a result and worse will surely follow.
And these same bright folks endorsing policies that have caused and enhanced our current misery want to cripple our corporations by making them less competitive in the world markets. Oh yeah, that will help increase jobs in America.
Our friendly “magical thinker” David wrote; “raise taxes on those same wealthy persons and corporations and cut taxes for middle and poor class consumers when the economy is suffering from contracting demand by consumers. (Note: the writer still believes that the poor pay taxes)
Does anyone besides me see the absurdity in this scheme? Example, Company A has its tax increased by one dollar. The company increases its price on its product one dollar. Government collects the dollar and sends 50 cents to the consumer to offset the dollar increase in the product. The cost to the consumer of this action is a net loss of 50 cents. (Note: I believe some of you can figure out where the other 50 cents went)
The consumer doesn’t buy as much product from company A as the price increase makes their product more expensive than the same product produced by company B in another country who has a low corporate tax rate. Company B hires more workers to handle the production increase necessary to meet the demand.
More dollars and jobs flow overseas and congress increases taxes on Company A even more. Yup…that’ll fix it. Does anyone remember the brilliant solution offered by NY mayor Bloomberg when it was discovered that higher cigarette taxes were producing less tax revenue? Yep…you got it…increase taxes on cigarettes.
Posted by: Jim M at October 5, 2008 04:25 PMI listed those in the senate that voted against the bailout.
Here’s a list of the House roll call:
Rep. Neil Abercrombie [D, HI-1] Aye
Rep. Gary Ackerman [D, NY-5] Aye
Rep. Robert Aderholt [R, AL-4] Nay
Rep. W. Todd Akin [R, MO-2] Nay
Rep. Rodney Alexander [R, LA-5] Aye
Rep. Thomas Allen [D, ME-1] Aye
Rep. Jason Altmire [D, PA-4] Nay
Rep. Robert Andrews [D, NJ-1] Aye
Rep. Michael Arcuri [D, NY-24] Aye
Rep. Joe Baca [D, CA-43] Aye
Rep. Michele Bachmann [R, MN-6] Nay
Rep. Spencer Bachus [R, AL-6] Aye
Rep. Brian Baird [D, WA-3] Aye
Rep. Tammy Baldwin [D, WI-2] Aye
Rep. James Barrett [R, SC-3] Aye
Rep. John Barrow [D, GA-12] Nay
Rep. Roscoe Bartlett [R, MD-6] Nay
Rep. Joe Barton [R, TX-6] Nay
Rep. Melissa Bean [D, IL-8] Aye
Rep. Xavier Becerra [D, CA-31] Nay
Rep. Shelley Berkley [D, NV-1] Aye
Rep. Howard Berman [D, CA-28] Aye
Rep. Robert Berry [D, AR-1] Aye
Rep. Judy Biggert [R, IL-13] Aye
Rep. Brian Bilbray [R, CA-50] Nay
Rep. Gus Bilirakis [R, FL-9] Nay
Rep. Rob Bishop [R, UT-1] Nay
Rep. Sanford Bishop [D, GA-2] Aye
Rep. Timothy Bishop [D, NY-1] Aye
Rep. Marsha Blackburn [R, TN-7] Nay
Rep. Earl Blumenauer [D, OR-3] Nay
Rep. Roy Blunt [R, MO-7] Aye
Rep. John Boehner [R, OH-8] Aye
Rep. Jo Bonner [R, AL-1] Aye
Rep. Mary Bono Mack [R, CA-45] Aye
Rep. John Boozman [R, AR-3] Aye
Rep. Dan Boren [D, OK-2] Aye
Rep. Leonard Boswell [D, IA-3] Aye
Rep. Frederick Boucher [D, VA-9] Aye
Rep. Charles Boustany [R, LA-7] Aye
Rep. F. Allen Boyd [D, FL-2] Aye
Rep. Nancy Boyda [D, KS-2] Nay
Rep. Kevin Brady [R, TX-8] Aye
Rep. Robert Brady [D, PA-1] Aye
Rep. Bruce Braley [D, IA-1] Aye
Rep. Paul Broun [R, GA-10] Nay
Rep. Corrine Brown [D, FL-3] Aye
Rep. Henry Brown [R, SC-1] Aye
Rep. Virginia Brown-Waite [R, FL-5] Nay
Rep. Vern Buchanan [R, FL-13] Aye
Rep. Michael Burgess [R, TX-26] Nay
Rep. Dan Burton [R, IN-5] Nay
Rep. George Butterfield [D, NC-1] Nay
Rep. Stephen Buyer [R, IN-4] Nay
Rep. Ken Calvert [R, CA-44] Aye
Rep. David Camp [R, MI-4] Aye
Rep. John Campbell [R, CA-48] Aye
Rep. Christopher Cannon [R, UT-3] Aye
Rep. Eric Cantor [R, VA-7] Aye
Rep. Shelley Capito [R, WV-2] Nay
Rep. Lois Capps [D, CA-23] Aye
Rep. Michael Capuano [D, MA-8] Aye
Rep. Dennis Cardoza [D, CA-18] Aye
Rep. Russ Carnahan [D, MO-3] Aye
Rep. Christopher Carney [D, PA-10] Nay
Rep. André Carson [D, IN-7] Aye
Rep. John Carter [R, TX-31] Nay
Rep. Michael Castle [R, DE-0] Aye
Rep. Kathy Castor [D, FL-11] Nay
Rep. Donald Cazayoux [D, LA-6] Nay
Rep. Steven Chabot [R, OH-1] Nay
Rep. Ben Chandler [D, KY-6] Nay
Rep. Travis Childers [D, MS-1] Nay
Rep. Yvette Clarke [D, NY-11] Aye
Rep. William Clay [D, MO-1] Nay
Rep. Emanuel Cleaver [D, MO-5] Aye
Rep. James Clyburn [D, SC-6] Aye
Rep. Howard Coble [R, NC-6] Aye
Rep. Steve Cohen [D, TN-9] Aye
Rep. Tom Cole [R, OK-4] Aye
Rep. K. Michael Conaway [R, TX-11] Aye
Rep. John Conyers [D, MI-14] Nay
Rep. Jim Cooper [D, TN-5] Aye
Rep. Jim Costa [D, CA-20] Aye
Rep. Jerry Costello [D, IL-12] Nay
Rep. Joe Courtney [D, CT-2] Nay
Rep. Robert Cramer [D, AL-5] Aye
Rep. Ander Crenshaw [R, FL-4] Aye
Rep. Joseph Crowley [D, NY-7] Aye
Rep. Barbara Cubin [R, WY-0] Aye
Rep. Henry Cuellar [D, TX-28] Aye
Rep. John Culberson [R, TX-7] Nay
Rep. Elijah Cummings [D, MD-7] Aye
Rep. Artur Davis [D, AL-7] Aye
Rep. Danny Davis [D, IL-7] Aye
Rep. Lincoln Davis [D, TN-4] Nay
Rep. Susan Davis [D, CA-53] Aye
Rep. Thomas Davis [R, VA-11] Aye
Rep. Geoff Davis [R, KY-4] Nay
Rep. David Davis [R, TN-1] Nay
Rep. Nathan Deal [R, GA-9] Nay
Rep. Peter DeFazio [D, OR-4] Nay
Rep. Diana DeGette [D, CO-1] Aye
Rep. William Delahunt [D, MA-10] Nay
Rep. Rosa DeLauro [D, CT-3] Aye
Rep. Charles Dent [R, PA-15] Aye
Rep. Lincoln Diaz-Balart [R, FL-21] Nay
Rep. Mario Diaz-Balart [R, FL-25] Nay
Rep. Norman Dicks [D, WA-6] Aye
Rep. John Dingell [D, MI-15] Aye
Rep. Lloyd Doggett [D, TX-25] Nay
Rep. Joe Donnelly [D, IN-2] Aye
Rep. John Doolittle [R, CA-4] Nay
Rep. Michael Doyle [D, PA-14] Aye
Rep. Thelma Drake [R, VA-2] Nay
Rep. David Dreier [R, CA-26] Aye
Rep. John Duncan [R, TN-2] Nay
Rep. Thomas Edwards [D, TX-17] Aye
Rep. Vernon Ehlers [R, MI-3] Aye
Rep. Keith Ellison [D, MN-5] Aye
Rep. Brad Ellsworth [D, IN-8] Aye
Rep. Rahm Emanuel [D, IL-5] Aye
Rep. Jo Ann Emerson [R, MO-8] Aye
Rep. Eliot Engel [D, NY-17] Aye
Rep. Philip English [R, PA-3] Nay
Rep. Anna Eshoo [D, CA-14] Aye
Rep. Bob Etheridge [D, NC-2] Aye
Rep. Terry Everett [R, AL-2] Aye
Rep. Mary Fallin [R, OK-5] Aye
Rep. Sam Farr [D, CA-17] Aye
Rep. Chaka Fattah [D, PA-2] Aye
Rep. Tom Feeney [R, FL-24] Nay
Rep. Michael Ferguson [R, NJ-7] Aye
Rep. Bob Filner [D, CA-51] Nay
Rep. Jeff Flake [R, AZ-6] Nay
Rep. James Forbes [R, VA-4] Nay
Rep. Jeffrey Fortenberry [R, NE-1] Nay
Rep. Vito Fossella [R, NY-13] Aye
Rep. Bill Foster [D, IL-14] Aye
Rep. Virginia Foxx [R, NC-5] Nay
Rep. Barney Frank [D, MA-4] Aye
Rep. Trent Franks [R, AZ-2] Nay
Rep. Rodney Frelinghuysen [R, NJ-11] Aye
Rep. Elton Gallegly [R, CA-24] Nay
Rep. E. Scott Garrett [R, NJ-5] Nay
Rep. Jim Gerlach [R, PA-6] Aye
Rep. Gabrielle Giffords [D, AZ-8] Aye
Rep. Wayne Gilchrest [R, MD-1] Aye
Rep. Kirsten Gillibrand [D, NY-20] Nay
Rep. John Gingrey [R, GA-11] Nay
Rep. Louis Gohmert [R, TX-1] Nay
Rep. Charles Gonzalez [D, TX-20] Aye
Rep. Virgil Goode [R, VA-5] Nay
Rep. Robert Goodlatte [R, VA-6] Nay
Rep. Barton Gordon [D, TN-6] Aye
Rep. Kay Granger [R, TX-12] Aye
Rep. Samuel Graves [R, MO-6] Nay
Rep. Raymond Green [D, TX-29] Nay
Rep. Al Green [D, TX-9] Aye
Rep. Raul Grijalva [D, AZ-7] Nay
Rep. Luis Gutierrez [D, IL-4] Aye
Rep. Ralph Hall [R, TX-4] Nay
Rep. John Hall [D, NY-19] Aye
Rep. Phil Hare [D, IL-17] Aye
Rep. Jane Harman [D, CA-36] Aye
Rep. Alcee Hastings [D, FL-23] Aye
Rep. Doc Hastings [R, WA-4] Nay
Rep. Robin Hayes [R, NC-8] Nay
Rep. Dean Heller [R, NV-2] Nay
Rep. Jeb Hensarling [R, TX-5] Nay
Rep. Walter Herger [R, CA-2] Aye
Rep. Stephanie Herseth Sandlin [D, SD-0] Nay
Rep. Brian Higgins [D, NY-27] Aye
Rep. Baron Hill [D, IN-9] Nay
Rep. Maurice Hinchey [D, NY-22] Nay
Rep. Rubén Hinojosa [D, TX-15] Aye
Rep. Mazie Hirono [D, HI-2] Aye
Rep. David Hobson [R, OH-7] Aye
Rep. Paul Hodes [D, NH-2] Nay
Rep. Peter Hoekstra [R, MI-2] Aye
Rep. Tim Holden [D, PA-17] Nay
Rep. Rush Holt [D, NJ-12] Aye
Rep. Michael Honda [D, CA-15] Aye
Rep. Darlene Hooley [D, OR-5] Aye
Rep. Steny Hoyer [D, MD-5] Aye
Rep. Kenny Hulshof [R, MO-9] Nay
Rep. Duncan Hunter [R, CA-52] Nay
Rep. Bob Inglis [R, SC-4] Aye
Rep. Jay Inslee [D, WA-1] Nay
Rep. Steve Israel [D, NY-2] Aye
Rep. Darrell Issa [R, CA-49] Nay
Rep. Jesse Jackson [D, IL-2] Aye
Rep. Sheila Jackson-Lee [D, TX-18] Aye
Rep. William Jefferson [D, LA-2] Nay
Rep. Eddie Johnson [D, TX-30] Aye
Rep. Samuel Johnson [R, TX-3] Nay
Rep. Timothy Johnson [R, IL-15] Nay
Rep. Henry Johnson [D, GA-4] Nay
Rep. Walter Jones [R, NC-3] Nay
Rep. Jim Jordan [R, OH-4] Nay
Rep. Steve Kagen [D, WI-8] Nay
Rep. Paul Kanjorski [D, PA-11] Aye
Rep. Marcy Kaptur [D, OH-9] Nay
Rep. Ric Keller [R, FL-8] Nay
Rep. Patrick Kennedy [D, RI-1] Aye
Rep. Dale Kildee [D, MI-5] Aye
Rep. Carolyn Kilpatrick [D, MI-13] Aye
Rep. Ronald Kind [D, WI-3] Aye
Rep. Peter King [R, NY-3] Aye
Rep. Steve King [R, IA-5] Nay
Rep. Jack Kingston [R, GA-1] Nay
Rep. Mark Kirk [R, IL-10] Aye
Rep. Ron Klein [D, FL-22] Aye
Rep. John Kline [R, MN-2] Aye
Rep. Joseph Knollenberg [R, MI-9] Aye
Rep. Dennis Kucinich [D, OH-10] Nay
Rep. John Kuhl [R, NY-29] Aye
Rep. Ray LaHood [R, IL-18] Aye
Rep. Doug Lamborn [R, CO-5] Nay
Rep. Nicholas Lampson [D, TX-22] Nay
Rep. James Langevin [D, RI-2] Aye
Rep. Rick Larsen [D, WA-2] Aye
Rep. John Larson [D, CT-1] Aye
Rep. Thomas Latham [R, IA-4] Nay
Rep. Steven LaTourette [R, OH-14] Nay
Rep. Robert Latta [R, OH-5] Nay
Rep. Barbara Lee [D, CA-9] Aye
Rep. Sander Levin [D, MI-12] Aye
Rep. Jerry Lewis [R, CA-41] Aye
Rep. John Lewis [D, GA-5] Aye
Rep. Ron Lewis [R, KY-2] Aye
Rep. John Linder [R, GA-7] Nay
Rep. Daniel Lipinski [D, IL-3] Nay
Rep. Frank LoBiondo [R, NJ-2] Nay
Rep. David Loebsack [D, IA-2] Aye
Rep. Zoe Lofgren [D, CA-16] Aye
Rep. Nita Lowey [D, NY-18] Aye
Rep. Frank Lucas [R, OK-3] Nay
Rep. Daniel Lungren [R, CA-3] Aye
Rep. Stephen Lynch [D, MA-9] Nay
Rep. Connie Mack [R, FL-14] Nay
Rep. Tim Mahoney [D, FL-16] Aye
Rep. Carolyn Maloney [D, NY-14] Aye
Rep. Donald Manzullo [R, IL-16] Nay
Rep. Kenny Marchant [R, TX-24] Nay
Rep. Edward Markey [D, MA-7] Aye
Rep. James Marshall [D, GA-8] Aye
Rep. Jim Matheson [D, UT-2] Nay
Rep. Doris Matsui [D, CA-5] Aye
Rep. Carolyn McCarthy [D, NY-4] Aye
Rep. Kevin McCarthy [R, CA-22] Nay
Rep. Michael McCaul [R, TX-10] Nay
Rep. Betty McCollum [D, MN-4] Aye
Rep. Thaddeus McCotter [R, MI-11] Nay
Rep. James McCrery [R, LA-4] Aye
Rep. James McDermott [D, WA-7] Nay
Rep. James McGovern [D, MA-3] Aye
Rep. Patrick Mchenry [R, NC-10] Nay
Rep. John McHugh [R, NY-23] Aye
Rep. Mike McIntyre [D, NC-7] Nay
Rep. Howard McKeon [R, CA-25] Aye
Rep. Cathy McMorris Rodgers [R, WA-5] Nay
Rep. Jerry McNerney [D, CA-11] Aye
Rep. Michael McNulty [D, NY-21] Aye
Rep. Kendrick Meek [D, FL-17] Aye
Rep. Gregory Meeks [D, NY-6] Aye
Rep. Charles Melancon [D, LA-3] Aye
Rep. John Mica [R, FL-7] Nay
Rep. Michael Michaud [D, ME-2] Nay
Rep. Candice Miller [R, MI-10] Nay
Rep. Gary Miller [R, CA-42] Aye
Rep. George Miller [D, CA-7] Aye
Rep. Jeff Miller [R, FL-1] Nay
Rep. R. Bradley Miller [D, NC-13] Aye
Rep. Harry Mitchell [D, AZ-5] Aye
Rep. Alan Mollohan [D, WV-1] Aye
Rep. Dennis Moore [D, KS-3] Aye
Rep. Gwen Moore [D, WI-4] Aye
Rep. James Moran [D, VA-8] Aye
Rep. Jerry Moran [R, KS-1] Nay
Rep. Tim Murphy [R, PA-18] Nay
Rep. Christopher Murphy [D, CT-5] Aye
Rep. Patrick Murphy [D, PA-8] Aye
Rep. John Murtha [D, PA-12] Aye
Rep. Marilyn Musgrave [R, CO-4] Nay
Rep. Sue Myrick [R, NC-9] Aye
Rep. Jerrold Nadler [D, NY-8] Aye
Rep. Grace Napolitano [D, CA-38] Nay
Rep. Richard Neal [D, MA-2] Aye
Rep. Randy Neugebauer [R, TX-19] Nay
Rep. Devin Nunes [R, CA-21] Nay
Rep. James Oberstar [D, MN-8] Aye
Rep. David Obey [D, WI-7] Aye
Rep. John Olver [D, MA-1] Aye
Rep. Solomon Ortiz [D, TX-27] Aye
Rep. Frank Pallone [D, NJ-6] Aye
Rep. William Pascrell [D, NJ-8] Aye
Rep. Edward Pastor [D, AZ-4] Aye
Rep. Ronald Paul [R, TX-14] Nay
Rep. Donald Payne [D, NJ-10] Nay
Rep. Steven Pearce [R, NM-2] Nay
Rep. Nancy Pelosi [D, CA-8] Aye
Rep. Mike Pence [R, IN-6] Nay
Rep. Ed Perlmutter [D, CO-7] Aye
Rep. Collin Peterson [D, MN-7] Nay
Rep. John Peterson [R, PA-5] Aye
Rep. Thomas Petri [R, WI-6] Nay
Rep. Charles Pickering [R, MS-3] Aye
Rep. Joseph Pitts [R, PA-16] Nay
Rep. Todd Platts [R, PA-19] Nay
Rep. Ted Poe [R, TX-2] Nay
Rep. Earl Pomeroy [D, ND-0] Aye
Rep. Jon Porter [R, NV-3] Aye
Rep. David Price [D, NC-4] Aye
Rep. Tom Price [R, GA-6] Nay
Rep. Deborah Pryce [R, OH-15] Aye
Rep. Adam Putnam [R, FL-12] Aye
Rep. George Radanovich [R, CA-19] Aye
Rep. Nick Rahall [D, WV-3] Aye
Rep. James Ramstad [R, MN-3] Aye
Rep. Charles Rangel [D, NY-15] Aye
Rep. Ralph Regula [R, OH-16] Aye
Rep. Dennis Rehberg [R, MT-0] Nay
Rep. Dave Reichert [R, WA-8] Nay
Rep. Rick Renzi [R, AZ-1] Nay
Rep. Silvestre Reyes [D, TX-16] Aye
Rep. Thomas Reynolds [R, NY-26] Aye
Rep. Laura Richardson [D, CA-37] Aye
Rep. Ciro Rodriguez [D, TX-23] Nay
Rep. Harold Rogers [R, KY-5] Aye
Rep. Michael Rogers [R, AL-3] Aye
Rep. Michael Rogers [R, MI-8] Nay
Rep. Dana Rohrabacher [R, CA-46] Nay
Rep. Peter Roskam [R, IL-6] Nay
Rep. Ileana Ros-Lehtinen [R, FL-18] Aye
Rep. Mike Ross [D, AR-4] Aye
Rep. Steven Rothman [D, NJ-9] Nay
Rep. Lucille Roybal-Allard [D, CA-34] Nay
Rep. Edward Royce [R, CA-40] Nay
Rep. C.A. Dutch Ruppersberger [D, MD-2] Aye
Rep. Bobby Rush [D, IL-1] Aye
Rep. Paul Ryan [R, WI-1] Aye
Rep. Timothy Ryan [D, OH-17] Aye
Rep. John Salazar [D, CO-3] Nay
Rep. Bill Sali [R, ID-1] Nay
Rep. Linda Sanchez [D, CA-39] Nay
Rep. Loretta Sanchez [D, CA-47] Nay
Rep. John Sarbanes [D, MD-3] Aye
Rep. H. James Saxton [R, NJ-3] Aye
Rep. Steve Scalise [R, LA-1] Nay
Rep. Janice Schakowsky [D, IL-9] Aye
Rep. Adam Schiff [D, CA-29] Aye
Rep. Jean Schmidt [R, OH-2] Aye
Rep. Allyson Schwartz [D, PA-13] Aye
Rep. David Scott [D, GA-13] Aye
Rep. Robert Scott [D, VA-3] Nay
Rep. F. James Sensenbrenner [R, WI-5] Nay
Rep. José Serrano [D, NY-16] Nay
Rep. Peter Sessions [R, TX-32] Aye
Rep. Joe Sestak [D, PA-7] Aye
Rep. John Shadegg [R, AZ-3] Aye
Rep. Christopher Shays [R, CT-4] Aye
Rep. Carol Shea-Porter [D, NH-1] Nay
Rep. Brad Sherman [D, CA-27] Nay
Rep. John Shimkus [R, IL-19] Nay
Rep. Heath Shuler [D, NC-11] Nay
Rep. William Shuster [R, PA-9] Aye
Rep. Michael Simpson [R, ID-2] Aye
Rep. Albio Sires [D, NJ-13] Aye
Rep. Ike Skelton [D, MO-4] Aye
Rep. Louise Slaughter [D, NY-28] Aye
Rep. Adam Smith [D, WA-9] Aye
Rep. Christopher Smith [R, NJ-4] Nay
Rep. Lamar Smith [R, TX-21] Aye
Rep. Adrian Smith [R, NE-3] Nay
Rep. Victor Snyder [D, AR-2] Aye
Rep. Hilda Solis [D, CA-32] Aye
Rep. Mark Souder [R, IN-3] Aye
Rep. Zackary Space [D, OH-18] Aye
Rep. Jackie Speier [D, CA-12] Aye
Rep. John Spratt [D, SC-5] Aye
Rep. Fortney Stark [D, CA-13] Nay
Rep. Clifford Stearns [R, FL-6] Nay
Rep. Bart Stupak [D, MI-1] Nay
Rep. John Sullivan [R, OK-1] Aye
Rep. Betty Sutton [D, OH-13] Aye
Rep. Thomas Tancredo [R, CO-6] Aye
Rep. John Tanner [D, TN-8] Aye
Rep. Ellen Tauscher [D, CA-10] Aye
Rep. Gene Taylor [D, MS-4] Nay
Rep. Lee Terry [R, NE-2] Aye
Rep. Bennie Thompson [D, MS-2] Nay
Rep. C. Michael Thompson [D, CA-1] Aye
Rep. William Thornberry [R, TX-13] Aye
Rep. Todd Tiahrt [R, KS-4] Nay
Rep. Patrick Tiberi [R, OH-12] Aye
Rep. John Tierney [D, MA-6] Aye
Rep. Edolphus Towns [D, NY-10] Aye
Rep. Niki Tsongas [D, MA-5] Aye
Rep. Michael Turner [R, OH-3] Nay
Rep. Mark Udall [D, CO-2] Nay
Rep. Tom Udall [D, NM-3] Nay
Rep. Frederick Upton [R, MI-6] Aye
Rep. Christopher Van Hollen [D, MD-8] Aye
Rep. Nydia Velazquez [D, NY-12] Aye
Rep. Peter Visclosky [D, IN-1] Nay
Rep. Timothy Walberg [R, MI-7] Nay
Rep. Greg Walden [R, OR-2] Aye
Rep. James Walsh [R, NY-25] Aye
Rep. Timothy Walz [D, MN-1] Nay
Rep. Zach Wamp [R, TN-3] Aye
Rep. Debbie Wasserman Schultz [D, FL-20] Aye
Rep. Maxine Waters [D, CA-35] Aye
Rep. Diane Watson [D, CA-33] Aye
Rep. Melvin Watt [D, NC-12] Aye
Rep. Henry Waxman [D, CA-30] Aye
Rep. Anthony Weiner [D, NY-9] Aye
Rep. Peter Welch [D, VT-0] Aye
Rep. David Weldon [R, FL-15] Aye
Rep. Gerald Weller [R, IL-11] Aye
Rep. Lynn Westmoreland [R, GA-3] Nay
Rep. Robert Wexler [D, FL-19] Aye
Rep. Edward Whitfield [R, KY-1] Nay
Rep. Addison Wilson [R, SC-2] Aye
Rep. Heather Wilson [R, NM-1] Aye
Rep. Charles Wilson [D, OH-6] Aye
Rep. Rob Wittman [R, VA-1] Nay
Rep. Frank Wolf [R, VA-10] Aye
Rep. Lynn Woolsey [D, CA-6] Aye
Rep. David Wu [D, OR-1] Aye
Rep. John Yarmuth [D, KY-3] Aye
Rep. C. W. Bill Young [R, FL-10] Nay
Rep. Donald Young [R, AK-0] Nay
While many Americans are against this bailout. I think they are wrong. We are attempting to avoid a fall into a depression here. Those failing to act will be the Hoover’s of the future.
The following is a list of those that switched from nay to yea after the pork was added. Although over sight was also added and may be the reason for a switch.
Democrats:
Abercrombie
Baca
Berkley
Braley
Carson
Cleaver
Cuellar
Cummings
Edwards (MD)
Giffords
Green, Al
Hirono
Jackson (IL)
Jackson-Lee
Kilpatrick
Lee
Lewis (GA)
Mitchell
Ortiz
Pascrell
Pastor
Rush
Schiff
Scott (GA)
Solis
Sutton
Thompson (CA)
Tierney
Watson
Welch (VT)
Woolsey
Wu
Yarmuth
Republicans:
Alexander
Barrett
Biggert
Boustany
Buchanan
Coble
Conaway
Dent
Fallin
Frelinghuysen
Gerlach
Hoesktra
Knollenberg
Kuhl
Myrick
Ramstad
Ros-Lehtinen
Schmidt
Shadegg
Shuster
Sullivan
Terry
Thornberry
Tiberi
Wamp
Weller (did not vote the first time)
Thanks for the list.
googlumpugus wrote:While many Americans are against this bailout. I think they are wrong. We are attempting to avoid a fall into a depression here. Those failing to act will be the Hoover’s of the future.
I disagree. Inflation is already bad.
The U.S. Dollar has been falling drastially since 1999 against most internation currencies.
Besides, googlumpugus, if I recall, you trivialized people like David Walker who warned us repeatedly about the massive debt.
Guess you were wrong, and David Walker was right. After all, David Walker was the U.S. Comptroller and head of the Government Accounting Office (GAO).
What Americans had better fear more than the pain of less credit and ability to borrow is hyperinflation.
By the pre-1983 inflation measurement method, $1 in year 1999 is now only worth less than 42 cents.
Year: _ Pre-1983 ____ Value
_______ Inflation ___ of $1.00
_______ Rate __________________
2000: ___ 10.0% _____ $1.00
2001: ___ 07.8% _____ $0.92
2002: ___ 09.0% _____ $0.84
2003: ___ 08.0% _____ $0.77
2004: ___ 09.5% _____ $0.70
2005: ___ 11.0% _____ $0.62
2006: ___ 10.0% _____ $0.56
2007: ___ 11.7% _____ $0.49
2008: ___ 15.6% _____ $0.42
Hyperinflation has happened before and it can happen again.
Today, we have the perfect ingredients for hyperinflation.
Hyperinflation has occurred in the following countries in the last 150 years:
- Weimar Republic of Germany 1920 – 1923 (1/466 billionth of starting value),
- Zimbabwe 2003 - present (6 quadrillionth of the starting value and continuing to fall),
- Former Soviet Union 1993 – 2002 (1/14th of starting value),
- Argentina 1975 – 1983 (1/1,000th of starting value),
- Austria 1921 – 1923 (about 1/4 of starting value),
- Bolivia 1984 - 1986 (1/1,000 of starting value);
- Bosnia-Herzegovina 1992 – 1993 (1/100,000th of starting value),
- Brazil 1960 – 1994 (1 trillionth of starting value), Chile 1971 – 1973 (1/3rd of starting value),
- China 1947 – 1955 (1/10,000th of starting value),
- Greece 1943 – 1953 (1/50 trillionth of starting value),
- Hungary 1945 – 1946 (100 quintillionth of the starting value),
- Hungary 1922 – 1923 (1/4 of starting value),
- Israel 1976 – 1986 (1/16th of starting value),
- Japan 1934 – 1951 (1/362nd of starting value),
- Poland 1990 – 94 (1/10,000th of starting value),
- U.S.A. (Confederate States of America) 1861 – 1865 (1/90th of starting value, and then, by the end of the Civil War, the Confederate Dollar depreciated to zero).
- It also happened in the ancient Roman Empire, when the silver and gold coinage of that day was progressively debased with base metals, in order to fund wars, giveaways to the Plebeians, and various other adventures. There are many additional examples that I have not bothered to cover here.
If hyperinflation destroys the U.S. Dollar, things will get MUCH worse.
And that is the risk with the trillions already spent in bailing out bad debt, and the trillions more likely to follow.
Posted by: d.a.n at October 8, 2008 11:28 AMQuote’ MySpace Digg Text Size
“The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults — the very misfortune that touched off the credit crisis last year.
The result of homeowners being “under water” is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.
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And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home’s value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.
About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody’s Economy.com.
The comparable figures were roughly 4% under water in 2006 and 6% last year, says the firm’s chief economist, Mark Zandi, who adds that “it is very possible that there will ultimately be more homeowners under water in this period than any time in our history.”
Among people who bought within the past five years, it’s worse: 29% are under water on their mortgages, according to an estimate by real-estate Web site Zillow.com.
The majority of homeowners still have equity, and even among those who don’t, many continue to make their mortgage payments on time. The financial-bailout legislation could at least “keep things from getting much worse” by helping banks avoid the need to tighten credit further, says Celia Chen, director of housing economics at Economy.com. Still, she expects housing credit to remain tight and home prices to decline in much of the country for another year or so.
Prices are back to 2003 levels in the San Diego and Boston metropolitan areas, and back to 2004 levels in Las Vegas, Los Angeles, San Francisco, Fort Lauderdale, Fla., and Minneapolis, according to First American CoreLogic, a data firm in Santa Ana, Calif.
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A sign is posted in front of a bank owned home that is for sale in Richmond, California.
Stephanie and Jason Kirschenman thought they were being prudent when they agreed in late 2004 to buy a new four-bedroom home in Lodi, Calif., for $458,000. They put a substantial 20% down and chose a loan with a fixed interest rate for the first 10 years. Two years later, they took out a second mortgage to pay off some bills.
At the time, the home was appraised for about $550,000. But a mortgage broker recently estimated its value at well below the $380,000 the family owes on it, says Ms. Kirschenman. “We were quite shocked,” she says.
The Kirschenmans, who both work for a company that makes trailer hitches, thought about sending the keys to the lender. But their financial planner, Christopher Olsen, helped persuade them to stick with the house, noting that they could still afford the payments.
Others aren’t so lucky. Among mortgages on one- to four-family homes, 9.16% were a month or more overdue or were in foreclosure in the second quarter, according to the Mortgage Bankers Association. That compared with 6.52% a year before and was the highest level since the association began such surveys 39 years ago.
Falling values have contributed to a sharp pullback in mortgage lending. In the third quarter, mortgage lending fell to the lowest level in eight years — down 44% in a year — says the publication Inside Mortgage Finance.
One reason is that as home values slip, growing numbers of would-be borrowers lack sufficient equity to refinance. The falling values also make mortgage lending look riskier to banks, spurring them to tighten credit standards.
Most mortgages in default were issued in 2006 and 2007, when lending standards were loosest and the housing market was peaking. Many who bought then made small down payments or none, so they had little equity in their homes from the start.
The performance of loans made earlier is getting worse, too, as price declines deplete the equity people built up. In Las Vegas, 6% of home loans made in 2004 are now 30 days or more overdue, up from 3.7% a year earlier, according to research firm LPS Applied Analytics.
In July, Congress enacted legislation designed to help borrowers who owe more than their homes are worth by allowing them to refinance into a government-backed loan, provided their mortgage company forgives part of their principal. It’s not clear how many borrowers the program will help, because before reducing the principal, lenders would almost always try first to freeze or reduce borrowers’ interest rate to make payments more affordable, says Tom Deutsch, deputy executive director of the American Securitization Forum, an industry group.
In contrast with the 12 million home borrowers estimated to be under water, 64 million have equity in their homes. These include 24 million households who own their homes free and clear, and 40 million whose homes remain worth more than is owed on them.
Even so, some borrowers fret that declining prices and tighter lending standards could make it hard for them to tap their equity.
Steven Schneider, a mortgage broker in Miami, bought his home at the end of 1992. When he refinanced about four years ago, he pulled out $150,000 in cash that he intended to use to build an addition. The transaction raised his total debt to about $350,000, at a time when his home had a value of about $650,000.
Recently, Mr. Schneider pulled out roughly $90,000 by tapping a home-equity line of credit. He says he put the funds in a money-market account that yields less than the 5% interest rate on the loan. “I was afraid they were going to shut down” access to the credit line, says Mr. Schneider. He figures his home, once valued at $750,000, now is worth about $600,000.
How much pain homeowners feel varies greatly from place to place. The most severe drops in home values are in parts of California, Florida, Nevada, Arizona and other areas where speculation pushed prices up and builders far overestimated demand.
Within metro areas, neighborhoods with short commutes are holding up better than others. And in many parts of Texas and North Carolina, home prices have continued to rise slowly, have leveled off or have declined only modestly.
On a national basis, home prices peaked in mid-2006 after rising 86% since January 2000, according to the First American index. Since peaking, that index has fallen 13%.
The declines have made homes more affordable, bringing prices in many areas closer to their long-term relationship to incomes. In the second quarter, the median home price of about $203,000 was 1.9 times average pretax household income, according to Economy.com. That was close to 1.87 times income for 1985 through 2000, prior to the housing boom.
Housing markets don’t tend to turn around quickly. The price slump in California in the early 1990s, for instance, was a long grind. According to the S&P/Case-Shiller home-price indexes, Los Angeles prices peaked in June 1990 and didn’t bottom until March 1996. They didn’t get back to their 1990 peak until 2000.
Write to James R. Hagerty at bob.hagerty@wsj.com and Ruth Simon at ruth.simon@wsj.com
Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved
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