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Acronyms to watch for: Roubini supports Hillary's HOLC, not RTC/RFC solutions to financial crisis

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[I'm leaving this sticky because I think it's still the litmus test, and because of the impassioned comment thread. --lambert]

Here's a litmus test for whatever Congress comes up with as they huddle with the finance boiz over the weekend: HOLC good, RTC/RFC bad.

I may not understand this class warfare finance stuff, but I can sure quote people who do! Nouriel Roubini:

The most important policy action ... is rather the realization that a generalized debt and solvency problem required a solution that leads to significant debt reduction.

Let me explain in detail how we now need bold policy action to resolve this most severe financial and economic crisis…

Households in the US have too much debt (subprime, near prime, prime mortgages, home equity loans, credit cards, auto loans and student loans) while their assets (values of their homes and stocks) are plunging leading to a sharp fall in their net worth. And households are getting buried under this mountain of mounting debt and rising debt servicing burdens. Thus, a fraction of the household sector – as well as a fraction of the financial sector and a fraction of the corporate sector and of the local government sector – is insolvent and needs debt relief.

When a country (say Russia, Ecuador or Argentina) has too much debt and is insolvent it defaults and gets debt reduction and is then able to resume fast growth; when a firm is distressed with excessive debt it goes into bankruptcy court and gets debt relief that allows it to resume investment, production and growth; when a household is financially distressed it also needs debt relief to be able to have more discretionary income to spend. So any unsustainable debt problem requires debt reduction. The lack of debt relief to the distressed households is the reason why this financial crisis is becoming more severe and the economic recession - with a sharp fall now in real consumption spending – now worsening. The fiscal actions taken so far (income relief to households via tax rebates) and bailouts of distressed financial institutions (Bear Stearns creditors’ bailout, Fannie and Freddie and AIG) do not resolve the fundamental debt problem for two reasons. First, you cannot grow yourself out of a debt problem: when debt to disposable income is too high increasing the denominator with tax rebates is ineffective and only temporary; i.e. you need to reduce the nominator (the debt). Second, rescuing distressed institutions without reducing the debt problem of the borrowers does not resolve the fundamental insolvency of the debtor that limits its ability to consume and spend and thus drags the economy into a more severe economic contraction.

So of the five possible uses of fiscal policy – income relief to households (the 2008 tax rebate), rescue/bailout of financial institutions (Bears Stearns, Fannie and Freddie, AIG), purchase of assets of failed institutions (an RTC-like institution), recapitalization of undercapitalized financial institutions (an RFC-like institution), government purchase of distressed mortgages to provide debt relief to households (an HOLC-like institution) – the last option is the most important and effective to resolve this severe financial and economic crisis. During the Great Depression the Home Owners’ Loan Corporation was create to buy mortgages from bank at a discount price, reduce further the face value of such mortgages and refinance distressed homeowners into new mortgages with lower face value and lower fixed rate mortgage rates. This massive program allowed millions of households to avoid losing their homes and ending up in foreclosure. The HOLC bought mortgages for two year and managed such assets for 18 year at a relatively low fiscal cost (as the assets were bought at a discount and reducing the face value of the mortgages allowed home owners to avoid defaulting on the refinanced mortgages). A new HOLC will be the macro equivalent of creating a large “bad bank” where the bad assets of financial institutions are taken off their balance sheets and restructured/reduced; thus it will be the macro equivalent of the “bad bank” that Lehman tried to create for its bad assets.

Creating a new HOLC mechanism is likely to be more effective than creating a new RTC (whose purpose was to buy and dispose over a number of years of the assets of already failed S&Ls): we need to provide debt reduction to households well before hundreds of banks failed as working out the bad assets only after banks have failed is costly.

Bottom line: Households first, then the banks (which, in the end, turns out to be better for the banks, too).

And HOLC, while Obama is still waiting for word from his finance guys to scroll up on his teleprompter, is the solution Hillary has already advocated:

A new government entity like the HOLC with a focus on attacking the source of the problem can serve the purpose of clearing a lot of those toxic mortgage securities from the market. We know there will not be any semblance of a normal or orderly marketplace until we have found a way to resolve these mortgage securities that are metastasizing in the bottom of our markets. By taking this paper out of the market and quarantining it in this new entity we will be able to give the market breathing room to recover.

Last spring when I called for a modern version of the HOLC, that’s the Depression-era entity that bought up old mortgages and issued new, more affordable ones in their stead, most people did not pay much attention. But I think it’s important to note that by the time the HOLC closed its books, that agency had turned a small profit and helped over a million people keep their homes. And this was 70 years ago. Our population has grown dramatically. So, obviously, if we did it right, we would be able to save a lot of homes. And I think if it is administered correctly it could be actually a net expenditure or even winner for the federal government.

Read the whole thing. It's great. It's what we should be doing.

Bottom line: Wall Street's treating Obama as if he were President right now (and that probably makes sense, though Constitutionally, I hate it). If Obama does not come out with a HOLC solution, and Harry, Nancy and the rest of 'em go for an RTC/RFC solution, we are even more totally fucked than we already are. For HOLC, we'll have to wait 'til 2012, because the other proposals just won't work.

NOTE Let's remember, too, that Hillary also, as a Senator from New York, also states as an explicit goal maintaining Manhattan as a financial center -- which is hard to do when the markets collapse. So, HOLC is not only good for the people, it saves the bankers' bacon as well. This is a classic fix for a runaway capitalist system in the FDR-mode, and shows the systems thinking that was a hallmark of the Hillary campaign (after it righted itself in February).

UPDATE As Glenn points out, and Barney Frank before him, the Paulson plan amounts to a financial dictatorship:

UPDATE: Here is the current draft for the latest plan. It's elegantly simple. The three key provisions: (1) The Treasury Secretary is authorized to buy up to $700 billion of any mortgage-related assets (so he can just transfer that amount to any corporations in exchange for their worthless or severely crippled "assets") [Sec. 6]; (2) The ceiling on the national debt is raised to $11.3 trillion to accommodate this scheme [Sec. 10]; and (3) best of all: "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" [Sec. 8].

Put another way, this authorizes Hank Paulson to transfer $700 billion of taxpayer money to private industry in his sole discretion, and nobody has the right or ability to review or challenge any decision he makes.

Really, it's just like Iraq, isn't it? And in Iraq, I've always thought it would have been simpler, cheaper, more humane, and far more effective simply to load C47s up with pallets of cash, and then airdrop them all over Iraq. Ditto here. Why are we giving infestment bankers the money, when they'll just send it offshore anyhow? Save people's homes, and they'll spend it right here.

UPDATE Krugman's dubious. As well he should be.

UPPDATE Atrios too. As well he should be. As a commenter there asks, shock doctrine, anyone?

UPDATE Krugman again: No deal.

UPDATE As Susie points out, Lord Eschaton is back at the top of his game. He asks a very good question:

It's unrealistic to imagine that I'd be able to really get enough honest information to have an informed opinion, but I spent some time thinking about what question all the Very Serious People should, at a minimum, want answered before the start cheering on pony plans. This is what I came up with:


What changed between Monday and Friday? What new information did you have at the end of the week that you did not have at the beginning of the week which caused you to go from $0 to $1 trillion?



And, no, tumbling stock prices or babble about "deteriorating credit conditions" don't count. Bernanke, Paulson, the SEC, the FDIC should have had access to a set of facts independent of day to day market turmoil. What actually changed over the week? If it was new information, what was it? If it was newly discovered information, why didn't you know it before?

Ponies? Will there be ponies?

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Comments

Submitted by jawbone on

watch/listen to everything, but I haven't seen anything about it except on the blogs I read. (Are the Obama Nation blogs covering her proposal?)

Seems like the MCM can only look at X many options, and those need to come from Very Serious Maladministration People, the candidates, of selected R&D pols, mostly in leadership positions. I heard Dodd, Shelby, the two prez candidates, some Maladmin people--Clinton??

Oh, there was some video on local NYC TV about Clinton cancelling an appearance at a pro-Israel rally after Palin was also invited. No policy news on the reasons, however, since everyone knows the accepted policy.

*MCM--Mainstream Corporate Media (now, more that ever, the C part is so important to how the news is presented to the public)

leah's picture
Submitted by leah on

Happily, Roubini is someone who is being quoted and listened to.

Unhappily, the emergency nature of this and the closeness of the election is going to put pressure on everyone to find a quick answer, and remember, some members of congress are facing an election in early November.

Also a problem, the Republicans are unlikely to even want an independent agency of any kind, and some Democrats are talking about a new agency, but instead of mentioning the HOLC, they are using the example of the RTC. That doesn't necessarily mean that they mean that example to set the example of how such an agency would function; I don't know whether they do or don't. Some may be referencing RTC because most people remember that example.

But I completely agree with Lambert's and Roubini's analysis - and not doing that will be an even further disaster - it will lead to a severe, or a severer recession than whatever we are now facing.

So let me make a proposal.

This is so big that the liberal blogisphere needs to work together to get these ideas out in the open, and repeated and repeated. We need a populist vocabulary to do so - talking points the voters will understand - ones that make clear that there are two ways to do this - relieve the rich of their burdens using our tax money, and that means, for instance, our social security money, or to reduce liability through-out the economy, to understand that the troubles of the finance sector are undermining the fundamental health of the economy, which means not only recession, but a possible return, at the same time, of inflation - stagflation anyone - and that it will be possible to use this man-made economic disaster to give relief to the people who created and hand the bill to the rest of us, but that it is just as possible to provide debt relief through-out the economy, i.e., to the rest of us, the vast middle and working class.

But there is also a way not to do that.

Let me suggest that someone from Corrente who still has an account at Daily Kos do a diary there, inviting Kossocks to join a movement to get this message out - to other bloggers - and to solicit ideas on how we can start a movement that will take some action that will be noticed. Dito at Firedoglake. Anyone know Ian Welsh's email? He's there now, and he's terrific on the economy. And let's just email bloggers we know. Digby writes a column for Campaign For America's Future. Center For American Progress has been on this and has good policy position papers. Let's get MOVE-ON in on this.

And some of this should be aimed at the congress, at Hillary, to take leadership within the Senate, and most of all, at the Obama campaign. And maybe even at Bill Clinton - calls and letters to is office asking him to make a statement - or to use his influence with Obama. Clinton, remember, is close to guys like Robert Rubin, but I think Bill also understand the economics and would agree with Roubini.

How about whoever started that page at Obama's website about whatever. Let's solicit support from his grassroots. We need to let that campaign know we are watching what he does and we know enough not to be fooled.

I can tell you this much about the Obama campaign; he has set up in his remarks the issue - who gets relief - only the big guys, no good - main street has to get it too. He's been vague about what that means - and his campaign is going to be loath to commit, but he may have to in the Senate - this is one he can't get out of voting on. There are overwhelming reasons that it will ruin him if he goes for the RTC model.

Now here's another task for the blogisphere. It doesn't matter what it's called - the point is restructuring mortgages of actual homeowners, not just restructuring securatized debt - i.e., bundles of mortgages. So we need to keep track of what is being talked about and not let anyone get away with creating and new entity without defining it in the liberal progressive New Deal way.

My understanding is that what the Bush administration wants is to let the Bush Treasury handle the entire thing - and I think we know what they will do. And the hell of it is - that is what is best for everyone in congress, because they won't have to take a stand. We can't let that happen.

I have an account at Daily Kos, if anyone can help me get something up there.

Why don't we try and get P.B 2.0 started by getting the entire liberal blogisphere to get organized on the most important issue of our time - one that has the potential, at its worst, to crush the possibilities for liberal progressive reform for another decade or two, if the economic fundamentals of the this country are undermined in the same way our standing around the world has been. Let's help the forces of progressivism that are clearly emerging to act boldly, by acting boldly ourselves.

On the local level - local blogs around the country could be inviting homeowners to sign petitions and talk about their own predicament, whether its trying to fend of foreclosure, or watching the value of their houses fall below the money they still owe on their mortgage - and get that to Congress.

I'm completely serious about these proposals. This is all going to happen very fast. We don't have a lot of time.

Submitted by lambert on

Leah:

I think an account at obama's site is the best idea

The equivalent idea for FISA got a lot of attention, and no doubt this would, too. Anyone want to do that today? Readers? Leah?

I can't, since I have to go paint caulk and paint some windows before it gets too cold. It would be an easy post to write, too -- copy this post, invert the snark into a plea for unity, and blogwhore, blogwhore, blogwhore.

Kos and the rest of 'em, IMNSHO, like so much else this year, "if it were going to happen, it would have already happened." In other words, they're totally focused on being Tier Two for the Obama campaign, and have no bandwidth to do this, although the Agonist and OpenLeft are possibilities.

However, I do have the slogan: Homes before banks!

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

tnjen's picture
Submitted by tnjen on

It's absolutely key that we control what gets out and put it in a real lingua franca. The blogs are great but if you really want to disseminate a message to main street we need to also target local message boards with our pitch.

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

Submitted by jawbone on

new soul of the Democratic Party wears pinstripes," as Kevin Phillips put it last night in saying he doesn't see the Dems trying FDR-type changes.

The Clintons may have been the last Big Dems who saw a way to form strong coalitions between the poor, working and lower middle classes, and the meritocracy. The NuDems seem to be, as has been noted during the prez primary, moving toward ignoring certain parts of the old Dem coalition.

But, since the meritocracy depends on a vibrant economy for many of its members to be in the meritocracy (by definition, having a good education and then getting paid well for work of some sort is how one gets into the meritocracy), that "class" may be losing some of its membership.

It's a hard rain a gonna fall....

(Had more in this post, but lost in a quick google search--that's going to be fixed in the new site, right? Right???)

inna's picture
Submitted by inna on

and thanks a lot for posting the whole thing, Lambert - it looks like one has to be a registered, paid user in order to have an access to full articles on Roubini's site.

btw, i'm pretty certain that Obama is going to go with HOLC, in fact i'm surprised he hasn't announced it yet.

Submitted by lambert on

Jeebus, does anybody think I paid? There are other service you can pay for, but plenty of great content is free. Go register now!

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

FWIW, and I don't trust him, but he's chairman of the Senate Banking Committee, so maybe backup pressure on him might be worthwhile.

Look, this can't just be about what they call "illiquid debt" -- basically, a lot of bad mortgages or a lot of bad securitized debt that's out there. It also has to be about the cause of the problem.

Let me emphasize this again. And that is, Michael, you've heard me talk about it for two years. And again, the secretary of the Treasury and the chairman, Bernanke, said it, as well. At the root cause of this is the housing foreclosure crisis. Still is today. So we can't just talk about what we do about the effects of this on Wall Street. We also need to talk about its cause.

And at this very hour, 9,000 to 10,000 people every day in the country are losing their homes. So part of this plan has to also affect people out there who are in danger of losing their residences, as well as their jobs, their retirement accounts, the 401(k)s. If it's just about Wall Street, then we've got a problem. I'm hopeful it will not be, and my intention is, over the weekend, to at least try and include some of these other pieces so that we can truly come together this week and get the job done.

TreeHugger's picture
Submitted by TreeHugger on

gave a 10 min talk (interview)to Maria WhatsHerName on CNBC video 2 nights ago. He actually said Hillary's plan was the best but he did not describe it. The only "media" coverage of this interview was a storm of criticism over his tepid support of the Democratic ticket and for supporting Hillary's economic plan. Give a listen...he makes pauses while he is searching for the right words to use but no um's for a solid 10 minutes.

An important difference of today's proposed bailout from the Resolution Trust Corporation model, as Joe Noccera in today's NYT points out, is that we are not talking about buying the friggin' MORTGAGES, which have real quantifiable value...we are talking about buying the derivitized derivatives these snakes sold each other...that is, junk of the nth degree that nobody knows how to value! That's why there is such a mess in the first place.

Paul Krugman said at the end of a 6 minute interview this am that he doesn't know if the proposed bailout will work or not. (Sorry, too many clicks ago to remember where I listened to it.)

Submitted by lambert on

I'd be interested to hear it.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

leah's picture
Submitted by leah on

...as almost equally to blame for the present cock-up. Didn't you hear him on Bob Rubin? Both Clintons have strong pin-stripped alliances. That is why many genuine progressives have a low opinion of them. I think those progressives are only seeing part of the picture.

But a post like yours is part of the problem. It's all hopeless - there's nothing we can do. There had been all kinds of grassroots protest and activity before Roosevelt took over in 32.

I notice that you didn't deal with my comment that in expressing his support for this new bailout, Obama has committed himself to the notion that it has to be a bailout of main street as well as Wall Street. Yes, it is entirely possible, even likely, perhaps, that under pressure, the Democrats might cave and pretend that what they agree to meets those qualifications. But the people who sit around doing nothing will have nothing to complain about.

Thanks, Valhalla, I saw Dodd's Hardball interview; he looked genuinely mad, and I think he meant what he said. Could some of us spare the time to contact his office by phone, and/or email to say thanks, and keep at it - and even mention an HOLC option; right now what the Bush administration has is a promissory note for a blank check for Hank Paulson, and as Atrios is pointing out, the consensus for that is being manufactured like crazy.

The one place where the liberal blogisphere is fairly united is on economic policy. We ought to be able to use that consensus to DO something.

Inna, I'm interested in your comment, assuming your weren't being ironic. Could you elaborate?

Submitted by lambert on

since IMNSHO that's a key factor in who's under the bus and who isn't. But this can be party invariant...

I think the key aspect is that the HOLC plan has been proven to work and by the time it wound down, actually made a profit. Even from the Stevensonian goo-goo perspective it's a winner.

And the Paulsen alternative is, in my mind, essentially fees for the boys who got us into this mess. Again, from the Stevensonian goo-goo perspective, that's a loser.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Valhalla's picture
Submitted by Valhalla on

I think you meant someone else than me? I haven't commented on this thread (although I've been reading it closely!).

Because the problem is not that we have too little condescension from our tribe. -- okanogen

gyrfalcon's picture
Submitted by gyrfalcon on

to have been mistaken for Valhalla. I posted the Dodd thing, but it doesn't matter.

Submitted by lambert on

1. "Homes before banks" (turns out to be better for banks, too!)

2. "Financial dictatorship" (what the Rs are proposing, and what the Ds will sign off on, if we're not careful)

3. "Infestment bankers" (haw)

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

Seriously. I'm not sure what you're getting at. If we're talking about "democracy" in terms of voting and will o' the people and all that, how do we vote on a bank bail-out plan? Our elected representatives are about to do that, but that's not enough?

I think you're trying to get at broader issues here, but the term "dictatorship" isn't doing that for me.

Submitted by lambert on

... giving $800 billion to one man to dispense as he sees fit with no accountability is not democratic.

And if they get away with this, it's hard to see how the guys who just looted $800 billion from the Treasury aren't running the show.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

Seriously. What's the alternative? Who should be voting on these auction purchases one by one, and how long should they be allowed to deliberate?

No kidding. What on earth are you talking about? I freely admit that I'm ignorant enough about this stuff that I may be totally missing something that's obvious to you. If so, would you please explain it to me?

Did you read Drum's post today (http://www.motherjones.com/kevin-drum/20...) and the Wall Street Journal tick-tock he links to as background (http://online.wsj.com/article_email/SB12...)?

Do you understand that the entire U.S. financial system is on the verge of imminent collapse-- not in a matter of weeks or months but days and maybe hours come Monday?

Do you understand what the $880 billion is for? Do you understand about the auctions? Do you understand that credit has essentially shut down and that no business in this country can function without it? If you doubt the seriousness of the situation that's developed just in the last couple of days, please read the stuff in the links.

Maybe you know all this and are just using shorthand that's going totally over my head?

What's your alternative to dealing with the immediate, urgent, emergency situation we have right now other than throwing the money at the smartest guy in the room and telling him to do what he needs to do?

And yes, I totally, totally agree that this mess developed in the first place because of greed and cowardice and fucked ideas of social Darwinism and insane selfish "I've got mine, Jack" attitudes about regulation.

But here we are, and it has to be patched up now, immediately, or we're all going down the rathole, and as BIO rightly says, no amount of backyard gardening is going to protect us.

Submitted by lambert on

and I'm not sure I believe any of the players. I'm with Krugman: No deal.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

Try reading up on what's been going on financially in the last week? It's totally impossible to evaluate this on the basis of politics and ideology alone.

Submitted by lambert on

and posting regularly -- and looking seriously at what well respected economists like Krugman and Roubini have to say. But thanks for your suggestion. Especially the idea that the administration isn't acting politically or ideologically. That's a humdinger.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

As far as I can tell, Lambert, you've been reading up on opinion, not facts on the ground.

And once again, I'm impressed by the refusal of some folks here to actually read what was said and instead insert their own constructions.

Where, Oh, Lambert, did I say the adminstration wasn't acting politically or ideologically? I did say I thought Paulson personally was pretty demonstrably a straight-ahead guy on this particular crisis, given the way his proposal matches the facts of the meltdown as I understand them.

And as far as I can tell, the rest of the Bush administration is just getting the hell away from the whole mess and letting Paulson have a free hand because they're scared shitless and don't want any part of the consequences if he's wrong, or even if he's right. That alone should tell you something.

And I gotta say, this whole thing is a damn depressing demonstration of aspirations to PB 2.0, which as I always imagined it, was intended to be based on facts and not haka.

Submitted by lambert on

So far as I can tell, gyrfalcon, you've linked to exactly one article, from AP, which was nothing but opinion -- unless you wish to treat Paulson's statements as factual?

And it's not clear to me, in the hall of mirrors that is modern finance, how facts are to be distinguished from opinion.

This is an open platform. I suggest that your best course of action is not to complain that others do not live up to your expectations but to "be the change you seek" by posting the kind of post that you would prefer to see. You will learn something, educate others, and make yourself and the blog look good. Or you can choose not to invest the time. Your call.

Eh?

UPDATE Actually, more than one. I lost the WSJ tick tock in the threads. Nevertheless, even the tick tock is being driven by fear, and that's being driven by.... What? We can't know.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

Here are a couple of the things I've posted, some of them repeatedly, to no apparent effect: http://online.wsj.com/article_email/SB12...

http://www.thisamericanlife.org/extras/r...

I have no memory of an AP opinion piece, but if you say I posted one, I won't argue.

I've said over and over and over again that my understanding of this stuff is limited and may be entirely wrong and *begged* for factual corrections, and instead have gotten responses that amount to little more than All Bush Admin Bad, End Of Story.

I have attempted repeatedly to outline what I understand to be the objective facts of what's been happening in the financial system, and gotten zero counterargument or correction on my understanding of the facts.

I'm a lifelong pretty dim bulb on financial/economic issues and a lot of people here are obviously a hell of a lot smarter than I am and almost certainly much more capable of understanding this stuff. I continue to await enlightenment on where my understanding has been faulty.

I've raised substantive questions on Krugman's post and the idea that HOLC is a reasonable substitute for Paulson's plan to deal with the immediate crisis and that the money market "bail-out" has to do with the freezing up of capital and gotten nothing more than the occasional flip dismissal in response. I'd be delighted to find out I've gone astray because I DON'T LIKE CAPITALISTS AT ALL and resent like hell the fact that I'm in their power and have to rely on even a relatively benign one like Paulson to save my neck.

I've done all I can do here to introduce a substantive discussion of the realities of the situation, and if nobody wants to deal with it, I give up.

And my God, if you can seriously say there's no difference between fact and opinion in talking about the financial system, I have literally no words for you at all.

There is a point at which healthy skepticism becomes malignant cynicism.

From the WSJ piece linked above:

n three days, the Fed had pumped hundreds of billions of additional cash into the financial system. But instead of calming markets and helping to suppress interest rates, short-term interest rates had gone haywire. Most strikingly to some Fed staff, its own federal-funds rate, an interbank lending rate managed directly by the central bank, repeatedly shot up in the morning as banks sat on cash. The financial system was behaving like a patient losing blood pressure.
Bracing for Redemptions

Fed staff discovered that one reason the federal-funds rate was behaving so abnormally was because money-market funds were building up cash in preparation for redemptions, leaving hoards of cash at their banks that the banks wouldn't invest.

U.S. depositary institutions on average held excess reserves of $90 billion each day this week, estimates Lou Crandall, chief economist at Wrightson ICAP. This is cash the banks hold on the sidelines that does not earn any interest. That compares with an average of $2 billion, he says, noting he estimates banks held $190 billion in excess cash on Thursday, as they feared they'd have to meet many obligations at the same time.

Through Wednesday, money-market fund investors -- including institutional investors such as corporate treasurers, pension funds and sovereign wealth funds -- pulled out a record $144.5 billion, according to AMG Data Services. The industry had $7.1 billion in redemptions the week before.

Without these funds' participation, the $1.7 trillion commercial-paper market, which finances automakers' lending arms or banks credit-card units, faced higher costs. The commercial-paper market shrank by $52.1 billion in the week ended Wednesday, according to data from the Federal Reserve, the largest weekly decline since December.

Without commercial paper, "factories would have to shut down, people would lose their jobs and there would be an effect on the real economy," says Paul Schott Stevens, president of the Investment Company Institute mutual-fund trade group.

Submitted by lambert on

0. "All Bush Admin Bad, End Of Story." Really? I guess if you don't see a repeated pattern of behavior where a crisis (manufactured certainly in the case of WMD) is followed by a demand for unaccountable authority and then followed by a massive fail (in public terms) and an orgy of looting, then there's not a lot I can do for you. I'm arguing we're looking at a modus operandi here; you characterize that as "Bush Admin Bad." Fine.

1. FWIW, the number Krugman follows is the TED spread, which, so far as I understand it, measures the risk of lending to banks; i.e., if "opinion" on Wall Street is that banks are going belly up, the TED spread increases.

2. Yes, the situation is awful. But--

3. Nothing in what I read in your comment above shows me why giving Paulson unfettered authority over $800 billion is good policy, and that's the point at issue in this thread.

4. On fact and opinion in financial systems, read Soros. In a complex feed-forward system, even opinions, based as they are on models of future events, affect prices in the here and now, becoming facts. Sorry you have "no words"; what can I say?

Shock doctrine, pure and simple. Give me $800 billion or I shoot this market.

UPDATE On financial dictatorship, see here. Why would anybody invest in a market not governed by the rule of law? That $800 billion may help for a few months, but in the long run, it's deadly to us.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Submitted by lambert on

We are truly doomed. It's not going to work. HOLC would work. That is the alternative you were asking for.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

tnjen's picture
Submitted by tnjen on

...on being democrats, haven't they? The only reason I can see for this is if we truly are going to completely collapse on Monday without it. If that's true, we're just slowing the fall with this plan. After that, we're going to have to do it all over again later and it may end up being even worse (if such a thing is possible).

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

gyrfalcon's picture
Submitted by gyrfalcon on

the crisis we have at hand, right now, that requires immediate emergency measures. Did I say right now? It needs to be *right now*, not even sometime next week. Right now.

(banging head on desk)

Submitted by lambert on

This is meant to make you bang your head on the desk.

So, if Paulson wants to be emperor, the answer to "And we get?" should be HOLC.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

that it isn't an emergency, that Paulson et al. are lying about the urgency of forestalling a major collapse? If so, how do you know?

Submitted by lambert on

Authorization to Use Financial Force == Authorization to Use Military Force.

With this administration, the burden of proof is on you to prove trustworthiness, not on me to show untrustworthiness.

Whoever's trying to force Paulson's hand -- assuming this isn't just another Village scammer looting the Treasury -- needs to be told "No" by Congress and the American people. If the abcess is going to burst, then, let it be now, because it's only going to get worse after Paulson pisses away $800 billion and there's nothing to show for it. The price, as I said, should be HOLC.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

Don't be silly.

I buy totally that the "Shock Doctrine" may well have been set up as a trap long ago, but *that doesn't change* the realities of the situation at hand.

C'mon, Lambert. If you're willing to have the whole structure collapse and the economy grind to a halt and the widespread suffering that would result in order to prove a point, please say so.

I wouldn't agree, maybe because I'm too old, but it's a legitimate position to take if you genuinely think a more just system would be certain to rise from the ashes.

If Congressional Dems can pry HOLC or the like out of the GOP without argument as the price, I'm all for it. But I'm NOT willing to gamble the livelihoods of however many Americans -- and my own -- on a game of chicken.

Submitted by lambert on

... a single man with $800 billion to spend and no accountability but an emperor?

You're already in a game of chicken -- and what Krugman and Roubini are telling you is that you're going to lose anyhow, because the $800 billion will help some bankers, but will not help you.

Nice petitio elenchi on "willing to have the whole structure collapse," though. Somehow, I don't think Krugman wants that to happen...

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

tnjen's picture
Submitted by tnjen on

...for the current proposal then they can (if they chose) utilize them for an HOLC. Yes, we need something now but what we don't need is a blank check that only serves to slow the inevitable and compound the overall cost.

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

Submitted by jawbone on

yellow machine!

OK, actual comment: Bernhard at Moon of Alabama is aghast at the proposal put forth by Paulson. He points out using this authorization will raise the national debt to dizzying heights.

Paulson also wants to lift the US national debt ceiling to $11,315,000,000,000.00. (When Bush took office, the U.S. federal debt was some $5.6 trillion and on a downtrend.) The U.S. GDP is roughly 13.5 trillion so the US government debt at that ceiling will be some 83% of US GDP. In international ranking that puts the U.S. debt to GDP ratio somewhere between Cote d'Ivoire and Sri Lanka. Still exclude[d] from that calculation are several trillions of liabilities of Fannie & Freddie and AIG the U.S. government recently took over.

Japan is of course still worse off with a debt to GDP ratio of nearly 200%. But most of Japan's debt is held at home as Japan is a nation of savers and has a positive currency account. It exports more than it imports. Over the last years the U.S. has imported a lot more than it exported and needs some $500 billion per year from foreigners to finance that habit. The U.S. national saving rate is somewhere near zero. It therefore needs foreigners to lend the money of any deficit.

Now Paulson wants $700 billion in emergency finance from where?

Who in this world can and will lend $700 billion for an emergency plan when the total lending to the U.S. in one year is only about $500 billion?

Did Paulson talk with China, Russia and the Saudis about this?

With this new debt and debt to GDP ratio the U.S. does no longer deserve an AAA rating. That will have to be cut down two or three notches.

Any future lenders will therefore ask for higher interest rates. Will they have additional conditions on top of those?

OMG--When the Bushies demand speed, and Congress, whether D or R controlled, goes along with that, we end of with terrible and sometimes terrifying legislation. OMG, OMG.. Why the hell weren't the Dems holding hearings on this kind of stuff? Why so unprepared? Hoping BushCo would manage to kick the can down the road until after the election? Well, reality bites. Hard.

China wasn't permitted to purchase Unical (correct name?). I don't think they will take that kind of treatment, now that they own US almost lock, stock, and barrel. Well, Russia owns us as well; as do many ME oil despots. Oh, my.

But this proposal simply cannot stand--Who among the Dems has the standing and balls to handle this kind of BushCo stare down?

Can we have Hillary as our nominee, please? If only Obama would decide he needs to spend more time with his family--and gaining exerience and expertise--and just goes back to the Senate.

I don't see either McCain or Obama as capable of handling this kind of mess. We are so fucked.

hobson's picture
Submitted by hobson on

It is my understanding that one reason foreigners will finance this plan is that they are also into this mortgage garbage. They will be allowed to trade the garbage for US treasuries putting taxpayers on a further hook.

amberglow's picture
Submitted by amberglow on

Atrios--
"Any member of Congress who looks at the plan to give Hank unchecked power to transfer $700 billion from the Treasury to his friends' companies and has any reaction other than "You've got to be f*cking kidding me" does not deserve to hold office."
-- http://www.eschatonblog.com/2008_09_14_a...

Submitted by Paul_Lukasiak on

increased taxes on capital gains, and higher taxes on upper income people -- and possibly a "temporary" 'wealth tax'.

Basically, the people who have the most to gain from this bailout are those who would suffer the most because of capital gains losses if the market collapses. And we need to have a mechanism to pay for these bailouts.

Oh, and one thing that REALLY pisses me off is the idea of the Fed guaranteeing Money Market Funds. The reason I don't invest in money markets, despite their higher return, is because they aren't insured by the FDIC. So, now that the funds are in trouble, we are going to remove the risk involved in putting your money into those funds? RE-FUCKING-DICULOUS!

gyrfalcon's picture
Submitted by gyrfalcon on

With respect, Paul, I think you don't understand the reason for this. According to the WSJ article linked above, the money market funds have dropped so far and have been hit so hard by people wanting to withdraw their money in panic that they've started hoarding money (so have the banks and the investment firms and every other financial institution in this country) so they can pay off the withdrawals.

That means there's NO MONEY circulating in the financial system as of a couple days ago.

No kidding, this is not a matter of saving the financial fannies of fat cats, or the gazillions of thin cats, ordinary folks with a bit of retirement savings in those funds who are no less deserving of a little protection than the folks with the bad mortgages we're all crying over.

That those investments will be partially protected is, yes, a side effect. But that's not why it has to be done.

Submitted by Paul_Lukasiak on

...and what the money market funds should do is declare bankruptcy, making it impossible to withdraw funds until this whole thing shakes out.

Its NOT guaranteed....and if there is a need for liquidity, the Fed can provide it.

Submitted by jawbone on

I thought your suggestions were terrific, then went to do RL stuff. Taking a break right now.

I took the Phillip's criticism of Bill Clinton's administration and Rubin's actions into account. I do believe Bill thought he could forge a coalition of Old Dems and the new meritocracy, some of whom were the new monied class. He also was fighting the perception, long fostered by Reagan and Bush I, that Dems are bad for business, anti-business. He worked hard to try to create conditions which would permit everyone to do better. He felt it could be win-win. And there was job growth and actual income increases for groups which hadn't seen that in many years (Hello, St. Ronnie!). Unfortunately, the MCM wanted to have beer with that dry drunk instead of the steady, experienced wonk.

And, yes, I am pessimistic about this mess. BushCo manages to make mincemeat out of Dems when they come to Congress with an emergency measure that must be legislated RIGHT NOW! We've had terrible results from such laws, and I fear we will have more bad, bad results.

Plus, I don't have great faith in Obama--what will he actually do? What are his basic principles? OK, you know the drill.

And back to trying to make order out of disorder (plus find tarps to cover all the junk I won't get back into the basement by nightfall...).

TreeHugger's picture
Submitted by TreeHugger on

Hey Lambert, sorry for the delayed response: I've been outside for a couple of hours mating a new frontporch light fixture to an ancient junction box that defied being fit with any of the so-called universal brackets. Finally ended up drilling into the siding to attach a mounting bracket and guessed right on which of the ancient paint encrusted wires was black and the whole shebang now works. What I like is that it is a compact fluorescent that automatically comes on at dusk & off at dawn. First time I've seen a low cost fluorescent version of this...$40 at the OTHER home improvement warehouse place.

But I digress. I googled video+billclinton+maria+nbc to get the url for the video I mentioned earlier:

http://www.cnbc.com/id/15840232?video=86...

Now, can someone briefly explain how to copy/paste an address that is in my browser (IE) search window? I keep having to write these down and type them in. Big Thank You.

amberglow's picture
Submitted by amberglow on

click so the cursor is in the address bar on top where the website's address is.

then highlight the whole address, and do COPY.

then go to the comment box here and hit PASTE.

Submitted by lambert on

Here:

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

The last blank check we handed the Bush administration was the AUMF. How's that working out?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

gyrfalcon's picture
Submitted by gyrfalcon on

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.

Far be it from me to disagree with Krugman, but this doesn't make sense to me. Maybe he wrote it before the details became public?

The rationale, as I understand it, is not to "convince creditors of troubled institutions that everything's OK," as he says, but to enable creditors or investors or whoever deals wiht them to *have some idea what the heck they are actually worth.* Right now, nobody knows what anybody who deals in this stuff is worth because these goddamn "securitized" craploads no longer have any established value. They might be worth a lot, they might be worth nothing at all.

It's to establish a degree of certainty not in the health of the institutions but in the ability to evaluate the health of those institutions, good or bad, by removing the unvaluable crap from the system and seeing what's left.

The whole point is that there IS NO market price for this crap. It can't be valued even approximately anymore. It's not worthless, but there's no way to establish how much above worthless it is.

The auction Treasury is proposing will establish at least some kind of objective value-- how much is it worth it to these financial institutions to lose in order to get this crap off their books?

The institutions with the really sucky weirdo "securitized" assets are going to have to pay the price for it because, as I understand it, the gummint will only pay them an auction price, which will be way, way below what they paid for them in the first place.

THe idea, as I understand it, is to get the stinking garbage out of the system entirely, and then the financial institutions can sink or swim on whatever else is left of their balance sheets. The ones that haven't got much of anything left are going to go down. The rest have the hope of struggling back into business on a more honest basis.

Submitted by lambert on

Here it is (and yes, it was available to Krugman when he posted, it was out at Calculated Risk last night).

I'm all for transparency and auctions and marking to market, but from my reading of the text of the law, none of that is mandated at all.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

It sure isn't spelled out in the text of the leaked draft of the act. Far as I can tell, it doesn't say anything about how what the gummint pays for the garbage will be determined.

gyrfalcon's picture
Submitted by gyrfalcon on

but the concept seems to have widely permeated MSM reporting, for instance, http://www.washingtonpost.com/wp-dyn/con...

I assume that Paulson has presented as non-specific a plan as he thinks he can get through Congress quickly, but somehow the auction concept has been peddled to financial reporters as part of what he intends to do.

I would imagine that he wants as much flexibility as possible to be able to act quickly as this thing develops. Cliche, but we're in uncharted territory, and he probably wants to avoid having to go back to Congress for authorization for actions that need to be taken fast as things develop.

Submitted by lambert on

But complete unnaccountability is what Paulson is asking for. Again, "facts" in the text of the proposed enabling legislation:

Sec. 8. Review.

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

Is the only argument in favor of trusting the Bush administration with $800 billion dollars the "fact" that they're telling us there's no choice in the matter?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

tnjen's picture
Submitted by tnjen on

...to have a Year of Jubilee for both homeowners and lenders. The reset button is looking awful good.

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

Submitted by lambert on

Presumably if I PB 2.0-ize this post, and touch it up, that would work for people?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

bringiton's picture
Submitted by bringiton on

Thank you. Not too much teddybear, though; Obama is tougher than he looks, a little snarl won't hurt him.

Subversion from within, good for you.

Submitted by lambert on

He is, after all, fully capable of running the sort of primary he did. Fit for office? Possibly. The next few days may show whether we really have two parties, or not. If the $800 billion goes through, we have one party. If it does not, we have two -- a good outcome.

Oh, and after weeks of screaming, in the midst of Tier Two hakas on Palin, 17 year old girls, and the rest, that "It's the economy, stupid," it turns out I was even more right than I thought. No thanks necessary....

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Submitted by lambert on

... is that this is what they would say.

Seems to me that if the problem is lack of trust, then Paulson at all are at the heart of the matter. And we should now trust him with $800 billion, no strings attached, to do what he wants to with?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Submitted by jawbone on

and have great faith in his analysis since '99-2000 when he was the one who spoke truth about BushBoy's tax plans and the whole MCM was like, oh, great guy and he's got all those wonderful advisers, so what's to worry about? Krugman kept me sane pre-internet and lefty blogs; 2)Atrios, when he isn't assuming more knowledge on the part of his readers than we all have, tends to be pretty savvy--and he nailed Big Shit Pile very early on--when he explains things he does it very well; 3) I used to adore Kevin Drum until he was for the Iraq Invasion, then wasn't--I think he tends to give too much credence to Very Serious People, many of whom are in the Maladministration; and 4) Kevin Phillips said last night on Bill Moyers' Journal that the aronsists are now showing up at the firs with their firemen's hats on, but still pumping gasoline on the fire (he does not trust Paulson, et al, and his Wall St. pals to do much besides look out for their cohorts' interests.

There simply can't be a blank check for anyone connected with BushCo.

Now, what to do?

gyrfalcon's picture
Submitted by gyrfalcon on

I *very* much appreciate the thoughtful and respectful response.

Swift Loris's picture
Submitted by Swift Loris on

News Analysis by Peter Goodman, titled "But Will It Work?"

...Still, the prospect that the government is preparing to wade in deep — perhaps sparing families from foreclosure and banks from insolvency — has muted talk of the most dire possibilities: a severe shortage of credit that would crimp the availability of finance for many years, effectively halting economic growth.

“The risk of ending up like Japan, with 10 years of stagnation, is now much lessened,” said Nouriel Roubini, an economist at the Stern School of Business at New York University. “The recession train has left the station, but it’s going to be 18 months instead of five years.”...

As the government steps in to take over bad debts, it is aiming to clear away the detritus and lift the uncertainty, emboldening banks to lend anew.

Whether it will work in the long term is a question that awaits reaction from investors. But even the most skeptical economists say this is the path the government must take for confidence to crystallize that a genuine fix is under way.

“It’s not enough,” Mr. Roubini said. “But it’s the first time they have done something that makes a difference.”

http://tinyurl.com/3rxkuy

Submitted by lambert on

all he's saying is that action commensurate to the scale of the problem is being taken.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

And Roubini is being quoted as saying, "It’s the first time they have done something that makes a difference,” immediately under this sentence:

"But even the most skeptical economists say this is the path the government must take for confidence to crystallize that a genuine fix is under way."

Nobody likes this plan. But Roubini doesn't appear to be objecting to it. Sounds to me as if it's as close to an endorsement as you're going to get from anybody.

TreeHugger's picture
Submitted by TreeHugger on

to keep working outside, so time to come in and enjoy the new light glowing on the front porch.

Thanks, Amberglow, for the how-to reply to my question.

I think parsing "opinions" and "facts" is a red herring. None of us is an economist, and the best and the brightest economists are expressing OPINIONS...I haven't heard a single one say definitely whether something will or will not work. Not without reason do they call it the dismal science.

I've been intensely reading Roubini, Krugman, Stiglitz, Kevin Phillip's book Bad Money, the Economist, Financial Times etc. for the past few months, and while there is great consensus on how we got here, on how to get out, not so much.

My congressman's email has crashed, but I have written to both Senators, listing specific concerns and saying I do not want to see a Patriot Act for the Economy ...a deal worked out behind closed doors, insufficiently vetted, full of special favors for the connected, loss of rights for the rest of us, and voted on in panic. How'd that work out for us, eh?

Swift Loris's picture
Submitted by Swift Loris on

None of us is an economist, and the best and the brightest economists are expressing OPINIONS…I haven’t heard a single one say definitely whether something will or will not work.

Of course not. But opinions are based on facts on the ground, or should be--A happened, then B happened, etc.--and gyrfalcon isn't seeing many of those facts reflected in the discussions here.

Submitted by lambert on

Serious question. We've got plenty of posts on the economy as such, based on things, things that can be seen and maybe even touched.

But in a financial crisis driven by fear and speculation and market manipulation and where so many of the actors are also interested parties, and with an administration that has shown, many times, that's it's entirely willing to "create our own reality," (fact) and loot the treasury (fact), where is the ground to be found?

NOTE If you put these events in the Shock Doctrine frame, then there is plenty of if A then B material....

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

peter's picture
Submitted by peter on

"What changed between Monday and Friday? What new information did you have at the end of the week that you did not have at the beginning of the week which caused you to go from $0 to $1 trillion?"

To my understanding, the money flo changed. Tuesday night Wednesday morning it virtually froze. Normally there's about a trillion dollars in the pipeline. Overnight Tuesday there was virtually nothing, resulting in the quick 140 bil from our Fed plus monies from the likes of Canada, Japan, England, as well as others. Banks began hoarding the money they possessed. Another occurrence of some sort happened Thursday afternoon. Congress, at least the leadership, had a meeting with our two money guys in Pelosi's office I believe. They scared the living crap out of those in attendance. "When Mr. Schumer described the meeting as “somber,” Mr. Dodd cut in. “Somber doesn’t begin to justify the words,” he said. “We have never heard language like this.”" NYT

http://www.nytimes.com/2008/09/20/washin...

“We have never heard language like this.” This is what "changed".

peter

Submitted by lambert on

You say it yourself, Peter. "They scared the living crap out of those in attendance."

And the solution? Give those who are doing the scaring, and who also created the problem, a blank check for $800 billion to spend, quite literally (check the law) without any review? Insane.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

Nobody can make up the kind of thing Peter just recited. See also the WSJ tick-tock that gyrfalcon keeps referring you to.

Those are the kinds of facts on the ground I was talking about.

Submitted by lambert on

"Make up" in what sense?

It's entirely possible to be opportunistic and take advantage of a real crisis; the crisis doesn't (necessarily) have to be manufactured (although market manipulation is perfectly possible, especially given that financial journalism is as bad, if not worse, as the rest of journalism).

Why on earth would you regard this "tick tock" as the critical "fact"? Why fix on it? I know the situation is bad, and that's all the tick tock says.

The issue is: Who gains going forward? You can be sure that with an $800 billion blank at stake, a lot of people are thinking very hard about that question right now, and exactly how much they can grab from it. You should be thinking about it too, because it's really your money.That's not tinfoil. It's just common sense.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

the urgency. That's what I think you're missing, or if you aren't, it's not reflected in your comments. It's like a bad chemical reaction: if you don't do something immediately, it's going to blow up in your face.

If that isn't the case, if we have a couple of weeks to ponder it all before it goes critical, then fine. But that sure isn't the impression I get. I don't think the WSJ tick-tock was a screenplay for a disaster film; I think it was a documentary. It's triage, not managed care.

If Krugman were to say tomorrow, Hey, relax, we don't have to rush into this, we can take our time and tweak it till we get it right, I'd be much relieved and would get busy petitioning for the tweaks I'd like to see.

gyrfalcon's right about the auctions, by the way. I just saw an AP article quoting him as saying the same thing. For whatever reason, auctions aren't written into the act that was leaked, but that appears to be what he intends to do.

Submitted by lambert on

Apparently, leaks about auctions fall under the heading of "immediate" and "urgent" but rational, workable, and historically proven programs like HOLC do not.*

I find that logic odd, to say the least. Nothing prevents the powers that be from leaking news about HOLC, saying they're going to implement it, coming up with some smaller bridging facility for any liquidity problems, and then doing the right thing. And, apparently, your view is that rather than take even one news cycle to test that, we have to write the Bush administration a blank check for $800 billion dollars. And I find that logic odd, too.

As for leaks about auctions from the administration, that, and a dime, will get you a cup of coffee. Why on earth would you trust what they say, when they have proven themselves (facts, again) untrustworthy over and over again?

I understand that you feel urgency, but as AA says (and I'm sure gyrfalcon would agree) feelings aren't facts. Nor do feelings bear a necessary relation to policy solutions.

* And I don't see anyone here taking on the merits of HOLC at all, so I assume what I say about it is common ground.

NOTE I argue here that HOLC is indeed an "immediate" and "urgent" solution.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

Swift Loris's picture
Submitted by Swift Loris on

Apparently, leaks about auctions fall under the heading of “immediate” and “urgent” but rational, workable, and historically proven programs like HOLC do not.*

I find that logic odd, to say the least.

...so I don't know what the hell you're talking about.

As for leaks about auctions from the administration, that, and a dime, will get you a cup of coffee. Why on earth would you trust what they say

I didn't say anything about trusting it, either. I reported that Paulson had said that's what he intended to do.

I understand that you feel urgency, but as AA says (and I’m sure gyrfalcon would agree) feelings aren’t facts.

My intellectual understanding of what I've been reading is that extreme urgency is a fact.

Lambert, you're reading so much into what I say that I have to wonder how much you're reading into what the folks in the thick of this are saying too.

tnjen's picture
Submitted by tnjen on

on this. lambert are you arguing against *any and all* intervention? I've read him as arguing against this proposal unmodified and I don't see a problem with that. We don't need a "no strings/oversight attached" plan, IMO and certainly not one that is so broad as that which is being proposed.

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

Submitted by lambert on

What I do know... is that giving the Bush administration $800 billion to spend as they please is nuts. I'm not alone; see Krugman; see Atrios in the UPDATEs to the post. Given past patterns of behavior by the Bush administration (these are "facts") there's every reason to believe it won't work except to the direct benefit of a very, very few at the top. The program is simply legalized looting; why else a clause (this is a "fact") that makes them literally unaccountable to any form of review, including the courts?

So the first order of business, before anything else, is stopping Paulson's plan. It's another Iraq in the making

As to alternatives -- I'm not sure there's even a clear problem statement. Here I'm going to try to sound like I know what I'm talking about, or at least that I've learned something. I'm guessing the real problem is not "confidence" (whatever that means, and however it is to be maintained except by constant infusions of billions of dollars), or liquidity, but solvency: That is, the banks cannot pay what they all owe each other, which is why none of them want to expose their balance sheets, and haven't, for over a year. Pumping more money into the system is no help, because they'll just hoard it; it's like pushing a string. And the banks are insolvent because all of their balance sheets are filled with toxic loans that they paid themselves huge salaries and bonuses and fees to create, primarily in housing. So, since there is no way for them to magically become solvent -- how do we grow our way out of this? -- the only solution is for the amount of toxic debt to be reduced, so that their books balance again. And the way to reduce that debt is to reduce what homeowners owe, because that is the troubled part of their balance sheets. That can be done through an orderly process: HOLC, as Roubini (and Clinton) suggest. And the fact that the process is orderly is indeed an immediate solution, as gyrfalcon demands, because it kills the fear, does introduce government backing at the scale of the problem, which is what caused the rally on Friday ("Christmas!" as Klein says), and even better, helps out the homeowner who, wearing their consumer hat, can begin to spend again. And best of all, HOLC made a small profit.

Phew!

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

tnjen's picture
Submitted by tnjen on

...that's what I read you as arguing for and I happen to agree with you and Krugman et al. I'm a bit baffled as to why this stance has generated any controversy.

PB 2.0 - Supplement the wonk!

PB 2.0 - Supplement the wonk!

peter's picture
Submitted by peter on

You're going to get mad at me here. The working economy, production as in the GDP is sound. The credit economy is being rocked. Take AIG, the subsidiary companies are all basically grade 'a' companies making money. The parent or umbrella company had a run that put it in trouble. It was a run that hit from all sides at once. There may have been warnings, I wouldn't know. But the crap hit the fan over the weekend with attempts on Monday to fine business help. Money was being hoarded on Monday and none was to be found. (BTW, did you know that AIG covers 90% of all aircraft in the world?) That's why the Fed got involved.

As far as who's doing the controlling, it's not just Paulson, but the next SecTreas too. And anyhow Paulson is a very good person for this task. This isn't another 'AUMF'.

The ground will be reached when money flows at some reasonable rate again. I wouldn't look at this as a market problem as in stocks and bonds. This is a money problem. Money has to be fluid, be moving. I'm not too concerned whether its called a HOLC or whatever. Money just needs to flow.

peter

Submitted by lambert on

... is a reason to give the Bush administration $800 billion dollars to spend with no accountability at all? As a policy prescription, that's not delusional; it's demented.

In any case, you're arguing that the problem is liquidity; but what if the problem is solvency?

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

peter's picture
Submitted by peter on

the bi-partisan manner this problem is being addressed? You're not 'giving' Bush anything. You're giving the US Treasury the ability to find our way through this money problem. Look, these people are working all weekend. They aren't just photo'opting this issue. Late nights, early mornings, lots of coffee for Congress right now. Our two money guys are working hard too. These two folks are very good at this. I believe that the many out there would say these two are nonpolitical in their approach to this. They are guarding our financial future, not the president's.

There will be records kept and an accounting made for review. And spending will take longer than the current term of President Bush.

peter

Submitted by lambert on

[hilarity ensues]

Bringiton, take over for me, wouldja? I've got to go to bed.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

bringiton's picture
Submitted by bringiton on

I intended to take this comment apart one sentence at a time with peter here to try and defend himself, but he decided to pass on the opportunity and took a bunk.

Rather than spend a bunch of time myself then, no sense in valuing peter's assertions any more than he does, I'll do a Vinny Gambini and simply point out that everything this guy just said is bullshit.

peter's picture
Submitted by peter on

did you see this?

http://www.bloomberg.com/apps/news?pid=2...

"John McCain, the Republican presidential nominee, avoided potential losses. Because of the Arizona senator's run for the White House, his wife, Cindy, last year liquidated a blind trust that had contained stock in AIG, Fannie Mae, Freddie Mac and Lehman. The amounts of stock she had owned weren't disclosed."

Read who didn't avoid the pain..

peter

bringiton's picture
Submitted by bringiton on

Picture 1: Bad man steals all your money.

Picture 2: Bad man sends one of his heyboys named Paulson to convince you to give the bad man the clothes off your back, your livestock and your crops, your spouse and your children and your cats and your furniture and the deed to your house and property, so the bad man can protect you from thieves.

Is this a good idea? Should you agree?

[Would bang head on desk but all that remains is a pile of splinters.
Bangs head on them anyway, for the exercise.]

Submitted by hipparchia on

all your splinters are belong to us. sorry, invisible headdesk only.

i rent this place. the only crops would be the salvia i had in pots on the front porch this spring but died of heatstroke by june. the clothes are all company-issue uniforms. the few sticks of furniture are all hand-me-downs older than i am, and nearly destroyed by the livestock anyway [the bad man would be doing me a favor if he hauled off the homemade bookcases and the 2000 books]. the livestock would be the 101 dalmations 927 cats, who deign to get close to me only because as ferals they recognize me as one of their own; you wouldn't think so many of them could melt away and hide in a place this small with so little furniture in it, but they do if anybody else comes to the door.

the closest thing i've got to real estate would be the boxes and boxes of cat litter i've got scattered about the place. used cat litter. hmmm, so they're going to take all this used cat litter off my hands? and come back for more? maybe this paulson plan has possibilities after all....

anyway, o/t, the only issue i feel like i can do anything about [and it's precious little at that] is health care, so how did your re-meeting with your congressman go? inquiring minds want to know.

bringiton's picture
Submitted by bringiton on

and they'll enjoy them.

Photobucket

If you don't care about yourself, won't you at least think of the furbearers?

Meeting was brief, apologies, kissy-kissy, shoot the shit about econ, very dismal prospects, over and out. Nothing will happen with healthcare this session. SCHIP expansion will be the first move next January, a shoe-in with Obama and a probable failure if McCain gets in. Tougher from there, although there is an argument for overall societal cost-reduction with single-pay that could work with Obama but is dead meat with McCain. Hell, with McCain we're all of us dead meat.

boxes and boxes of cat litter i’ve got scattered about the place. used cat litter
Paints an attractive picture; nothing personal, but 2500 miles upwind seems close enough.

To bed; my sleave is all ravelled threads, in need of knitting.

peter's picture
Submitted by peter on

Was this a good cop bad cop thing? Lambert's the good cop, Bringiton the bad?

Not a bad man, nor are the two money guys bad.

If they placed a HOLC in the program, it would be fine with me. Anything to get the credit industry settled and money flowing again.

peter

bringiton's picture
Submitted by bringiton on

(Yep. Heh. Just really, really wanted to say that.)

I'm the bad cop. You are not going to like me at all.

Bring it on.

peter's picture
Submitted by peter on

not. Hey, have a nice night. Enjoyed my time with y'all. Good night!

peter

bringiton's picture
Submitted by bringiton on

Stop back when you have something worthwhile to contribute.

Submitted by jawbone on

resist being stampeded into whatever BushCo wants--it's happened before, and Glenn goes through three biggies. Oh, and getting closed door, super secret inside info is often a crucial step for the R's in getting what they want. Does look like the same game plan.

This crisis has a shorter time frame, so it should probably be easier to achieve "bipartisan" support.

Please recall that for the Repubs, bipartisan means doing what they want. For Dems it means compromise. Dems tend to give more--and get less. Or nada.

That's worrying. BushCo has only a few more months to accomplish their goals. Hold on to your seats. (Speaking of which, what will they do if they don't have another R administration to throw up some cover-up and protection? They will be busy beavers gnawing away at all the stuff they have to chew through and destroy....)

http://www.salon.com/opinion/greenwald/

bringiton's picture
Submitted by bringiton on

is not about economics.

Lambert would argue otherwise, that it should be all about economics and over the longer haul I agree completely. Of the purposes of government, seeing that the basic needs of citizens are met is the first and foremost.

Short-term for the Democrats, though, is this election and they will do almost anything to win it. What they will stand up for, and what they will yield, will all depend on the Electoral College math. Call it craven, call it smart, whatever; it is the only math they are discussing. If there are enough congressional votes to shove a better plan down Bush's throat they'll make the move. If there are not, and they have to eat a crappy plan now to avoid looking like even bigger chumps after a veto and being forced to cave to the BushCo plan, then they'll negotiate what they can get now and put lipstick on it; it is all right now about winning the election, long-term anything else be damned.

Jawbone, following your argument, what is better for the American people? An immediate capitulation on the economic issues (ghost of Lambert plus FISA plus war funding plus plus plus) in the hopes of putting the VRWC at ease and pulling off a Democratic victory with the opportunity for eventual pushback, or defiance now at the risk of oh say nuclear war with Iran and martial law as a last-ditch BushCo attempt to cling to power? How in the current circumstance can we define “win”?

[Ghost of Arthur Silber looks over the shoulder of the ghost of Lambert Strether, both of them shaking fists: It is also possible that electing the Democrats will have no effect on the economic future for thee and me. It could well be that the only difference is to which criminal gang the proceeds of sucking the middle class dry will eventually accrue, and how fast our veins are emptied.

Let's don't accept that as possible though, shall we? I would like to have one more holiday season during which I am only miserably despondent; fully suicidal can wait until January, on Inauguration Day.]

Submitted by jawbone on

in the MCM?

Send the HOLC (hulk) to the rescue!

Dipping in to NPR this morning, no mention of Hillary, her proposal, or HOLC. In discussion of alternatives, actually!

To the MCM, it's "Who is this Hillary and strange HOLC of which you speak?"

On The Media had a segment about the reporting of the crisis, which the Col Journalism Review guy said is now pretty good--caveat, right now. Previous reporting was sadly lacking and spotty. Plus, it did seem to parrot the govt line.

Submitted by jawbone on

how do Dems, even with a Dem prez, get much done? That's before adding in the uncounted amounts for AIG, etc. Oh, and there's that outstanding off-budget Iraq War, which will have to be paid for whether McCain or Obama wins. And the existing mushroomed debt.

OK, judges. Very important. Excellent point.

As Kevin Phillips said, this mess is going to eat the FDR social programs. Guess BushCo is on the brink of accomplishing some longstanding GOP objectives--creative choas comes home to roost. I hope Phillips is wrong. I hope I'm wrong.

HOLC (see if we can borrow The Hulk image for ongoing PR) may be the best way to approach this, but then Hillary would get some credit and that would not be good presidential politics for Obama....

I do not know what to do, but, based on the opinions of econ writers for whom I've developed trust and respect, I do not believe we can give a blank check of any sort to BushCo. Also, our experience with giving any kind of authority to BushCo means they take all of it and way beyond; then, they dare anyone to challenge them or do one damn thing about what they've done. Facts on the ground, babeeee.

I understand your argument--do whatever it takes to get power, and then use that power. Just what BushCo did. Makes me feel kinda sick. I guess if I had a better handle on how Obama would govern I could even go along with the Do Anything to Get In Office argument. I don't have that, and apparently you do. I hope you are right, I do so hope that.

BTW, per Calculated Risk, Paulson's plan allows him to spend up to $700B at one time, leaving the rather strong implication that he can spend more or any "profits" realized.

...the cost is still unknown, but there is no way that the taxpayers will profit. My initial estimate is that the direct costs of the Paulson plan will be $700 billion to taxpayers. That is about double the cost of the S&L crisis (compared to GDP).

Why $700 billion?

The plan only limits the Treasury to "$700,000,000,000 outstanding at any one time", so the total purchases can exceed $700 billion. In fact, every time the Treasury sells some securities, they will probably plow the net proceeds back into more troubled assets until the entire $700 billion is gone.

Think of a drunk gambler at a slot machine. He starts with $100 and slowly loses. Every now and then he wins some money, but he keeps putting the coins back into the slot until he has lost everything. That is how this plan will work.

Read the entire post--it's short.

Noticing how often I used the word "hope," I guess I do see this as a Hope and Change election.

bringiton's picture
Submitted by bringiton on

I'm just offereing abare-bones discussion of how this might play out if the Dems can't see a way clear to actually taking control now. If this were mine to control I'd be tempted, very tempted, to just grind the whole thing to a halt and force the Rs to do the right thing. Perhaps that is one of the reasons I don't get to have the keys.

Letting the thieves that have done this, and that includes Paulson, get control over another trillion dollars without controls and limits is insanely stupid. Miscalculating the coming events and making decisions that enable John McCain to take the presidency is insanely stupid. The reason the Dems have to chose between one bad outcome and another is becasue the Republicans have driven us past the point of bankruptcy, and they are on the hook becasue for the most part they either enabled or stood mute while it happened.

There are no good choices to be made here for Obama. Ironic, that, but not in an amusing way.

Oh, and it won't be $700 Billion. By the time the package is put together it will be at least $1 Trillion and that is only a beginning. The term "Big Shitpile" has the emphasis entirely on "Big".

Submitted by lambert on

... supporting it, even if legislation cannot be passed at once, that would be enough to restore calm. If Obama has the negotiation chops, now is the time to use them.

HOLC's orderly process and promise of clean balance sheets answers the fear, and its the fear that's at the root of the problem. The Treasury guys could then build whatever bridges are needed until HOLC is enacted, instead of throwing $800 billion down the rathole.

It's a chance for Obama to show leadership, do the right thing, and do the politically smart thing, all at one time. For obvious reasons (FL/MI recount, FISA, Hillary VP) I have no faith whatever that Obama will rise to the occasion, but all we can do is hope for the best and give it our all.

[ ] Very tepidly voting for Obama [ ] ?????. [ ] Any mullah-sucking billionaire-teabagging torture-loving pus-encrusted spawn of Cthulhu, bless his (R) heart.

First they ignore you, then they ridicule you, then they fight you, then you win. -- Mahatma Gandhi

hobson's picture
Submitted by hobson on

One of the many things that I find puzzling is that this administration only has about 4 months to run. This authorization is proposed to be for 2 years. The first report to Congress has to be made after 3 months and then every 6 months thereafter.

So all talk of doing something like HOLC and re regulation would come after some large infusion of cash if only on paper. And some transfer of these securities away from their owners to the government. And transfer of power to the Sec of Treasury to dispose as in Dieu Dispose.

Doesn't that build the house of cards first and then dare anyone to disturb it once its in place? From what I've been reading, these mortgage securities have been trading in numbers that exceed the GDP of the entire world. Is a trillion bucks going to be a drop in the bucket if some real bookkepping gets done on this stuff? And like "supporting the troops," isn't this already in place situation going to be held over Congress' head?

And is this confidence bolstering we keep hearing about to keep ordinary people like us from pulling our cash out of banks? I heard someone on the street telling someone else how they advised yet another person to "liquidate everything." Forget Social Security, I don't believe my money is protected along with everyone else's by the FDIC anymore. I'm wondering what is stopping an Indiemac style old fashioned run on banks. If ordinary people suddenly make the connection that they might not be able to cash their paychecks, as many people I know do rather than banking them anyway, what's going to happen? Or am I just panicking?

amberglow's picture
Submitted by amberglow on

and they want regular people not to rely on Government for their needs or to solve problems or trust the Govt., etc --- and for Executive Power to be unlimited -- this goes a very long way to making it all so. They've been doing that since Nixon.

And to reward their kind, of course, as usual.

So, they've hamstrung any incoming president, and raised the deficit to unheard of levels (like Reagan/Bush did), and took the "power of the purse" away from Congress, and rewarded their cronies, etc.

Plus, they'll just keep extending it if needed--most of these things get renewed like Patriot Act, and all the other funding things--after all, if Dems voted for it once, they'll vote for it again.

pie's picture
Submitted by pie on

just posted Hillary's latest statement about the bailout.

Go read.

a little night musing's picture
Submitted by a little night ... on

@jawbone:
HOLC (see if we can borrow The Hulk image for ongoing PR) may be the best way to approach this, but then Hillary would get some credit and that would not be good presidential politics for Obama….

Obama must continue to run away from Hillary in the General Election, you're saying?!

She must be deprecated for the forseeable future?

Is she not campaigning for him?

Is she not included in the Unity Pony ride?

This is not a way to get my vote for Obama, just for the record.

(BTW, Don't know if Jawbone's an Obama supporter, and don't mean to put this on him/her, just saying if this is how they think, it's not good for their candidate.)

We can't afford not to have Improved and Enhanced Medicare For All!!

Submitted by jawbone on

No, but there will be plenty of horse shit.

Simple answers to simple questions.

little night--I fear that Obama does not want to highlight good ideas from Hillary as it may bring to mind what voters are missing. I am not an Obama supporter--I am a nose holder.

I have not seen the light.

BIO-Sorry if I misread your comment. And, yes, it is already over $1 Trilion, if administration figures are taken at face value. Might be a tad less, but could also be more.

pie--t/u for the link!

Lambert--While I'm at it, t/u for all your great work. How have you done any painting??

herb the verb's picture
Submitted by herb the verb on

Interesting that nobody has done the math of what $800billion really is.

It equals 4 million $200,000 home loans
or 8 million $100,000 home loans.

Most everyone, especially Dodd, has been saying the root cause is the foreclosure crisis.

As far as "restoring fiscal confidence" what if the fed guaranteed to buy from banks the face value of up to $100,000 on any home loan no matter the threat of foreclosure?

It's simple, yes, but would that be so stupid? Between that cash value of the loan and the value of the property itself, wouldn't that go a long way to relieving the pressure?

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Around these parts we call cucumber slices circle bites

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I'm not such a bad guy once you get to know me.