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[2013-04-25 I guess "For future reference" means now. Quite a contrast to the picture of the disemployment hearngs. --lambert]

future_reference

Why are they smiling?

You'd almost think they enjoy fucking the voters!

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

...the next song after opener "Darkness, Darkness" on the Youngbloods Elephant Mountain, so it's been going through my head since the Morning Becomes Meta thread...

Nothing that you say
Nothing that you do
Nothing that I feel
Can hide what is true
That you have cheated me
And you have cheated you

Submitted by jawbone on

There's so much that's wrong with what's going on, with what's happened in the financial sector, with how this Paulson Fix (Is In), aka Doing the Hanky Panky, is structured.

I would really appreciate suggestions as to the best points to make, brief and pithy--and hopefully the most compelling.

Submitted by jawbone on

Would be nice if we knew what they were really putting into the legislation. The one minute speeches today when the House opened its session were, for the most part fiercely against this Paulson Fix.

Kucinich had great sound bites; Marcy Kaptur said there's going to be a hearing with dissenting econominists at 2PM today. Several Repubs were against it--heard, I think, one rep in favor, but I was doing the dishes and missed who it was.

A Dem pointed out that the legislative directive that the executive come up with some plan to assist floundering homeowners is essentially DOA and totally meaningless. No teeth and no need: If the prez wants to do it, it will be done; if not, it won't. Period.

And nowhere are the toxic derivatives, which are hanging up the credit flow, mentioned. AFAIK. But, as noted, Paulson can buy whatever he and his experts want.

Paulson will have about 3 and a half months to do his "business."

Doing the Hanky Panky.

Krugman seems to be pulling his punches a bit on this mess (better than crisis, altho' there is a crisis within the halls of Congress in rushing to pass this thing)--he seems to be saying this sucks big time, but, he fears, something must be done and this a somewhat better than the first 3 pager. Yikes!

Others (see Anglachel for a couple, along with tart commentary--pun fully intended); Roubini.

Sounds like Acorn is left out--which is one thing the Repubs got, that any profits will go back to the general funds.

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

It sounds as if this is being sold as "the taxpayers won't be left on the hook, because the govt is going to recoup its bailout by selling the assets":

"Many of these assets still have significant underlying value, because the vast majority of people will eventually pay off their mortgages," President Bush said yesterday in his weekly radio address. "In other words, many of the assets the government would buy are likely to go up in price over time. This means that the government will be able to recoup much, if not all, of the original expenditure."

[source]

ORLY? The mortgages will be paid off - in what? Spun hay?

Submitted by lambert on

The toxicity isn't in the mortgages (though some of them aren't so good), the toxicity is in the derivatives of the mortages -- all the bets that were laid on them. And we're buying the toxic derivatives, not the mortgages. That's why the HOLC plan was better, it bought the mortgages.

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

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

Although I see it came out that way.

The taxpayers are acquiring the least valuable possible "asset" under the plan, as far as we know what it is. It would be much more fiscally sound to bail out those mortgages, yes. [But - clutching pearls - we can't reward poor people for taking on debts they can't repay! Heavens!]

I guess I was thinking that taking this additional ~1 trillion (plus or minus 300 billion) expense on (without protections for the "little people") as weakening the government's ability to deliver services when worse economic times hit, and I am fairly sure they're on the way - this bailout does nothing to forestall that. Meaning, folks with these mortgages get economically stressed even more in months to come, while the level of national debt puts the pressure on Congress to cut social programs [more].

This fallout happens on the next President's watch. Which makes me wonder just WTF Pelosi et al. are thinking.

splashy9's picture
Submitted by splashy9 on

Not the mortgages?

Wow! A compulsive addicted gambler's dream! Someone else pays their debt for them, so they can live to gamble another day without getting themselves kneecapped or worse.

I don't gamble for that very reason - I would lose everything. Why do we have to pay for their losses? I control myself, why can't they and why do I have to cover their BS? They should lose everything, just as I would!

makana44's picture
Submitted by makana44 on

posted by 'Simply Stupid'

"It is funny how politics has diametrically changed where the Republicans are the ones looking out for the little guy while the Dems are vested with special interests. McCain should finally be able to say that Obama is Bush III rather than the opposite. McCain went back to Washington and can counter the Schumer dem offensive that will be the Sunday talk show agenda. I think he did not want to let cat out of bag Friday at debates since the devil is in the details."

Ya think?

Valhalla's picture
Submitted by Valhalla on

of the articles, even the most armageddon-sounding ones, about the bailout. Those are the smiles of people who fucked over the voters again and still won't lose their jobs or their money troughs. Ugh.

Sarah's picture
Submitted by Sarah on

repeated in the thousands of emails and calls to Congress.

We must make them afraid.

Afraid of consequences for their behavior.
Afraid of losing their prestige and their salaries and their cushy lifestyles.

And we have 36 days to do it.

We can admit that we're killers ... but we're not going to kill today. That's all it takes! Knowing that we're not going to kill today! ~ Captain James T. Kirk, Stardate 3193.0

peter's picture
Submitted by peter on

I'm sorry, the smiling Republicans are hard to see in the picture. Too many Democrats are in the way.

This was being run by Democrats folks, not Republicans. Don't you trust your fellow Democrats? Republicans were out numbered seven to two and they had no choice but to accept that. Paulson and Bernanke provided some guidance for this rescue/bailout bill. Make no mistakes folks, our money guys and the president sent a three page proposal to Congress. The Democrats there expanded it, or as Speaker Pelosi said, "improved it." They worked hard over the weekend. I'm sure it was a lot like herding cats.

Warren Buffet said we need this bill.

As for the media...they continued to use the "bailout" instead of "rescue" in their narrative. Bailout implies that money won't be seen again. this money, the majority will be seen again. The HOLC program FDR instituted saw a modest profit. This program will be obtaining assets. Houses, some foreclosed on, some about to be foreclosed on. Their will be payments received from mortgage holders along the way as well a proceeds from the eventual sale of the mortgaged properties. Foreclosed upon or vacant properties will also see proceeds coming in when they are sold off.

The government has the ability to wait this downturn out. As we have seen recently, banks and lending institutions don't. The economy will turn around, and these properties will be occupied again by a better qualified mortgage holder. The loan sold to a private concern shortly thereafter. the Fed pays a heavily discounted rate for distressed properties and is able to recoup that plus add to it. A greater return than the previously mentioned HOLC program FDR had.

And, who knows, another HOLC program may follow soon.

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

This program will be obtaining assets. Houses, some foreclosed on, some about to be foreclosed on. Their will be payments received from mortgage holders along the way as well a proceeds from the eventual sale of the mortgaged properties. Foreclosed upon or vacant properties will also see proceeds coming in when they are sold off.

This program, so far as it is known, will specifically not be acquiring those assets. it will only be acquiring the "toxic assets," i.e. the derivatives (the betting on the mortgage action in this explanation).

The Bush/Paulson selling point is the hope that when the mortgages are eventually repaid, these derivatives will regain their hypothetical value.

At least, that's my understanding of the plan. Anyone else?

Submitted by lambert on

Nor do we have yet the text of the bill.

However, what we do know is that where plans like HOLC buy up the mortgages, plans like the Bush + Reid + Pelosi + Frank + Paulson + Obama plan can buy whatever they want, including the toxic stuff. I don't have the link to hand, but IIRC, the mortgages themselves (at least the defaulted ones) don't add up to a trillion. Therefore, we're purchasing the toxic stuff. That's what Roubini says.

Readers, check me?

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

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

here: [my bolding]

What is the Treasury planning to do?

The Treasury is asking for unlimited authority to purchase these "troubled assets" in order to remove the "illiquid mortgage assets" that are clogging the financial markets.

It wants wide authority to purchase any "residential and commercial mortgage-related assets, which may include mortgage-backed securities and whole loans".

It also wants authority to purchase "any other assets as deemed necessary to stabilize the financial system" after consultation with the chairman of the Federal Reserve.

And it wants complete discretion to determine the timing and scale of any purchase, only subject to the total spending cap of $700bn.

The bail-out plan is scheduled to last two years, after which the authority to buy up assets, but not to sell them, would expire.

Impossible to know until we see the text of the agreement, but nothing I've seen so far indicates any substantial change in this part of the plan.

True, Paulson wanted Treasury to able to buy whatever assets it seemed to be a good idea to buy, but it doesn't seem to me that anything but derivatives was really being thought of here. But I'd be happy to be wrong on this.

peter's picture
Submitted by peter on

The "toxic stuff", there are I believe some million to 1.2 million foreclosed upon houses. At the median price of $160,000, that amounts to 192 billion. There's going to be mortgages heading into default also involved here. Other mortgages with late payments too.

As for the timing, the hurried movements here. Go look up the Basel Accords. They may be the answer to that. I said 'may' there, not 'are'. September 30th 'may' be the trigger, not the Asian markets which open today at 6 PM. But, protecting the markets, rescues all of us with 401k's and the like retirement accounts from a loss in value. Main Street can breath a sigh of relief!

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

And I could be wrong (but I don't think I'm far wrong).

It's true that under the Paulson plan, and I am assuming that this survives in the agreement, Treasury can buy whatever it deems necessary, for all intents and purposes. My point was that the language being used indicated pretty clearly that what was being contemplated was buying the derivatives, not the mortgages themselves.

When I, and I assume Lambert also, use "toxic assets," we're referring to the derivatives, the "betting". Mortgages are not "toxic" in this way. It would not be a bad thing IMO for Treasury to bail out the mortgages - I wish they would. But this emphatically did not seem to me to be the intent of the plan.

[And I have to leave this discussion now, alas.]

Submitted by Randall Kohn on

"The Bush/Paulson selling point is the hope that when the mortgages are eventually repaid, these derivatives will regain their hypothetical value."

Why should ANYBODY but the derivatives' holders give a FLYING FUCK about their value? It's the mortgages that have real-world value and consequences for regular people. This piece of shit doesn't sound like it will do anything BUT bail out the investment banks and bankers.

"You'd better get this straight. Wise up before it's too late." -- Sister Sledge

Submitted by lambert on

[rimshot. laughter]

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

Damon's picture
Submitted by Damon on

Why, this is what you do after you've dumped a rather difficult and uncomfortable load, of course. It's called relief. lol

And, Pelosi's grinning extra hard (is that even possible?) because she knows that her San Francisco congressional district is hers for life regardless of any kind of legislation she gets passed.

danps's picture
Submitted by danps on

"If you take money from them, but you don’t vote [for] the things they want, how does that put you in conflict?"

Presumably he thought that several years ago.

You know, lambert, we need a site for these kind of slow developing stories. I've done similar things in the past - particularly the David Obey Bluster Watch - and they're very handy to have close by. Updating a 4 year old post (or adding a comment to it) doesn't seem to be a good way to freshen them up as needed.