Village Implosion

The Village is outraged at the Failout. Just livid, beyond angry. They thought they had the ultimate bipartisan bill here, and instead it turned into a revolt by the dirty bourgeois masses to block this BI-PARTISAN BILL.

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.

The Bailout Is Dead

...and on fire, and stabbed. It's official, defeated in the House.

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.

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.

At least for now the bailout is dead. Dow's off over 500. NASDAQ and S&P 500 are both down 6% and falling.

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.

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.

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.

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.

Bloodbath: The Lossification 2 The Revenge

Financial stocks, particularly regional banks, are utterly tanking right now, particularly Ohio banks. Fifth Third, National City, Key Bank, and out in California FirstFed Financial all having a really, really bad day. FDIC can process and sell these banks off, they're not large enough to pose any kind of threat to the economy.

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.)

Sandbag Job Redux

Obama's expected to go Wednesday to vote on the Bailout. McSame? If his "schedule allows it" sure. Maybe. We don't know.

Democratic presidential nominee Barack Obama plans to return to the Senate this week so he can vote for the Wall Street bailout package.

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.

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.

Oh Please Please Please Do This

Bill Kristol on how McSame can pull off a miracle: FREE SARAH PALIN!

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.”

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.

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.

We Can't Go In There, It's Too Perilous

The Justice Department's Inspector General's office has released its report on US Attorneygate, and has concluded that due to nobody saying a damn thing, a dreaded special prosecutor is needed to get to the bottom of the case. (h/t TPM Muckracker)

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?

The Bush-Pelosi-Reid-Obama Bailout Bill

Over the weekend the narrative is shaping up that the Bush-Pelosi-Reid-Obama Bailout Bill has Bush and the Democrats on one side and the Heroic House GOP Resistance on the other. Once again the Democrats have walked right into the goddamn exhaust intake of the jet engine, and they're going to get shredded.

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.

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.

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.

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.

Another Bank Down

...and this time it's Wachovia.

The government says Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp.

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.

No failure, straight buyout. Massive Consolidation(tm) continues.

Global No-Confidence Vote: Full Circle

This series of posts started back in January with the title "Global No-Confidence Vote For Bush-O-Nomics" because at the time, the global response to the announcement of the financial stimulus package was just that: A global vote of No Confidence. Asian and European stock markets plummeted and continued to fall for the entire year so far.

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?

Guess.

No Confidence.

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.

Above all there are two forces at work here: insolvency and psychology. The bailout fails to address either one of these two problems. The world has moved on and has rendered judgment on the situation in America. That judgment is "We have to look out for ourselves now. We don't have the resources to spare to help America any more. They will have to take care of themselves, just like we have to do now."

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.

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.

The bailout is not working. Despite a deal being reached, the jury is back in this week:

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...

Be prepared.

Cross-posted at the Frog Pond.

StupidiNews!

• 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.

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.

WE ARE ALL SCREWED.

sigh.

"Makes 1929 Look Like A Walk In The Park"

The UK Telegraph is reporting that Washington officials are terrified that a collapse in a bailout deal could lead to a 3,000-4,000 point loss on the Dow next week.

Officials close to Paulson are privately painting a far bleaker portrait of the fragility of the global economy than that advanced by President George W Bush in his televised address last week.

One Republican said that the message from government officials is that “the economy is dropping into the john.” He added: “We could see falls of 3,000 or 4,000 points on the Dow [the New York market that currently trades at around 11,000]. That could happen in just a couple of days.

“What’s being put around behind the scenes is that we’re looking at 1930s stuff. We’re looking at catastrophe, huge, amazing catastrophe. Everybody is extraordinarily scared. It’s going to be really, really nasty.”

If the situation is that bad, how come we were lied to? Oh yes...GOP in charge. Never mind. If there's no deal by Sunday evening when Asian markets open, it could be the end. Preznitman used his weekly radio address to tell America to suck it up and deal with the bailout.

"Many Americans are anxious about their finances and their future," Bush said in his weekly radio address. "I know many of you listening this morning are frustrated with the situation.

"You make sacrifices every day to meet your mortgage payments and keep up with your bills. When the government asks you to pay for mistakes on Wall Street, it does not seem fair. And I understand that.

"And if it were possible to let every irresponsible firm on Wall Street fail without affecting you and your family, I would do it. But that is not possible," Bush said, warning: "The failure of the financial system would mean financial hardship for many of you."

As lawmakers in Congress negotiated details of a final rescue plan amid turmoil on global markets, Bush argued that a collapsed financial sector would mean less credit, fewer new businesses and fewer jobs.

"And that would put our economy on the path toward a deep and painful recession," he argued.

I got news for you George, we're already there.

I don't think the bailout is going to help, honestly. We're being told of dire consequences if the bailout doesn't happen. My fear is the bailout happens and we plunge into a recession or depression anyway.

Remember, one month ago the economy was sound. America was fine. The Bush Boom was the most underreported story in America. These guys have been lying to us for years now. They're lying to us now. The bailout is there to give the CEO's and fat cats enough time to get to their lifeboats before the crash.

It's too late for most of us. Far, far too late. What happens if the bailout passes and we still crash?

Dow 8,000 may be generous.

Do We Need The Bailout?

It's a valid question. There are two schools of thought on it.

The first school is that government intervention in the market brought about this disaster in the first place. From a strictly Libertarian point of view, the successive bailouts and intervention by the Fed only delayed what in and of itself is an unsustainable system. America is basically far past bankrupt at this point and has only been operating by the power of an increasingly arcane system of smoke and mirrors and the Chinese and Saudis buying up our debt, since it was such an awfully good deal for them. Not anymore. We're tapped out, our neighbors are tapped out. We've got no fuel in the tank.

We're to the point now where the first school, myself included, say that paying the piper now is better than later. If we let the chips fall and manage the collapse, we might be able to dig ourselves out in a number of years. No bailout now, take the pain, recover from it. If there's a bailout, the collapse that will result from the cure (hyperinflation) will be fatal. The bailout itself is fatal for America.

The second school believes the first paragraph, but argues that the bailout is necessary now or that the whole house of cards comes down in a systemic collapse without it. In other words, bailout now, or the game ends. The lack of bailout is fatal for America.

This is not the discussion we're having in Washington right now. It's the debate we should of had last night but didn't.

One side says the bailout will kill us. The other side says the lack of bailout will kill us.

Who is right?

Shouldn't we be asking that this election?

Debate Deblogging: Morning After

CNN is saying Obama won the debate, most folks are of the mindset that it was a draw among male viewers, but Obama won handily among female ones.

Fifty-one percent of those polled thought Obama did the better job in Friday night's debate, while 38 percent said John McCain did better.

Men were nearly evenly split between the two candidates, with 46 percent giving the win to McCain and 43 percent to Obama. But women voters tended to give Obama higher marks, with 59 percent calling him the night's winner, while just 31 percent said McCain won.

"It can be reasonably concluded, especially after accounting for the slight Democratic bias in the survey, that we witnessed a tie in Mississippi tonight," CNN Senior Political Researcher Alan Silverleib said. "But given the direction of the campaign over the last couple of weeks, a tie translates to a win for Obama."

CBS had similar numbers as well.

Uncommitted voters said Obama won the debate against Republican John McCain, and more of those voters improved their opinion of the Democrat. But while 66 percent think Obama would make the right decisions about the economy, 56 percent think McCain would do so about Iraq.

Immediately after the debate, CBS News interviewed a nationally representative sample of nearly 500 debate watchers assembled by Knowledge Networks who were "uncommitted voters" - voters who are either undecided about who to vote for or who say they could still change their minds. Thirty-nine percent of these uncommitted debate watchers said Obama won the debate. Twenty-four percent said McCain won, and another 37 percent thought it was a tie.

This is where John McSame should have won hands down, Foreign Policy. He didn't. He didn't come close to delivering the knockout blow he had to have. Obama got some excellent counterattacks in and held his own. McSame came across as Cranky Old Man, not Elder Statesman.

Obama got the tie/slight win he needed here, which is far better than I thought was going to happen, I figured it would be "McSame won, Obama didn't knock him out, he has the momentum now." He doesn't. McCain had to have a KO here to get back in this. Instead I'm betting he lost ground here.

Now everyone is waiting for the bloodbath that will be Thursday nigh's debate between Joltin' Joey and Sister Sarah. I still say this one gets canceled. There is no way Palin can be allowed on live national television against Biden.

All Joey has to do is show up.

Global No Confidence Vote: Running On Empty

The story that nobody is talking about this weekend nationally should be making your head spin and your heart flutter.

Gas lines are back in America. And the thing is, they may be here to stay for quite some time.

While Congress and Bush administration officials have been working to complete a bailout plan and stem the financial contagion on Wall Street, a different kind of economic crisis emerged across the South this week: A severe, hurricane-related gasoline shortage has curtailed trucking from Atlanta to Asheville, N.C., and created a wave of panic buying among motorists.

The return of gas lines has largely flown under the radar of politicians who are usually keenly attuned, because their constituents are, to what's going on at the pump. But more of the Capitol gang should be paying attention to this.

That's because nationwide our gasoline inventory is shockingly low. Liquidity must be restored soon to this market, or we could be facing a crippling run on the gasoline bank. And if you think Americans are outraged about Wall Street, wait until their Main Street grocery store doesn't get the bread and milk delivery for a week or two.

I have family in Western NC. I can tell you that these gas shortages for the last two weeks are very real, and that these shortages are going to be way more common in the future for a number of reasons.

No slack in the system. America works these days on the Just-In-Time delivery principle. Supply routes for everything you buy are computerized and calculated to arrive "just in time" to restock supply. Warehousing stock for long periods of time wastes money. If a product is sitting in a warehouse when it could be on a store shelf or in your shopping cart, the company selling that product is losing money on it.

The stores where you live are sent what the corporations think they will sell each week and no more. This goes for groceries, electronics, sports equipment, guitars, beauty products, fast food hamburger patties and this includes gasoline as well.

Ike hit the system for the Southeast US. The Colonial Pipeline is what provides gasoline for the interior regions of the South and Mid-Atlantic: northern Alabama, northern Georgia, eastern Tennessee, upstate South Carolina and western North Carolina, as well as parts of eastern Virginia, Maryland, and even Delaware and western New Jersey are all served by this pipeline.

But the Just-In-Time system has no slack in other parts of the country right now, because inventories are so low. They are that low because storing gasoline is expensive. Wringing out slack saves refiners and gas stations money.

We had a hurricane shut down the Colonial Pipeline at the same time gasoline inventories were at 50 year lows. Result: Just in time is not in time. Shortages will continue in the South for the foreseeable future.

Now here's the real problem. Everything else in just-in-time delivery works on gasoline. Shortages on gas mean delivery interruptions for everybody else. Delivery interruptions means stores are having either sit on supply because customers can't get to the store to buy it, or that stores have shortages because of no deliveries on time. These refineries create diesel fuel too. Trucks have to have it or they stop. No diesel, no delivery.

This leads to panic buying where there are shortages. What you're seeing in cities like Charlotte, Hickory, and Asheville in North Carolina right now could end up getting a whole lot worse very very quickly as fuel shortages may very well become shortages of everything else.

No fuel means no deliveries of other just in time items...like electronics, shampoo, car parts, fertilizer, oh and things like, I dunno, food.

No gas. No fuel to truck food in. No food.

There's a cheerful thought. Panic buying of gas leads to shortages of everything else across the board, including food.

Now imagine that hitting where you live. Grocery stores start running out of food because there are no deliveries...leading to panic buying of groceries in your neighborhood.

How long would you last not being able to buy food right now? There are food shortages across the world right now, water as well. Just-in-time delivery, plus a rotting American infrastructure, plus commodity shortages around the world...that equals catastrophe for urbanized areas of the world.

If even one of these crucial links in the chain drops out, disruptions across the entire system result.

Systemic disruptions can lead to the crash of the entire system. As megacorporations grow fat off of wringing out the slack in the system, Americans grow increasingly dependent on the system just to survive.

And if the system does crash, then what? You're betting on the Federal government, this government, OUR government, to save you?

Good luck on that. What do you think would happen where you lived if there was no gasoline and no diesel within a full tank's drive of your house for a period of seven days? What would happen, honestly?

System crash.

We're seeing chaos in that part of the country. I'm pretty scared, my parents and brother live there. They're doing alright according to Dad, but those gas shortages are beginning to take their toll. Lines are bad. People are cutting way back on activities now. They're having to miss work and school. Another couple of weeks of this and things could be bad.

Very bad. The refineries are still down. No slack to help from other parts of the country. One real good weekend of panic buying could really cause serious problems.

When Barack Obama says that our economy is a national security issue, this is what I think it means. I hope he understands the issue. The Bush administration's entrenched corporate culture of greed, deregulation of industries and allowing them to police themselves, removal of consumer protections because they are "expensive regulatory barriers" and PROFIT PROFIT PROFIT has led directly to this situation.

Because we're going to see a lot more of this as the economy continues to tank. We don't have the money for infrastructure. We're almost $11 trillion in the hole now. We spent that money on Iraq and Afghanistan and Wall Street, not fixing and future-proofing our most basic infrastructure systems.

We privatized them instead. Look how that turned out. Disaster capitalism at its finest. And we're going to be in for a lot more of it in the future before we're forced to try to salvage a system on the brink of collapse.

What happens when the systems we rely on to kick in when the primary systems are down, are also down?

System crash. I've been talking about an economic system crash for months now. We're seeing that happen. But there are many, many other systems, and wringing every drop of blood out of them for PROFIT PROFIT PROFIT always PROFIT has left those systems just as vulnerable.

And all those systems are interconnected. They affect each other. If one goes down, they take the others with it. We live in a systemic, interconnected world. All those systems have to work.

Now realize Bush has been in charge of watching those systems for eight years. McSame and Palin and the GOP want to continue that same philosophy.

Scared yet? I am. You need to be too. It needs to scare you into action.

Be prepared.

Cross-posted at the Frog Pond.

StupidiNews, Weekend Edition

• Actor Paul Newman has died of cancer at age 83.
• Major House GOP opposition to the bailout plan remains.
• Palin aides pulling a no-show for subpoenas could be found in contempt.
• Condi Rice has quietly admitted to Bush administration torture discussions in 2002-03.
• Both lefty and righty political blogs are asking for last night's debate footage to be made public domain.