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Friday, October 3, 2008

Bailout Bill Passes

posted by on October 3 at 10:37 AM

The measure was approved in a 263 to 171 vote, with 172 Democrats and 91 Republicans offering support. … Democrats also won 32 more votes than they had on Monday, despite reservations from some conservative Democrats that the tax package would add to the deficit. […]

In addition, federal legislators noted that the publicís view of the measure seemed to swing following Mondayís precipitous stock market drop. While many lawmakers had said that nine out of 10 callers objected to the measure over the weekend and on Monday, things appeared to balance out later in the week.

Now we can shift our economic panic to the unemployment crisis.

Via The Hill.

RSS icon Comments

1

SUPER!!! I did not need to ever see Social Security in my retirement and certianly we do not need any health insurance for everyone.

All that money is gone for good. Good luck President Obama. You have no money to do anything.

Posted by Cato the Younger Younger | October 3, 2008 10:49 AM
2


The real panic will come when the markets do not respond in the near term.

My prediction: markets go up today and early next week, and then continue downward.
Gold will go down during that time, then it will be time to load up on gold. And then hold on....

Posted by gk | October 3, 2008 10:53 AM
3

Now would be the perfect time for another war, guys.

Posted by Ziggity | October 3, 2008 10:55 AM
4

The unemployment crisis was just forestalled.

Unemployment is bad, and we're still in recession, but those numbers are BEFORE the credit crisis. If the bill hadn't passed, the next unemployment report would have shown a couple of MILLION new entries.

Posted by Fnarf | October 3, 2008 10:59 AM
5

can we invade canada and take their health care? it worked in iraq for oil.

Posted by jrrrl | October 3, 2008 11:03 AM
6

The Dems and Obama certainly get full credit for this bill passing. Time will tell if that's a good thing.

Posted by tomasyalba | October 3, 2008 11:05 AM
7

unemployment crisis? why don't these people just live off their investments? lazy bums.

Posted by jrrrl | October 3, 2008 11:05 AM
8

Unemployment and deflation, here we come!

Posted by Bellevue Ave | October 3, 2008 11:06 AM
9

wall street will just gobble that trillion up & ask for more.

layoffs start in 3... 2... 1...

Posted by max solomon | October 3, 2008 11:07 AM
10

The problem is, I have NO IDEA if passing this bill was a good or bad thing to do. And that freaks me the fuck out.

Posted by Greg | October 3, 2008 11:08 AM
11

Excuse my cynicism, but somthing tells me white collar criminals are salivating.

Posted by Vince | October 3, 2008 11:14 AM
12

Not that it really matters since the bill passed, but did anyone else notice that not only did Inslee repeat his NO vote, but McDermott switched from YES first time around to NO this time (full roll call here). Interesting.

Posted by The Tim | October 3, 2008 11:22 AM
13

IT's not a bailout, it's a socialization (partial) because the money goes to buy assets.

Think.

Govt. gift to wall street = bad, = bailout.

Govt. money to buy their distressed paper, put it in public ownership = socialism = good.

It worked and made a profit in RTC example and in Sweden and about 5 European nations just did it too.

If Obama handles this right it could bring us everything we want.

First, after elected,he'll have to administer this so if done right it can work = huge credit to Obama for saving the whole fucking economy.

Second, it can lead to (a) a profit or (b) moral high ground for govt. internvention/participation in taking over sectors of the economy like our:

--stupid health care finance sector which finances not paying people's health care costs
--our stupid failure to invest in greenining the economy, the investment sector really needs govt. help here, too.
--all the rest of Obama's plan.

It's all about reframing the whole way that we talk about govt/economy in America from the GOP frame of govt bad to a new frame of govt. is needed to get all the economic benefits we can achieve.

So, please stop the ultraleft babyish critique this is a bailout. It's not a gift. You get assets. You get public ownership of assets. Isn't this the direction we want to move in?

And also it worked in Sweden.

Posted by PC | October 3, 2008 11:27 AM
14

That is pretty interesting, The Tim - wonder if someone McDermott trusts sat down and read him the riot act. (and P.S., much Sloggy thanks for having been so very far ahead of everybody else locally on the broader consequences of declining house values.)

Posted by tomasyalba | October 3, 2008 11:53 AM
15

Here's how this went down, and it's pathetic:

Overwhelming public animosity toward the bailout causes the House to defeat the bill on Monday. The markets freak out a little bit (17th worst drop in history), causing lawmakers to immediately bicker and second guess, and allowing the media (which is owned by publicly-traded corporations) to start calling the vote a failure.

Markets rebound on Tuesday a little bit. The media continues to call the House vote a "failure," trying hard to turn public opinion. Lawmakers made their little show of listening to the angry rank and file voters who earned the billions of dollars that are on the table, and now focus on "rescuing" Wall Street in earnest.

Bailout becomes rescue, though no substantive changes are made to the bill. Instead of taking the opportunity afforded by the bill's defeat to substantially modify it, or to write an entirely new bill, congress merely adds some pork to it in order to entice more yes votes, essentially "buying" the support of lawmakers who were still otherwise listening to voters. This raises the bailout -- er, rescue -- to $800 billion. It passes the Senate. It passes the House.

Our money goes to the sink-hole. Long-term solutions disappear. Everything now depends on judicious use of the money (yeah right), and oversight, a word that no longer exists in Washington. Great plan!

I feel incredibly let down by Patty Murray and Jim McDermott and wrote both of them to say so. I also wrote Maria Cantwell, but to tell her that she did the right thing to oppose this bill. I urge all of you to do the same. Guess who I will and won't be supporting in future elections? This vote was that important.

I have lost a lot of respect for Obama, too. Mr. "Change Happens From the Ground Up" threw his weight behind a trickle-down bill. When the money is on the table, he voted for trickle-down. That is very telling, people. Too bad he's the only viable choice available in this election.

But why am I so whiney about all of this? Hell, it worked in Sweden.

Posted by doctiloquus | October 3, 2008 12:03 PM
16

PC, despite her usual disabilities with grammar and sense, is right here. Not that this "the direction we want to move in" -- government ownership of bad housing loans isn't really very high on my list of goals -- but in the fact that we will receive assets from this; it's not a straight cash giveaway. These assets are in many cases salable right now (at a big loss) or in other cases will be eventually, possibly at a much reduced loss.

This sets up a fire sale for dodgy home loans. You can pick up bargains at a fire sale, if you front cash. The government can front cash, rescue the banks, and restore liquidity, in exchange for the assets. It's even possible -- unlikely, but possible -- that we could come out ahead.

The taxpayers have made billions of dollars on deals like this -- Fannie Mae and Freddie Mac, for instance, have been HUGELY profitable for the government over the years. It's sad to see so-called liberals falling for the neanderthal right-winger "it's socialism, gosh durn it" argument. Government WORKS if you do it right.

And even if we lose some billions here and there on this new program, we come out way, way ahead in the long run, because with liquidity in the market again we all have jobs. Not passing the bill was going to destroy the world economy.

And please, please don't watch the stock market on this one.

Posted by Fnarf | October 3, 2008 12:10 PM
17

Doctiloquus, you completely and utterly misunderstand the nature of the bill or the nature of the crisis it is intended to forestall.

Hint: it doesn't have fuck-all to do with the stock market.

Posted by Fnarf | October 3, 2008 12:14 PM
18

@ Fnarf,


But it does absolutely nothing to address the causes of the crises, quite the opposite. At best, it will temporarily re-inflate the credit bubble and set the stage for an even bigger crash due to massive deleveraging.


I guess it depends on if you accept the standard line that this is a "credit crisis," when--in fact--it's a solvency crisis.


And BTW, I am not a "neanderthal right-winger," and this is not like the Swedish solution because there's one crucial missing factor: Equity ownership of failing firms for taxpayers.

Posted by Original Andrew | October 3, 2008 1:20 PM
19

The bailout is like DayQuil -- it makes you feel better temporarily but you get sicker in the long run because you don't properly treat the illness.

In other words: It's like putting on a band aid to treat internal bleeding.

Posted by Dawgson | October 3, 2008 1:30 PM
20

@18, I didn't say you were a neanderthal right-winger; I said that an awful lot of bailout opponents are using the argument provided to them by the neanderthals: "ooh, it's socialism". As if socialism hasn't been an important part of every rich country for most of a century; as if this evil socialism was worth destroying the world economy to prevent even a glimmer of; as if socialism hasn't been operative in a dozen other preventive measures taken just in the past week. AIG, anyone?

The bank that matters most IS nationalized; the Fed, like all national banks, is de facto government owned. We don't WANT to nationalize all these other banks; what the hell would we do with them? Let them operate as per usual. We take some of their bad debt -- which is NOT a "bailout" in the auto-industry sense; we're not forking over dough for nothing. We're getting assets back -- assets which have some value, especially in a settled-down market. If that means that all those $400,000 homes are marked down to $200,000 where they belong, so be it.

The most critical flaw of your suggestion, though, is the fact that you'll never in a million years get it passed, or even close; it wouldn't make it out of committee.

Posted by Fnarf | October 3, 2008 2:28 PM
21

This clusterf**k of an economic mess is increasingly convincing me that the Austrian School of Economics is right -- fiat currency is a scam, fractional reserve banking is fraud, and "liquidity" and "velocity of money" are measures of how successful the Ponzi scheme is at bilking people into paying in.

I find this very disconcerting, as I'm a pretty left-leaning guy who supports a lot of regulations that make the Austrians cry.

Posted by Chronos | October 3, 2008 2:30 PM
22


@ Fnarf,


You are right in that a plan that puts the American people--instead of corporations--first will never pass in today's political climate.


I was reading a really interesting article in Der Spiegel that basically said Americans may pay lip service to their phony spirit-in-the-sky gods, but free- market, Reaganomics-style capitalism is the nation's true, unquestioning religion. When hard-core fanatics are faced with a crisis, they become even more committed to their beliefs, facts and reality be damned.


Maybe we'll get a real bill after the next crash.

Posted by Original Andrew | October 3, 2008 3:03 PM

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