Monday, September 29, 2008
On the news shows tonight the Village is decimating Congress. On Hardball, Tweety is yelling at Republican Rep. Darrel Issa that Congress failed the American people here, and that McSame looks like a complete idiot now (which is the real problem, because if Obama runs away with this election, the Village has no clout to shape the narrative, and they HATE that.)
It's crazy. The Village is basically going WHAT THE HELL ARE YOU MORONS DOING?!?! (a 777 point drop in the Dow will do that.)
If the people hate the bill, and the bill fails, isn't that the will of the people? Not since the Village doesn't give a damn about the people...what do THEY matter? WE liked the Failout bill. WE wanted our stocks to go up. YOU guys screwed it up.
So the Village is going to kill them.
U.S. lawmakers rejected a $700 billion bailout plan for the financial industry in a shock vote that sent global markets sliding as the world credit crisis claimed more banks.At least for now the bailout is dead. Dow's off over 500. NASDAQ and S&P 500 are both down 6% and falling.
By a vote of 228-to-205 the House of Representatives rejected a compromise plan that would have allowed the Treasury Department to buy up toxic debt from struggling banks.
The plan's defeat sent U.S. stocks down sharply, with the Dow Jones industrial average briefly falling more than 700 points, its biggest intraday drop ever.
Shares had already been under pressure following sharp declines in Asian and European shares on fears the crisis was spreading. Global money markets remained frozen, even as central banks poured in cash in an attempt to boost liquidity.
The Crash of '08 is here, and here there be dragons. We're off the map, kids.
Now the fun really begins.
Meanwhile, the Fed is pumping billions into the credit markets and not waiting for Congress to finish with the blaming and the hate and the stabbing and the fire.
And it's doing NOTHING. The LIBOR is at 5.24%, TED Spread at 3.37%. It's over. Hopefully the pain this causes will be an excellent motivator to come up with a REAL PLAN THAT WILL WORK.
Under one new step, the Fed will boost the amount of 84-day cash loans available to U.S. banks. The Fed is increasing the amount to $75 billion, up from the current $25 billion starting on Oct. 6. Banks bid on a slice of the loans at an auction.
That move will triple the supply of 84-day loans to $225 billion, from $75 billion, the Fed said.
Meanwhile, the Fed will continue to make $75 billion worth of shorter, 28-day loans available to banks.
All told, the total amount of cash loans -- 84-day and 28-day -- available to banks will double to $300 billion from $150 billion, the Fed said.
Moreover, the Fed made an extra $330 billion available to other central banks. That boosted to $620 billion the total amount available to the central bank through currency "swap" arrangements, where dollars are traded for their currencies. That total is up from $290 billion previously being made available through such arrangements.
Having said that, the GOP leadership is not blaming the GOP rank and file, they are blaming...Nancy Pelosi! (She was mean.) This keeps getting better.
Just, you know, my job.
[UPDATE] House GOP buried the bailout. Dow off 700 just after the vote, now off 450 or so. It's chaos.
"Now what?", the universe asked, breathlessly.
"I don't have a clue," the universe replied.
GO HOUSE REPUBLICANS! (Damn, that feels weird.)
Democratic presidential nominee Barack Obama plans to return to the Senate this week so he can vote for the Wall Street bailout package.And if McSame gets away with this, as in the Democrats let him get away with this, then he deserves to win, and Obama deserves to lose.
The Illinois senator is expected to support the plan, but hasn't committed yet since he's still examining the details. The $700 billion compromise legislation is up for a vote Monday in the House, with the Senate vote expected as early as Wednesday.
A spokesman for John McCain said the Republican nominee plans to be in Washington and hopes he'll be able to vote, depending on the schedule.
OH GOD YES. Let's have America see more of unscripted, uncontrolled Sarah Palin. Let it all hang out Thursday. I mean the McSame camp is already telling VP debate moderator Gwen Ifill how to do her job, so it's not like they come across as completely terrified of this and the end of the McSame campaign should she totally foul this up.
With respect to his campaign, McCain needs to liberate his running mate from the former Bush aides brought in to handle her — aides who seem to have succeeded in importing to the Palin campaign the trademark defensive crouch of the Bush White House. McCain picked Sarah Palin in part because she’s a talented politician and communicator. He needs to free her to use her political talents and to communicate in her own voice.
I’m told McCain recently expressed unhappiness with his staff’s handling of Palin. On Sunday he dispatched his top aides Steve Schmidt and Rick Davis to join Palin in Philadelphia. They’re supposed to liberate Palin to go on the offensive as a combative conservative in the vice-presidential debate on Thursday.
That debate is important. McCain took a risk in choosing Palin. If she does poorly, it will reflect badly on his judgment. If she does well, it will be a shot in the arm for his campaign.
In the debate, Palin has to dispatch quickly any queries about herself, and confidently assert that of course she’s qualified to be vice president. She should spend her time making the case for McCain and, more important, the case against Obama. As one shrewd McCain supporter told me, “Every minute she spends not telling the American people something that makes them less well disposed to Obama is a minute wasted.”
So please, let's see more Palin out there. Daily. Reminding us of McSame's better judgment. And when THAT falls on its face, let's remind people of the people who said McSame's judgment was GOOD.
Late update: The report also describes the stonewalling the investigation received in trying to gather information on the removals. Specifically, it mentions a "fact memo" created for Alberto Gonzales by the DOJ's Office of Legal Counsel, which outlined the events chronologically, using a draft written by Michael Scudder, associate White House Counsel. Investigators were refused the timeline by the OLC who claimed they were ordered not to release it by the White House Counsel's office.
This just keeps getting worse. Will an Obama administration follow up on this?
[UPDATE] Could it be Mukasey actually doing his job?
So now, any time Obama wants to do anything, the GOP will say "TAX AND SPEND LIBERAL! HE BAILED OUT WALL STREET! MORE SOCIALISM!" and will Heroically Resist.
If the GOP sucessfully hangs this around the necks of Pelosi, Reid, Bush and Obama then there is nothing Obama will be able to do. The GOP will just say BAILOUT and block it and the Bush Dog Democrats (they'll still be around) will join them.
Digby has more.
The argument over this bailout is going to be with us for a long time to come and unless Democrats play this right, they are going to wind up holding the bag. The "populist Republican" meme is alredy out there and starting to take hold. They've bet on this economy getting very bad and being able to blame the hated Bush and Clinton for causing it and then blame the Democrats for throwing money at the problem and failing to solve it.Boehner and Blunt aren't going to do a damn thing to get votes. They are going to force the Dems to vote for this and hang themselves in the House. They figure they have the people on their side in a populist revolt and they are correct. Some folks that I normally would think would be able to see the trap aren't noticing it at all and the Dems are about to get squashed.
Why would the Democrats let them do that?
Right now I'm watching Pelosi and Reid, Frank and Dodd stand there all by themselves taking "credit" for this bill. They are handing out plaudits to all the others who "helped" them get it done like members of "the Hills" at the MTV awards.
The optics are all wrong. If they really feel they have to do this thing each one of them should have a Republican under each arm every time they make an announcement.
The House GOP knows that whoever's in power is going to be an extremely unpopular President because of the economic meltdown, and they'll will be running away from them the whole time, McCain or Obama. There will be Congressional hell to pay come 36 days for any House member who votes for this. I see it. The GOP sees it. The Dems? The Dems think they'll still be in control of the House come January.
If the House GOP hangs this on their necks, they very well may not be come January. Anyone who votes for this bailout is not safe in the House, and the people are seeing the GOP "fight the bailout". This is a game-changer vote. You'd better believe 4 weeks of "Bob Democrat voted for the Wall Street bailout, SHAME ON HIM" ads leading up to November 4th are going to be the end of Bob Democrat's congressional career.
I'd vote against my Senators and Reps if they did that. Of course, this being Northern Kentucky, they're all GOP anyway. But if they were Democrats, I'd have to vote em out. This bailout is hideous. Congress is greatly underestimating how much anger is out there in the electorate this year. They are looking for bums to throw out regardless of party.
And once again the House GOP caucus is playing 2-4 moves down the chessboard in preparation for manuvering against the next administration. The Dems meanwhile are still playing Parcheesi with Bush.
The government says Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.No failure, straight buyout. Massive Consolidation(tm) continues.
The FDIC says Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
The sale of Wachovia comes just days after the government's seizure of Seattle-based Washington Mutual Inc. -- the largest bank failure in U.S. history.
Wachovia has been among the banks hardest hit by the ongoing crisis in the mortgage market. Its current problems stem largely from its acquisition of mortgage lender Golden West Financial Corp. in 2006 for roughly $25 billion at the height of the nation's housing boom. With that purchase, Wachovia inherited a deteriorating $122 billion portfolio of Pick-A-Payment loans, Golden West's specialty, which let borrowers skip some payments.
Everything since then has been No Confidence. Every time the US tries something else, the global markets aren't convinced they are going to work. They've been right so far: the economic stimulus package, Bear Stearns bailout, rate cuts over the summer, and now the last two weeks leading up to the bailout bill have all failed.
So what does Asia and Europe think about The Big Big Bailout?
Stocks tumbled in Europe and Asia and U.S. index futures retreated as bank bailouts accelerated and the $700 billion plan to rescue American financial institutions failed to unlock money markets.
Dexia SA sank 24 percent after the governments of Belgium, the Netherlands and Luxembourg were forced to rescue Fortis and the U.K. seized Bradford & Bingley Plc. Hypo Real Estate Holding AG slumped 62 percent as the German government and a group of private banks provided a 35 billion-euro ($50 billion) guarantee for the commercial-property lender. Westpac Banking Corp. of Australia slid 3.5 percent. Wachovia Corp. declined 21 percent in Germany on increasing speculation the sixth-largest U.S. bank by assets may be forced to seek a buyer or mortgage partner.
Europe's Dow Jones Stoxx 600 Index lost 3.1 percent to 257.79 at 11:24 a.m. in London. Futures on the Standard & Poor's 500 Index dropped 1.7 percent following the measure's steepest weekly slump since May. The MSCI Asia Pacific Index slid 2.7 percent today.
``There's more pain to come,'' said Andy Lynch, who manages about $3 billion at Schroder Investment Management Ltd. in London. ``People knew the bailout was going to happen. Now it's back to the same-old, same-old of capital writedowns and weekend bailouts. Earnings estimates for next year still are too high.''
Credit losses at UBS AG, along with profit declines at technology companies such as Ericsson AB, helped send earnings lower at 153 of the 332 members of the Stoxx 600 tracked by Bloomberg that reported quarterly results since the beginning of July. More than 40 percent of the Stoxx 600's companies trailed Wall Street's estimates, Bloomberg data show.
Europe in particular has far too many problems with its own failing banks to deal with ours.
European governments stepped in to rescue Bradford & Bingley Plc, Fortis, and Hypo Real Estate Holding AG as tremors from the U.S. credit crisis reverberated around the world.
The U.K. Treasury seized Bradford & Bingley, Britain's biggest lender to landlords, while governments in Belgium, the Netherlands and Luxembourg threw an 11.2 billion-euro ($16.3 billion) lifeline to Fortis. Germany guaranteed a loan to Hypo.
The interventions exposed how fallout from the crisis that drove Lehman Brothers Holdings Inc. into bankruptcy and prompted a $700 billion U.S. bank-rescue package has gone global. It also added urgency to negotiations among European policy makers as to how they deal with banking collapses.
``The precarious global environment means the weakest links in Europe are now falling,'' said Mamoun Tazi, an analyst at MF Global Securities Ltd. in London. ``If banks continue not to lend to each other we'll see more failures.''
Shares of Dexia SA, a lender based in both Brussels and Paris, fell as much as 33 percent trading after Le Figaro said the world's biggest lender to local governments may soon announce a plan to raise capital. Iceland agreed to buy 75 percent in Glitnir Bank hf, the island nation's third-largest bank by market value, for 600 million euros.
European equities and U.S. stock-index futures fell today. Euro-area economic confidence dropped this month to the lowest since the aftermath of the Sept. 11 attacks amid concern that the U.S. plan will fail to stem the crisis. The pound tumbled the most against the dollar in 15 years and the euro slid.
That rate that banks charge each other, the London Interbank Overnight Rate, or LIBOR, remains in record high territory this morning. Banks are still afraid to lend money to one another, because they're all terrified. They have no confidence in their own books. They have no confidence in the books of other banks. And they are wondering if they are next. Europe and Asia injected a fresh round of money into the system this weekend. It has done NOTHING. Liquidity is NOT the problem...it is the symptom of a much worse problem, insolvency. Europe and Asia have caught our Bank Flu. They played the same games we did. Now they are falling too, all over the continent.
Despite a bailout deal reached last night, Europe and Asia just don't care anymore. They have their own problems to deal with thanks to us. They don't have time to worry about the US right now.
They will not help us now. Nobody will.
We're on our own. The outlook this morning is very very grim.
Wall Street looked set to plunge on Monday, taking its cue from Asian and European stocks markets, as Congress is expected to vote on a bailout package but fears engulf world markets.The bailout is not working. Despite a deal being reached, the jury is back in this week:
Doubts about the health of the world financial sector are increasing as two European banks were nationalized in two days and central banks threw money at banks trying to persuade them to lend to each other.
No Confidence. Literally, no confidence to lend, no confidence that they will be paid back, no confidence that assets are worth what they are worth, and no confidence that the US can lead the world out of the coming global recession.
And now, the pain, the real pain, begins. This week is going to be bloody.
And so will next week.
And most likely the week after that. I imagine we'll see and emergency rate cut or two again. That too will not help.
No Confidence. No parachute when we land. No view of where the bottom is. No magical solution to fix it.
We've come full circle from January. In January when the world gave Bush-O-Nomics the vote of No Confidence, we still had options. Those options have not worked other than to buy us time.
Nine months later we're in the same spot...facing a global no-confidence cascade, a systemic meltdown...and we're all out of options now.
Other than to watch the wagon go over the cliff.
More than ever...
Cross-posted at the Frog Pond.
- Hurricane Kyle smashes into Nova Scotia.
- A mosque in Dayton was attacked over the weekend with a "chemical irritant."
- More Americans are on food stamps than ever before, and it's not enough.
- A pair of toy night goggles for $80 works surprisingly well.
- The Florida Marlins end the New York Mets' season once again.