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Monday, September 29, 2008

Bailout Deal Collapses

posted by on September 29 at 11:30 AM

The House of Representatives shit-canned the bailout deal—the one Bush said they had to pass “or else”—and the Dow tumbles toward 10,000.

Good times.

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Guess Pelosi didn't have all the DEMOCRATIC votes she thought she had. Because, make no mistake, if every Democrat in the House were on board with the plan, the bill would've passed because Boehner got enough Republicans to flip their position to pass this.

Members of the House were bombarded with phone calls all weekend from their constituents urging them to vote no. The switchboard was so clogged this morning no calls were going through. The congressional website was down.

It looks like "main street" didn't want to bail-out "wall street" after all. Damn the consequences, full speed ahead.

Posted by PopTart | September 29, 2008 11:38 AM

George Bush is "very disappointed."

Good. Now our Government can work out a real plan.

Posted by doctiloquus | September 29, 2008 11:44 AM

seriously, damned if you do, damned if you don't.

Also, how did banning short sales stop stocks from sliding?

Posted by Bellevue Ave | September 29, 2008 11:46 AM

Socialist revolution, here we come. Charles will be creaming his pants.

Posted by tsm | September 29, 2008 11:49 AM

Interesting and fairly bizarre voting pattern from our delegation: Baird, Dicks, Larsen, McDermott, and Smith voting "yes" to support President Bush, and Hastings, Inslee, McMorris Rogers, and Reichert voting "no" with Dennis Kucinich. What gives?

Posted by Murgen | September 29, 2008 11:51 AM

Inslee was the only D from Washington to vote no. As a center-left guy with a lot of white collar and high tech jobs in his district, can anyone explain his rationale?

Reichert, Hastings and McMorris-Rodgers also voted to wipe out your savings. That's one hell of a way to distance yourself from Bush in an election year.

Posted by Joe M | September 29, 2008 11:53 AM

It's not "supporting President Bush", it's supporting the idea that we don't want to have a major depression. If they don't restore liquidity the Dow's going to sink a lot further than 10,000, and more importantly none of you are going to have jobs.

Posted by Fnarf | September 29, 2008 11:54 AM

none of you? Fnarf, what was the unemployment rate during the great depression?

Posted by Bellevue Ave | September 29, 2008 11:55 AM

I understand economics only marginally better than John McCain does and I don't want to eat dog food in my retirement, but I also don't want to bailout Wall Street.

This seems to be the obvious final stage of the eight-year plan of looting the Treasury. I don't want to live through an actual all-out Depression (what's happening now isn't fun already), but the only answer can't possibly be just to make rich people richer. We can't give them the rest of everything, can we? Or do I have no grasp at all on this situation?

Posted by whatevernevermind | September 29, 2008 11:56 AM

1. Increase taxes on the top two brackets.
2. Equity Stakes in companies in return for cash.
3. Increase the yield on municipal bonds.

Posted by Bellevue Ave | September 29, 2008 11:58 AM

@1: no way in hell the dems would pass this without GOP buy-in. first the GOP de-regualated & then neglected to enforce the remaining regulations. the free marketeers broke it, they have to own it.

a dem-only bailout is handing the GOP a club marked 'socialism' to beat them with up till nov. 4.

this isn't over. and mccain's "contribution" to wrangling his caucus into agreement just proved to be hot air. he was supposed to have provided 100 "yea" votes.

fuck the GOP.

Posted by max solomon | September 29, 2008 12:01 PM

and instead of paying attention to the DOW, a cherry pick of an index, look at the S&P 500 for a broad picture.

Posted by Bellevue Ave | September 29, 2008 12:04 PM

I knew this shit sandwich wasn't going to pass as soon as WaMu tanked. I'm so glad I'm not at work today. The calls from investors must be hellacious.

Posted by Gitai | September 29, 2008 12:05 PM

I'd tell them to be pissed off at the inability to short the market today. SKF is way up on this but could have been even way further up!

How did the ban on shorts prevent this crash?

Posted by Bellevue Ave | September 29, 2008 12:06 PM

Jesus Christ, BA! Yes, you're right -- not literally EVERYONE. Forgive me if I find the prospect of repeating the Great Depression unattractive.

Your prescription isn't a bad one, though. I'd add "triple the capital gains tax", though. But not just yet; getting the banking system straight is more important than balancing the budget right now (gee, funny how all the Bushies have turned into Keynesians in the last couple of weeks, huh?)

Posted by Fnarf | September 29, 2008 12:09 PM

Well, hell. I don't have a job now, Fnarf, so things aren't going to change for us here at the Balt-O-Matt manse too much. Ha ha. Depressions are fun! The past is NOW!!!! Bread lines are the FUTURE!

Posted by Balt-O-Matt | September 29, 2008 12:10 PM

Meanwhile oil drops to $98 a barrell down from a high of $140 due to the collapse of oil speculation.

Biggest players in oil speculation: Bear Sterns, Morgan Stanley, Goldman Sachs...

Posted by DavidC | September 29, 2008 12:19 PM

Glad it failed. Maybe they can work on curing the damn cancer that is eating up Wall Street instead of buying them a nice car to die off in?

Have any of you READ the 110 page document they were voting on today? Glad it failed. It did not fix the problem and frankly did damn little to address the current symptoms.

Oh yeah, that $700 Billion tab? Paulson just MADE THAT UP!!!!! It is not based on a SINGLE bit of Economic data as a benchmark.

Posted by Andrew | September 29, 2008 12:23 PM

Senator Obama, Break's over!

Posted by Jed Bartlett | September 29, 2008 12:24 PM

the capital gains idea is dumb fnarf and you know it.

Posted by Bellevue Ave | September 29, 2008 12:25 PM

Low capital gains tax benefits only the richest of the richest. For everyone else, it doesn't make a significant difference or makes no difference at all.

What DOES make a huge fucking difference is a ten percent drop in the S&P 500 in a single day, like we're about to hit. THAT represents almost all of the real-world investment and pension value in the country, much more so than the Dow. Most people and almost all pensions are indexed to the S&P, not the Dow. Including mine. Our retirements are disappearing before our eyes, people.

Posted by Fnarf | September 29, 2008 12:36 PM

BA@20 is right; you may think raising the capital gains tax is the moral thing to do somehow, but tripling it at a time when money is pouring out of the stock market like Niagara Falls isn't really going to help anything.

Posted by tsm | September 29, 2008 12:38 PM

I am glad it did not pass. Perhaps there is a tiny bit of government left that won't be bullied by GWB and his minions. They have made their bed and we're all going to have to lie in it - but I'd prefer we teach these corporations a lesson and not bail them out. We have prevented every third world country that ever wanted to bail themselves out from doing so - stating the market would right itself. The people responsible for this catastrophe should have to bear the pain, too, without a bailout from the American taxpayer - who will have to struggle through a recession either way. I am proud of those who voted no - who will not simply give in and do what GWB says must be done just because he and his cronies say so. Perhaps we have a semblance of a democracy left after all.

Posted by xina | September 29, 2008 12:38 PM

@21 - If you want to increase the tax burden of the rich, just do it directly by raising income taxes on the top tax bracket. Jacking up the capital gains tax is a crude and imprecise way of doing the same thing.

Posted by tsm | September 29, 2008 12:41 PM

oh no guyz! did you see, food prices have risen 300% today and all our paychecks got cut by half! what are we going to doo!!

wait, that's not right? this only means that mega-financial institutions will have to stop borrowing ridiculous amounts of money until they pay some of it off? oh ok, let's move onto more important matters, like that bill to establish a new cafeteria at the lincoln memorial.

Posted by stop responding to bush/fnarf calling wolf | September 29, 2008 12:53 PM

The problem I see is that right now, we are just starting to see the fall out--as it spreads around the world. This is only started, and we will see it come back here in many, many different ways.

One the upside, our currency is gaining as Europe starts to slide...

Posted by Original Monique | September 29, 2008 12:58 PM

@24: Except for people who make a significant portion of their income through capital gains. Now who would those people be?

Posted by Greg | September 29, 2008 12:58 PM

@27, Grannies that collect interest off their savings accounts?

If you increase capital gains taxes up to 3 times you'd shock the system in an unprecedented way. And higher brackets already pay more in capital gains.

I don't want to say that there shouldn't be a raise in capital gains tax but I'd like to see it in a less ham fisted and sensational way. perhaps extend the upper bracket to 38% and the lower bracket to 5% on short term capital gains tax.

sometimes fnarf, i don't think you like anyone pointing out how wrong or ridiculous you are because the majority of the time you aren't

Posted by Bellevue Ave | September 29, 2008 1:20 PM

fnarf is right, unfortunately. Our entire economy is driven by credit, which ultimately comes from big greedy asshole bankers on wall street. If they don't lend, the economy implodes. A bailout sucks on moral grounds, but the alternative is absolute disaster.

Posted by mnm | September 29, 2008 1:25 PM

@28: grannies living off their savings accounts? At what, 0.25% interest? My god, you really must have aced the "straw man" module in your econ classes.

In the real world, most ordinary people earn their capital gains on TAX FREE ACCOUNTS, so they aren't affected.

Taxing income instead of capital gains doesn't work, because any executive with enough income to matter one way or the other already channels most of it through capital gains anyways. Not to mention the hedge fund managers, some of whom earn a BILLION DOLLARS A YEAR, all in capital gains, all taxed at the most trivial rate imaginable.

All I want is to see capital gains tax returned to, oh, maybe what it was under that notorious commie socialist Ronald Reagan. Is that too much to ask for? Yes, it is -- because even Barack Obama is pledging to put up to a fraction of that. McCain doesn't think there should BE a capital gains tax.

But yeah, today's not the day to do it. You're right there. Today's the day for restoring the banking system to functionality, and let the budget deficit go hang.

TOMORROW is the day we cut the heads off the Wall Streeters and carry them through the streets on pikes.

Posted by Fnarf | September 29, 2008 1:34 PM

Fnarf, it was a joke. You seem like you're about to lose it today.

Posted by Bellevue Ave | September 29, 2008 1:41 PM

No, I only lost about 8.41% of it, BA.

Posted by Fnarf | September 29, 2008 1:50 PM

Poor baby! Maybe I can give you financial advice?

Posted by Bellevue Ave | September 29, 2008 2:00 PM

Correct me if this sounds off-base, but doesn't this response just further show that Wall Street was gambling on the bailout saving their asses without consequence? I understand there's still uncertainty about the future of credit markets, but this sell-off right after the vote tells me there's still tons of artificial value that needed to be shed before we can return to fundamentals. If the bailout was approved then the stock market would have (presumably) just run up based on the same artificial numbers as before. This should be the final wake-up call to credit markets and lenders.

Posted by laterite | September 29, 2008 2:03 PM

laterite, you hit it on the head.

Posted by Bellevue Ave | September 29, 2008 2:07 PM
Grannies that collect interest off their savings accounts?

Thanks for proving how ignorant you are. Savings account interest is taxed as regular income, you fucking idiot.

Posted by keshmeshi | September 29, 2008 2:08 PM

it was a joke keshmeshi. Did you also lose a shit ton of money today?

Posted by Bellevue Ave | September 29, 2008 2:08 PM

Another problem here is that not all the people 'on wall street' caused this problem. In fact, it was ONE sector. Yet, without this bailout, its not just them that are suffering. Its every sector, and it will continue to hurt businesses that were responsible, and small businesses that have nothing to do with this.

It's not about Bush and his people, or 'getting the bad guy'. That is so goddamn ignorant.

Posted by Original Monique | September 29, 2008 2:22 PM

Proportionally, today's slide is about the same as on 9/17/01, when the market reopened after 9/11. Now the DJIA is around where it was in late 1999-early 2000. Essentially what today proved is that our economy during the Bush administration has been entirely built on falsehoods created in the market. Original Monique, Wall Street took advantage of the Bush administration's light hand to blur the lines between sectors and expose them all to risk and failure. What should have happened today is only the investor classes took a beating but credit markets stayed fluid. Instead both are in disrepair and Wall Street was gambling on this bailout to subsidize their foolishness.

Posted by laterite | September 29, 2008 2:39 PM

OM, you think you can put a day of reckoning off forever? at some point, drunken abusive people need to be put in jail (excuse the metaphor) even if they are the head of the household and have mouths to feed. Poor people suffer no matter the economic condition (either through price inflation keeping pace with growth or deflationary spiral where they wind up without a job); it's a good incentive to not remain poor.

Posted by Bellevue Ave | September 29, 2008 2:42 PM

and seriously, you'd be proud of the south korean government that let executives out of jail (after being convicted of many embezzlement and corruption charges) simply because there was nobody to step up and take leadership of the companies. gotta love almost nationalized crony corporations right? I mean south korea could have been doomed if the 100+ people weren't let out.

Posted by Bellevue Ave | September 29, 2008 2:45 PM

Oh, and thanks BA @35. I was hoping I articulated my thoughts properly.

Posted by laterite | September 29, 2008 2:46 PM

The best news of today is that I got a 9% raise from my job.

Posted by Bellevue Ave | September 29, 2008 3:44 PM

BA: This has nothing to do with what you are saying. I agree, people should go to jail, assests seized, etc.

A 'reckoning' will happen regardless, yes. You can have a soft one, that protects small business who need credit for payroll, and keeping neighborhoods afloat


you can have massive failures that cannot be made up, even in even in decades in industries that have nothing to do with this.

That is the choice, and I am glad you got a raise, but do you think when businesses cut back by, lets be conservative, 25% that people are going to be using the convention center? Even having conventions? Your revenue is going to go down, down, down. And as a young employee, you might be first in the layoffs!

Oh yeah, GET THOSE BADDIES! woooo!

Posted by Original Monique | September 29, 2008 3:53 PM

I forgot my favorite quote I heard today, this is a fucking gem:

"I am glad this bailout failed, we can't turn this government into a socialist society. I like my freedoms too much."

HAHAHAHA oh christ, people are so fucking dumb.

"Freedom isn't costs folks like you and me....freedom costs a buck o five!"

Posted by Original Monique | September 29, 2008 3:55 PM

OM, you need some time enhanced perspective; Depressions don't last forever and I'm not tied to this job. Further, the Convention Center and by extension the SCVB is mostly funded by tax revenue from hotels, which in a huge downturn would lose money hand over fist but you know, if it comes to that, I can at least appreciate the fact that

a. I like soup
b. I'm good with my hands

and in the big picture I wouldn't be the first to lose my job since I'm part of infrastructure maintenance for the core business. Marketing is always the first to go in tough times, and revenue streams are the last.

And the bailout had nothing to do with propping up small mom and pop businesses or funding the small business administration, so it's a moot point.

Posted by Bellevue Ave | September 29, 2008 4:08 PM

re: @46

I'll vouch for that...I made soup last night and he loved it!

Posted by Mikki | September 29, 2008 4:23 PM

OM read Rothbard's "America's Great Depression" and you see how voting against the bailout is the best vote for keeping us out of a depression. Our economy is artificially high, it needs to come down.. we just love to print money to pay for things.

Posted by Lyon | September 30, 2008 12:03 AM

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