What The Heck? The Bailout Failed?
September 29, 2008 / 9:45 pm • By Dr. Melissa ClouthierI take a nap and this is what happens while I’m sleeping? Good. Grief.
My natural instinct is to say that it’s good when new laws don’t get passed. Gridlock is a beautiful thing because laws tend to make the average person’s life harder. So the bailout plan failed. I should be ecstatic. Certainly, the vast majority of Americans didn’t really want this bill. So are they right? Time will tell.
Right now, the stock market is tanking. It will likely tank tomorrow. Now, it’s a psychological as much as a financial thing. People get stupid when they’re scared and that’s what makes me nervous.
90 Democrats voted AGAINST the bill. So don’t listen when the Dems blame Republicans for the legislation’s failure to pass. Only 12 Democrats needed to pony up for this.
Nancy Pelosi is a knucklehead. What a vindictive woman. It is called politics–as in care for the toes you step on because they are connected to the ass you have to kiss tomorrow. It’s called don’t insult the people you need to help you.
David Bernstein of Volokh Conspiracy:
As I wrote in the comments, I have no idea why any particular member, or group of members, of the House, voted for or against the bill. All I’m saying is that if you are trying to rally the House to pass an emergency bill, you make it seem like there is AN ACTUAL EMERGENCY, which more or less precludes partisan attacks. To the extent any Republican voted against the bill because of Pelosi’s speech, it may not be a question of them being offended by her partisanship, but the perspective that if Pelosi thinks that the situation calls for partisanship, it must not be a serious emergency, because leaders simply don’t engage in such antics when a true emergency is at hand. For that matter, if I were a Democrat skeptical of the bill, Pelosi’s speech may have discouraged me from voting for it for the same reason.
On the other hand, maybe Nancy Pelosi isn’t stupid. Maybe she doesn’t want the crisis to go on and on, damn the American economy, damn small businesses. If you’re rich enough, low valued stocks are nice for making some money. She’s rich enough. Oh, and don’t forget that every day this crisis continues is more votes for Barack Obama. At least, Pelosi and Obama count on voters being that superficial. [Updated: Soren Dayton seems to agree with my hypothesis. Help us! I don't know what the country will come to with politicians who filter every single defining moment through self-interest rather than what is in the best interest of the country. And Jeff Goldstein asks if Pelosi inadvertently helped America. That would be the only way it'd happen]
After sleeping tonight, Americans may face the consequences of their anger. I hope the populace is right. I fear a situation where people can’t pay their employees, who can’t pay their bills, where more homes are lost, which will exacerbate the problem. [Update: Are people already reconsidering? Or are people just confused? Are people finally understanding the implications of letting this slide could be disastrous? Or, do people, like me, hate all alternatives and figure something has to be done, just not what Paulson was proposing.]
Pain. There will be pain.
More here. And another reminder of the timeline:
Michelle Malkin has the vote tally. Want to know how your Senator and Congressman voted?
AllahPundit shares this:
You’d think The One at least could flip 12 Democrats by promising to swing by their districts while he’s on the road and turn some water into wine or whatever to help get them reelected. After all, if the polls hold, this is going to be his mess to clean up come January. Waiting only makes it worse. Grab a mop, Messiah. Click the image to listen.
And did Obama help things? No. Here’s how the Congressional Black Caucus responded:
More members of the Congressional Black Caucus, whose heavily black districts include many of Obama’s most ardent supporters, opposed the bill than supported it.
Few of these members are in, or will ever have, tough re-elections.
Obama, it seems, could have helped deliver some of these votes if he had been more invested in the bill.
Frank Luntz: “The taxpayers want someone hung and they don’t want it to be the taxpayers.”
Ace explains market to market accounting crap that might help all this.
Again, I will conclude with pain. Tomorrow, we wake up with it.
Updated: From Ron Paul (I know, I’m quoting and linking to Ron Paul)–
Yes, we need change, but the change we need is to get rid of the perverse government incentives for banks to make those bad decisions in the first place. But all we hear about is band-aids, symptoms, and bedtime stories about how this will fix everything.
It won’t and it comes down to this: You can save the banks that are failing, or you can save the dollar. But you can’t save both.
14 Responses to “What The Heck? The Bailout Failed?”
September 30 2008 / 9:40 am
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It is a good thing. Some brave representatives on both sides of the isle stopped conventional wisdom from railroading this crap-tastic slush-fund down America’s collective throat.
Will there be pain? Of course, but so what?
Some of life is pain. And the jackasses who foisted these lending practices need to feel it. Buying their bad debt just teaches them there are no consequences for their irresponsible decisions.
September 30 2008 / 10:22 am
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The jackasses who foisted these lending practices.
This mess is on the Dems.
September 30 2008 / 11:14 am
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This whole thing has created “strange bedfellows”. I find myself on the same side as Ron Paul and Michael Moore. I have no idea who is crazy anymore.
I do know, however, that the DOW is up this morning.
September 30 2008 / 11:47 am
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Economists-assuming the world is rational-are perpetually amazed that “mark to market” accounting matters. After all, it’s just appearances, and the “reported” numbers don’t change the “real” values.
But the reason it matters is the reason markets work at all — appearances, not reality, drive psychology.
We trust a piece of paper is worth a dollar. We trust the other driver will stay on the right side of the yellow line. Lose trust and you can’t function.
Which is why the Fed/Treasury plan fails. It seems to get markets moving, but it destroys the basis for free markets; everyone will know the government will pay for all errors. Heads the investor wins, tails the taxpayer loses.
Guess what happens to speculation in THAT environment.
The downside is that we re-play the Japanese blunder, where “tatamae” (appearances) trumped “honne” (truth). By denying their banks had bad loans, they went into a nearly two decade slump.
Better the cleansing light of day.
September 30 2008 / 12:05 pm
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I wonder what could you possibly be talking about. Dems passed the measure by 60 percent. In the wake McCain’s lunatic wanderings and Bush’s complete irrelevance – GOP leadership couldn’t even deliver HALF of their caucus.
And that’s Nancy Pelosi’s fault?
Keep smoking.
September 30 2008 / 12:07 pm
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E-x-a-c-t-l-y, Robert. If there’s pain to be had, then let’s have at it. Guess it’ll be red beans and rice for dinner for the next couple years.
September 30 2008 / 1:08 pm
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The problem of credibility is key: nobody trusts Washington OR Wall Street any more, and with bloody good reason. Basically, we’re being asked to hand over a huge amount of money to the very people who SHOULD have prevented this happening in the first place, and indeed can be blamed in large part for CAUSING it.
I’m not an economist, but I do believe in watching what people do rather than what they say.
We’re told that this is a crisis and that, if we don’t act now, we’re headed for Great Depression v2.0 (oh, and we won’t get the lifetime supply of free towels). Yet:
1 – The dems initially tried to pork up the bailout with HUGE payouts to their favorite constituencies. Politics as usual.
2 – The GOP members of the House weren’t even invited to the initial negotiations. Politics as usual.
3 – Nearly half of the filthy democrats didn’t vote for it, and there is no evidence that their leadership did much to persuade them to close ranks and vote “yes”.
4 – The Senate didn’t even schedule a vote on it, apparently waiting for the House so they could see which way the wind was blowing. Politics as usual.
5 – Despite the “urgent” need for action, the Congress is taking the next two days off. Business as usual.
6 – SanFran Nan didn’t bother to try to rein in her big mouth for a change. Politics as usual.
7 – There has been little or no serious discussion of overhauling the system, or even trying to determine what happened and why. Instead, it looks like business as usual after we get hosed with a $700 billion bill.
When we’re assured that we face a crisis but everybody involved is carrying on “as usual”, it’s pretty good evidence that the crisis isn’t that bad.
I’m not convinced, and I’m sure as hell not comfortable giving Uncle Sugar that much money without some solid evidence of reform. I don’t want to hear any, “Give us the money now and we’ll take up reform later”, ‘cuz I don’t believe it. I don’t trust Bush, Paulson, or Bernake, and I sure as hell don’t trust Pelosi, Reid, Dodd, or Frank.
When that collection of thieves and liars starts acting like it’s a real crisis, give me a call. Until then, keep your damned dirty paws off my wallet.
September 30 2008 / 2:00 pm
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Melissa… Please come over to
http://fuanglada.wordpress.com/
& to see if you think there is any validity to my argument that
—
“Speaker Pelosi DELIBERATELY sabotaged the Bailout Bill??…
—
Any of your readers who comes over, please add comment… Am I just paranoid or does the evidence support this analysis?
September 30 2008 / 2:15 pm
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Yes, we’re told this is a crisis and that if we don’t act now, “average Americans” are going to be affected. It’s disgusting how Washington is trying to foist this plan on the taxpayers by trumpeting the dire consequences that will accrue to “Main Street” if the bailout fails.
Since when has the government been concerned about “average Americans”? Average Americans have been losing their jobs and their homes for months, even years now. They have been told to retrain for “21st century jobs” in the “new economy.” But now, suddenly, when Wall Street starts feeling pain, there’s no talk about bankers and brokers “retraining” for jobs in the “new economy.” Suddenly there is a national crisis.
If this crisis will affect you and I, imagine — just IMAGINE — how deeply it will affect those at the top. It must be a pretty long and sharp thorn that Wall Street is sitting on to make all those deregulationist free-marketers run to Washington for a government program.
Methinks that many average Americans have been in crisis for some time and the poison pen filled with red ink has simply finally touched Wall Street. The solution is NOT to dump money into the system at the top. That’s like trying to heal a drought-stricken plant by soaking the leaves.
What has impressed most people about this whole business is that they know that Wall Street never gives a damn about Main Street. If a factory closes in Ohio because it was cheaper to ship the jobs to China, Wall Street rejoices because it knows that corporate profits will rise and stock values will go up. But when the Ohio workers lose their homes because they lost their jobs and those failures affect mortgage-backed securities, THEN Wall Street cries foul and wants a government welfare program called “Financial Security” to immunize them from what will probably be catastrophic losses. Tough.
The “pain” that I hear average Americans will suffer is an inability to get a car loan or a home loan. (Big deal. I can wait. I don’t need to buy a house or a car right this minute. I can rent. I can buy a cheap used car.) Some small companies may not be able to get a loan to make payroll and some folks will lose their jobs. That’s it.
Isn’t that just business as usual? Lots of people can’t get home and car loans. That’s nothing new. And lots of businesses can’t make payroll on a steady basis, especially in the construction industry, where contractors often have to wait in a line of a string of subcontractors before they can pay their workers. That happens all the time. And guess what? Workers keep working until the money trickles in.
The idea that banks will stop lending is silly. Banks HAVE to lend. That’s why they exist. If they don’t lend, then they can’t make money and they’ll go belly up anyway. So banks will ALWAYS continue to lend to anyone with excellent credit.
If a business is so cash-poor that it has to get a loan to make payroll, and so credit-poor that it can’t get a loan, then it probably shouldn’t be in business anyway. Lending to such borrowers is part of what got us into this mess in the first place. Those businesses SHOULDN’T be getting loans. The number one reasons all businesses fail is lack of adequate cash flow. That has always been true, even in non-crisis times.
I just don’t hear anything from Washington that suggests to me that there is a real — or rather a NEW — crisis, that anything is happening that hasn’t been happening for a long time. What I hear is that the consequences of some very bad decisions have finally touched some very, very wealthy people and they are scared to death.
That’s no reason to BORROW another $700 billion from China, adding to our multi-trillion-dollar national debt, to buy up a lot of worthless securities so various banks’ balance sheets can look rosy again.
No, I think the tightening of the credit markets is a good thing. There’s been too much money flying around the past ten years or so. Too many bad borrowers, too many over-leveraged companies, too many risky investments, too much so-called “growth” that is nothing more than a lot fluffy nothingness masquerading as business. It needs to stop.
We can all do our part. Let’s skip Christmas and find 1001 recipes for beans!
September 30 2008 / 2:26 pm
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Drive-time radio last night was reporting secondhand stories about banks suddenly tightening credit, cancelling HELOCs in mid-use, dropping credit card limits to whatever was on the card or lower.
Drive-time radio this morning was joking about “Learn to like the taste of Alpo” and “Get your money out of the bank While You Still Can”.
And the survivalist crazies are all coming out of the woodwork (or at least from Art Bell’s 3AM phone lines) at the same time.
Tip: Any phrase starting with “Coming One World…” is Christianese for “HERE COMES THE ANTICHRIST!” End-of-the-World rant coming up.
Tip: The phrase “Worthless Government Fiat Currency” or “Wheelbarrows of banknotes” is Libertarianese for pretty much the same thing.
You know it’s getting really crazy when your financial planner starts talking about “You know we’re living in The End Times…”
September 30 2008 / 11:20 pm
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Can someone explain this 630bil that the fed is pumping into the econ?
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9MTZEgukPLY
If this is real– why the bailout? I can find little or no news on this.
October 1 2008 / 9:53 pm
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The bill is crap. I’m for McCain – I think – and I still think the bill is Corporate Welfare. It’s a classic case of good money after bad. Who did the House rely on when drafting this? Bernanke – the stupidest guy in the room – and Paulson, the most corrupt guy in the room. Not one hearing with REAL experts who might have a clue. Like Nouriel Roubini, who has been predicting crisis for so long, he was called Doctor Doom until he was proven right, and who thinks this plan is lousy.