Looking for writing-related posts? Check out my new writing blog, www.larrykollar.com!

Thursday, October 02, 2008

Sinnertors FAIL (as expected)

Well, the Senate had the bailout vote today, and (along with both Obama and McCain and ¾ of the Senate, dangit), both sinnertors from Planet Georgia voted for it. One of them is up for re-election, and the race has been tightening a bit lately… although I’ve often said, the pod people would elect Satan if he ran as a Republican, and call him a “defender of moral values.”

Anyway. I wrote both of them earlier in the week (as well as my reprehensible, Nathan “Raw” Deal), urging them to vote NO and come up with a better idea. I was 1-for-3; Deal voted the way I wanted him to… I think for the first time ever. So here’s the excuses the other two had to offer.

Sen. Isakson:
The cause of the decline was the funding of marginal credit mortgages (subprime) through the creation of mortgage-backed securities… The market for these securities declined and ultimately evaporated, thus causing a liquidity problem for the financial institutions and a credit crisis for American consumers and small businesses.

… The Treasury has proposed using up to $700 billion dollars to purchase, at a discount, these mortgage-backed securities. … If the Treasury properly discounts the securities to, say, 50 or 60 cents on the dollar, and holds the securities to maturity there should be little or no cost to the Treasury. …

While I am not a big government regulator, if the investment bankers on Wall Street were held to the same standards of transparency and accountability as our national banking system, this would not have happened. …

… Not a dollar of the $700 billion will go to the brokers who created the securities. Instead, they will go to the investors who bought them, and then only after they take a significant discount or loss. Properly executed, the Secretary of the Treasury and the Chairman of the Federal Reserve believe this proposal will restore liquidity to the credit markets and return confidence in the financial system.

Mrf. I’d like to believe our tax dollars would be buying discounted paper. The bill, though, says only that the purchase price is not to exceed 100% of the stated value. FAIL. There’s nothing in the bill about accountability… indeed, the bill removed “mark to market” requirements that forced companies to value their paper at what it’s worth. FAIL #2. Finally, the “investors who bought them” are (in many cases) foreign banks that demanded their cut at the trough. FAIL #3, hit the showers dude.

On to Sen. Saxby Chambliss, running for re-election this year. Amazingly, Jim Martin is giving him a real contest at the moment, and even the pod people think this bailout idea is a stinker. So you’d think he’d be a little more circumspect with his ayes and nays? Well… you know, I’m going to have to take this one down point-by-point, and I didn’t want to do that.
I strongly believe that doing nothing will destroy the financial security of millions of Americans and possibly lead us into a depression. I just as strongly believe the bill as now negotiated will arrest the crisis and begin to turn our economy around.

Ah yes, lead off with the false dichotomy. Voting this bill down = do nothing. How about: flush this steaming load and come up with something that actually addresses the problem? FAIL.

I know that my vote in favor of this package was not the politically popular thing to do, but this is not a popularity contest. This is about the future of our country and the future that my children and grandchildren will inherit. I have absolutely no doubt in my mind or my heart that my vote in support of this measure was the right thing for our economy, for Georgians, and for our country.

Translation: I was paid well for my vote. But where have I heard that “this is not a popularity contest” cant? Oh yeah: McSame during the debate.

I did not support the original proposal submitted by the Administration because it did not address the critical needs of the American taxpayer, community banks, retirees, and small businesses and it concentrated too much power in a small group to administer the plan. …

Moreover, when the House rejected the plan, the economy suffered a $1.2 trillion dollar blow in the stock market, which only made more apparent the impact this credit crunch is having on Main Street. Specifically, in some cases, Georgia community banks are unable to make auto loans.

And the new plan does? As I understand it, it’s the plan the House rejected with a few tax credit extensions and a bump in FDIC coverage. FAIL #2

Oh dear, a $1.2 trillion dollar blow, and no mention that 2/3 of that came right back the next day. And banks are unable to make loans? Making loans is what banks do; either they make loans with necessary and prudent conditions attached or they close. End of story. If they can’t make loans, they might as well shut down.

TAXPAYERS ARE PROTECTED. In its current form, the legislation before the Senate protects taxpayers in many ways. Accountability, safeguards, and oversight measures are numerous. …

NOT A BLANK CHECK. I opposed the President's initial request to simply give a blank check to Secretary Paulson. I also opposed the second version submitted by the President and Congressional Democrats that would have given taxpayer money to liberal groups such as ACORN. …

NO GOLDEN PARACHUTES. CEOs and other executive officers who drove their companies into the ground will not be able to walk away with millions leaving taxpayers holding the bill. Those companies that choose to participate in the program will be subject to strict compensation limits.

NO NEW GOVERNMENT SPENDING. The language is clear - all revenue generated through the repayment of any assets purchased and any sold must be used to pay down the national debt. No money will go to pork projects, new government spending, or liberal groups such as ACORN.

Oh gasp! Liberal groups! Dude: would you please point me to a conservative advocacy group for low-income housing? Fouled it off, still 0-and-2.

HELP FOR MAIN STREET. As this crisis continues, community banks are being affected more and more. Car loans and home loans, even to those with good credit, are drying up. … If we allow this to continue, jobs will be lost, more retirement accounts will be impacted, and credit will get even tighter.

So handing Wall Street a huge wad of money is going to fix Main Street? FAIL #3, hit the showers. If we’re lucky, you’ll hit them permanently come Nov. 4.

But wait, there’s more!

PUNISH CRIMINALS. The Federal Government is actively investigating cases of fraud and abuse. Where wrongdoing is found, the perpetrators, including, if implicated, members of Congress will be brought to justice. …

ADDRESS THE UNDERLYING CAUSE WHILE WE TREAT THE SYMPTOMS. We are seeing the symptoms now - lack of trust in the banking industry, daily tightening of the credit markets, losses in personal retirement accounts - and while this legislation addresses those issues, it also goes further to treat the cancer that got us here. This legislation authorizes the Securities and Exchange Commission (SEC) to modify the 'mark to market' accounting procedures that magnified this crisis by forcing banks to mark down the value of assets they had no intention of selling in the near future. This mark down of value caused a corresponding loss of value to the institutions. The SEC has already begun the process to modify this procedure.

whiff Sax-dude, you already struck out. You can stop swinging. Any time now. So banks can hold a big steaming load of crap, and call it solid gold as long as they don’t try to sell it? Um… exactly how is this going to do anything to help with the lack of trust in the banking industry?

RETURN TRUST IN THE BANKS. By increasing the Federal Deposit Insurance Corporation (FDIC) protection on bank accounts from the current $100,000 to $250,000, taxpayers and bank customers can once again trust that their money is safe in the bank of their choice.

DEBT REPAYMENT. Toxic loans will be purchased at a discount and 100% of the monies repaid to the government will go to reduce the debt we incur in this process. While we shouldn't expect full repayment, it is possible that all of the money expended will be repaid.

Yeah, and it’s possible that I’m the Queen of England. What’s the discount rate? 99 cents on the dollar? Whiff again.

PROTECT OUR NATIONAL SECURITY. If we do not act and this crisis spreads like a cancer to every segment of our economy, it will destroy not only taxpayer savings but it will erode our ability to fund our military, supply our troops with the resources they need, and protect our homeland.

Oooo, and I thought the terrorism card couldn’t be played on this one! You might have fouled that one off if there had been a pitch and the umpire wasn’t busy trying to push you out of the batter’s box.

NO TIME FOR POLITICAL FINGER POINTING. There is plenty of blame to go around but now is not the time to throw stones, now is the time to address this crisis and get our economy moving again.

Too bad you didn’t think of that before you started whining about ACORN. Whiff and the umpire dodges while the pitcher scratches his head and goes, “WTF?”

blah blah blah However, history warns us against inaction by hard lessons learned. Delaying to act would be a repeat of the mistakes of the 1920s, when thousands of banks failed before significant confidence was restored to our financial markets.

Dude, you just made it harder to actually FIX the problem. Like Mrs. Fetched, your rush to DO SOMETHING NOW is wasting time and energy while doing little to solve it.

And the ump gets some help from the 1st- and 3rd-base umpires, the catcher, and a few fans… they escort Saxby “Ignorance is” Chambliss off the field, still swinging at a ball that has long gone by.

Judas Priest. The pod people tossed a guy who left pieces of himself in Vietnam for this?

10 comments:

  1. Hey Far! I'm just as disappointed as you are...They did vote for a "plan" today...However, I think the damage is done, and this will not stop the hemorrhage of foriegn investment leaving the country. Our markets will very likely continue to freeze (credit tightening) as there are no takers to buy our debt. Faith has been lost and these people are wondering out loud if they're ever going to be paid back. It'll take time (if ever) to restore faith..

    Something is up, and I think it has to do with the Russians and Chinese...Finance is definitely not my strong point... On others threads I was suggesting a bail out of the American homeowner. If each and every homeowner got $10,000 this would go a long way in shoring the the mortgage crisis,(this is what they claim is the problem). Those that hold mortgages would have to pay done the entire $10,000, those who own outright(Nationally, one third own outright) would get a $10,000 stimulous gift. What an incentive! Everybody wins! That way we're not just handing the crooks any money, they'd have to earn it, to get it..

    Maybe the 700 billion is needed to pay off investors from China and Russia, who are unwilling to continue to "rollover" or continue to carry the debt here and want some kind of compensation now? While the dollar is still worth something?

    Hang onto your hat, this could be an attempt to appease investors once more and carry over until after the elections..

    I believe the Titantic is about to hit the iceberg dead ahead. The engines were running full out in reverse and just now we've lost all power (energy equalling money), hence the surge foward, we are witnessing now.

    Hold tight, my friend....we're about to impact......

    ReplyDelete
  2. I'm back. Perhaps, better explaining what this means to us here at home,(however, this is a world wide crisis, the same thing is happening all over the world, as being experienced in Iceland and Ireland for example.) As commercial paper markets continue to freeze(borrow tonight, pay tomorrow), bank failures are expected to rise. This is nothing more than "payday loans" that some people play, who are actually living beyond their means...I would dare say the next shoe to drop here, would be credit card companies pulling the plug on many people...

    This has been a long time in coming... It seems events have unfolded very quickly in the last three weeks, indeed they have. This is not going to be a slow motion train wreck or anything of the sort, for now we may be at the point of financial collapse. The only way the goverment can prevent a possible run on the banks(by us) at this point is to have a bank holiday (which could last for days, weeks?) Of course this kind of action would even further erode what confidence is left, but at this point they may not have a choice..Sound familiar?

    Possibly, the best thing for people to know is that this is a global unraveling of markets that are interconnected, very much dependent on one another. Perhaps now couldn't be a better opportune time in having one's affairs in order (the best they can be), as they see fit. True ecomonics, begins at home...

    Limits to growth?

    ReplyDelete
  3. Yes, Boran, that's exactly it.

    Yooper, I agree that we should have been dumping that kind of money into fixing the mortgages that are at the root of the problem. Sure, some people just bought too much house & they're just not going to be able to cover the payments even at current values, but I suspect there would be a *lot* of people who could make the payments on re-valued mortgages.

    Shoot, throw a bone to the banks: if the market picks up (uh-huh), the bank gets anything between the current and original values if the owner sells & makes a profit. Or some similar range.

    Do you think maybe this will put a finger in the dike and leave the problems for Obama or McCain to clean up (or not)? Or at least delay the biggest problems until after the election? Or is it beyond the ability of $700B to affect?

    ReplyDelete
  4. Far, I truly think this Failout is nothing more than an attempt to slow down the train heading over the cliff. It will only make the ride a little longer so we will have a bit more time to enjoy the ride to the bottom of the canyon....however far down that may be.

    Is the popcorn ready?

    I tell you, I was laughing my backside off when I saw the market dropping down into the negative numbers AFTER The Bill was passed! Now they blame it on the job loss rate being the highest in 5 years.

    What other excuses will they come up with for every lurch that the market takes???

    ReplyDelete
  5. Hey Far! I think Mrs. M, has it right, is the popcorn ready? ha!

    As I've said before, finance is not a strong point of mine. However, I don't view this as a problem in the market, but rather a liquidity crisis. It really doesn't matter what the market is doing, if businesses cannot borrow.. This is a banking crisis that is happening world wide. We're not the only country in the world who has a mortgage crisis, either...

    I don't think there's enough fingers and toes to stop the leaks in the dikes..to leave the problems to McCain or Obama.. I do think it's beyond the ability of 700 billion to have any effect at all, either now or after the election. After all, the Fed injected over 630 billion into the finanical system last week alone....

    Thanks, yooper

    ReplyDelete
  6. Mrs. M, I agree… ooh, look at the view! You can see for miles! The upside is, if the economy collapses fast enough, I won't have to kick the renters out of the double-wide & move back there.

    I thought the $700B would settle everyone's jumpy nerves for a little while, but looking at some fringe-econ sites & the Dow, I'm starting to wonder.

    ReplyDelete
  7. Hey Far! suppose, this may shed some light on the subject here and provides some timelines...

    October 6 and 10 are big dates to watch out for with Fannie/Freddie and Lehman CDS auctions being scheduled and payments to be demanded (but not be able to be paid). I don't see how we get past next week without financial Armageddon being obvious for ALL to see.

    I am still not sure how the auctions work other than the amount of money actually insured against default of the reference entities (Fannie/Freddy and Lehman) is set, and it is currently estimated to be over 500 billion collectively. Nobody can pay that, of course. So it's a matter of how payment is demanded and defaults on payment are handled.

    I imagine a lot of desperate hands in the air and pleas for intervention. That 700 billion dollar band-aid is an absolute joke that addresses nothing here. Nobody will get paid and nobody can get paid without massive interventions, and nothing can restore trust in the credit markets ever again.

    ReplyDelete
  8. Well, anon, I hope you're wrong & the auctions go smoothly. Right now, I think things could go either way.

    ReplyDelete
  9. FAR, I can only agree with all here and especially B2, we're tous foutus as the French would say. Tonight, I heard on the Paris radio station I listen to that banks are starting to get shaky over there as well, and they're looking for ways to shore them up. And banks there are much more highly regulated than they are here ... how about that Wells Fargo snapping up Wachovia now? I can't believe I'm still seeing positive Wachovia ads on TV here. At least my bank is doing the snapping up, for what that's worth....

    ReplyDelete

Comments are welcome, and they don't have to be complimentary. I delete spam on sight, but that's pretty much it for moderation. Long off-topic rants or unconstructive flamage are also candidates for deletion but I haven’t seen any of that so far.

I have comment moderation on for posts over a week old, but that’s so I’ll see them.

Include your Twitter handle if you want a shout-out.

LinkWithin

Related Posts Plugin for WordPress, Blogger...