AMERICAblog: Why I'm still concerned about yesterday's vote and its impact on the economy
dances_with_beagles
· 1 year ago
Ok. So how does $700,000,000,000 of taxpayer money free up the credit market? For how long? One week, one month, forever? What will prevent the crisis from recurring? These questions are so simple and I don't think I'm stupid. These questions weren't answered or explained by the Administration or Congress, and is why the bill failed yesterday.
SCLiberal
· 1 year ago
I totally agree and I think most Americans feel this way. The mood out here is ugly. Love your moniker.
ZennButtKicker (tlhwraith)
· 1 year ago
It aint the money, it's psychological. The markets have, and always will be, driven by psychology as much as raw currency. Right now, no one in the international market is seeing any indication the US is doing "anything" to mitigate this problem other than bickering. This is a powerful signal, even if unintentional, and even those lending facilities with the capital to continue liquidity are holding on to it because the risks are high.
So, while the proposal in question sucked, if Congress doesn' get "something" out the door you'll continue to see errosion in the global markets. the clock is ticking and for all of those that voted down the bill yesterday, you've just inherited the timebomb and should be held accountable for pushing forth an alternative ASAP!
Dave of the Jungle
· 1 year ago
The crisis is in the credit markets. The stock market reaction is secondary.
cmpnwtr
· 1 year ago
Markos doesn't know s**t about economics or finance. These people are whistling past their own graveyard because of a political agenda. The far left think it's fine if the financial markets go under because somehow they think it has nothing to do with us. They are idiots.
fostert
· 1 year ago
Agreed. But the Far Right is no better. They would rather prevent any form of socialism than stabilize the credit market. It seems the Centrists are really the only adults in this situation. This kind of validates my theory that the political spectrum is not a line, but a circle with the Far Right and the Far Left meeting at the boundary between communism and fascism.
devlzadvocate
· 1 year ago
Totally agree. I think the far left and far right have met somewhere in an alternate universe on this issue.
shrrrr
· 1 year ago
I usually agree with Markos' political observations but his position surrounding this situation is misguided, to me.
It's frustrating to watch him use his intellectual and political capital this way, as he does not know what he's talking about here. I wish he had deferred to the experts.
PeteWa
· 1 year ago
I laugh that you consider Markos to be on the "far left". lol
SCLiberal
· 1 year ago
The quote from the Boston Globe sounds very familiar. Sounds like someone who had to declare bankruptcy trying to make ends meet, draining savings " to extremely low levels". I've gotten through it. The country can too. Really, all I'm seeing is the economy threatening to take the middle class and show them how the poor and lower classes in this "great nation" have been living with for decades.
lucky hussein
· 1 year ago
ahh, you mean whatever is left of the middle class after 30 yrs of riech-wing rule?
lcdrrek
· 1 year ago
Yesterday, I read a comment on a blog, I think it was on TPM, saying that we shouldn't be judging this "Bailout" with a political viewpoint. I totally agree with that. I have seen well respected Economists on news shows saying that the passage of a bill is of the highest importance. I saw Paul Krugman say that this was a necessity and also a former economic advisor of Clinton's on the Rachel Maddow show last night saying that it was necessary to pass a bill. She stated that one of the main problems in this bill was that it wasn't presented in the correct light and that the public needed to be educated on the need for this bill. She stated that it should have been presented not as a "bailout" but as a "recovery" bill. It is important that the public takes a step back and examines the need for the government to do something right now.
paulbot5
· 1 year ago
We don't have credit because America is in debt, no one saves. The bailout will create credit out of thin air, which is what caused this mess in the first place!
Indigo
· 1 year ago
Reasonable people have reason to be concerned. Grab bag horror shows aren't the best indicator of future performance, though. The Paulson Plan was not ever a paradise and will not ever be a lost paradise. It was a Czarist wet dream at best.
This is the D- correction of a C market that was perceived as a B+ market on Fraternity Row. That's a good thing. A little discomfort, evenly distributed, is about all that's going to happen. The credit freeze will soften but probably not thaw out much for another 6 months. Tightened belts are this winter's fashion.
Once upon a time, in my Depression Era conscious family, personal good times were signaled with pretty wrapping paper for the Christmas presents. In personal tough times, the Christmas presents were carefully wrapped in newspaper. This is a good season to revive that old time, Ma and Pa Kettle practice. Plan to wrap the presents in newspaper this year. Call it Zeitgeist wrapping.
Dave of the Jungle
· 1 year ago
Only a handful of people who comment on this matter in the media seem to understand the radical restructuring and hideous over centralization of global capital flows that has occurred during the Bush era. It takes rare mathematical intuition even to comprehend what the relevant numbers mean.
1970cs
· 1 year ago
Another thing that Sirota said yesterday was that he agreed something has to be done to stop the credit freeze, just not what was being proposed yesterday. Giving $700 billion to the same system that got us here is the equivalent of throwing it out the window because we will be back in exactly the same situation in a couple of months.
There is a better solution.
EmGD
· 1 year ago
Yeah the bailout failure might have serious consequences, but then again you just aren't taking into account how badly House Republicans feelings were hurt by Nancy Pelosi. What about the emotional damage?
WSJ: " There is no one to buy up the busted hedge funds, so government and the taxpayer end up holding the bag" Can someone out there with a firm grasp of the economy explain that one to me? If the hedge funds like the derivatives market largely consists of speculative margin crap, leveraged upon a fraction of genuine stock holdings, why do we -- the tax payers and the gov -- need to hold that bag? Unless the fancy hedge fund shit pile is held by e.g. a state pension fund or something like that, doesn't it just tank and whoever held it goes under? I mean, isn't that how the "wonderfully" deregulated market is supposed to work? Winner win, losers loose? It's clear that "we" may have to do "something" to recapitalize the credit market, but why all these assumptions by the market players (like WSJ) about what, specifically, we have to do? If the hired help on the Hill would sit down and think for a second with Paulson and his lobbyist friends running around scaring the shit out of the sheep, then perhaps they could think outside the box and this could be a blessing in disguise: a New Deal style re-invigoration of a stagnant, rotten economy?
bluestockton
· 1 year ago
The market's bouncing up and down is one reason Joe Biden wasn't entirely wrong when he said that FDR appeared on TV to reassure Americans about the stock market crash. Yes, the Great Depression started with a crash in 1929 when Hoover was president. But even after FDR became president in 1933, the market yo-yo'd through several more recoveries and crashes until the economy finally recovered.
Dave of the Jungle
· 1 year ago
Except there was no TV then.
bluestockton
· 1 year ago
I know, Dave. That's why I said Biden wasn't entirely wrong. That means he was PARTLY wrong--about FDR appearing on TV.
Indigo
· 1 year ago
rewrite: until Pearl Harbor and World War II broke the economic stalemate with war munitions production.
insouciantlad
· 1 year ago
Markos and other left wingers are really moronic on this issue. They come at it in essentially the same mind-numbing way right wingers do...they care about their precious ideology and not the good of the country.
It is for this reason that Obama (a pragmatist through and through) is needed now more than ever.
SCLiberal
· 1 year ago
The "welfare queens" pale in comparison to corporate CEOs. Here's hoping the public finally figures that out.
FunMe
· 1 year ago
That's nice and dandy, and republicanly to be worried but I DO NOT fall for the "sky is falling" aka as FEAR & SCARE tactics now coming from Wall St.
We survived the S&L crisis. We survived the dot com. We will be fine. Things go up and down.
I tend to believe more Economists who have studied LONG-TERM trends than my local financial "advisor". Check out some of the leading University professors who are opposed to the plan from yesterday:
"To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
Chris From Maine
· 1 year ago
dont be fooled by today's rise in the stock market.
After a 777 point drop, if the market DIDNT go up, then it would be a complete disaster. Rich people buy lots of stocks when it crashes, and thats why its up today.
We are still in deep shit. Dont be fooled.
jlassen
· 1 year ago
This is a correction.... markets in general, and specifically the credit market has been out of whack for some time. The LIBOR rate has been at historically low rates over the last 8-12 years. If it goes up in the short term, it is because lending money to large financial institutions is inherently risky right now. Why would it be risky? Because credit markets are beginning to internalize the fact that 20 years of deregulation and a lack of transparency has made it possible for "the best minds in the field" to be completely and utterly wrong... That institutions can be hiding enormous amounts of debt and bad assets....
What is the fix? Buying the assets will not change the system... thus the short term infusion of capitol will not fix the underlying problem. A real move towards banking transparency will. Look what the Japanese do to their banks since their big government bail out for an example of a truly transparent banking system -- In fact, how many Japanese banks failed because of this bad paper? Whats that? None? because the government auditors forced them to acknowledge the risk and the value of those sketchy assets.
I for one am glad that republicans stood up and said no to this bail out. Because my democratic party leadership was willing to hand over a trillion dollars... with no real changes to banking regulation at all. WTF? forget about CEO pay and all the other window dressing. Where was the REAL regulatory reform to go along with this money? Because once they have the money, wall street will turn around and spend it on lobbiests in order to prevent the kinds of regulations that need to be done to ensure this doesn't happen again.
If the economy is truly a global economy, lets get the IMF and theWorld to bail out these financial institutions, instead of the US tax payer. Let the World bank buy up this bad paper if its such a "good deal." Perhaps such a bailout from an international organization could enforce the kinds of transparency on the system that our American political system seems unable to put in place.
ZennButtKicker (tlhwraith)
· 1 year ago
Uh, the international community is already in full bailout mode. Almost every country BUT the US is already implementing comprehensive mitigation strategies to save their financial institutions, including erecting firewalls against further contagion from US institutions. The longer we appear to be unwilling to do anything to stop the hemorrahage, the more other nations can, and will, be forced to isolate us economically.
If you don't believe me, just turn on any financial channel that covers international market. There's a lot of blood in the water but the other countries seem to be pragmatic enough to address the issue rather than take ideological "pure" stances while their entire economy tanks.
aravir
· 1 year ago
I work in the financial industry. I don't say that to pull any kind of rank. Clearly there are a lot of idiots in my business, and I might be one of them. The last time we saw these kind of spreads between short term treasuries and interbank rates like this was right before the 1987 crash. So-called Black Monday, the market fell 508 points. Well, you might say, we did worse yesterday. Wrong. The percentage was 22.6%. The market opened this morning at 10371, and is trading at 10706 as I write this. Let's say it keeps that gain, and has a similar crash as 1987 tomorrow. Tomorrow, the market will close at 8286. Now, I don't think that's happening tomorrow. Because I think the Senate will pass the bill, which will put it off a bit. But if House Democrats start to play games like the House Republicans did, all bets are off. Does that mean we should care? Not everyone has money in the stock market. True. But if nobody can get loans of any kind, and that's where we are today, the economy will collapse. Soon and brutally. So, add some bells and whistles, by all means. Take FDIC coverage up to $250,000. Add something else that helps voters without killing the bill. But don't play games. One thing about the whole Shock Doctrine theory which people are missing right now is that it is morally wrong to behave that way. We don't adopt the tactics, in this case, of the other side. We perform triage, and fix the real problems later. Right now, the Republicans own this disaster. Anyone who thinks we can't come back in January, and get public support for a more progressive package is thinking small. We will win, and win big. And then we will have the credibility to do something special. Let's not blow it.
caphillprof
· 1 year ago
you have to do it now. later never comes.
aravir
· 1 year ago
Yes it does. The Republican philosophy which has been dominant since Reagan's time is finally dead. I left the GOP over trickle-down economics in 1980. Believe me, if I didn't think it was dead, I would be less patient.
met00
· 1 year ago
Sorry, but I would rather fix the fundamentals that were destroyed by Gramm than bail out the symptom.
I would rather:
1) Re-regulate (bring back FDR's regulation) and oversight. 2) Create a $70 Billion liquidity fund for business loans for businesses that are 3 years old or older that have yearly gross sales revenues of $250,000 to $5,000,000 where they can borrow up to $50K at prime. 3) Invest an immediate $70 Billion into green startups (any new company that wants to enter green technology) 4) start a WPA for $5 billion a month 5) Invest $70 Billion into a national healthcare system that allows anyone without insurance to join Medicare 6) Put in a RTC and do the S&L thing for any banks that fail 7) Increase depositor insurance to $250K to reduce runs at the bank.
For a price tag of 30% of what is being asked I would start to cover the costs and expenses of the middle class. I would start to support the BASE of the pyramid. I would create employment for those that want to work by having a WPA rebuild our infrastructure. I would directly face the cause of most of the BKs and foreclosures (healthcare, as Moore points out) by creating a health care safety net to cover those that need it. I would invest in small business so they can survive the downturn. And of course re-regulate the unregulated so they can't create this mess again while providing a way to catch those that do fail and protect depositors.
Will the markets take a hit? Yes. But by stablizing the base rather than a $750 billion dollar giveaway to the crooks that created the mess, in the long term we will solve the problem, not cover up the symptom.
And for the record, Krugman actually prefers this form of bailout over a capital giveaway.
So let's stop crying like chickens with our head cut off about WMDs in the economy and let the gamblers take their lumps for playing fast and lose in a wild west without rules and oversight, correct the problems that allowed that and protect the people at the bottom.
lucky hussein
· 1 year ago
The WPA was build for 300 billion in today's dollars. Imagine!
met00
· 1 year ago
consider what we are spending in Iraq. if 1/2 of that per month was being spent here on a WPA doing infrastructure projects... what a difference.
Plisko
· 1 year ago
Let it burn.
Let the corporate titans fall, lets take our lumps and lets force America to take a long hard look in the mirror and think about how important it is to pay attention to what their government is doing. What could be more patriotic?
Half this country deserves to loose their jobs and worry about their families because they have been walking around in a bubble for the past 20 years talking about blowjobs, Brittany, banning gay marriage and which politician they want to drink a beer with.
Without pain, this crisis won't seem real to people. It's like a war you only watch on TV. It is easy to forget about sacrifice and change and go right back into old patterns. There is never the political will to make the big needed changes in the system. Without pain, there is just more of the same.
lucky hussein
· 1 year ago
All you people should not be bashing Markos or the 'far left' - you don't have a clue as to what Sirota is saying or Markos. Read thier posts, they are NOT saying there is no crisis - they differ in how to deal with it, and they are not as concerned about the stock market.
Money in the stock market is NEVER that same as 'money in your pocket'.
For the past 30 years, the reich-wing has moved the definitions of right vs left, so the 'middle point' ends up being far-right. Why do that? So that all the lemmings that 'just want to be safe' or say 'well, I don't know, I just want to be in the middle...' and they end up on the right. Think first! Postiion yourself later, if at all. The value of something is not neccesarily what it's price is...
lynne
· 1 year ago
We don't have time to take to reregulate right now.
However, you are wrong, John, on at least one thing. 1) the points made at dKos and other liberal sites is that there are other GREAT or more tried and true alternatives to getting the credit crisis fixed or alleviated that won't hose us in the long run, and by never even asking or consulting or discussing these, there's been serious failure in the House. Second, they aren't saying it's not a crisis, or that the DOW is the sole reason that they feel like we have breathing room to fix this. It's that we MUST take some breathing room to fix this - and fix it right.
We could start by nationalizing some of the failing banks rather than just handing them money...
Of course, Bush and the Repubs might obstruct, but they are up against the same horrible pressure that got us here to this place, so I suspect you could actually force the Decider not to veto something coming out of Congress Thursday/Friday that is a progressive solution. Because by the end of the week we WILL be in total crisis, I think, for the reasons you state.
lynne
· 1 year ago
Oh and the "we dont have time to reregulate" was sort of in response to met00. A lotta liberals are like, we need to make this crisis about the long term fix!. But we don't have time for that.
met00
· 1 year ago
what is the core problem? solve that. Throwing $350 billion and then another $100 billion and then another $300 billion to Wall Street DOES NOT fix the problems that created the "crisis"
Immediate: 1) open credit by guaranteeing it to small business 2) stop runs by assuring people that their money is safe 3) Create a mechanism for having a safety net for bank failures
Mid term: 4) regulate and oversight 5) create a safety net for the people a) health care safety net b) employment safety net
long term: 6) Invest in future technology/business
"What about my 401(k)?" Unless you plan on pulling it out tomorrow, thinking long term is in your best interests. And if you do plan on pulling it out tomorrow and you have been building it for the last 20 years or so, well based on what you put in, it's still way up.
So, besides the loosening of the credit markets, just what is the "crisis" that requires $700 billion (and at $700 billion, why not just write checks to every taxpayer for $10K each and let consumerism save the day? It would be a hell of a lot cheaper.)
roooth
· 1 year ago
Yeah, we had to rush into Iraq too. We had to hurry and pass the Patriot Act without reading it. We had to quickly ship 9 billion to Iraq in cash, on pallets in the bays of military cargo planes to hand out to the Iraqis. We had to hurry and suspend minimum wage and hand out billions in no-bid contracts to rebuild the Gulf after Katrina.
We don't have the resources to rush anymore without a long, cold, hard look. To paraphrase from one of my favorite movies, "A Few Good Men", "my feeling is that if this...is handled in the same fast-food, slick-ass ' Persian Bazaar manner with which (Bush) seems to handle everything else, something's gonna get missed."
lynne
· 1 year ago
Er, and "serious failure in the House" should read somethign like "serious failure of Dem leadership in the House"
palmtree1
· 1 year ago
The survey of articles on the implications of the credit market freeze is excellent. The voices of anger and irresponsbility on either side, whether driven by delusions that the not-so-fee market will make it all ok or by equally lurid delusions that somehow a more just society will emerge after a depression must both be overcome by reason. The harsh reality is that the Fed and Treasury are in the process of spending $630 billion without the bail-out, so anyone thinking that this vote 'saved' some money is ill-informed or just willfully stupid.
The arguments advocating the 'let it fall' point of view are simply a further indictment of the US educational system and of those who refuse to learn more.
lynne
· 1 year ago
Can I also just say, how surreal this all is, all this disagreement between liberal and liberal, and conservative and conservative?
The sites I frequent (or write), I find myself nodding when some of the conservatives say stuff, and shaking my head when some of the liberals say stuff, and agreeing with others on both sides, and this is all really fucking with my head.
Just goes to show you how pooched up this really is, if progressives can't come to some sort of consensus at all about this crisis, or the bill from yesterday...
JJF
· 1 year ago
Thanks for your concern, John. I'm concerned too. I don't know how close we are to the brink, but I know there are a lot of trustyworthy experts who are concerned, and I think it's stupid to ignore them.
The lack of concern among many lefty bloggers is, frankly, shocking. I've lost a lot of respect for some people who I've been a fan of for past few years.
Anyone who argues that stocks going up today is proof there is no crisis is akin to wingnuts arguing that a cold day is proof that global warming is not happening.
aquarius2
· 1 year ago
I keep saying WILL SOMEONE, ANYONE inject the truth into this bail out package scenario. Everybody seems split on what is honest and true and what is a scare tactic. Economists, right side, left side all are at each others throats. Ordinary folk, like me, are trying to figure out what the hell is going on.
SociologistTina
· 1 year ago
I'm as confused as the next person as to what it all means, but I think that Michael Moore's comments are reason for pause:
This is what happens when you have a perfect storm: ideologues nominate George Bush because he has name recognition and not much else, Congress disables the FDR banking legislation allowing greed to run rampant, Republicans decline regulatory enforcement--no antitrust or fraud investigations at justice, no SEC oversight, no banking oversight, no monetary oversight; neo-cons lie our way into a war in Iraq, then continue lying about most everything--Valerie Plamb, Katrina, Bin Laden, and now nobody is in place with any credibility as a leader, nobody is in place with any credibility as a truth teller. You're wishing too much to expect congressmen to vote against the overwhelming wishes of their constituencies, particularly when we are within 5 weeks of a general election. John, you picked the wrong time for your financial meltdown.
roooth
· 1 year ago
Well, well, well, surprise, suprise - the people charging interest are starting to raise prices faster than a gas station after a hurricane.
"When there's blood in the streets, there's money to be made."
armoderate
· 1 year ago
If the bail out does not occur what will happen is that the U.S. will have to pay additional interest premium to entice those with wealth to loan it to us. That means the prime interest rate would rise probably significantly and any loan or credit card interest terms would follow suit. Do people remember the 1980's when interest rates for mortgages were 12 to 14%? It could happen. If credit card interest percents go up by 4% and the average American household is carrying $8,000 in credit card debt, that will be a significant hit to disposable income. Get the picture.. a very deep recession.
KarenK_from_LA
· 1 year ago
Thank you for your intelligent column and excellent round up of commentary. I am appalled at how much the lefty blogosphere is fueling the fire on rejecting the bailout plan, particularly when they do not understand the underlying economic fundamentals.
"Sure, I guess if you're 20 it's not a big deal to shrug and say - Let it all burn! Who cares if there's another recession?"
But if you're middle-aged or older and have been diligently saving and denying the luxuries so you can put away a nest egg for retirement, this is devastating. My mother and mother-in-law lived through the Great Depression and they have vivid memories of lost businesses, banks closing and many nights when they went hungry because there wasn't enough for dinner.
Let's stop the irresponsibility and listen to reason!
MNUSA
· 1 year ago
I found your column informative. I'm against the bail-out as is, not because I don't believe one is necessary. But, how are we going to pay the $700 billion back? Perhaps they need to add a method of paying back the money to the original bill. I don't think we should just take on additional debt and leave it to the next president as to how to pay off the debt. Maybe if we started paying for what we're spending, we'd have more of a concept of what things really cost. The Repubs never want new taxes, they just want to spend.
All Comments
Love your moniker.
So, while the proposal in question sucked, if Congress doesn' get "something" out the door you'll continue to see errosion in the global markets. the clock is ticking and for all of those that voted down the bill yesterday, you've just inherited the timebomb and should be held accountable for pushing forth an alternative ASAP!
It's frustrating to watch him use his intellectual and political capital this way, as he does not know what he's talking about here. I wish he had deferred to the experts.
This is the D- correction of a C market that was perceived as a B+ market on Fraternity Row. That's a good thing. A little discomfort, evenly distributed, is about all that's going to happen. The credit freeze will soften but probably not thaw out much for another 6 months. Tightened belts are this winter's fashion.
Once upon a time, in my Depression Era conscious family, personal good times were signaled with pretty wrapping paper for the Christmas presents. In personal tough times, the Christmas presents were carefully wrapped in newspaper. This is a good season to revive that old time, Ma and Pa Kettle practice. Plan to wrap the presents in newspaper this year. Call it Zeitgeist wrapping.
There is a better solution.
http://thesebastards.blogspot.com/
It is for this reason that Obama (a pragmatist through and through) is needed now more than ever.
We survived the S&L crisis. We survived the dot com. We will be fine.
Things go up and down.
I tend to believe more Economists who have studied LONG-TERM trends than my local financial "advisor". Check out some of the leading University professors who are opposed to the plan from yesterday:
http://faculty.chicagogsb.edu/john.cochrane/res...
"To the Speaker of the House of Representatives and the President pro tempore of the Senate:
As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.
For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.
After a 777 point drop, if the market DIDNT go up, then it would be a complete disaster. Rich people buy lots of stocks when it crashes, and thats why its up today.
We are still in deep shit. Dont be fooled.
What is the fix? Buying the assets will not change the system... thus the short term infusion of capitol will not fix the underlying problem. A real move towards banking transparency will. Look what the Japanese do to their banks since their big government bail out for an example of a truly transparent banking system -- In fact, how many Japanese banks failed because of this bad paper? Whats that? None? because the government auditors forced them to acknowledge the risk and the value of those sketchy assets.
I for one am glad that republicans stood up and said no to this bail out. Because my democratic party leadership was willing to hand over a trillion dollars... with no real changes to banking regulation at all. WTF? forget about CEO pay and all the other window dressing. Where was the REAL regulatory reform to go along with this money? Because once they have the money, wall street will turn around and spend it on lobbiests in order to prevent the kinds of regulations that need to be done to ensure this doesn't happen again.
If the economy is truly a global economy, lets get the IMF and theWorld to bail out these financial institutions, instead of the US tax payer. Let the World bank buy up this bad paper if its such a "good deal." Perhaps such a bailout from an international organization could enforce the kinds of transparency on the system that our American political system seems unable to put in place.
If you don't believe me, just turn on any financial channel that covers international market. There's a lot of blood in the water but the other countries seem to be pragmatic enough to address the issue rather than take ideological "pure" stances while their entire economy tanks.
Now, I don't think that's happening tomorrow. Because I think the Senate will pass the bill, which will put it off a bit. But if House Democrats start to play games like the House Republicans did, all bets are off.
Does that mean we should care? Not everyone has money in the stock market. True. But if nobody can get loans of any kind, and that's where we are today, the economy will collapse. Soon and brutally.
So, add some bells and whistles, by all means. Take FDIC coverage up to $250,000. Add something else that helps voters without killing the bill. But don't play games.
One thing about the whole Shock Doctrine theory which people are missing right now is that it is morally wrong to behave that way. We don't adopt the tactics, in this case, of the other side. We perform triage, and fix the real problems later. Right now, the Republicans own this disaster. Anyone who thinks we can't come back in January, and get public support for a more progressive package is thinking small. We will win, and win big. And then we will have the credibility to do something special.
Let's not blow it.
I would rather:
1) Re-regulate (bring back FDR's regulation) and oversight.
2) Create a $70 Billion liquidity fund for business loans for businesses that are 3 years old or older that have yearly gross sales revenues of $250,000 to $5,000,000 where they can borrow up to $50K at prime.
3) Invest an immediate $70 Billion into green startups (any new company that wants to enter green technology)
4) start a WPA for $5 billion a month
5) Invest $70 Billion into a national healthcare system that allows anyone without insurance to join Medicare
6) Put in a RTC and do the S&L thing for any banks that fail
7) Increase depositor insurance to $250K to reduce runs at the bank.
For a price tag of 30% of what is being asked I would start to cover the costs and expenses of the middle class. I would start to support the BASE of the pyramid. I would create employment for those that want to work by having a WPA rebuild our infrastructure. I would directly face the cause of most of the BKs and foreclosures (healthcare, as Moore points out) by creating a health care safety net to cover those that need it. I would invest in small business so they can survive the downturn. And of course re-regulate the unregulated so they can't create this mess again while providing a way to catch those that do fail and protect depositors.
Will the markets take a hit? Yes. But by stablizing the base rather than a $750 billion dollar giveaway to the crooks that created the mess, in the long term we will solve the problem, not cover up the symptom.
And for the record, Krugman actually prefers this form of bailout over a capital giveaway.
So let's stop crying like chickens with our head cut off about WMDs in the economy and let the gamblers take their lumps for playing fast and lose in a wild west without rules and oversight, correct the problems that allowed that and protect the people at the bottom.
Let the corporate titans fall, lets take our lumps and lets force America to take a long hard look in the mirror and think about how important it is to pay attention to what their government is doing. What could be more patriotic?
Half this country deserves to loose their jobs and worry about their families because they have been walking around in a bubble for the past 20 years talking about blowjobs, Brittany, banning gay marriage and which politician they want to drink a beer with.
Without pain, this crisis won't seem real to people. It's like a war you only watch on TV. It is easy to forget about sacrifice and change and go right back into old patterns. There is never the political will to make the big needed changes in the system. Without pain, there is just more of the same.
Money in the stock market is NEVER that same as 'money in your pocket'.
For the past 30 years, the reich-wing has moved the definitions of right vs left, so the 'middle point' ends up being far-right. Why do that? So that all the lemmings that 'just want to be safe' or say 'well, I don't know, I just want to be in the middle...' and they end up on the right. Think first! Postiion yourself later, if at all. The value of something is not neccesarily what it's price is...
However, you are wrong, John, on at least one thing. 1) the points made at dKos and other liberal sites is that there are other GREAT or more tried and true alternatives to getting the credit crisis fixed or alleviated that won't hose us in the long run, and by never even asking or consulting or discussing these, there's been serious failure in the House. Second, they aren't saying it's not a crisis, or that the DOW is the sole reason that they feel like we have breathing room to fix this. It's that we MUST take some breathing room to fix this - and fix it right.
We could start by nationalizing some of the failing banks rather than just handing them money...
Of course, Bush and the Repubs might obstruct, but they are up against the same horrible pressure that got us here to this place, so I suspect you could actually force the Decider not to veto something coming out of Congress Thursday/Friday that is a progressive solution. Because by the end of the week we WILL be in total crisis, I think, for the reasons you state.
Immediate:
1) open credit by guaranteeing it to small business
2) stop runs by assuring people that their money is safe
3) Create a mechanism for having a safety net for bank failures
Mid term:
4) regulate and oversight
5) create a safety net for the people
a) health care safety net
b) employment safety net
long term:
6) Invest in future technology/business
"What about my 401(k)?" Unless you plan on pulling it out tomorrow, thinking long term is in your best interests. And if you do plan on pulling it out tomorrow and you have been building it for the last 20 years or so, well based on what you put in, it's still way up.
So, besides the loosening of the credit markets, just what is the "crisis" that requires $700 billion (and at $700 billion, why not just write checks to every taxpayer for $10K each and let consumerism save the day? It would be a hell of a lot cheaper.)
We don't have the resources to rush anymore without a long, cold, hard look. To paraphrase from one of my favorite movies, "A Few Good Men", "my feeling is that if this...is handled in the same fast-food, slick-ass ' Persian Bazaar manner with which (Bush) seems to handle everything else, something's gonna get missed."
The arguments advocating the 'let it fall' point of view are simply a further indictment of the US educational system and of those who refuse to learn more.
The sites I frequent (or write), I find myself nodding when some of the conservatives say stuff, and shaking my head when some of the liberals say stuff, and agreeing with others on both sides, and this is all really fucking with my head.
Just goes to show you how pooched up this really is, if progressives can't come to some sort of consensus at all about this crisis, or the bill from yesterday...
The lack of concern among many lefty bloggers is, frankly, shocking. I've lost a lot of respect for some people who I've been a fan of for past few years.
Anyone who argues that stocks going up today is proof there is no crisis is akin to wingnuts arguing that a cold day is proof that global warming is not happening.
http://www.michaelmoore.com/words/message/index...
Definitely something to consider.
"When there's blood in the streets, there's money to be made."
"Sure, I guess if you're 20 it's not a big deal to shrug and say - Let it all burn! Who cares if there's another recession?"
But if you're middle-aged or older and have been diligently saving and denying the luxuries so you can put away a nest egg for retirement, this is devastating. My mother and mother-in-law lived through the Great Depression and they have vivid memories of lost businesses, banks closing and many nights when they went hungry because there wasn't enough for dinner.
Let's stop the irresponsibility and listen to reason!