Reason Magazine
- reason.com
- reason.tv
- reason.org
- Donate
- Site Search:
Reason on Facebook
Reason on Twitter
Reason on YouTube
Reason RSSGet Reason E-mail Updates!
Manage your Reason e-mail list subscriptionsadvertisements
And On the Eighth Day, Congress Created a Bailout...
From USA Today:
"We hope sometime tomorrow evening we can announce that there has been some sort of agreement in principle so that the only thing that will have to be done is to write the legislation," said Sen. Harry Reid, D-Nev. "It is still a long way from completing it but we've made significant progress."
Aides worked late into the night, he said, and there are "probably 15 issues still left outstanding that senators are going to have to get together and resolve."
Here's hoping the free-market-oriented House Republicans stick to their guns.
Many House conservatives say they are against such heavy federal intervention. Under the House GOP plan, the government would insure the distressed securities rather than buy them. Tax breaks would provide additional incentives to invest.
House Minority Leader John Boehner on Friday released a letter to House Speaker Nancy Pelosi demanding that "serious consideration" be given to the radically different proposal. "If such consideration is not given, a large majority of Republicans cannot - and will not - support" the administration's plan, Boehner wrote....
We don't have to rush in with the greatest advance of socialism in the Western world," said Rep. Louis Gohmert, R-Texas and a backer of the House Republican proposal. "The only thing we have to fear is fear-mongering from the secretary of the Treasury."
Gene Berkman|9.27.08 @ 5:54PM|#
The House Republicans have given opponents of the bail-out some
time to marshal opposition. But the House Republicans themselves
propose to offer government backed insurance to the financial
institutions with bad mortgage backed securities, and thereby put
the taxpayers on the hook when the banks try to collect the
insurance.
Also, Rep. Eric Cantor told the L.A. Times that some of the
mortgage backed securities are so weak, the government will have to
buy them anyway. So the House Republicans will probably end up
selling us out too.
Don the libertarian Democrat|9.27.08 @ 6:00PM|#
They're not guns, they're pea shooters. Look,if you want
government to stay completely out of it, fine. However, if
government has to be involved, then I'd rather the government get
an asset for this bailout. It is true that, as in Sweden, we'll
have to eventually sell these assets and get the government out of
this business altogether, but a deal without equity seems awful. As
Robert Reich says:
http://robertreich.blogspot.com/
"Congress knows the public is furious. That's why it's insisting on
the above-mentioned provisions. But Congress and the
Administration, and Wall Street, also know that the public -- and
the media -- can easily be hoodwinked into believing that certain
limits and protections have been built into the deal when, on
closer inspection, they haven't. Wall Street is masterful at
creating the appearances of value when there's no value there, and
many of our representatives in Congress are well-versed in the art
of creating the appearances of public gains when the gains are
mostly private. So the media has to dig hard and look at the
details of this deal."
Again, if you like Randazzo's plan, I understand, because I at
least understand it, and agree with it. However, this hybrid plan,
without any equity for the bailout, is a prescription for a huge
mess and a huge loss.
I'm no expert in economics, but as a taxpayer I am an expert in
getting fleeced.
By the way, what's with the auto loan bailout?
|9.27.08 @ 6:06PM|#
Considering the public is hugely against the bailout, rightly or wrongly, the Republicans in the house have an opportunity to pick up support with a vote that won't mean anything anyway. Unless 40 GOP senators grow a spine, the bill passes Monday. All of you ACORN lovers can start celebrating, at least until America smells the rat and the Democrats pay a huge political price.
|9.27.08 @ 6:08PM|#
I sure hope that the Republicans stick to their guns. I draw
hope from the fact that it's Harry Reid who is making these claims
of progress.
At the very least, let the Democrats pass this one alone if they
must. Not with Republican support.
John McCain said something about short-term loans to banks that are
being adversly affected through not fault of their own. They should
hammer on that idea some more.
DannyK|9.27.08 @ 6:36PM|#
I like some things about the RSC plan, but how can they
seriously be advocating that the Federal government write massive
insurance policies on these shady financial dealings without taking
any control? Isn't that exactly what killed AIG, like, one week
ago?
Also, didn't anybody notice that McCain said in the debate TWICE
that, sure, he'd sign off on the Paulson plan? Check the
transcript. I think it's getting to the point that people are
ignoring what he actually says and substituting something that
makes sense, but as it stands he's endorsing the Paulson plan and
keeping mum on the RSC plan.
I think we should arrange a leveraged buyout of the American
economy by the Germans -- good beer, techno music, good bankers,
and hey, they owe us one for supporting reunification. And the way
things are going, it's either them or the Chinese.
Colonel_Angus|9.27.08 @ 6:45PM|#
"Tax breaks would provide additional incentives to
invest."
Here we go fucking around with taxes again as a form of economic
manipulation.
JMR|9.27.08 @ 6:56PM|#
No, no, not a "bailout." Fox News is trying to call it a "rescue," and they're "fair and balanced" so they MUST be right! Sigh...
Kolohe|9.27.08 @ 6:57PM|#
Many House conservatives say they are against such heavy federal intervention. Under the House GOP plan, the government would insure the distressed securities rather than buy them. Tax breaks would provide additional incentives to invest.
This is singularly dumb. I wouldn't mind if they took a stand that
*nothing* would be done - it would be principled and perhaps even
work. But adding more 'insurance' to the mix is the exact wrong
thing. This stuff already has insurance; it's the questionable
ability to pay off claims that's the whole problem.
Kolohe|9.27.08 @ 7:01PM|#
I see DannyK already beat me to it, despite his deeply flawed assessment of german techno music. (I've seen those ATT ads)
zoltan|9.27.08 @ 7:05PM|#
Should banks be allowed to be responsible for more money than they can pay back in the first place?
|9.27.08 @ 8:06PM|#
I don't understand how this bad paper becomes good when the government (the taxpayer)ends up with it. Hearing that there might be some profit in it perked up my capitalistic ears. why wouldn't an investor buy it, if a profit might be made? The whole shooting match stinks and the smell test has failed miserably. As an old fart, with some investments in the scam, I would lose without a bailout, but I read the prospectus. Past performance does not indicate any future profits. As a father and grandfather, I don't think it's for the children, any more than SS, Medicare and Prescription drugs are for the children, except to pay for us old duffers. The future is bleak, for those we will leave behind. Don't sell your guns.
|9.27.08 @ 9:03PM|#
Under the House GOP plan, the government would insure the
distressed securities rather than buy them.
Does anyone know what that means? Insure them for what? How?
The Bearded Hobbit|9.27.08 @ 9:26PM|#
.. I am fully and unequivocally sincere in my belief that
Congress will somehow, in some way, fuck this up ..
.. Skeptical Hobbit
Lfiti|9.27.08 @ 10:48PM|#
Here's hoping the free-market-oriented House Republicans stick
to their guns.
Yeah, I mean fuck! Market discpline, man. When things go wrong, the
market corrects, and if everybody gets fucked over in the process,
that's the way it works. Let them fucking eat cake. Fucking
whiners.
|9.27.08 @ 10:56PM|#
The shocking mendacity of the Dems on this one, trying to siphon
off 20% of the "profits" (which could be billions of dollars) for
"affordable housing" groups (read: Dem surrogates and auxiliaries)
has only confirmed my visceral distrust and distaste of them.
At least a few Repubs are trying to stand athwart the Treasury,
shouting stop. The Dems seem wholly consumed with creating as big a
slush fund as they can.
Really, really shameful. I wouldn't be surprised if, in the very
long run, the verdict of history is that this "bailout" package, by
so utterly distorting the financial markets for generations to come
and embedding the federal government as an equity owner and market
maker in the financial and housing sectors, was more damaging to
the US than the Iraq war.
D.A. Ridgely|9.27.08 @ 11:25PM|#
Should banks be allowed to be responsible for more money than they can pay back in the first place?
Certainly not. Only governments are allowed to do that.
|9.27.08 @ 11:33PM|#
Your Urgent Help Needed
Dear American:
I need to ask you to support an urgent secret business relationship
with a transfer of funds of great magnitude. I am Ministry of the
Treasury of the Republic of America. My country has had crisis that
has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be
most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator,
you may know him as the leader of the American banking deregulation
movement in the 1990s. This transactin is 100% safe.
This is a matter of great urgency. We need a blank check. We need
the funds as quickly as possible. We cannot directly transfer these
funds in the names of our close friends because we are constantly
under surveillance. My family lawyer advised me that I should look
for a reliable and trustworthy person who will act as a next of kin
so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund
account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your
commission for this transaction. After I receive that information,
I will respond with detailed information about safeguards that will
be used to protect the funds.
Yours Faithfully
Minister of Treasury Paulson
economist|9.28.08 @ 12:10AM|#
Dear Minister of Treasury Paulson,
I regret that I'm busy investing all my money in Iraqi
securities.
Some Guy|9.28.08 @ 7:44AM|#
I would give House Republicans more credit if they weren't
proposing the same plan with different language. The difference
between the plans is like handing our money directly to compulsive
gamblers vs. building a casino for them where the house always
loses.
But here's to hoping that all of Congress would rather blame the
other party for nothing getting done than working together.
Partisan hackery is good for something I guess.
GG|9.28.08 @ 11:22AM|#
Can someone please explain to me what these craven criminals are smiling about?
|9.28.08 @ 11:27AM|#
Hey wouldn't you be smiling if you'd just managed to pull of the biggest heist in history.
JMR|9.28.08 @ 11:54AM|#
Not just a great heist, they bailed out their buddies. And the "AIG bailout" actually ALSO bailed out Goldman but most financial "journalists" have spent the past week cluelessly claiming how supposedly strong Goldman's books are, as if these guys are actually more fiscally responsible than the other weirdos or something. Yeah, right Goldman-worshippers, as long as your guy keeps being Treasury Secretary, that might seem to be so...
JP|9.28.08 @ 12:00PM|#
Somewhat OT: Arnold Kling over at EconLog has been writing some
great stuff on the "crisis" and the "bailout." Something I loved
from today's post:
"the bailout is a transfer from ordinary Americans to the
holders of mortgage securities. That is like giving rich people
priority access to lifeboats on the Titanic. At some point,
ordinary Americans are going to figure that out, and there will be
hell to pay.
If we implement the Paulson plan, we will make the wealth shock
more painful for ordinary Americans. The Democrats' approach for
offsetting that is to try socialism (government taking equity in
financial firms, etc.) Socialism will destroy even more
wealth."
Kling is generally in favor of taking it slow.
http://econlog.econlib.org/
economist|9.28.08 @ 1:48PM|#
"What are these craven criminals smiling about?"
Maybe they all got drunk beforehand.
Oh yeah, and they're sociopaths, so they enjoy it.
|9.28.08 @ 2:00PM|#
Hey wouldn't you be smiling if you'd just managed to pull of
the biggest heist in history.
And we thought Ocean's Eleven and opening the vault at the
Nakatomi building were audacious.
Just Plain Brian|9.28.08 @ 2:29PM|#
And we thought Ocean's Eleven and opening the vault at the Nakatomi building were audacious.
At least the Nakatomi heist was thwarted by John McClane. It's like
Matt Welch says - the real "maverick" is fictional.
Paul|9.28.08 @ 3:30PM|#
Nick, this is not a bailout, it's a rescue.
Conjure image of bank execs, tied to the railroad tracks while the
"free market" twirls its moustache and looks on from behind a
nearby rock.
|9.28.08 @ 3:46PM|#
Why does my ass hurt every time I hear the phrase
"bipartisan consensus"?
It's your sphincter exhibiting a classic Pavlovian response.
Mad Max|9.28.08 @ 5:24PM|#
(With apologies to the
Geto Boys, and to this
guy)
Damn it feels good to be a banker
Lending dough to folks that are broke
And when it comes time for repayment
All the money goes up in smoke
But everything's cool in the world of a banker
The U.S. Treasury will bail us out
We'll get a bill passed in Congress
Because bankers have lots of clout
And all I gotta say to you taxpayers and bondholders
Is you gotta go along with us, see
'Cause if you don't give us what we want
We'll crash the whole economy
thoreau|9.28.08 @ 5:56PM|#
"From each according to how carefully he saved.
To each accordingly to how recklessly he borrowed or loaned."
-Hank Paulson, The Wall Street Manifesto
|9.28.08 @ 9:30PM|#
I'm not sure what is the descriptor for what we have here right now. But one thing is for sure, it is far worse than socialism. This needs to be fought against, vigilantly.
|9.28.08 @ 11:02PM|#
This is a letter published in "The Idaho Statesman" newspaper
today.
These points should help explain GOP economics
For those who are having a hard time understanding Republican
economics, here's a primer:
If you're a farmer and take money from the government for NOT
farming, that's capitalism.
If you lose your job, can't find another job and exhaust your
unemployment benefits, that's unfortunate. But we can't give you
money for not doing anything. That's socialism.
If you're the CEO of an investment bank and take a government
bailout, that's capitalism.
If you're in danger of losing your home and would like the
government to help you, that's socialism.
If you nearly bankrupt a company, you deserve to get a $42 million
golden parachute and be a presidential adviser. That's
capitalism.
If you invest in a company and your 401(k) plummets because the CEO
nearly bankrupted it, helping you would be socialism.
If you're a congressman, you have the best medical insurance - for
free. That's capitalism.
If your employer doesn't offer medical insurance and you have
medical problems, you'll just have to suffer. If the government
provided insurance, that would be socialized medicine.
That should clarify everything. If it doesn't, just remember this:
If rich people get money from the government, that's capitalism. If
workers get money from the government, that's socialism.
JACK BONAWITZ, Meridian
Ebeneezer Scrooge|9.29.08 @ 1:38AM|#
The proposition of government buying "assets" that nobody knows
how to price, makes no sense in the first place.
The voters don't want it.
By and large the market doesn't really believe it's going to save
the day.
Why do I have a feeling that we aren't being told the real story as
to why they're jamming this down our throats, when doing it is so
obviously swimming against the current?
You can write all the letters you want to your congress animals.
Whatever is really going on, they're going to do it come what
may.
I'm normally not a conspiracy type, but this one just reeks. And
it's the come what may part that bothers me.
Ebeneezer Scrooge|9.29.08 @ 1:49AM|#
And more --
It got sprang on us out of nowhere, like a tidal wave that nobody
saw coming.
It's being pushed by Bush. Public approval rating: 18%? Does
anybody trust his judgement at this point?
It's being agreed to by congress. Public approval rating: 10%?
Pelosi may be one of the few people who's judgment I trust less
than Bush.
Really, I'm not the conspiracy theory type. But this REEKS of
hidden agendas.
|9.29.08 @ 10:11AM|#
Why does my ass hurt every time I hear the phrase "bipartisan consensus"?
Probably from the strain of pumping out that huge
bipartisanSHIT.
Metamucil ain't gonna help either.
Site comments/questions:
Media Inquiries and Reprint Permissions:
(310) 367-6109
Editorial & Production Offices:
3415 S. Sepulveda Blvd.
Suite 400
Los Angeles, CA 90034
(310) 391-2245