Choose Your Own Bailout

If you haven't yet read the draft of Treasury's bailout plan, it's right here, and it's losing steam every minute.

The Secretary may, at any time, exercise any rights received in connection with mortgage-related assets purchased under this Act.

The Secretary may, at any time, upon terms and conditions and at prices determined by the Secretary, sell, or enter into securities loans, repurchase transactions or other financial transactions in regard to, any mortgage-related asset purchased under this Act.

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.

The people's bulwark against this: Connecticut Sen. Chris "Friend of Countrywide" Dodd.

Sen. Dodd's plan would not allow the Treasury Department to purchase any assets "unless the Secretary receives contingent shares in the financial institution from which such assets are to be purchased equal in value to the purchase price of the assets to be purchased."

Treasury officials have not suggested that the government would receive any shares of companies that sell distressed assets into the huge government fund.

Democrats are also expected to clash with the Treasury Department on a separate provision that could limit executive compensation at firms that participate in the program. Sen. Dodd's plan would limit the pay "to exclude incentives for executives to take risks that the Secretary deems to be inappropriate or excessive." It would also allow limitations to senior executives as it is "determined to be appropriate in the public interest in light of the assistance being given to the entity."

It's all moving very fast and getting crazier. Minnesota Sen. Norm Coleman (R), in particular, is running against Al Franken by trying to be funnier than him.

U.S. Sen. Norm Coleman said the massive government bailout of failing financial institutions is not only necessary but could make money for the federal government.

The government could make 10 or 20 times what it pays on this, possibly," Coleman said during a campaign stop at Christy's Cafe in North Mankato Saturday morning.

Hey, everybody! We're going to get rich!

Comments

[Pro Libertate]

The proposed bailout is bad enough, but it's going to get much, much worse when the Democrats in Congress finish adding on provisions in a fit of ourturnitis. No more executive compensation! Ponies for everyone!

[Guy Montag]

Lovely.

I leave the freaking beltway for a few weeks and all soers of socialistic hell breaks loose!

[Handsome Dan]

Hey, everybody! We're going to get rich!

/Rodney Dangerfield

[P Brooks]

I guess this means we're going to have to shut the fuck up about Castro and Chavez.

[Naga Sadow]

There is no way they can pass this. No judicial review? Come on. Also, what is the deal with ad asking me to make a tax deductible donation to reason. Stop it!

[zig zag man]

The government could make 10 or 20 times what it pays on this, possibly," Coleman said during a campaign stop at Christy's Cafe in North Mankato Saturday morning.

Isn't this the kind of thinking that got us into this mess in the first place? Now, it's the government looking at making a killing, just like the greedy investors who got burned

We are so going to pay, big time.

[Guy Montag]

At least the John Birch Society skipped tax-free status as to keep government opinions out of theirs . . .

[P Brooks]

If we've nationalized the financial services industry, we can just pay the people running these new funds on a government pay scale. Eighty-seven grand per year should be sufficient; that'll save us a bundle.

[David]

Hey, everybody! We're going to get rich laid!

/Rodney Dangerfield

Fixed.

[Abdul]

The government could make 10 or 20 times what it pays on this, possibly," Coleman said

I don't know about 100 to 200% returns on the investment, but there is a possibility that the government will recoup what it spent on AIG.

Also, the S&L bailout was passed, in part, because Uncle Sam was supposed to recoup some of what it spent. Sincere question: does anyone recall how that turned out? I sure don't.

[Elemenope]

Abdul --

Ten or twenty times: that would be 1000% to 2000% returns. That's why what Coleman is saying is properly understood to be *crazy*, not optimistic.

[Mad Max]

Minnesota is a real People's Republic, on the order of New York. Minnesota Democrats are officially known as the Democratic-Farmer-Labor Party, based on a merger between the Dems and some other leftwad parties. To compete with these jokers, the Repugs have to be even more socialist than Republicans in other states - although I'm no longer sure that's possible.

Sen. Coleman did one impressive thing - he restored the high profile of the Permanent Subcommittee on Investigations of the Government Operations Committee. Only two other Senators have achieved this before - Joseph McCarthy and Robert Kennedy.

[Mad Max]

(Robert Kennedy was a Senate aide at the time, not a Senator)

[Atabrat]

The government could make 10 or 20 times what it pays on this, possibly," Coleman said.

Sauce PLEASE!

[Episiarch]

Is there even one single politician saying "this is insane!"? Just one?

[Pro Libertate]

Does this bailout mean that the financial regulators will be compensated like financial services CEOs? Hmmm, that might explain a few things.

[Goliath]

Hey, everybody! We're going to get rich laid fucked!

/Rodney Dangerfield

Fixed.

For Reals.

[Pro Libertate]

Say, I just got an e-mail from the LP attempting to put this $1 trillion bailout in perspective. I yawned and felt nothing until I read that this amount would buy "two Mitsubishi 73" HDTVs for every household in America."

Son of a bitch must pay.

[Guy Montag]

Can someone translate this bailout bill into 2009 HEMI 'Cuda units for me please?

[Daze]

Invest $1 trillion, get $20 trillion back?!? Best infomercial ever.

[Guy Montag]

Invest $1 trillion, get $20 trillion back?!? Best infomercial ever.

Sounds a lot like some e-mail I keep getting from people who say they are in Africa . . .

[tim]

@Mad Max

spoken like someone who obviously doesn't live in this state.

[Kolohe]

Abdul --

Ten or twenty times: that would be 1000% to 2000% returns. That's why what Coleman is saying is properly understood to be *crazy*, not optimistic.

Nah, its easy. 1000% nominal return in 10 years can be achieved with about a 26% inflation rate per year. This is well within the capacity of most governements.

[A Stoner]

I might be inclined to vote for this, if, prefered stock of all corporations were put into treasury and used to help fund Personal Retirement Savings Accounts for people who pay into Social Security.

[Pro Libertate]

I'd like to buy into a fund that tracks the growth of the federal deficit.

[Kolohe]

Can someone translate this bailout bill into 2009 HEMI 'Cuda units for me please?

1 HCU (unsure of of the SI notation) -> 50 k$.

Bailout = 14 MHCU

[alan]

Episiarch | September 22, 2008, 2:14pm | #
Is there even one single politician saying "this is insane!"? Just one?

Yes, but I'm not swimming back across the river just so you can have a sane economic policy. That thing is filthy.

[alan]

alan | September 22, 2008, 2:41pm | #
Episiarch | September 22, 2008, 2:14pm | #
Is there even one single politician saying "this is insane!"? Just one?

Yes, but I'm not swimming back across the river just so you can have a sane economic policy. That thing is filthy.

By that I meant Ron Paul. Non regulars would not get the context.

[Kolohe]

I'd like to buy into a fund that tracks the growth of the federal deficit.

You could buy inflation indexed bonds with a exchange rate hedge, which I think would be close. (I think doing something like this Soros has made another gazillion dollars this decade)

[Jack Burton]

Son of a bitch must pay.

We really shook the pillars of heaven, didn't we Wang?

The check is in the mail.

[joe]

Ten or twenty times?

What?!?

This isn't a liquidity problem, Norm. Those things are junk. What, are they going to be worth something as antique documents in 200 years?

Nah, its easy. 1000% nominal return in 10 years can be achieved with about a 26% inflation rate per year. This is well within the capacity of most governements. Winnah!

[New World Dan]

[insert facepalm.jpg here]

Norm hasn't got an independant thought in his head. He's a career politician that just parrots what other people tell him. And yet, I'll still take that over comrade Franken. At this rate, Dean Barkley is going to be a viable candidate soon.

[alan]

Kolohe, on e of the more chilling memes
going around is the phrases and terminology and ideas the Democrats are using come straight out of Soros' The alchemy of Finance. I haven't seen anyone in the media pck up on this, but the talking points on the shows yesterday were riddled with this stuff.

Don't make me reread that dreadfully boring piece of bogus economic science just to keep in the loop of the current crises Democrats. I tend to hold grudges.

[alan]

correction:

Kolohe, on e of the more chilling memes
going around is the phrases and terminology and ideas the Democrats are using come straight out of Soros' The alchemy of Finance

Kolohe, one of the more chilling memes going around is in the phrases and terminology and ideas the Democrats are using come straight out of Soros' The Alchemy of Finance

If that was tough for me to decipher it must have been excruciating for some of you, my apologies.

[Elemenope]

Norm hasn't got an independant thought in his head. He's a career politician that just parrots what other people tell him. And yet, I'll still take that over comrade Franken.

This, boys and girls, is why *nobody* takes independent voters seriously.

"I'll vote for the tool over the socialist!"

-Why?

"Cause the tool will fuck me sideways, but I learned from my pappy that socialism is TEH EVIL!!!"

-Oh, OK. Fuckhead.

[joe]

Ohnoes! George Soros!

Not the guy who funded civil-society groups in the old Warsaw Pact nations!

[Warren]

OK Doc, you got me fair and square. Would you like to shoot me now? Or wait till you get home?

[alan]

Ohnoes! George Soros!

Not the guy who funded civil-society groups in the old Warsaw Pact nations!

Yes, JOe. I'm warning you ahead of time to expect a new level of insufferable syntax on the current bureaucratese your job requires of you in order to further reduce to euphemism the usual fluffery your side mistakes for coherent thought. It's a cold world out there, but I do it because I'm a fucking humanitarian.

[joe]

You are also a presumptuous dipshit, alan. I haven't worked for the government in three years, dumbass.

[Kolohe]

alan-

All I was trying to say is that if you bet at the beginning of the decade that the nat'l debt would be larger and the dollar would be weaker, you'd be right. And IIRC, Soros did this.. I think he also lost a ton of money because he was the wrong way on the recent (until last week) dollar strenghtening / oil & gold pullbacks.

[alan]

My, my listen to the mouth on the little man.

I haven't worked for the government in three years, dumbass.

I was being a bit overly generous to you by referring to what you did as 'work', that wasn't really assumption as much as politeness.

[Kolohe]

I basing this on some panel (CFR?) I saw on C-SPAN w/ Soros on it back in July (when oil/gold were at there peaks and $ was in its trough) where he implied what his postions were, and that he was maintaining them. (saying something like, 'I've made a lot of money off of George Bush's mistakes, and will continue to make it as long as he in charge')

[joe]

Yawn.

[alan]

I really haven't followed his work much since the early nineties when Eastern European development was the concentration of my major. That tome of his doesn't bring back any pleasant memories and the suddenly you start hearing 'reciprocity' all over the news shows.

[Paul]

Eighty-seven grand per year should be sufficient; that'll save us a bundle.

I'll take it.

[Paul]

I haven't worked for the government in three years, dumbass.

Joe, that was your opportunity to offer the possibility as to why the government is in this current mess.

It's not my job to watch your back. And if you tell anyone about this...

[R C Dean]

What, are they going to be worth something as antique documents in 200 years?

I have a really cool Confederate bond that I paid, what, $50 for ten years ago.

Until you have a bond from that era, you don't know what "clipping coupons" really means. Across the bottom of the bond are little coupons to be clipped off every six months and exchanged for the interest owed. Each one is hand initialed by some assistant treasury secretary. I think the last one clipped off was in 1864.

[Paul]

Oh shit, now they're getting all bipartisan on us. Everybody duck.

[Pro Libertate]

So long as each citizen gets a check for U.S. $1 billion, I'm okay with the plan. No inflation, however!

[ChicagoTom]

The government could make 10 or 20 times what it pays on this, possibly," Coleman said during a campaign stop at Christy's Cafe in North Mankato Saturday morning.

I have seen this talking point parroted a few times since last Friday. And as much as we may mock it, some people are believing it.

They don't understand that the only way for the government to "make" money off of these bad loans is to pay pennies on the dollar for them -- something that private entities can currently do, but the financial institutions don't want that.

Most people don't realize that what the government is offering is to pay top dollar for a bunch of bad loans that no one in their right mind would pay and then pretend that if they just hold them for a while, they would become valuable assets that taxpayers would profit from.

It's the Underpants Gnomes business plan.

Step 1: Buy a bunch of bad debt at premium prices
Step 2: ????
Step 3: Profit

Paulson himself has said that the #1 priority is to re-capitalize the banks, only secondarily (and only really via lip-service) is he concerned about protecting taxpayers and a very distant third is minimizing moral hazard. And his desired plan is only focusing on priority #1, and doesn't even pretend to address at any other "priorities". His whole plan is a fucking boondoggle.

Oh and any companies who take a government bailout should have their executives forced to complete credit counseling courses and write a letter to shareholders explaining what they learned and how they will prevent making those types of mistakes in the future. That's what they did to consumers when they "reformed" the bankruptcy rules.

[Paul]

Most people don't realize that what the government is offering is to pay top dollar for a bunch of bad loans that no one in their right mind would pay and then pretend that if they just hold them for a while, they would become valuable assets that taxpayers would profit from.

I sense a market signal coming. If it were me, I'd be shorting the U.S. Government.

[Paul]

Chitom,

To sum up your point, if it there were a potential profit in it, the government wouldn't have to bail these institutions out. It's that simple.

[brotherben]

Lemme see if I gots this right. The gubmint is gonna "invest" a trillion bucks in these companies. Then the gubmunt will "massage the economy some more so's we/they get enough of a return on that investment to pay off ALL of our national debt and have many dollars left over?

Hell I'm all for that!!!

yours truly,

mr. average voter

[Happy Jack]

Also, the S&L bailout was passed, in part, because Uncle Sam was supposed to recoup some of what it spent. Sincere question: does anyone recall how that turned out? I sure don't.

I don't know who said they would make money. Most estimates were that it would cost tax payers around $50 billion. At last count (in 2000), the number was $150 billion.

[joshua corning]

Democrats already set up Fannie Mae to buy up bad credit.....how is this going to be any better?

[Thomas]

10 or 20 times 700 billion? Yahooooo! Our national debt will paid off and we'll have enough to fund NASA for another century! Or free healthcare for all! MOON BASE! ROCKET CARS!

Thanks, Norm!

[Jon H]

"Also, the S&L bailout was passed, in part, because Uncle Sam was supposed to recoup some of what it spent. Sincere question: does anyone recall how that turned out? I sure don't."

It's apples and oranges. The S&L bailout was simple things like empty lots and strip malls - commercial real estate that was pretty easy to value.

Big Shitpile, on the other hand, is a tangle of slices of tranches of fancy financial instruments that nobody really understands, not even on Wall Street, and nobody knows how to value. A single bad mortgage could be split up among many mortgage-backed securities, and each mortgage backed security can represent many, many mortgages, of various qualities. (The combinations and slicing were supposed to make the instruments 'safe investments', but then too many of the mortgages were made of fail.)

What we'll be buying is a riddle wrapped in an enigma tucked inside a Hellraiser puzzle box, times a billion.

This American Life had a great segment about this. In one part they go to a mortgage outfit and try to trace a particular bad loan into all the bundles it was rolled into.