I would not get optimistic yet, since Our Fearless Feckless Leader is on prime time tonight, but Republican legislators are telling the Treasury secretary that trying to rush a skeletal bill through is not going to succeed, and they need time to craft something more fully fleshed out.
From Bloomberg:
House Republicans warned Treasury Secretary Henry Paulson today that his $700 billion financial rescue plan wouldn’t pass and asked for more time to consider alternative ideas, lawmakers said.
“The $700 billion bill is simply not going to pass, and they recognize that,” Representative Ray LaHood of Illinois said after Republicans met with Paulson behind closed doors at the U.S. Capitol today. “Now it is up to Congress.”
Paulson and Federal Reserve Chairman Ben S. Bernanke asked lawmakers to come together quickly behind the proposal to help soothe financial markets, prevent bank failures and bolster the slowing economy, lawmakers who attended the meeting said.
They were met with requests for more time so other ideas could be examined. Representative Steven LaTourette, an Ohio Republican, said Republicans told Paulson they are prepared to stay in town beyond a planned Sept. 26 adjournment to negotiate.
“To say that there is a healthy dose of skepticism would be putting it mildly,” LaTourette said. “I think the overwhelming sentiment at this moment in time is, what’s the rush?”
Paulson and Bernanke showed some willingness to compromise after Republicans made clear “we are not going to have this thing jammed down our throat,” LaHood said.
“The door has been opened for us to make an offer and for those guys to see where it goes,” LaHood said. Paulson, he said, told lawmakers, “If you don’t like our plan, we’re willing to talk a bit.”
“We are going to stay here until we can come up with a plan,” said Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee.
Virginia Republican Tom Davis, who supports the administration’s program, said Paulson “had a tough audience” because “there is a huge credibility problem with this administration.”
“You still have a lot of members think they are crying wolf,” Davis said.
48 comments
Comments are closed.
Matthew Dubuque
My sense is that it is closer in the House than in the Senate.
Do others share this view?
Matt Dubuque
mdubuque@yahoo.com
Your “sense”?
You must mean your belief.
Exactly what brings you to such a belief?
Did you talk to each member of Congress?
Are you parroting what you heard said through TV?
Matthew Dubuque
In response to your strident comment, I point out that the House, being up for election every two years, is generally more responsive to the people.
By the way. I don’t watch TV. Thanks for the ad hominem innuendo.
Matthew Dubuque
mdubuque@yahoo.com
Re: they need time to craft something more fully fleshed out.
>> Let's all scream for more pork! Pork is the other white meat and without legislative riders some CEOs and politicians may not get all the gravy they want! It may be God's plan to offer more pork, but I can't say (ask Palin).
See: Thanksgiving Day Meals
Also: In legislative practice, a rider is an additional provision annexed to a bill under the consideration of a legislature, having little connection with the subject matter of the bill.[citation needed] Riders are usually created as a tactic to pass a controversial provision which would not pass as its own bill. Occasionally, a controversial provision is attached to a bill not to be passed itself but to prevent the bill from being passed (in which case it is called a poison pill).
So Bush is actually going to give a primetime speech to tell taxpayers they’re about to be phucked over by plutocrats and they should damn well accept it, if not like it.
Man, is that ever disgusting. Which means Bush is the perfect President for the job. Wasn’t he saying not all that long ago that he wouldn’t sign a housing bill that ‘rewarded speculators’?
Problem’s over. Bill Gross is offering to fix things himself. For free! Grab your wallets. Mr TalkHisBook is going to Washington.
“William H. Gross, the manager of the country’s largest bond mutual fund, has a solution for that: He is offering to do it free.”
Both Secretary Paulson and Alan Blinder think that the people who do not like the current prices of houses will like higher prices for the same properties in the near future. The market is speaking. The Paulson plan is a loss for We the People have already spoken. Housing is overpriced where it is and I think many people are looking to move to cities where there are services. We could be looking at the paper decades from now. This is a build your own long term Depression kit, the very reverse of Monopoly.
I’m still getting this gut feeling about Bush remaining in office for a third term, and now with McCain setting up that generational agenda-thing and Treasury out of control and obviously too many idiots, too big to fail lobby groups… makes me uneasy! I wonder if SIFMA has the blueprint online yet?
See: Under the 22nd amendment it would be possible for a president to serve two full four-year terms after having assumed the Presidency by means other than election for a duration of up to two years.
Dwight D. Eisenhower expressed his strong opposition to term limits, saying, “The United States ought to be able to choose for its President anybody it wants, regardless of the number of terms he has served.”[5] Ronald Reagan publicly supported repealing the amendment. Bill Clinton stated his support for repealing the amendment and replacing it with one that prohibits people from serving more than two consecutive terms, but permitting them to seek election after an intervening term.[6]
Some have criticized the Amendment as a potential erosion of a second-term president’s power and influence, as the president becomes a political lame duck. The term was coined by 18th century English stockbrokers to mean someone who is bankrupt, but later came to mean anyone who has been made weak and ineffective. It now most often applies to politicians who are soon to leave office. This effect was referred to by President George W. Bush when, after winning his second term, he told the media “I’m going to come out strong after my swearing-in. We have to move quickly, because after that I’ll be quacking like a duck.”
“Willingness to compromise?”
“Willing to talk a bit?”
These guys are so full of themselves it’s sickening. They’re willing? They don’t have a choice but to listen to us. They may think they have the unchallengeable power but that Section 8 hasn’t passed yet.
Matt D.:
You talked about the will of the people. Every poll I have seen on this matters points to a rejection by te people.
Le’s try again:
“….on this matter points to rejection by the people”.
“Paulson and Federal Reserve Chairman Ben S. Bernanke asked lawmakers to come together quickly behind the proposal to help soothe financial markets, prevent bank failures and bolster the slowing economy, lawmakers who attended the meeting said.”
You know what? I’m beginning to wonder if the FED is really independent anymore…
Mr. Dubuque,
Just wondering here… about your “By the way. I don’t watch TV” statement, couple questions:
So is Cspan out?
Did you not watch yesterday’s Senate hearing?
What about today’s House hearing (that I could not even find on the Cspans)?
Do you draw the line somewhere or just don’t own a TV?
If you don’t own a TV where do you get your real_time_unfiltered congressional information?
Again, just wondering.
This link might be a pro pos:
http://www.realclearpolitics.com/
Very worth watching here folks IMHO:
Federal Reserve Bailout – Marcy Kaptur – CNN
Marcy Kaptur talks about the fat-cat bailout of wall…
http://www.youtube.com/watch?v=ZIE0ZyXEsKQ
Talking about will of people as reflected in polls, check out this CNN poll. Click on the Quick Vote to see the results:
http://robots.cnnfn.com/2008/09/22/news/economy/bailout_survey/index.htm?postversion=2008092307
http://www.thenation.com/blogs/notion/363876/bailout_increasingly_unpopular_in_congress
Paulson is demonstrating the corporate game in broad daylight –common practice among those “too big to fail” and getter bigger by the minute: they come up with the slogans, sound bites, promises and threats via TV and print media designed to influence the public who in turn are guaranteed to put pressure and fear into Congress to do their bidding and produce legislation favorable to them.
This is exactly how they have been making the non-regs of their game (shareholders before everything else like consumers and employees), that allows them to take these $100,000,000 + incomes (no one ‘earns’ that much money).
And, throwing a bone to an angry public like limiting executive compensation and golden parachutes when these lawyers and MBAs know (or should know) that price controls don’t work (the last attempt to limit executive compensation under Clinton to $1,000,000 led compensation consultants to come up with options in a work around) is a really cheap way to try to sound like you’re tryin’ to do sumpin’ for the peeple. Talk about insulting.
U.S. Treasury bill rates fell on Wednesday, with one-month rates briefly dipping below zero, as worries about passage of the government’s bank bailout caused a stampede into cash and safe-haven assets.
Lawmakers were holding a second day of hearings on the government’s proposed $700 billion bank bailout on Wednesday. Worries about the plan’s prospects curbed appetite for stocks and intensified safety bids for bills as well as longer-dated bonds, traders and analysts said.
Matthew Dubuque
Hi, in response to your question, I don’t own a TV.
I have an XM radio and listen to C-SPAN when necessary (not typical, but this week of course is an exception).
I much prefer the broader perspective with a longer time horizon I have without the constant distractions spewing from what I call the idiot box. I’m a much happier (and informed) person.
It leaves much more time for my compulsive reading habit.
Matthew Dubuque
mdubuque@yahoo.com
Hanke-Panke plan (picked this up on clusterstock.com) is maybe a throwaway? Ask for complete world domination, settle for less, so in the end a plan still passes that protects Friends of Hank at the expense of everyone else, but doesn’t immediately suspend the Constitution?
But let’s not be hasty about the Constitution. Check this out from Todd Harrison at Minyanville, the headline article for today:
….The angst is palpable and tension is high as we edge towards what promises to be a very tenuous election.
Indeed, anticipation of social unrest may be the catalyst for the decision to transfer troops back to the States. Beginning October 1st, a military army brigade will be an “on-call federal response force for natural or manmade emergencies and disasters,” the first time an active unit has been given a dedicated assignment of this kind…..
Anyone else notice that large parts of the SouthEastern US are out of gas, and some have been for about two weeks? Read NYT and WSJ A-sections today, but this news is apparently not fit to print.
The whole system is behaving more chaotically. Doc Holiday isn’t the only one who won’t be too surprised if the elections need to be postponed until the outcome can be reliably predetermined.
“William H. Gross, the manager of the country’s largest bond mutual fund, has a solution for that: He is offering to do it free.”
Gross would NOT manage the securized hybrid instrument transaction (SHIT) bail out for “free”. Anyone who manages the SHIT fund can manipulate the market: the manager can drive down the price of assets he wants to buy below intrinsic value, so he can buy at distressed prices, and can drive up the price of assets he wants to sell above intrinsic value, so he can sell at inflated prices. And the manager can make tons of money this way, without charging a fee or even buying assets from or selling assets to the SHIT fund.
Also, if the SHIT fund is going to be managed to buy assets at above market prices, and sell them at market prices DURING the credit crunch, it is certain the taxpayer will lose money by losing the premium on each transaction. And if you do the price premium on enough transactions, you’ll lose $700B in no time.
One point I haven’t seen made much if at all: both programs (Paulson/Bernanke and Dodd) cover $700B in holdings outstanding at any time. Unless I’m missing something, this means potential losses can far exceed $700B. The program would run for two years, so, assuming an average loss of 30%:
– Month 1: buy and sell $700B, loss $210B
– Month 2: buy and sell another $700B, cumulative loss $420B
Etc.
Unless I’m missing something…
““You still have a lot of members think they are crying wolf,” Davis said.”
This guy just sooooo clueless.
finally they are NOT crying wolf….we almost imploded last week and credit markets worsen markedly over the past three days. Yikes!
Whats bad is the free handout to wall street with no strings totally screwing the taxpayer and totally lying about the fiscal impact. Banking whores.
“finally they are NOT crying wolf….we almost imploded last week and credit markets worsen markedly over the past three days. Yikes!”
Paulson is crying wolf. The only thing that’s caused a crisis is money market fund investors freaking out, and starting redeem large amounts of shares last week, which drastically reduced demand for corporate commercial paper and corporations customer receivables. However, that is easily adressed by providing investors an FDIC type guarantee.
The crisis was provoked by Scy Paulson when Paulson decided to screw over Lehman bondholders, which hurt a money market fund that invested in corporate bonds. The fund only broke the buck by redeeming shares for 97cents rather than 1 dollar. But people are irrational, so they got spooked and started to redeem shares.
Paulson’s proposal is totally unrelated to the run on money market funds. It is like when Bush used terrorists as a justification for invading Iraq: a phony reason for Bush to pursue his own agenda.
Matthew Dubuque
Reality Based Lawyer. Nice to hear from you. I’ve also passed the Bar.
Your analysis is correct.
ALSO, keep in mind that it seems rather likely (from my data points) that the Treasury will be conducting these purchases on MARGIN, which makes the potential losses that much greater.
Matt Dubuque
mdubuque@yahoo.com
Yes. Its true. (News from Bloomberg)
The real question is, who is copying who?
Kazakhstan Plans Paulson Style Bailout: Borat?
Last Thurs was scary (pull up a chart on STT – no position).
WEB said they were also the scariest days he’s ever seen…and he’s seen a lot.
I’m not sure what Congress should do, but all i know is, after reading jansen’s across the curve posts all day, the fixed markets are close to another collapse.
I’m sure nobody really wants to witness hooverville up close and personal…and if someone has some reassuring words on why we’re not going there, please speak up.
Given the mere mention of the Paulson plan last fri eased the markets, i have a feeling passing ANYTHING will restore a bit of confidence. Lets hope for the best.
One last point, the way to win the war on rhetoric against Paulson and Bernanke is to frighten people with the TRUTH that their way of life is threatened by their blank check corporate handout.
As the WWII propogandists used to say: “The people can always be brought to the bidding of the leaders. That is easy. All you have to do is frighten them with allegations their way of life is under attack and will collapse if they do not hand over their money. It works the same in any country.”
Bernanke and Paulson think they are like the US government selling the public on losing money by buying War Bonds. Not true. The public was only willing to lose money on buying war bonds for the greater good of fighting the Nazi’s. Once the public is well-informed, it will not intentionally lose money in order to provide a massive corporate handout.
Democratic lawmakers set to ‘rebut’ government bailou
http://afp.google.com/article/ALeqM5jHFq5uPEAjuAIARQSyeqKTq1emUQ
“But there are still some sticking points,” Adamske said. “We want greater acountability and a large degree of reponsablity,” he added echoing the Democrats’ insistence that any plan should limit compensation packages for company leaders.
Frank told CNN television that “we’re going to set a precedent because we’re going to get restrictions on CEO compensation. They won’t be everything we want, they will apply to only the companies that are benefitting from this, but it’s a pattern I’m trying to take and apply broadly.
“We’re also doing proxy access, where you have these boards of directors that are immune to anybody. And we’re going to give the shareholders the right to petition so they can elect the directors,” he added.
But McCain’s surprise move, coming two days before the first of three long-scheduled presidential debates, offered him a high-risk chance to reshuffle the political deck heading into the final five weeks of the campaign.
If it works, he could cast himself as a decisive “presidential” leader above partisan politics, devoted to finding a solution to the crisis, eroding if not reversing the advantage that Obama has on the issue of the economy, now the top concern by far on voters’ minds.
Yet if McCain’s move fails, it could be seen as a desperate gimmick, raise questions about whether he’s prone to rash decisions and reinforce Obama’s image as the more cool-headed, deliberate leader.
“There is a risk there,” said Steven Schier, a political scientist at Carleton College in Minnesota. “There is the potential that he’ll seem a little hasty in his actions, that people will think this guy just flies off the handle, that he can’t multi-task.”
Oh man, this is the best news I have heard all week. Thank you very much for passing it on.
I apologies for any offensive language if previous comments
I understand that the USA does not like hearing the word FASCIST.
After all what would have been the point if having defeated Hitler (National Socialist) and Mussolini (Fascist), that word ever had to pass the lips of any American again.
What is the point of defeating an enemy if words like this can be presented to your leaders?
“Sec. 8. Review.
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”
And the presenter of those words provides your leaders with seven days to comply or die.
The USA, its leaders political, religious and philosophical in The House of Representatives (representing the citizen) and in the Senate (having knowledge of history and the consequences of actions) need to consider it a possibility.
If my language is considered intemperate I beg your indulgence.
I will not call any man a FACIST.
I will call the desire to influence the actions of others in haste fascistic.
I know the USA does not like the word FACIST.
I know you don’t like the word FACIST.
I don’t like the word FACIST.
But Fascism is what Fascism is.
Paulson’s Plan is not “Imperial”, would become the King (or Regent) of $2T?
Paulson’s Plan required (or did require before the Senate Committee gave him a proper grilling) the transfer of the will of the Citizens of the democratic republic of the United States of America to be subservient to the will of an unnamed Corporate State or State Corporate.
You can put State before Corporate or the other way around if you wish. It makes no difference.
The State is NOT the Republic.
The State is NOT Democratic.
The Corporate is NOT the Republic.
The Corporate is NOT Democratic.
Where the State and the Corporate combine the Republic is dead and Democracy is dead.
Again, begging your indulgence.
$2T (and no I don’t believe its $700bn) ~ what’s the rush?
Let me see if I understand this correctly.
A thing called the “Money Market” froze.
A thing called “The CDS Market” is in spasm.
I understand that “Money” must flow. We all need a means of exchange to buy bread.
I understand that faith in “Money” is required or that I cannot trade it in exchange for bread.
I understand that “Money” can be stored in order that I can save my labour or enterprise and exchange it at some future time for bread.
Indeed, give us this day our daily bread.
While Wall Street and the State were inventing CDS, I don’t recall my opinion being asked about the possible damage to the Republic or the Democratic will of the Citizens of the Republic.
Now, Wall Street I can understand. What possible difference could it make to the Citizen if “Wall Street” was located in Lagos or Zimbabwe?
None what so ever.
If a bunch of gamblers want to gamble let them gamble. Where they do it is of no concern.
The difficulty is what they chose to gamble with.
Money ~ My means of exchange ~ My faith in the value of being presented with a fair price for my Labour/Enterprise ~ My store of value.
Hank Paulson was CEO/Chairman of Goldman Sachs (Corporate) for six/seven years prior to becoming Secretary to the Treasury.
Hank Paulson (while CEO/Chairman of Goldman Sachs) with the blessing of the SEC (State) created a new method of creating money.
Hank & the SEC did not ask my opinion on this new money.
Had they done so I would have told them that I cannot buy bread with a CDS and that I would be obliged it they didn’t use Money to play their clever game.
So,
Here’s my solution.
Support any Main Street bank that can still stand on its on two feet.
Nationalize and consolidate those that cannot.
In other words keep Money flowing.
The Recsession/Drepression that is coming is coming and throwing $2T at Wall Street won’t stop it.
Use the $2T to protect the circulation of Money on MainStreet.
And then,
Let the CDS MARKET DIE.
It China has a problem with that then ~ TO HELL WITH CHINA
It Europe has a problem with that then ~ TO HELL WITH EUROPE
It the United Kingdom has a problem with that then ~ TO HELL WITH THE UNITED KINGDOM.
It Goldman Sachs have a problem with that then ~ TO HELL WITH GOLDMAN SACHS
Ad nauseam.
The SEC, The Federal Reserve and The Treasury have already displayed a remarkable ability to waste Money.
Don’t give them another cent.
It is obvious to most that when you arteries are clogged, the blood doesn’t flow. When you have blocked arteries it is an emergency, and to avoid a heart attack it is critical to get the blood flowing, which implies the use of a stent or open heart surgery. A complete blockage will result in a heart attack or worse. Time is critical, and the required correction is an emergency.
Analogous to your vascular system, the financial markets are the arteries of the economy. Analogous to your arteries, when the financial markets are frozen, the monetary supply does not flow. This creates an emergency situation where it is imperative that we restore the monetary flow.
In today’s environment it is critical that we on an emergency basis thaw the financial markets thereby enabling the required monetary flow. There is not a lot of time to react. Waiting too long will create a severe recession or a depression.
Jcc, go back to med school. The markets are not frozen, they are just behaving more reasonably [skeptically, that is] in light of current events.
I suggest you read oour earlier post on the package. The flaw in the logic of many of the comments above is that they assume this package will actually do something to solve the problem. It won’t.
Trying to prop up asset at above market levels is DESTINED to fail, and worse, only digs us deeper in the debt hole in the process, making the ultimate resolution of our economic mess even more costly and painful
I am not alone in this view. Virtually no economist is in favor of the program. University of Chicago even sponsored an open letter against it. And commentary on econoblogs has been as close to unanimity as one sees in these parts against. it.
All it will do is provide a short-lived burst of confidence, then as market participants think through its operation and ramification, the anxiety and stressed conditions will return. How long will the false euphoria last? Two weeks to six weeks, I’d hazard.
And worse, the existence of this program will block any other course of action being taken. It is such a large and resource-intensive an approach that it precludes any other course of action.
Yves is right, but with the same breath I am telling you that a version of this bill will pass by Friday.
Therefore, we better adjust the focus of this discussion from “what should have been” to “what are we going to do the day after”.
Cash Mundy: Sunday’s New York Times had an article about the gas shortage in the Southeast. For what it’s worth, the Times had an editorial today calling for Congress to slow down and come up with a better plan, such as the government receiving equity interests. I guess they haven’t rolled over completely.
MXQ: You may be right about the credit markets, but Paulson–and I know you’re not defending him, so this isn’t directed at you–deserves nothing but blame for his unconscionable proposal. He overreached terribly with a conceptually flawed plan, probably in part because he had not prepared for this eventuality. In any case, any delays begin with his failure to provide a feasible, effective, politically acceptable proposal from the start.
Are these people stupid? Yes! This is not about MBS — it’s about the synthetic derivatives engineered to be linked, backed and connected to MBS. MBS in the future, which Buffett is stealing today, like Potter (in It’s A Wonderful Life) will have future value/cash flow — the synthetic shit being offered to taxpayers will be as worthless in 20 years as it is today!!!!!!!!
Anyone wanna fight?
Dean
The day after, you can sell the Dollar.
Dubya, Hank and all the rest will do it.
Save the Main Street banks not Wall Street.
CDS are a Global issue.
If China, Eurpope & The United Kingdom won't pony up $1T, then left that false market collapse.
this has all the elements of deja vu doesn’t it?
Here vote for this or the next thing you will see is a mushroom cloud.
On the edge of the abyss and the futures are green.
http://tinyurl.com/3wkre9
Sorry–Monday’s New York Times had the gas shortage article.
John McCain Cancels Letterman Appearance, Keith Olbermann To Fill In
http://www.huffingtonpost.com/ 20…e_n_128998.html
The longer the delay, the greater likelihood that the evidence of the sky not falling might actually build true confidence, the only thing that will ultimately cure the crisis.
Yves is spot on with his diagnosis: TELLING someone that all is well doesn’t mean they will BELIEVE it.
It seems to me that there is some merit to attempting to decouple the concept of “mark it all to market” from the concept of “value best measured at maturity”. The latter’s value is more likely a function of issuer default risk across a relatively limited set of scenarios, the former is…subjectively and contextually determined, and less predictable than the weather.
Thought experiment: get two buyers to bid on an asset. Tell one that he will never have to mark it to market and for capital purposes, can be carried at cost (until irretrievably impaired), and the other, that it will have to be marked daily with reliable bids … from parties who are themselves short of liquidity and capital. Will the first buyer’s bid necessarily be “fraudulent”? The obvious flaw, but one that I don’t think is insurmountable, even if it does beg the question of how to initiate a “virtuous cycle”, is that even the “risk of issuer default” is contextual – and the current context – this kloodge of liquidity and credit, makes that risk awfully hard to reliably estimate.
Still, with enhanced transparency to a “valuation protocol” with limited nonassignable rights to hold to maturity, (and without the warts and all provided by Paulson and pals), I think a modification of the Dodd plan might at least flatten the descent vector…
R in NY
Point of clarification: the “value at maturity” pricing is appropriate only for assets that reasonable buyers might agree are/were customized at creation.
Isn’t this the underlying problem? As much as structurers argued for commodification of the derivatives, they were largely individually “decorated” by the structurer, the asset manager/sponsor and the lead investors.
Finding a “market value” for a bespoke hybrid CDO with a monoline wrapper (now rated on par with the senior sub debt) taking the “mezzanine super senior” tranche is like finding the “market value” for that chopped beemer with the dual hemi’s and reverb woofers in the trunk … seemed like a good idea at the time. You may not like being seen in it anymore, but it gets you there and back… and it probably won’t break down.
R in NY
America, sorry to say it but as a great financier once said (Mellon) “”Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate” For too long the USSA (add the extra S for socialist) has lived beyond its means. Now it’s time to start paying the piper and give it up to our creditor friends in Asia, and the big money oil sheiks.
I am going to quote the Center for Responsible Lending’s position on this. It’s a whole page, but now stay with me here. They have been warning about the lending practices that led to this situation for years and trying to stop them.
It turns out that their position agrees with how it looks to me. Now, people have called this nuclear this and tsunami that and plane-crash or pseudo-whitewater the other thing, so let me add that it is like a fire burning down houses (literally in some cases) and still growing. Now, the Hanke-Panke Plan is to put all our effort into protecting the wealthy gated community which is in the path of this thing because if they freak out, they will suck all the oxygen out of the atmosphere to protect themselves and we’ll all die. More or less.
Well, call me naive, but it seems to me that you fight the fire at the FEBA, or in this case Forward Edge of the Fire Area, which would be houses in foreclosure, and in front of the fire, which would be houses at risk [this being “defense in depth” or “elastic defense” to mix in more tactical metaphors], and not way out ahead or off to the side or whatever, which is the Wall Street Resort community. The Hanke-Panke Plan is to load all our money on those big tanker planes and drop it not on the fire but on the resort. Won’t Help.
Obviously it is not possible nor desirable to support the bloated prices of houses, and it is desirable to let them deflate back to a reasonable ratio to prevailing wages and so forth, so people can afford to buy houses on terms that don’t guarantee foreclosure down the road.
The goal should be to stop foreclosures more or less completely for a short time to clear the backlog, and then allow the value of the houses for mortgage, tax and resale to drift downwards while minimizing foreclosures. Foreclosures may be the late great free market’s way of deflating housing prices, but if they are the best way, then basically we’re done and it’s time to go long on long guns and nitro-packed soybeans. People who really can’t afford the houses they are in even at a reasonable price should be given a way out with their credit intact so they can buy a cheaper house and thus both stay housed and support the housing market.
Any relief should only apply to owner-occupied first homes. People turning in their trophy houses is a good thing. Most of them should be torn down anyway. And investors in real estate know the rules of the investing game: risk and opportunity. No help for them, unless Hanke-Panke also wants to buy my SKF and financial puts at their prices just before they changed the rules on me.
As for systemically essential functions such as for example gasoline supplies to the SouthEast, the government lets it be known that any systemically essential enterprise that is unable or unwilling to perform its essential function will be nationalized for an indefinite period with no guarantee of compensation or anything, equity gone, executives fired. Not that I would trust this government to run a gas station, let alone a war, but if things get bad enough someone, meaning for want of anyone else probably the military and emergency services, would have to start running things or allow starvation, looting, chaos, and general mayhem and complete societal breakdown: Not Good.
OK now, stay with me here, folks: call me naive, call me crazy, call me anytime you want, but just remember: if this is what I’m thinking, just imagine what all those people who wouldn’t know a strike-price from stone soup must be thinking.
It’s just that simple.
Bailout Won’t Stop Foreclosures that Push Prices Down
Center for Responsible Lending
September 20, 2008
The government plan announced by Treasury Secretary Paulson and Fed Chairman Bernanke fails to deal with the root cause of the crisis—families in foreclosure—-and instead is purely and simply a bailout of the lenders who created this disaster. The bailout will not solve our economic problems because it will do virtually nothing to stop the foreclosure epidemic. Continuing foreclosures will drag down the economy even further.
A truly comprehensive plan must also benefit ordinary, hard-working Americans, the ones who already are bearing the brunt of Wall Street’s excesses. If it doesn’t, then any new plan is more of the same—-only with more taxpayer money at stake.
By forcing taxpayers to buy abusive and reckless loans from irresponsible lenders,taxpayers are funding a multi-billion dollar subsidy to private corporations. Yet the millions of families who have been unfairly pushed to the financial brink by these mortgages get nothing. Only by preventing the 6.5 million foreclosures expected in the next few years—and the $356 billion drop in surrounding property values that will result for an additional 46 million families—-will the economy begin to recover.
Don’t let anyone tell you the government will be able to prevent foreclosures by buying this troubled debt. Wrong. Mortgages of questionable value have been sold into highly complex securities, which have been carved up and sold to thousands of investors around the world. The government can’t put these Humpty Dumpty slices back together again because it won’t own or even control them all. Bailing out financial institutions is NOT the same thing as providing relief to foreclosure-plagued American families.
Regulators and lawmakers must implement solutions that benefit American families at least as much as banks, or nothing will change. Stopping the flood of foreclosures and adopting common-sense protections against predatory lending are the only lasting solutions.
A plan that addresses root causes must:
Lift the ban on judicial loan modifications. Voluntary loan modifications are not working, as the as mounting crisis attests. Today homeowners are barred from applying for loan changes through the bankruptcy courts if the loan is on their one and only home. Bankruptcy courts provide an existing infrastructure for supervising court-ordered loan modifications and addressing the many hurdles that prevent voluntary modifications. Judicial modifications are the best solution for preventing foreclosures that will drag down the economy further. This provides a fair, targeted way to make a real impact without requiring any tax dollars.
Cap consumer loans at 36% interest. This stops abusive interest rates that push vulnerable families back even further, and it also protects responsible lenders from unfair competition from abusive payday lenders charging 400% interest. This action alone would save America’s working middle class billions of dollars.
Read our 1 page analysis of
why this newest bailout plan for industry won’t allow for large-scale foreclosure prevention.
Judicial Modification of Loans Would Save 600,000 Homes: Purchase of Securities Will Save None
For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Sharon Reuss at (919) 313-8527 or sharon.reuss@responsiblelending.org; or Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org.
###
About the Center for Responsible Lending
The Center for Responsible Lending is a nonprofit, nonpartisan research and policy organization dedicated to protecting homeownership and family wealth by working to eliminate abusive financial practices. CRL is affiliated with Self-Help, one of the nation’s largest community development financial institutions.
Economic Fascism and The United States
Illegal Use of Equity – Average and Normal
If I do not believe in, trust, or support the US Federal Government, my home should not be in jeopardy. The Federal Government, whenever they choose, through the IRS, will take your home if you do not support them. This confiscation of property by the Federal Government is absolutely and unequivocally wrong, and it is illegal.
For the Federal Government to threaten me with stealing my home because I want them to fail, is economic FASCISM.
Let the Federal Government collect it’s taxes but to put my home in peril because of taxes – is ECONOMIC FASCISM.
I want the Federal Government to spend itself into bankruptcy and irrelevance; and it is my patriotic right as a human and and an American to have control over my money to do so.
I believe in local taxes, and local representation of those taxes; to me – the FED is DEAD.
The day a Trident Nuclear submarine pulls into port for salvage and dismantling, because the US Federal Government has no money, will be the day I open a bottle of champagne, and christen my life.
(I will drink it and not smash it on some battleship).
If you would like more information on this please check out this article:
Illegal Use of Equity – Average and Normal
http://www.indymedia.org.uk/en/2008/10/410488.html
http://perth.indymedia.org/?action=newswire&parentview=133033
sent from: fav.or.it