Sunday, September 28, 2008

Crunch Time

House GOP leaders are mulling the bailout over. They have been for 2 hours.

It's unknown at this hour if the votes are there. The GOP rank and file just isn't buying this right now. We may not know until tomorrow when the vote is taken. Democrats are saying they will not walk off the cliff without the GOP votes.

Anyone who votes for this bill is going to lose 10 points in the polls. For a lot of the House, that will cost them their jobs on both sides as it should.

We'll see.

A Roubini Primer

I've been talking about economist Dr. Nouriel Roubini for quite some time now. I've been reading his website since early last year, and as more and more of his dire predictions have come true I've been posting about the basics behind the economic disaster we're now facing. He's a former Clinton-era Treasury Department economist turned academic who warned the world about the US housing depression back in 2004. Making a career of studying the characteristics of collapsing emerging markets, he noticed the same warning signs in the US economy.

He presented his findings to the economic world in early 2006. He was ignored then.

He is no longer ignored now. Digby has an excellent post on Roubini and his history and his take on the bailout...and how the Bushies have ignored him totally.
If that's true, then this plan will end up being an economic Iraq. And just as people who said "No Blood For Oil" were told to sit down and shut up or risk having the boogeyman use drone planes to create mushroom clouds in shopping malls, those who are saying today, "no bail out for the rich" are similarly being told that the global economy will suffer a nuclear meltdown if the government doesn't spend this enormous amount of money. And just like then, this all happened in the few short weeks between September and November in a major election year.

We don't know if there are financial WMDs out there. Certainly, enough people think there are that you can't dismiss it. But when the experts who have been predicting the WMD say that the plan to rid the world of them is fatally flawed and won't cure the problem, then they should be listened to. And unfortunately, that won't happen. We're listening to the usual suspects who have always been wrong about everything. And the results are likely to as good as they always are.

I'm not expert in these matters, but the more I read, the less I'm sanguine that this huge giveaway is designed to do anything but constrict the next president from being able to successfully intervene in the recession. The money will be gone, the problem will be growing and there will be fewer tools available to adequately stimulate the economy.
Read the whole thing.

The Calls Are Getting Louder

...for Sarah Palin to resign from McSame's ticket.
Will someone please put Sarah Palin out of her agony? Is it too much to ask that she come to realize that she wants, in that wonderful phrase in American politics, "to spend more time with her family"? Having stayed in purdah for weeks, she finally agreed to a third interview. CBS's Katie Couric questioned her in her trademark sympathetic style. It didn't help. When asked how living in the state closest to Russia gave her foreign-policy experience, Palin responded thus:

"It's very important when you consider even national-security issues with Russia as Putin rears his head and comes into the airspace of the United States of America. Where—where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to—to our state."

That's Newsweek's Fareed Zakaria taking her apart. It gets worse.
Can we now admit the obvious? Sarah Palin is utterly unqualified to be vice president. She is a feisty, charismatic politician who has done some good things in Alaska. But she has never spent a day thinking about any important national or international issue, and this is a hell of a time to start. The next administration is going to face a set of challenges unlike any in recent memory. There is an ongoing military operation in Iraq that still costs $10 billion a month, a war against the Taliban in Afghanistan and Pakistan that is not going well and is not easily fixed. Iran, Russia and Venezuela present tough strategic challenges.
I honestly think she'll resign before Thursday's debate. She has to or McSame loses in a landslide. They have to know that Biden won't defeat her, she'll simply defeat herself.

I give her until Tuesday, maybe Wednesday at the latest. But if she's not off the ticket by then, Obama wins in a wipeout. Believe me, the McSame team is making calls right now to line up a successor. She will give family reasons: Trig's health, her daughter's pregnancy, Troopergate, a sick moose somewhere near Nome, I have no clue what it'll be but more than ever I believe she's off the ticket. It's a question of days now. The media is in open revolt against her. Palin is under total lockdown now, they've turned on her and Palin's numbers have dropped precipitously after those interviews, especially the Katie Couric one.

But voters are now apparently having doubts. A CNN/Opinion Research Corp. survey released yesterday found that while 47 percent of likely voters believed that Palin had the personality and leadership qualities a president should have, 49 percent said she didn't.

Compare that with her Democratic counterpart Joe Biden: 55 percent said he had the necessary qualities, while only 39 percent said he did not. Both Barack Obama and John McCain had 62 percent of voters believing they have what it takes to be president.

It's time to start seriously gaming ahead here on who McSame would get to replace her.

My money's still on Lieberman.

Under The Radar

Oh, and while we were busy Saturday, Congress quietly passed a $630 billion omnibus spending bill that includes that $25 billion for the big 3 automakers, among other things.

Congress on Saturday agreed to finance a $25 billion loan package to help troubled auto makers as part of a mammoth spending bill that will keep the government running until early March 2009.

The U.S. Senate approved the more than $630 billion spending bill 78-12. The bill was needed to finance defense, education, farm, health, foreign aid and other government programs after the current fiscal year expires on Sept. 30.

The House passed the legislation earlier this week and it now heads to the White House for President Bush's signature.

Congress passed the bill as lawmakers continued negotiations on a $700 billion bailout for Wall Street that lawmakers say is needed to free up credit markets and avert a steep economic downturn.

The spending legislation allows a ban on offshore drilling to expire on Sept. 30. Democrats had hope to extend the ban, but did not have the votes in the face of stiff opposition from Republicans.

The bill sets aside $7.5 billion in taxpayer funds needed to guarantee $25 billion in low-interest loans to help struggling General Motors , Ford Motor and Chrysler produce more fuel-efficient cars and trucks.

Congress rushed to pass the massive spending bill before the new fiscal year begins Oct. 1 because lawmakers failed to approve any of the 12 spending bills Congress needs to act on every year to fund the government operating.

So, you can add all this to the pyre too. While America is slowly roasting alive over the smell of pork, it's time to start asking yourself what you need to cut in your life.

Get your things in order, folks. You don't want to have debt in the months ahead.

Weekend Wheeling And Dealing

Once again everyone's saying there will be a deal by tonight and even a vote, but that deal won't include any help for homeowners.
House Democrats say the idea of letting judges rewrite mortgages to help bankrupt homeowners avoid foreclosure won't be a part of the $700 billion financial industry bailout.

Speaker Nancy Pelosi, D-Calif., told Democrats at a closed-door meeting Friday evening the provision would be a deal-breaker for Republicans who she has said must deliver substantial votes for the rescue plan. That's according to several lawmakers who attended the session.

Democratic presidential nominee Barack Obama had said earlier that the measure didn't belong in the bailout.

Nor did I expect that measure to pass; it depended on the Democrats, you know, not folding.

Washington Post this morning has more.

A senior administration official, who requested anonymity to speak freely about the plan, said both sides had made significant concessions to achieve compromise. The Bush administration has agreed to accept a number of Democratic demands, including:

· The money would be dispersed in segments, with Paulson receiving $250 billion immediately, $100 billion upon White House certification of its necessity and the final $350 billion only after Congress has been given 15 days to object.

· Firms participating in the bailout would be required to grant the government warrants to obtain nonvoting shares of stock, so taxpayers can benefit if the companies return to profitability.

· Firms taking advantage of the bailout would be required to limit compensation for senior executives, with especially severe limits on "golden parachutes" at failing firms. The compensation limits will be enacted primarily, but not solely, through the tax code by reducing tax deductions for firms that pay executives more than $400,000 a year.

The administration also agreed to Democratic demands that the financial services industry should help pay for the program. Under the agreement, the president would be required to propose a fee on the industry if the government has not recovered its money through sales of the assets within five years.

Democrats also made a number of concessions, abandoning demands that bankruptcy judges be empowered to modify home mortgages on primary residences for people in foreclosure. They also agreed not to dedicate a portion of any profits from the bailout program to an affordable housing fund that Republicans claimed would primarily assist social service organizations that support the Democratic Party, the official said.

Meanwhile, House Republicans won a major victory, persuading negotiators to include a provision that would require the Treasury Department to create a federal insurance program that would guarantee banks and other firms against loss from any troubled asset, the official said.

Again, those last two paragraphs are the ones that bother the hell out of me. They are the GOP's doings and they are terrible. What do they mean to you and me?
  1. No direct help for homeowners in this bill. More people will lose their homes and will continue to lose their homes as real estate prices plummet.
  2. The "insurance program" now puts taxpayers on the hook for the loss of "any troubled asset" on the books. We just nationalized the losses on the financial sector and privatized the profits. And with dropping housing prices and dropping commercial and industrial real estate prices, that's going to be a tremendous amount of losses the American taxpayer is going to be on the hook for.
  3. When the losses do pile up and the government has to make good on the insurance, the only way out is hyper-inflation and the death of the dollar.
This is horrendous, folks. Please, please somebody stop this bill.

[UPDATE] That physically ill feeling is back. From the NY Times article:
A senior administration official who participated in the talks said the deal was effectively done. “I know of no unresolved open issues for principals,” the official said.

In announcing a tentative agreement, lawmakers and the administration achieved their goal of sending a reassuring message ahead of Monday’s opening of the Asian financial markets.

Lawmakers, especially in the House, are also eager to adjourn and return home for the fall campaign season.

Among the last sticking points was an unexpected and bitter fight over how to pay for any losses that taxpayers may experience after distressed debt has been purchased and resold.

Democrats had pushed for a fee on securities transactions, essentially a tax on financial firms, saying it was fitting that they contribute to the cost.

In the end, lawmakers and the administration opted to leave the decision to the next president, who must present a proposal to Congress to pay for any losses.

Officials said they had also agreed to include a proposal by House Republicans that gives the Treasury secretary an additional option of issuing government insurance for troubled financial instruments as a way of reducing the amount of taxpayer money spent up front on the rescue effort.

We're about to be on the hook for trillions. Wall Street will be fine. That insurance will protect them. The American Taxpayer? Nobody's protecting them.



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