Double G On The UberBailout

As usual, Double G is three steps ahead of me on things.

Leave aside for the moment whether this gargantuan nationalization/bailout scheme is "necessary" in some utilitarian sense. One doesn't have to be an economics expert in order for several facts to be crystal clear:

First, the fact that Democrats are on board with this scheme means absolutely nothing. When it comes to things the Bush administration wants, Congressional Democrats don't say "no" to anything. They say "yes" to everything. That's what they're for.

They say "yes" regardless of whether they understand what they're endorsing. They say "yes" regardless of whether they've been told even the most basic facts about what they're being told to endorse. They say "yes" anytime doing so is politically less risky than saying "no," which is essentially always and is certainly the case here. They say "yes" whenever the political establishment -- meaning establishment media outlets and the corporate class that funds them -- wants them to say "yes," which is the case here. And they say "yes" with particular speed and eagerness when told to do so by the Serious Trans-Partisan Republican Experts like Hank Paulson and Ben Bernake (or Mike McConnell and Robert Gates and, before them, Donald Rumsfeld and Colin Powell).

So, we know UberBailout is going to happen. We just don't know how much of a bribe we'll get.

Second, whatever else is true, the events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function -- and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is "necessary" or makes utilitarian sense, it is a crime of the highest order -- not a "crime" in the legal sense but in a more meaningful sense.

What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism -- where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We've retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded.

Which goes back to my moral hazard argument. America should be pissed off and in the streets on this...but we don't care.

Third, what's probably most amazing of all is the contrast between how gargantuan all of this is and the complete absence of debate or disagreement over what's taking place. It's not just that, as usual, Democrats and Republicans are embracing the same core premises ("this is regrettable but necessary"). It's that there's almost no real discussion of what happened, who is responsible, and what the consequences are. It's basically as though the elite class is getting together and discussing this all in whispers, coordinating their views, and releasing just enough information to keep the stupid masses content and calm.

Can anyone point to any discussion of what the implications are for having the Federal Government seize control of the largest and most powerful insurance company in the country, as well as virtually the entire mortgage industry and other key swaths of financial services? Haven't we heard all these years that national health care was an extremely risky and dangerous undertaking because of what happens when the Federal Government gets too involved in an industry? What happened in the last month dwarfs all of that by many magnitudes.

All true. And he ends with this shocking statement:

Here is the current draft for the latest plan. It's elegantly simple. The three key provisions: (1) The Treasury Secretary is authorized to buy up to $700 billion of any mortgage-related assets (so he can just transfer that amount to any corporations in exchange for their worthless or severely crippled "assets") [Sec. 6]; (2) The ceiling on the national debt is raised to $11.3 trillion to accommodate this scheme [Sec. 10]; and (3) best of all: "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" [Sec. 8].

Put another way, this authorizes Hank Paulson to transfer $700 billion of taxpayer money to private industry in his sole discretion, and nobody has the right or ability to review or challenge any decision he makes.

Financial dictatorship. No oversight. No accountability. Just like Iraq, Afghanistan, Katrina, everything. No plan. Just a crazy scramble to sucker the Democrats into giveing Bush another blank check to fix a problem that he can't fix, and months, years down the road we'll need trillions more.

If McSame's president of course he'll get it.

Why, why, why, why, why are we giving Bush another blank check?

Welcome to Bush's America. Long after he is gone, we're still be trapped in it.

Pushback On UberBailout

Looks like the Dems at least remember there's an election on, and that the geniuses who got us into this without any oversight are the same people Bush wants in charge to get us out...with no oversight.

House of Representatives Speaker Nancy Pelosi said on Saturday that Democrats want to deal swiftly with the Bush administration's $700 billion financial market rescue plan, but also want more oversight, taxpayer protections and regulatory reform.

"In working with the administration, we will strengthen the proposal by ensuring that the government is accountable to the taxpayers in any future actions under this broad grant of authority, implementing strong oversight mechanisms, and establishing fast-track authority for the Congress to act on responsible regulatory reform," she said in a statement.

"We will also seek to protect lower- and middle-income Americans ... from the fallout of the ongoing Wall Street crisis, by enacting an economic recovery package that creates jobs and returns growth to our economy," the California lawmaker added just hours after the rescue proposal was unveiled.

Financially this is a disaster either way. But frankly from a purely political standpoint, I believe the Democrats have the Republicans by the balls here. The Dems are going to want a lot of concessions out of this and they are going to get quite a few of them.

If the GOP doesn't play ball, the Dems are going to hammer them on the fact that the "fiscally responsible" GOP has no problem spending $700 billion on banks, but zero on American homeowners.

Even the most die-hard Republican voters aren't going to put up with that with an election just around the corner.

McGamble

Obama on the road in Florida today made a very important point: If we had listened to Bush and McSame and the Republicans in 2004 about privatizing Social Security, how many Seniors would be getting wrecked by the markets over the last year?

Democrat Barack Obama accused Republican presidential rival John McCain on Saturday of wanting to gamble with the retirement savings and health care of Americans by subjecting them to the uncertainty of open markets.

As the government prepared another costly bailout of the reeling U.S. financial system, Obama said McCain's support for privatizing Social Security and opening up the health care system to market forces would put Americans at financial risk.

He attacked McCain for supporting some privatization of Social Security retirement funds, a proposal President George W. Bush made a centerpiece of his 2004 White House campaign but was unable to push through Congress.

"I know Senator McCain is talking about a 'casino culture' on Wall Street -- but the fact is, he's the one who wants to gamble with your life savings," Obama said at a rally in Daytona Beach in Florida, a state with a large population of seniors and retired workers.

"That is not going to happen when I'm president," the Illinois senator said, asking the crowd to imagine the fears of retirees who found their Social Security funds tied to the current market.

"We're not going to gamble with your ability to retire with dignity after a lifetime of hard work. We're going to strengthen and protect Social Security so it's a safety net our families can count on -- today, tomorrow and always," he said.

This is a winning attack in Florida. Obama needs to pounce on this in states like Florida and New Mexico.

More Details Of UberBailout

Preznitman is starting the price tag at $700 billion dollars.

President Bush said Saturday that the plan matches the scope of the problem.

"It is a big package because it's a big problem," he told reporters at a joint news conference with Alvaro Uribe, the president of Colombia.

"The risk of doing nothing far outweighs the risk of the package," Bush said.

Treasury Secretary Henry Paulson, lawmakers and their aides are expected to work through the weekend in an effort to craft a bill swiftly. Democratic leaders on Capitol Hill said they expect the bill to go before a vote within days.

Paulson, Federal Reserve Chairman Ben Bernanke and other officials have said in recent days that the lack of easy credit between banks and other financial institutions threatens to inflict serious damage on the economy if not addressed immediately.

Remember, that's just the opening bid. And once again I remind you that every step the government has taken to fix this problem has been increasingly more expensive and has failed every single time.

They are still treating this as a liquidity problem. Buy the toxic waste off the books and banks will magically be solvent again? No. Look, let's call this what it is: the plan to push this crisis off for another six months onto the next President's plate.

The basic problem here is that the housing depression is still going. It will go well into 2010. Mortgages will lose money. Banks are still leveraged out the ass. This plan does nothing -- not a single thing mind you -- for homeowners facing foreclosure. Even worse, this bailout will lock up the foreclosure market. Nobody's going to buy a house if the value goes down. Millions of more Americans will go underwater on their mortgages.

They will walk away, broken. Imagine what $700 billion could do for homeowners in underwater mortgages. But they won't see a dime. They will lose their homes. Homes nearby will lose their value. More people will get into trouble. Homeowners already are maxed out on debt.

So that $700 billion won't be nearly enough to buy these toxic debts, because more debts will go bad, more homes will go into foreclosure, banks will lose money on foreclosed properties as real estate drops and they will become increasingly more insolvent.

All this bailout will do is encourage massive consolidation. You'll see megabanks buy out everything they can get their hands on in order to take more assets and force the government to take toxic debt off the books through UberBailout, for these new hyperbanks will be Too Big To Fail. AIG has shown the financial sector the way.

What assets they do have they will take increasingly larger risks with. And those risks will fail as mortgages and the economy fail.

It's a death spiral, and we're trapped in it. This too will fail. $700 billion will turn into trillions and trillions, until hyper-inflation kicks in and we're all screwed. And how do I know it's going to fail? The same Wall Street people who got us into this mess are going to be in charge of managing the bailout.

As part of the government bailout of the financial industry, the Treasury has floated a plan with industry executives that envisions the $700 billion in bad mortgage debts being bought by the government will be run by five to ten outside asset managers, CNBC has learned.

These managers will each run portfolios of up to $50 billion each, according to a source familiar with the plan. The portfolios will be amassed through so-called "reverse auctions" where the seller bids the lowest price it will accept from the government for buying up the asset.

Enjoy the ride.

StupidiNews, Weekend Edition

• The Large Hadron Collider is offline for a while after the magnets have malfunctioned.
• A University of California study suggests ethnic cleansing was behind lower Iraq violence this year, not the Surge.
• The UberBailout will cost the next President dearly.
• Israel's PM handover process could start as early as Sunday.
• A new report shows the BATF is good at watching alcohol, tobacco and firearms, just not good at watching their own laptops.

Devil's In The Details

And the details of Uberbailout are coming at some...point...in the future. Kinda. Maybe. We'll see.

Here's what we know so far:

The plan: The federal government would buy up "hundreds of billions of dollars" of illiquid mortgage assets at a deep discount from banks. The Treasury Department is likely to run the program directly, unlike the savings and loan crisis of the 1990s that led to the creation of the Resolution Trust Company.

"The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," said Paulson.

What remains to be seen is how the Treasury Department will structure the purchases and what price they'll pay.

The cost: While the proposal calls for the purchase of "hundreds of billions of dollars" of bad loans, it's unknown what taxpayers will ultimately pay for the bailout.

The government will likely buy the assets at below-market rates and hold onto them until the market recovers. Ideally, the loans could then be sold at a gain.

"The government could make a profit, a substantial profit," said Jaret Seiberg, a financial services analyst at the Stanford Group, a policy research firm. "The pricing mechanism is going to be central."

Will it work: The jury is still out, although experts are cautiously optimistic the plan will help the housing crisis.

The plan will help banks shore up their balance sheets by removing hard-to-value assets. This would address the seemingly endless rounds of writedowns and capital raising that have been rocking the financial sector.

Without these bad loans weighing on their books, banks may be more willing to lend. Or at least that's the goal.

The problem is that the bailout will not automatically make banks profitable, nor will it stop the slide in home values that is wreaking havoc on the economy.

Will it help homeowners: It's unclear at this point. If the government buys an entire securitized loan, it could opt to help struggling homeowners by modifying the terms. This could include reducing a loan's interest rate or principal balance.

But it could prove difficult to snap up all the securities sold on a mortgage, experts said. And as long as investors still hold a piece, they could block any changes to the loan.

If the plan doesn't stem the tide of foreclosures, home prices will not stabilize and the economy will not recover, experts said.

The more I hear about this plan, the less I like it. It seems like nothing more than the mother of all corporate welfare programs and sets a horrendous precedent. Surely the airlines and auto industry will want a piece of this action too.

Taxpaying homeowners won't see a dime. Worse yet, the millions of Americans who don't have a mortgage and rent aren't going to see a dime either, but will be expected to pay their taxes towards this.

And even better, Republicans are going to say that helping out ordinary Americans will be too expensive and not fiscally responsible. It's 54 days before a Presidential election. There's no way this is going to get passed without a disatrous amount of pork, riders, and perks for fat cats. Both sides will threaten to block the bill.

You thought this week was bad? Try next.

How Bad Was It?

Seriously, how bad was the financial situation yesterday about noon or so when the Fed let it slip that UberBailout(tm) was coming and it goosed the markets by 400?

You notice that not a single Beltway type is saying "This is a bad idea." How bad is the situation that the most fractured and partisan Congress in the history of the country is united in an election year?

How bad, indeed? This bad.

It was a room full of people who rarely hold their tongues. But as the Fed chairman, Ben S. Bernanke, laid out the potentially devastating ramifications of the financial crisis before congressional leaders on Thursday night, there was a stunned silence at first.

Mr. Bernanke and Treasury Secretary Henry M. Paulson Jr. had made an urgent and unusual evening visit to Capitol Hill, and they were gathered around a conference table in the offices of House Speaker Nancy Pelosi.

“When you listened to him describe it you gulped," said Senator Charles E. Schumer, Democrat of New York.

As Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking, Housing and Urban Affairs Committee, put it Friday morning on the ABC program “Good Morning America,” the congressional leaders were told “that we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.”

Mr. Schumer added, “History was sort of hanging over it, like this was a moment.”

When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”

“What you heard last evening,” he added, “is one of those rare moments, certainly rare in my experience here, is Democrats and Republicans deciding we need to work together quickly.”

Scared shitless. Scared to the point where they unanimously have decided it is a good idea to spend upwards of a trillion dollars in the latest attempt to fix this problem.

That should terrify you, because up until now everything they've tried has failed. It has failed so miserably that this is now the only option remaining.

If this fails, we lose.

The same people responsible for this mess are telling us they now need trillions of your money to fix this and that they have no choice or the economy implodes.

Do you believe this is over?

The ride is just beginning.

In Which Barry O Kicks McSame's Ass

This right here? This is Barry winning this election. (h/t AmericaBlog)



Transcript:

This morning Senator McCain gave a speech in which his big solution to this worldwide economic crisis was to blame me for it.

This is a guy who's spent nearly three decades in Washington, and after spending the entire campaign saying I haven't been in Washington long enough, he apparently now is willing to assign me responsibility for all of Washington's failures.

Now, I think it's a pretty clear that Senator McCain is a little panicked right now. At this point he seems to be willing to say anything or do anything or change any position or violate any principal to try and win this election, and I've got to say it's kind of sad to see. That's not the politics we need.

It's also been disappointing to see my opponent's reaction to this economic crisis. His first reaction on Monday was to stand up and repeat the line he's said over and over again throughout this campaign -- 'the fundamentals of the economy are strong' -- the comment was so out of touch that even George Bush's White House couldn't agree with it.

I'll take Charles Nelson Reilly in the middle for the MY TANK IS FIGHT!

Zandar's Thought Of The Day

To reiterate the GOP position:

Taxpayer money for the UberBailout, what, 2 trillion? No problem. We're protecting America.
Taxpayer money for the Iraq War, 3 trillion? No problem. We're protecting America.
Taxpayer money for rebuilding hurricane ravaged homes? Fiscally irresponsible, those people need to live with the consequences of their own choices.

Compassionate conservatism for all. Vote Republican for more.

More On The UberFix

Hank Paulson gave more details this morning on this gubment superagency that will magically make everything better.

Treasury Secretary Henry Paulson on Friday called for the U.S. government to spend hundreds of billions of dollars to take toxic mortgage assets off the books of financial firms to restore financial stability.

"We must now take further, decisive action to fundamentally and comprehensively address the root cause of our financial system's stresses," Paulson told a news conference.

"The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy," he said.

There are only two things you need to know.

1. The people who got us into this mess have failed at every single opportunity they have been given in the last several years to fix this mess so far.
   
2. The people who got us into this mess have now fucked up so badly that these same people now say they need trillions of taxpayer dollars to fix it this time.
   

Feel better? I know I do.

[UPDATE] When US Senators are throwing around numbers like a trillion dollars as "back of the napkin" calculations, then we're truly fucked.

Ironically Enough

I am reminded by sharp readers that while America is being plundered of trillions, that today (Spetember 19th) is International Talk Like A Pirate Day.

The irony, she is thick like grog today.

In Which Zandar Loses His Temper Completely And Fails To Be Dispassionate

The meltdown on Wall Street?

It's not Wall Street's greed. It's not lack of regulation. It's not arcane and byzantine debt packaging. It's

It's all those goddamn poor black people that those evil liberal Democrats forced Wall Street to give loans to in the name of affirmative action and that of course has ruined our patriotic American banking system.

No, seriously.

OK .. so we all know that a lot of really bad real estate loans were made. The political class would sure love for us to believe that the blame here rests squarely on “greedy” (try to define that word) mortgage brokers and lenders. The truth is that most of the blame rests on political meddling in the credit decisions of these mortgage lenders.

Twenty years ago the buzz-word in the media was “redlining.” Newspapers across the country were filled with hard-hitting investigative reports about evil and racist mortgage lenders refusing to make real estate loans to various minorities and to applicants who lived in lower-income neighborhoods. There I was closing these loans in the afternoons, and in the mornings offering a counter-argument on the radio to these absurd “redlining” claims. Frankly, the claims that evil mortgage lenders were systematically denying loans to blacks and other minorities were a lot sexier on the radio than my claims that when credit histories, job stability, loan-to-value ratios and income levels were considered there was no evident racial discrimination.

Political correctness won the day. Washington made it clear to banks and other lending institutions that if they did not do something .. and fast .. to bring more minorities and low-income Americans into the world of home ownership there would be a heavy price to pay. Congress set up processes (Research the Community Redevelopment Act) whereby community activist groups and organizers could effectively stop a bank’s efforts to grow if that bank didn’t make loans to unqualified borrowers. Enter, stage left, the “subprime” mortgage. These lenders knew that a very high percentage of these loans would turn to garbage – but it was a price that had to be paid if the bank was to expand and grow. We should note that among the community groups browbeating banks into making these bad loans was an outfit called ACORN. There is one certain presidential candidate that did a lot of community organizing for ACORN. I won’t mention his name so as to avoid politicizing this column.

These garbage loans to unqualified borrowers were then bundled up and sold. The expectation was that the loans would be eventually paid off when rising home values led some borrowers to access their equity through re-financing and others to sell and move on up the ladder. Oops.

Right now this crisis is being sold to the American public by the left as evidence the failure of the free market and capitalism. Not so. What we’re seeing is the inevitable result of political interference in free market economics. Acme bank didn’t want to loan money to Joe Homebuyer because Joe had a spotty job history, owed too much money on his credit cards, and wasn’t all that good at making payments on time. The politicians told Acme Bank to figure out a way to make that loan, because, after all, Joe is a bona-fide minority-American, or forget about opening that new branch office on the Southside. The loan was made under politicial pressure; the loan, with millions like it, failed – and now we are left to enjoy today’s headlines.

So … why aren’t you reading the whole story in the mainstream media? Come on, are you kidding me? Do you really expect the media to blame this mess on deadbeat borrowers and political interference in the free market when it is so easy to put the blame on greedy lenders and evil capitalists? Remember … there’s an election going on. One candidate is decidedly anti-capitalist. Do the math.

I'm doing the math, Neal. I'm seeing an economy in the red. I'm seeing mortgage brokers selling loans to anybody and everybody with NINJA loan crap for years because there was no regulation and wall street looked the other way. And yes, as long as housing prices went up these companies made hundreds of billions.

But if you actually think that Wall Street was forced to make loans to people who couldn't pay by Democrats, you really are a complete moron.

No offense.

But it sure is a great excuse to blame anytbody but the GOP, the Wall Street titans getting golden parachutes and the companies that frittered away trillions of YOUR mortgage dollars in bad investments and then are taking that money BACK in turn from the American taxpayers all over again. It sure is a great excuse to blame black America for Wall Street's shitty investments. It's not like those mortgage brokers preyed on people by hiding the fine print and taking advantage of them. They got paid to do so. It was institutionalized fraud against millions of poor Americans of ALL races.

And you're telling me Lehman Brothers is the victim here?

Fuck you, Neal Boortz. Fuck you and your entire racist bullshit.

You do the math.

Global No Confidence Vote: Deal Or No Deal Pt 5

The Ultimate Deal is about to be made.

Sick and tired of making individual Deals with individual companies, Helicopter Ben, Hammerin' Hank, and the whole Deal or No Deal crew has decided to fundamentally change America's economy from capitalism to kleptocracy.

IT'S A DEAL FOR EVERYBODY ON WALL STREET!

Everybody on Main Street will pay for it.

The motherfugger of all bailouts is about to be upon us. .

Not the PROFITS mind you...no, that's still privatized. But all the junk mortgage debt...millions...BILLIONS...TRILLIONS...even reaching into the stratosphere of OVER A QUADRILLION DOLLARS of toxic, mutant derivative funny paper is about to be dumped on our backs.

We just became a socialist country.

The federal government, in what will be its most far-reaching attempt yet to contain the financial crisis, is poised to establish a program to let banks get rid of mortgage-related assets that have been hard to value and harder to trade.

Leaders from the House and the Senate were briefed on Thursday evening by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

"The root cause of distress in capital markets is the real estate correction and what's going on in terms of the price declines in real estate," Paulson said at a press briefing after the meeting. "So we're coming together to work for an expeditious solution aimed right at the heart of this problem, which is illiquid assets on financial institutions' balance sheets."

Many details of the plan remained unclear, but it is likely the government would take on tens of billions of dollars in mortgage assets - if not more.

House Speaker Nancy Pelosi, D-Calif., said late Thursday night that lawmakers expected to get the proposal from Treasury in a matter of hours.

"We hope to move very quickly - time is of the essence," Pelosi said.

Paulson, Bernanke and other officials expect to work through the weekend with congressional leaders to finalize a plan, said Brookly McLaughlin, a Treasury spokeswoman.

Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said he believes legislation could be acted on next week.

Let's get this out of the way: Obama will not save us on this. The Democrats are behind this plan 100% as much as the Republicans are. This could be signed into law before the end of the month, a behemoth government agency who will simply take all the nasty results of risk away. Risk is for poor people. Change we can believe in!

The questions are staggering. With American taxpayers already on the hook for trillions in bad mortgage paper for Freddie and Fannie, we're now going to be proud owners of trillions more of it. How will we possibly pay for it? Easy...we make the money up.

The road to hyper-inflation is now clear as day. We're simply going to pretend this debt doesn't exist and replace it with money we believe does exist...money backed up by a dream and faith.

Faith-based economy. When you're asking yourself why you lost your health insurance, why you can't afford to send your kids to college, why you can't afford a place to live anymore, why you can't afford transportation costs, why you can't afford gas and food and water in a few years, go back to this week.

We just sold our country to save the financial industry. Only the creation of massive amounts of fiat money -- trillions and trillions -- will be able to retire this debt.

The dollar is on the verge of becoming a third world currency. It'll start small, of course.

Options that U.S. officials are considering include establishing an $800 billion fund to purchase so-called failed assets and a separate $400 billion pool at the Federal Deposit Insurance Corp. to insure investors in money-market funds, said two people briefed by congressional staff. They spoke on condition of anonymity because the plans may change.

Another possibility is using Fannie and Freddie, the federally chartered mortgage-finance companies seized by the government last week, to buy assets, one of the people said.

``We will try to put a bill together and do it fairly quickly,'' House Financial Services Committee Chairman Barney Frank, a Massachusetts Democrat, said after the meeting. ``We are not in a position to give you any specifics right now'' on the proposals, he said when asked about the potential cost.

The likelihood of the government taking on yet more devalued assets, after the seizures of Fannie, Freddie and AIG and the earlier assumption by the Fed of $29 billion of Bear Stearns Cos. investments, may spur concern about its own balance sheet.

Debt Concern

The Treasury has pledged to buy up to $200 billion of Fannie and Freddie stock to keep them solvent, while the Fed agreed Sept. 16 to an $85 billion bridge loan to AIG. The Treasury also plans to buy $5 billion of mortgage-backed debt this month under an emergency program.

``It sounds like there's going to be a giant dumpster for illiquid assets,'' said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management in Grand Rapids, Michigan, which oversees $22 billion in assets. ``It brings up the more troubling question of whether the U.S. government is big enough to take on this whole problem, relative'' to the size of the American economy, he said.

I've got news for you, Mr. Mikelic. It's not. The derivatives attached to these nightmares are a thirteen-digit number...more than orders of magnitude of the entire global economy.

So what does it matter then if we say "Let's just toss another $1.2 trillion dollars into the pile!" Where is it coming from? Who knows? Who cares? We're the government, we'll just make it up!

Our entire economy is about to be turned into a giant dumpster, surely. We're the dumpster. All the plans you're expecting Obama to do for us, universal health care, new jobs in the green energy sector, getting off foreign oil, all that just died this week along with any hope we had.

Whoever is President in January is the new Herbert Hoover. We'll all be living in the giant dumpster when the debt the government takes on in your name detonates and wipes out the global system.

The US government is on the verge of committing economic suicide.

You think things are bad now?

You have no idea. None. Well, if you've been reading Global No Confidence Vote you have some idea. But this is scaring even me beyond the capacity for rational thought. This is endgame stuff, folks. This is going to end America as we know it.

The good intentions that will pave the road to the Second Great Depression goes right through The Motherfugger Of All Deals here.

And it will pave right over each and every one of us.

Forget wheelbarrows of cash. Start thinking about self-reliance. Start thinking about what you'll need to have on hand to survive this. Start thinking about the skills you'll need to have in the new barter economy that will replace this. What's coming down the pike is going to be worse than you ever imagined.

And more than ever...

BE PREPARED.

Cross-posted over at the Frog Pond.

StupidiNews!

• 250,000 people in the Cincy area still don't have power, but I finally do.
• Rebuilding Galveston after Ike may not happen thanks to Texas law.
• A press "no-fly zone" over hardest hit areas from Ike is irking journalists.
• First Dude Todd Palin will not testify in Troopergate.
• Microsoft has dumped Jerry and Bill's ads.

The Mother Of All Bailouts

The Dow is up huge at this hour. It was down 150, now up almost 400. Why?

The entire financial sector is about to get a bailout.

U.S. Treasury and Federal Reserve officials are considering a ``permanent'' plan to address the financial crisis, said Senator Charles Schumer, who proposed a new agency to pump capital into troubled financial companies.

``The Federal Reserve and the Treasury are realizing that we need a more comprehensive solution,'' Schumer, a Democrat who chairs the congressional Joint Economic Committee, told reporters in Washington today. ``I've been talking to them about it.''

Schumer proposed an agency to inject funds into financial companies in exchange for equity stakes and pledges to rewrite mortgages to make them more affordable. His remarks indicate momentum is building for some wider plan after the Fed and Treasury's takeovers of Fannie Mae, Freddie Mac and American International Group Inc. this month.

Discussions with the Treasury and Fed focus on ``trying to do something more permanent'' after the series of government interventions, the New York senator said. For the Fed, ``it's hard for them to do monetary policy, which is their primary task, and then run all these businesses,'' he said.

It's nothing short of the nationalization of the whole financial sector.

It will take trillions and trillions of dollars to do this. This is the endgame, folks. If this goes through we'll be on the hook for millions of dollars for every single American. It will wipe the country out.

This is downright terrifying...and it's being proposed by a Democrat.

[UPDATE] Bonddad takes this idea out back and shoots it.

Why is this a dumb idea? Let me count the ways.

1.) Where is the money for this going to come from? I've detailed the proposed spending plans we've seen so far. They total $900 billion. Now we're going to pump more money into the system from some as yet unknown source.

2.) Just what will the government do with these interests? They're going to wind up the majority shareholder in some of these institutions -- and a minor big holder in others. Who will decide the government's policy?

3.) What is the criteria for investing in a company? If ever there was going to be a highly politicized process this is it. I can see it now ... "Senator from big important district gets huge cash infusion not because it's a good investment but because the Senator is in a close reelection bid and needs votes.

4.) Will the government ever get out of these companies? Will there be a time limit?

5.) Will there be a time limit for this entity's duration? Will it go on forever?

6.) Will the government become intimately involved with the company's internal deliberations and policy? Will Congressmen sit on various boards?

I could go on, but you get the idea. This is a disaster waiting to happen.

Agreed wholeheartedly.

The problem is the Dems will jump on this and pass the thing. They now have to. There's a reason the stock market shot up 400 points. Wall Street is posititively giddy about the prospect of being able to unload trillions of debt onto the American taxpayer. You thought moral hazard and Too Big To Fail consolidation was bad before?

Republicans will be crowing. The party of "fiscal conservatism" and "small government" will immediately fall in line behind this program because now they can say the Democrats are preventing this vital solution from reaching Preznitman's desk, and they will lay every second that this Uberagency doesn't exist at the feet of Barack Obama, Nancy Pelosi, and Harry Reid. You'd better believe the marching orders are being put out right now, and that this is how the GOP plans to take control of the "it's the economy, stupid!" argument.

Absolutely bet on it. Wall Street has spoken. Everybody will want their piece of this multi-trillion dollar bailout, and they want it NOW. The lobbyists are already working the halls of power.

You will hear McSame call for this legislation to be passed as early as tomorrow. You will hear Obama call for this legislation to be passed as early as tomorrow. You will hear Preznitman call for this legislation to be passed as early as tonight.