In the case of the "failure" option, would all taxpayers be on the hook equally, or would the prudent, non-debt enslaved people with property and means of production sort of come out of it just fine?
I agree entirely with Krugman. If taxpayers are putting up money, they, and not Paulson's former colleagues should reap the benefits of success. The Treasury must receive warrants from business that receive taxpayer help. Otherwise it's pure welfare for the rich.
What happened at the BB congressional meeting that took the "air out of the room"
BB: We're all subprime now
BB: We're all fucked
BB: None of the large banks in the US are solvent. NONE. They're all essentially broke.
BB: If we dont support them, we're even more fucked
BB: Any questions?
He's speaking for effect, as all the members of this administration do. Any actual truth contained in these words is merely incidentally. Say what works, and move on to the next thing. If it doesn't work, say something else.
But always, always, find a way to do what you really wanted to do anyway.
I would rather let the whole house of cards collapse and then use the 700 billion to rebuild the US infrastructure and develop alternative energy sources. At least that way the future citizens that will be paying for this will have something to show for it.
I have to wonder CR (just rhetorical wonder), what this has to do with individual Americans who are over-leveraged on credit-cards and auto-loans...you take the whole "financial meltdown away" and you could still scream "SYSTEMIC RISK" in the theater. Oh, wait, there's a nice gentlemen knocking down my door and says.......
Prime Minister Gordon Brown should weigh whether to follow the U.S.'s lead and pursue a government- backed rescue of the U.K. mortgage market, Goldman Sachs Group Inc. chief economist Jim O'Neill said.
The British government should consider ``doing something to take over the activities of all those institutions that are just not in a position to lend here any more, because it's going to end up causing significant economic weakness in the U.K.,'' O'Neill said in an interview on Bloomberg Television.
U.S. Treasury Secretary Henry Paulson has proposed a $700 billion plan to stabilize the banking system by buying devalued securities from financial institutions, after seizing mortgage lenders Fannie Mae and Freddie Mac on Sept. 7. While the Bank of England last week extended emergency measures to help banks repair balance sheets, it stopped short of backing new lending.
So he says the alternative is "a continuing series of" more of the same. No apocalypse!
I'm willing to stand that long enough to consider this situation, have hearings, and pass well considered legislation, probably not based on the template Paulson presented.
Paulson needs to put some skin in the game.
He has the assets, if buying these bonds at a premium is a good long term bet, lets see him chip in for, say, 0.1% of the taxpayer exposure.
We could even let his share be non-subordinate, equal risk.
Don't anybody be fooled by the questions. The vote is all that matters and I have a bad bad feeling they all cave. Re-election depends on a large piece of these funds finding their way into campaign coffers.
Jerome suggests that the fed has overextended itself and needs the bailout more than wall street does. I'm in no position to evaluate this idea. Do any experts here want to weigh in?
We know that house prices have come down but they are still pretty high compared to historic standards. This plan artificially props up home prices and will only delay the inevitable. Wages are not going up. How will house prices stop declining? They won't.
Also this bailout will be upwards of 3 trillion dollars not the 700 billion they want you to believe.
NY Times:
"Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the panel, called the Treasury proposal stunning and unprecedented in its scope and lack of detail.
Asserting that the plan would allow Mr. Paulson to act with absolute impunity, Senator Dodd said, After reading this proposal, I can only conclude that it is not only our economy that is at risk, Mr. Secretary, but our Constitution, as well.
all this from a man who walked away with 1/2 billion dollars tax free from cashing in his stock when he took the Treasury position.
I know he feels our pai
Congress: Er... so you want us to have our taxpayers who have net negative savings to bailout banks who're broke so we can continue to lend credit to homebuyers in a housing market that is plummeting and increase our deficits using foreign capital putting us ever more at the mercy of the world and also trash the value of our currency and bring into question the AAA rating of the full faith and backing of the United States of America. Is that about right King Henry?
"I believe we need oversight. We need protection. We need transparency. I want it. We all want it."
Yeah, but it's not coming from you.
Maybe this administration just can't cope with all the crises they've had to endure. They need a vacation.
Let's put this issue on the back burner and let it be issue #1 for the new administration. If the issue can't wait, maybe we should bring on the new team a few months early.
"By choice, the Paulsons are not part of the high-society whirl of CEO-dom. "We aren't very social," says Paulson. "We've never joined a country club." In their free time they often head for exotic places like Belize and Brazil to see wildlife. Paulson's particular favorites are birds and animals of prey: "I'm fascinated because they're at the top of the food chain." If they're healthy, he adds, the ecosystem is healthy. When he handles creatures such as raptors, snakes, and spiders, he seems completely unfazed..."
Folks (hope you are still here Yearning) it's working:
from the Times today:
None of the senators disputed the grim possibilities if Congress should do nothing, but it was clear that they are hearing from their angry constituents. Senator Elizabeth Dole of North Carolina, for instance, said people in her state have been complaining about costly and reckless behavior on Wall Street, and the potential cost to people who are anything but wealthy. (Senator Dole is running for re-election.)
Here's what we can do: Go to Amazon or Target.com, order 1 pitchfork and 1 Tiki Torch, then overnight to Congress. We can shout on line, email Congress, and fax, but imagine the impact of 1000 pitchforks and torches showing up on the Capitol steps. Now that's media impact!
Ben just said that he is going to buy these securities at hold to maturity price. He has some model that tells him that house prcs are going to fall 25% (or whatever). then he figures out the foreclosures and the recovery rate. He figures these securities are worth 65 cents (not 22c as they are selling for now). Holy mother of God! How is the taxpayer making money on this? This is a give away - recapitalization of the banking system. Short treasuries. Am I reading this correctly?
Why the heck is our MO credit expansion? Basically why is our economic growth tied to credit? Are we not using the credit that we used the past Y years efficiently? What the ****!
"...The best protection for the taxpayer is to have this work."
The best protection for the taxpayers is to let these damn banks stockholders get wiped out, let the bondholders take their hit and then restructure what is left if anything THEIR company. The taxpayer shouldn't have to pay any of this shit. Hank!
aked kings writes:
Did anyone watch the hearings on Bear Steanrs and that example of democracy?
Ayup. Anyone else notice that JPM's Jamie Dimon brought criminal attorney Bob Bennett to sit directly behind him at the Bear hearings? Paulson needs no such counsel. Being above the law and not subject to scrutiny are part of his deal. See, comrades? Easy. Now hand over the tril.
After listening to the BS by Burn-ass-ke and Treason Secretary Hankie Panky Americans Need to Outsource Their Government, Urgently
That is if Americans still have any common sense left and some humility. An American is brainwashed all his, or her, life that America has the best political and economic system no matter how much it changes over time. Crooks saw the flaw and changed the system to be among the worst from among the best decades ago. Every human institution, including the Church, is vulnerable to be taken over by Crooks and in America that has already happened. American govt at the federal level is staffed with the agents of the Crooks. I had known it for years but now more and more Americans can see it.
Let us face the facts on the ground Americans ARE incompetent compared to their past and populations of some other countries and they need to come to terms with their bad habits and false beliefs acquired over the past few decades. America is no longer a great nation. That was in the past. Let us worry about the present because living in the past in not going to do anything other than feel good.
The biggest problem in America is leadership. The second biggest problem is quality of the population. And the third biggest problem is a bad political system that accentuates the first two. So, we are in a fix.
I suggest that we outsource our government to the Germans or the Chinese. The biggest mistake would be to outsource to Indians. The govt run by Americans (certifiable agents of the Crooks) will dig America into a deeper and deeper hole. Americans have shown themselves to be unfit to govern themselves via democracy (only bad leaders are electable by a doped population) and they need to be governed by others.
All this is really, is an extreme game of shorting which uses Paulson to help game the markets, so that Goldman can get things cheap, then run it back up in a few years. We need a serious internal investigation here with conflict of interest and corruption!!
Well I called my 2 Texas Senators and 7th District Congressman. The Congressman's office said he is going to vote against the bailout. All three offices seemed very receptive and interested in what I had to say, noting that Paulson still owns GS stock, that things have been going uncannily well for GS in all this, that time should be spent and hearings held, and that it would be best to scrap this plan and, say, buy new equity at current market price from any banks that want to be bailed out.
I don't see Paulson as being motivated by anything dubious. I just think as an I Banker he has an overinflated sense of the importance of preserving the exisiting system.
We are supposed to let businesses collapse and weak hands give way to strong hands. This is nothig more than an intervention to thwart free markets. It is being justified by scare tactics that no one can really quantify or justify.
This is similar to bailing out the airlines in the name of national security or stability. All we do is subsidize bad businesses.
If we let more businesses go belly up, we would probably get better at reforming new ones with what is left over.
The missing sentences:
I resign because I helped cause this. I missed every sign that it was being set up; I've been wrong at every turn about the scope and the consequences. Any action you take on this proposal should be taken on the recommendation of persons other than me because I cannot speak objectively on this matter.
I'm so bummed. I just talked to my US Representative's local office (Mike Thompson). They wouldn't give me a clear indicator what his position is, merely that he's currently 'deliberating.' Which I can only take to mean that he's actually in the process of figuring out how to justify his yes vote.
Given that we're likely to maintain a Democratic majority, Republicans are going to spend the next four years running against this bailout as though it were the Democrats' idea. I utterly fail to understand how any Democratic officeholder doesn't see this clearly. How can they even be seated at the negotiating table? This this is so absurd on its face that they should all walk out the door en mass and refuse to come back until November 5 at the earliest. January 21 would make a lot more sense.
What is implied here, is that if we DONT do this, there is no way you can offset any of the pain to the taxpayers, which frankly, is just not true. I think the only taxpayers he is worried about are the ones that pay a lot of money (assuming they dont pay lawyers to evade taxes), basically his buddies who make tons of bank. But seriously, he makes this statement that if this isnt done, taxpayers are screwed. As in, the economy has problems, and those problems fall on taxpayers, and at that point, well, we'll just have to sit and watch, because, like, ya know, we dont have a trillion dollars or anything THAT WE DIDNT ALREADY spend, to help out those taxpayers who might see some pain.
So, what you are seeing here, is a GIANT insurance policy, with the taxpayers paying the premiums, and the insured being the very same players who f-ed the taxpayers in the arse.
This is heresy - didnt they burn people for this kind of stuff? HOw is it that we as a nation are too stupid to see the flaw in this logic? As far as I can tell not one legislator has mentioned this.
"I just think as an I Banker he has an overinflated sense of the importance of preserving the exisiting system."
Quite true. You'd hear the same dire predictions from a homebuilder, an automaker, a real estate agent, a wind-power advocate, a health care professional....
Question: How do you discover the value of an asset in the absence of a market
Paulson: It is a complex problem. Translation:"I will make up numbers"
Question: Will this plan work?
Answer: Alternatives are worse.
Question: Why did you not warn us earlier, weeks or months ago?
Answer: Er I mean, ...
Question: What about punishing fraud and incompetence of executives?
Answer: Outmoded regulations caused the problems
If I hear once more all four parrots (Pauslon, Bernanke, Cox, Lockhart) utter the words "outmoded regulation" I will have to write letters requesting their removal.
Oversight? HuffPo reported this yesterday, from Section 9 of the bailout plan: "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."
Recently I find myself remembering Bernake's testimony a year ago where he said this was "contained to the subprime" markets or something to the like...
"I believe we need oversight. We need protection. We need transparency. I want it. We all want it."
...
I think it's a bit late but fine.
Please start by disclosing how the OTC derivatives such as CDSs are leveraged and more importantly disclose who all the counterparties are. What are the procedures involved in the event of a Default being triggered on a CDS, and what happens if one or more counterparties are bankrupt or have ceased to exist.
"I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion."
...
I put forth another alternative, let the banks fail and go bankrupt and set up new banks in their place with the 700B supporting CLEAN assets. Market confidence would be greatly improved no doubt.
"I'm frustrated. The taxpayer is on the hook. The taxpayer is already on the hook. The taxpayer is already going to suffer the consequences if things don't work they way they should work. ...The best protection for the taxpayer is to have this work."
Well that's the best protection in your opinion. What if it does not work? Can you please tell us what you would do then or do you think it would be solved by the time you leave next year...
The man, HP, is sweating... I feel pity for him for a moment - I've been in such uncomfortable positions, when marketing crap - WPS+ wordprocessing s/w when WordPerfect was the competition.
I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures...
What have these financial institutions that we need to save done besides run ponzi schemes and scam investors?
Isn't this kind of like saving the mafia because they contribute to the economy?
If the Chinese (or the Russians or one of the SWFs) said something ominous to Paulson, he really should come clean and spit it out. If there are people holding a 'sword of damocles' over our financial system, its only fair that the citizens know this.
Many institutions will wait and hope to be bought/merged rather than go this route as their balance sheets can't take the hit. Failure is the only option.
Some experts are going to be making a lot of money despite a bear market.
"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."
What about me. Can i review them. I think everyone should be able too...
"The taxpayer is on the hook. The taxpayer is already on the hook."
Yes, for tax payers that's the problem with the Federal Reserve system. It is one of the first things that bankers learn.
I agree w/ Krugman. No ownership, no cash bailout. We know the MBS are unworthy of purchase. All we could conceivably really buy is a piece of the companies that made them.
"Isnt' the election... That's why this is actually good timing, "
I disagree completely, but concede that I'm guessing wildly. The only reason this plan has even gotten to a Hearing and not laughed out of the building is because an election is weeks away.
If Paulson really believes the MBS purchased will turn a profit, then he should accept the provison for an equity stake by warrants .... If the MBS turn a profit, warrants will never be called. warrants portect only if the securities purchased fail to break even.
Call them on the BS. Call the bluff.
If Paulson is that bad a poker player, then we've got to get in a game of draw with him in Vegas. Jeez.
It looks like this is going to pass. Nobody is debating whether or not to do it, they are debating HOW to do it.
However: i think we're going to see some meaningful changes to the original proposal.
1) I think the taxpayer IS going to get some equity. Many of the senators posed questions about why equity isn't/shouldn't be involved. Equity is going to happen. Hank looks pissed about it, but I think it's going to happen.
2) Paulson may not get the whole $700B in one shot
3) there may be some restrictions on WHO can get the money
-as example: people asked about whether or not banks could sell distressed assets in this for a PROFIT (for example, institution buys distressed assets for pennies on the dollar, then sells for more to the Treasury)
-whether or not it needs to be REGULATED industries that get the money
-there may be more transparency than Hank wanted.
I think that the Senators are nervous about this one. Watching them, there is considerable pushback here. And not just from the estimable senator from Alabama.
I remember Paulson was acting nervous like that about six months ago, don't remember exactly what the precipitating event was. But yes he gets very nervous.
Well we have to drive to discover the cause of his nervousness. Think of this hearing as therapy for poor Hank!
I don't think they are going to pass the plan as it is. They have uncovered his bluff. Paulsen hasn't done enough to justify his position.
Working in engineering, I have to say that any program manager who pitches his program in such a manner like this will not get his money at all. Maybe if he included some type of BS consequences instead of waving his hand and saying "monsters are going to eat you if you don't give me my money!". Lay out something like Dow 8k, housing down 75%, etc. etc... we don't even know exactly how his plan is going to help out as well.
If Congress passes this... well we already know they are idiots...
Paulson believes that executives won't participate in the bailout if their compensation is limited. But otherwise, they would participate because the bailout is in the company's interests. So what I hear him saying is that executives will disregard their fiduciary duties to shareholders in order to further their own interests.
Look, if you own shares in a company and the execs put their interests ahead of yours, you have a good cause of action against them. Breach of fiduciary duty class actions could lead to extraordinary liability. Why not take the risk? If execs do wrongfully forgob the plan, fine - shareholders can sue the execs, and that leaves taxpayers out of the entire mess. Why is that bad?
Also, Rep. Barton said of this bill: "Just because God created the world in seven days doesn't mean we have to pass this bill in seven days." That's scary. Bad data makes for bad policy. Barton should know that God created the world in six days. God blessed the seventh day and hallowed it, because on it God was so busy covering his shorts that he didn't have time to focus on Creation.
Kiran Chetry: You know talk about waking a sleeping giant -- we have almost 2,000 blog posts on CNNMoney.com about this bailout alone. Many people are outraged about it. They feel the government is spending $700 billion or more to reward bad behavior. What can you do to assure people that this is the right thing?
Sen. Christopher Dodd: Well, I'm not sure it is at this point. That's why we're having this hearing this morning. We'll have Secretary Paulson and Ben Bernanke, the chairman of the Federal Reserve, before the banking committee to explain this plan, why it's necessary and where we go from here. They basically have asked for a blank check of $700 billion for the next several years here to buy a lot of bad instruments out there in these institutions. See what power Paulson would have if the bailout is approved »
CR, I'm rather shocked you highlighted THOSE quotes from his testimony.
The man is blatantly trying to ram through a shock&awe bailout package, and you find the pablum he threw to the ravenous dogs on the floor of the Senate?
He is a traitor and should be tarred and feathered. Instead, the best we can hope for is the Senator from Vermont who demands all bailout recipients are made NOT too big to fail.
You just know that Bush is pulling another bait and switch on the hapless Dems. They're arguing for the bailout now, then we'll discuss regulations later. When later comes it's going to be "We can't interfere with the free market and saddle American businesses with all these regulations."
ac,
I don't see where either Paulson or Bernanke has made a case for that. Lots of generalities, lots of woo-woo talk.. but no case, no specifics, no linkages, no logic, no explanation for the amazing reversal of opinion. No justification of the amount, of the means, of picking particular targets, no definition of 'success', no exit strategy. Nada. Nothing.
Did you hear any of that in his testimony?
On the question of how to rescue the system versus whether to rescue the system (or to bailout or not to bailout, if you prefer):
Remember that if you think Roubini, Krugman, Conjure, and so many other esteemed economists and trans-millenial creatures (Conjure) are right that there is a financial systeme meltdown in progress, then the question is what to do about it.
Rejecting Paulson's plan (hey, give me $700B and watch what I do) doesn't answer the question of what to do.
So far, the best possible plan seems to be the Dodd/Frank plan, more or less. In a better country I think we could have sweish style nationalization, but we're not a better country. We're the worlds first sub-prime superpower.
At the hearing, it was Republicans who at times leveled the sharpest attacks on the proposal. Kentucky Sen. Jim Bunning said the plan amounts to "financial socialism, and it is un-American." Wyoming Sen. Mike Enzi said the plan would cost every individual in America $2,300.
The panel's top Republican, Sen. Richard Shelby of Alabama, said he doesn't believe "we can solve the crisis by spending a massive amount of money on bad securities. It is time that the administration and Congress do the hard work of devising, as quickly as possible, a comprehensive and workable plan for resolving this crisis, before we waste $700 billion of taxpayer
I called Schumer's office & told him not to back off the idea of tranches. That is our only hope here - a Dodd bill, giving them no more than $150 b now. Then everyone can get to work crafting a regulatory regime.
Oh - and why can't Congress appoint Volker to oversee an independent fund? Why does the money go to Paulson, given his obvious conflict of interest?
I support reinstatement of crucifixion for crimes of state and I'd charge high admission fees and use those to pay off the bankers. Watching these guys writhe in the wind would be a good start toward educating them about the consequences of abuse of power.
Crucifixion was almost never performed for ritual or symbolic reasons outside of Christianity, but usually to provide a death that was particularly painful (hence the term excruciating, literally "out of crucifying"), gruesome (hence dissuading against the crimes punishable by it) and public (hence the metaphorical expression "to nail to the cross"), using whatever means were most expedient for that goal. Crucifixion methods varied considerably with location and time period.
Paulson totally avoided Dole's OTC derivatives question. The amount outstanding of these instruments has doubled since June 07...step one is to stop the levels from increasing.
I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.
THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.
PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.
What Treasury Secretary Paulson is trying to do now is no different from what Rumsfeld did during the run up to the Iraq war. Same bs. Give us the authority and the money... we know what we're doing... we'll get it done...
Yeah right! Don't buy it for a second.
This sort of behavior, what Naomi Klein calls "Disaster Capitalism," is a hallmark of this administration.
If we "can't design this" right here and right now, and know we're doing the best we can for the country, then we'd better put the markets on holiday while we take the time to get this right.
There is too much at stake to be doing this on a wing and a prayer.
Why were Burn-ass-ke, an expert in Great Depression, and Hanky Panky (from Goldchain Silverknife) were appointed at the time they were?
Some must have known what was in store, no?
Jas
PS: Despite some clear disagreements with CR, I am very appreciative of his efforts. Sorry for not making it clear earlier. I am a self-proclaimed critic and, therefore, I focus on criticism.
anything yet on curbing executive and CEO compensation for firms that have to beg for money from the taxpayer? or was HP's little speech at the start about CEOs getting ousted at Fannie/Freddie considered enough?
The Chinese or Saudis or Russians must have threatened to stop buying Treasury bonds. Maybe this is the flip-side of screwing those Mideast Sov. Wealth Funds and is just one more reason why they want to avoid dilution.
This, along with GSE bailout, is all about saving the biggest borrower of all...
Frank's plan is something like 30 pages long (can't remember the exact number) versus Paulson's 2 or 3. Who has done their homework.
I think paulson's plan was dead on arrival
Even paulson, for example, includes oversight now.
It won't be Paulson's plan, but some version of Frank/Dodd...I hope with Schumer's amendment to stage it in steps.
It will include oversight, equity stake, CEO pay caps, claw backs, and mortgage cramdowns in bankruptcy.
It already includes new regulations and will include more.
calling Schumer's office is a great idea..... going to do it now.
call Frank's office yesterday to voice my support for him. also wrote my home conrgessman (Waxman) and Senators over the weekend warnign about the Patriot act/Iraq War like qualitity of the Paulson proposal
My wife keeps asking me how we (the US government) can borrow our way out of trouble. Being one of the little people, I can only see this ending badly.
The first rule of being in trouble of any kind is stop digging yourself deeper into trouble.
I agree with other commentators. Bernake tipped his hand that we will be vastly overpaying for this garbage by paying "hold-to-maturity" pricing. He thinks the rubes (us) should pay MSRP + markup to recapitalize his banker buddies. Someone needs to ask the FMV of the Bear Stears portfolio that we took on in March. I bet its down double digits.
I need to ask a question of those who understand these issues better than I do.
Paulson said "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures..."
Ok. Please, explain to me what the cost to my family will be if there is a continuing series of institutional failures. It's a for real question. I have not seen the alleged consequenses explained and my background does not provide me with an easy answer. I've only seen the phrase about the price of failure trotted out as magical mantra that deflects questions.
All this fury unleashed against the financial industry, the Fed chair, and the Treasury secretary, yet nobody's talking about the two states that virtually precipitated this mess: California and Florida. The problem loans and weak housing prices are still heavily concentrated in those two states.
If their citizens and their mortgage-enablers hadn't behaved so recklessly and irresponsibly, I don't think we'd be in the fix we're in now, but literally nobody is talking about cutting them loose. The discussion is virtually 100% about evil/stupid/reckless bankers, with zero accountability expected from the people who got the mortgages and bought homes they couldn't really afford.
So my idea: Segregate the bad debt by state, and let California and Florida homeowners take it on the chin as they ought to in a free-market economy. You play, you pay.
As to Michigan and other Rust Belt states that are having trouble, my vote is to give them a pass, because it's not the fault of their citizens if good high-paying automobile and other manufacturing jobs have gone away. Homeowners in the worst housing bubble states knew what they were doing and should bear their share of the responsibility.
Don't you love farce?
Followed by fear.
You will be homeless and poor.
Sorry, my dear.
But where are the clowns?
Quick, send in the clowns.
Don't bother, they're here.
Good to be rich.
The end is near,
Losing my 401k
And my career?
And where are the clowns?
There ought to be clowns.
Well, maybe next year.
If you haven't got good credit and aren't capable of paying off the loan, you won't get a loan - the system of loans despite crappy credit ends. A failure would do YOU a favor !
Ok, Bernanke gave the first reasoning for extending this beyond just failing institutions.
So, that those that are not failing will also want to participate in the auction and to help ensuring the price discovery is more market based than fire sale.
One of my Senator's (Patty Murray-WA)office staffer said calls are coming in about 80% opposed to this. I asked him if the other 20% were realtors, bankers and WAMU staffers. He just laughed.
If the Chinese (or the Russians or one of the SWFs) said something ominous to Paulson, he really should come clean and spit it out. If there are people holding a 'sword of damocles' over our financial system, its only fair that the citizens know this.
Comrade RayOnTheCollective | 09.23.08 - 12:33 pm | #
Comrade Ray:
Assume that there is something in the back room going on. The key, I think, is that they're opening the spigot for the foreign entities.
This has become a financial MAD exercise and the chinese will also suffer for it. they have their own problems and are in the process of making them our problems.
And it would be hell to pay for the political/financial classes to pay if the general public were to find out.
So, let's play the Great Depression scenario to scare the crap out of people and jam it through.
I prefer to think of it as a $1.5T shakedown which commenced with the F^F bailout.
If you can't quantify what the risk of doing this is, and you can't quantify what the risk of not doing it is, how can you say one is better than the other?
At the hearing, it was Republicans who at times leveled the sharpest attacks on the proposal. Kentucky Sen. Jim Bunning said the plan amounts to "financial socialism, and it is un-American." Wyoming Sen. Mike Enzi said the plan would cost every individual in America $2,300.
It's worth noting that the Republicans have been such a mess the past couple of decades precisely because they've abandon the tenets of fiscal conservatism that they claim to support.
Madness like "deficits don't matter" runs counter to everything we know about having a stable financial system and economy, yet these very words have come out of the mouths of Republicans.
Both political parties have good and bad ideas. The real world isn't so simple that one party is completely wrong and the other party is completely right.
It's just worth recognizing that the Republican party has basically abandon their ideas that have historically had the most merit ("don't try to live life off borrowed money").
The flip side is that if some of the republicans out there do return some of these ideas that do have merit in experience, they might start to sound a bit more sensible.
Try to look at the ideas being expressed, not what party they're coming from. It's going to be tempting for people to dismiss anything the Republicans say at this point because they rightfully don't have much credibility, but again I think viewing any of this through a partisan lens obscures the real problem and is a mistake.
My take from shorting Goldchain Silverknife is $50K+ for the past six months. I derive enormous satisfaction from the profits from shorting Fraudsters and Goldchain Silverknife, the most powerful of the Fraudsters, happen to be my favorite.
I remember Galbraith's treatise on the crash of 1929: "In Goldman Sachs We Trust."
It is obvious that THERE IS NO PLAN.
They are FIREFIGHTING.
NEITHER of them can give a straight answer to the pertinent questions except to say " we are focused on this" and "this will preserve the system" and "we have the taxpayers interest".
lemme get this right: the system is almost broken because citizens owe too much on their houses. The debt to income ratio of the average american taxpayer is just too high.
Solution: increase the debt by an average of $7000 per taxpayer, and hand this money over to the banks.
Brilliant!
The investment banking firms have experienced the same shock as homeowners; It's not worth what you think it's worth, no matter how much you paid for it. It's worth whatever the market bears. Sell the securities at "fire sale" prices, which is what they're worth, and get on with it!
ac,
True. "Republican" and "Democrat" mean completely different things than they did just a few years ago. This particular issue is really scraping the veneer off and getting to the core.
BTW- I keep hearing no one knows what the crappy paper is worth. BS. It's their business to know. And they do know. It's just not the number they want to hear.
If you were sitting there and lying your ass off and it became clear that everyone knew it you might be a Little afraid yourself. This bastard needs to be in prison.
Segregation of debt by state an interesting idea. Unfortunately, senators from Florida and California would nix that faster than you can say "accountability."
Krugman post on Bernake's Balance Sheet Baloney, ie evading the questions of price for the assets and the need to recaplitalize . . .all to escape from including an equity stake.
o way dude
Bank holiday, liquidate, nationlize. Equity and bondholders take the first hit.
Do we pull the bandaid off quickly or let it fester for a decade?
oh NOW we need oversight????
sounds like the letter I wrote & sent to my senators & congressmen yesterday...
But he doesn't want any limits on executive compensation and says any such could kill participation in a bailout.
HOW ODD.
In the case of the "failure" option, would all taxpayers be on the hook equally, or would the prudent, non-debt enslaved people with property and means of production sort of come out of it just fine?
I normally don't swear, but...
FUCK YOU, PAULSON!!!!!
oh... that's almost made me cry...
saying one thing and doing another
Economics and Politics - Paul Krugman Blog - NYTimes.com
I agree entirely with Krugman. If taxpayers are putting up money, they, and not Paulson's former colleagues should reap the benefits of success. The Treasury must receive warrants from business that receive taxpayer help. Otherwise it's pure welfare for the rich.
Uh.... He's still short on details of what's actually happening. Not a very convincing case.
No, what we need is an internment camp in Death Valley to place Paulson and his banker buddies. A 5 year sentence sounds appropriate.
Of what use is transparency, if there is no punative action for misbehavior - criminal or otherwise?
I believe we need 700,000,000,000. We need Jeeeezus. We need ponies! I want them. We all want them!
No bailouts for bad business people.
Why no coverage on LEH 2.5 BILLION bonus? that works out to $250,000 for their 10k employees in NYC:
Fury at $2.5bn bonus for Lehman's New York staff -
Business News, Business - The Independent
If he wants oversight, why isn't that in the bill?
everything is fine. The market is stable. don't do anything. nothing needs to be done.
What happened at the BB congressional meeting that took the "air out of the room"
BB: We're all subprime now
BB: We're all fucked
BB: None of the large banks in the US are solvent. NONE. They're all essentially broke.
BB: If we dont support them, we're even more fucked
BB: Any questions?
FUCK YOU, PAULSON!!!!!
LA Seller
edzachary....
couldnt agree more...
.....
"The best protection for the taxpayer is to have this work."
And if (and when?) it doesn't work, what's the next best protection?
He's speaking for effect, as all the members of this administration do. Any actual truth contained in these words is merely incidentally. Say what works, and move on to the next thing. If it doesn't work, say something else.
But always, always, find a way to do what you really wanted to do anyway.
He said he was "Shocked at the lack of oversight and regulation when I took over."
Where the hell where you again before taking over? Goldman something, wasn't it?
Nailed him.. Well done ! Who is that Senator
-K
Noble - EXACTLY! Where is this imperative to act?
I'm still pushing CR's idea of a website with each auction's collateral and characteristics.
Put some daylight on this trash, heck it might kill some of the bacteria that has been festering...
......
Rubbish. He seriously needs his ass kicked.
I would rather let the whole house of cards collapse and then use the 700 billion to rebuild the US infrastructure and develop alternative energy sources. At least that way the future citizens that will be paying for this will have something to show for it.
heh heh, Paulson stammering and licking his lips now.
HP,is asked if insisting on a stake will cause this bright CEOs to willingly, wilfully risk their enterprises and not participate in the plan..
HP evades and talks about executive compensation and is cut off and brought back on point. Brilliant
I have to wonder CR (just rhetorical wonder), what this has to do with individual Americans who are over-leveraged on credit-cards and auto-loans...you take the whole "financial meltdown away" and you could still scream "SYSTEMIC RISK" in the theater. Oh, wait, there's a nice gentlemen knocking down my door and says.......
looks like paulsons not going to wear a condom while raping the taxpayer. This will feel a lot better with out the protection...
anon1929 writes:
"Why no coverage on LEH 2.5 BILLION bonus? that works out to $250,000 for their 10k employees in NYC:"
That would wreck the narrative. Can't have that.
Comrade Mike,
Everyone knows you just have to take a shower to wash off the ookys.
geez.
So that was Senator Reid ( Reed?) who did well in the questioning. Give the man a cigar.
Still no questions about Section 8 of Paulson's TARP proposal...
so many lies coming out of his mouth, but one truth.
the taxpayer is already on the hook.
Field a new economics team!
Field a new economics team!
Goldman is taking over:
Prime Minister Gordon Brown should weigh whether to follow the U.S.'s lead and pursue a government- backed rescue of the U.K. mortgage market, Goldman Sachs Group Inc. chief economist Jim O'Neill said.
The British government should consider ``doing something to take over the activities of all those institutions that are just not in a position to lend here any more, because it's going to end up causing significant economic weakness in the U.K.,'' O'Neill said in an interview on Bloomberg Television.
U.S. Treasury Secretary Henry Paulson has proposed a $700 billion plan to stabilize the banking system by buying devalued securities from financial institutions, after seizing mortgage lenders Fannie Mae and Freddie Mac on Sept. 7. While the Bank of England last week extended emergency measures to help banks repair balance sheets, it stopped short of backing new lending.
So he says the alternative is "a continuing series of" more of the same. No apocalypse!
I'm willing to stand that long enough to consider this situation, have hearings, and pass well considered legislation, probably not based on the template Paulson presented.
Paulson needs to put some skin in the game.
He has the assets, if buying these bonds at a premium is a good long term bet, lets see him chip in for, say, 0.1% of the taxpayer exposure.
We could even let his share be non-subordinate, equal risk.
Bernanke: TARP to pay "hold to maturity" values on mortgage securities. How do you re-inflate a popped bubble again? Keep blowin' boys.
Oh and you forgot competent leadership.
And not having the very people that caused this mess being in charge of fixing it.
God bless Senator Richard Shelbey.
The only one asking tough questions of Polsen and Bernake.
Gotta write that man a check for reelection even though I don't live within 1000 miles of the man.
a 700B shower I guess will clean the ooky off.
Paulson, one bad penny.
Don't anybody be fooled by the questions. The vote is all that matters and I have a bad bad feeling they all cave. Re-election depends on a large piece of these funds finding their way into campaign coffers.
There is an interesting theory about this at Eurotrib. European Tribune - Community, Politics & Progress.
Jerome suggests that the fed has overextended itself and needs the bailout more than wall street does. I'm in no position to evaluate this idea. Do any experts here want to weigh in?
Do any experts here want to weigh in?
Don't trust 'em - can 'em !
Did anyone watch the hearings on Bear Steanrs and that example of democracy?
We know that house prices have come down but they are still pretty high compared to historic standards. This plan artificially props up home prices and will only delay the inevitable. Wages are not going up. How will house prices stop declining? They won't.
Also this bailout will be upwards of 3 trillion dollars not the 700 billion they want you to believe.
NY Times:
"Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the panel, called the Treasury proposal stunning and unprecedented in its scope and lack of detail.
Asserting that the plan would allow Mr. Paulson to act with absolute impunity, Senator Dodd said, After reading this proposal, I can only conclude that it is not only our economy that is at risk, Mr. Secretary, but our Constitution, as well.
all this from a man who walked away with 1/2 billion dollars tax free from cashing in his stock when he took the Treasury position.
I know he feels our pai
TARP to pay "hold to maturity" values on mortgage securities.
ComradeBusinessTime
I want to see the model. What default rates are assumed and what is the loss severity.
I know if I was selling the treasury something it would be much different than if I was the treasury buying something...
....
"The best protection for the taxpayer is to have this work."
Hope is not a plan.
Congress: Er... so you want us to have our taxpayers who have net negative savings to bailout banks who're broke so we can continue to lend credit to homebuyers in a housing market that is plummeting and increase our deficits using foreign capital putting us ever more at the mercy of the world and also trash the value of our currency and bring into question the AAA rating of the full faith and backing of the United States of America. Is that about right King Henry?
is this an Armageddon ? a prevent Armageddon ?
What is the subject ? At least it's clear why the last two IB's decided to become "regulated financial institutions""
"I believe we need oversight. We need protection. We need transparency. I want it. We all want it."
Yeah, but it's not coming from you.
Maybe this administration just can't cope with all the crises they've had to endure. They need a vacation.
Let's put this issue on the back burner and let it be issue #1 for the new administration. If the issue can't wait, maybe we should bring on the new team a few months early.
Is Paulson willing to give back all the compansation he got while beuing head of GS ?
He and other exces should be made to return to the tax payers all their bonuses, stock compensation and pay tax on their home appriciation....
Dragged over from previous thread:
Let's not forget:
"By choice, the Paulsons are not part of the high-society whirl of CEO-dom. "We aren't very social," says Paulson. "We've never joined a country club." In their free time they often head for exotic places like Belize and Brazil to see wildlife. Paulson's particular favorites are birds and animals of prey: "I'm fascinated because they're at the top of the food chain." If they're healthy, he adds, the ecosystem is healthy. When he handles creatures such as raptors, snakes, and spiders, he seems completely unfazed..."
"http://money.cnn.com/magazines/fortune/fortune_archive/2004/01/12/357911/index.htm
Quick poll:
Does this bailout/rescue/abortion
As much as I hate to admit, I say PASS. CONgress is too corrupt and in bed with Wall Street.
CR started a new thread on Paulson - take your comments there.
We're still waiting for him to post another so we may continue to debate exactly who on CNBC is the hawt.
Paulson is Gonzo. and I really think he is Satan's son, not Paul's son. Maybe we should just call him Gonzo Hank Satanson.
"The best protection for the taxpayer is to have this work."
The best protection for the taxpayer is to OWN the banks it saves from going bust.
Quick update from down in the engine rooms: CP spread even wider: 568/216.
This market just gives a reading of the market perceptions of solvency risk in the real economy. It's getting worse.
Mr. Scott to the bridge.
Thanks all for the reporting. Far better signal/noise ratio reading here than watching.
poll response: not enough information - info thus far has been confused. hence, I abstai
Shnaps writes:
CR started a new thread on Paulson - take your comments there.
This is that thread, dude.
Erin > Maria > the rest
In their free time they often head for exotic places like Belize and Brazil
Uh oh CSC. Did you see that? You better think of another place to go.
Folks (hope you are still here Yearning) it's working:
from the Times today:
None of the senators disputed the grim possibilities if Congress should do nothing, but it was clear that they are hearing from their angry constituents. Senator Elizabeth Dole of North Carolina, for instance, said people in her state have been complaining about costly and reckless behavior on Wall Street, and the potential cost to people who are anything but wealthy. (Senator Dole is running for re-election.)
Buyout Plan for Wall Street Is a Hard Sell on Capitol Hill - NY Times
Congress.org - Get informed, get involved -- find the numbers of your state, local, and federal officials and call them now!
Here's what we can do: Go to Amazon or Target.com, order 1 pitchfork and 1 Tiki Torch, then overnight to Congress. We can shout on line, email Congress, and fax, but imagine the impact of 1000 pitchforks and torches showing up on the Capitol steps. Now that's media impact!
Roughly $50.00
My .02
Ben just said that he is going to buy these securities at hold to maturity price. He has some model that tells him that house prcs are going to fall 25% (or whatever). then he figures out the foreclosures and the recovery rate. He figures these securities are worth 65 cents (not 22c as they are selling for now). Holy mother of God! How is the taxpayer making money on this? This is a give away - recapitalization of the banking system. Short treasuries. Am I reading this correctly?
Geez cut hank some slack folks,he is doing almost as good a job as mike brown did at fema!
Why the heck is our MO credit expansion? Basically why is our economic growth tied to credit? Are we not using the credit that we used the past Y years efficiently? What the ****!
"...The best protection for the taxpayer is to have this work."
The best protection for the taxpayers is to let these damn banks stockholders get wiped out, let the bondholders take their hit and then restructure what is left if anything THEIR company. The taxpayer shouldn't have to pay any of this shit. Hank!
aked kings writes:
Did anyone watch the hearings on Bear Steanrs and that example of democracy?
Ayup. Anyone else notice that JPM's Jamie Dimon brought criminal attorney Bob Bennett to sit directly behind him at the Bear hearings? Paulson needs no such counsel. Being above the law and not subject to scrutiny are part of his deal. See, comrades? Easy. Now hand over the tril.
Horsefeathers.
You can take the IB-honcho out of Wall Street, but you can't take Wall Street out of the IB-honcho.
whoa shumer, without his suit jacket "why not do this in tranches, less than 700b?"
Doing this in 'tranches.' Niiiice.
Hold to maturity price is dead giveaway. They get a giveaway, we get dead. Shame on Bernanke.
After this grilling.
I cannot see medium term (and possibly in the very short term) the international community having any faith in the USA never mind Wall Street
--
Sorry, first posted on a wrong thread...
After listening to the BS by Burn-ass-ke and Treason Secretary Hankie Panky Americans Need to Outsource Their Government, Urgently
That is if Americans still have any common sense left and some humility. An American is brainwashed all his, or her, life that America has the best political and economic system no matter how much it changes over time. Crooks saw the flaw and changed the system to be among the worst from among the best decades ago. Every human institution, including the Church, is vulnerable to be taken over by Crooks and in America that has already happened. American govt at the federal level is staffed with the agents of the Crooks. I had known it for years but now more and more Americans can see it.
Let us face the facts on the ground Americans ARE incompetent compared to their past and populations of some other countries and they need to come to terms with their bad habits and false beliefs acquired over the past few decades. America is no longer a great nation. That was in the past. Let us worry about the present because living in the past in not going to do anything other than feel good.
The biggest problem in America is leadership. The second biggest problem is quality of the population. And the third biggest problem is a bad political system that accentuates the first two. So, we are in a fix.
I suggest that we outsource our government to the Germans or the Chinese. The biggest mistake would be to outsource to Indians. The govt run by Americans (certifiable agents of the Crooks) will dig America into a deeper and deeper hole. Americans have shown themselves to be unfit to govern themselves via democracy (only bad leaders are electable by a doped population) and they need to be governed by others.
Jas
Well, if it hasn't been said before, I'm calling bullshit on Paulson.
If he cares about those things, why weren't they in the bill from the get-go?
Lying sack of shit.
Heckuva job, Mr. Hanky!
We all really have two choices here.
A. Deploy our yet to printed National Debt to rescue bankers.
B. Let the system fail and print to rebuild.
I chose B any day of the week and twice on Sunday. At least with B, I know the money I spend has a chance of doing some good.
Schumer has got a good plan to slow it down....
response that can't wait for congress to come back in January
answer should be, this is an emergceny, congress will stay in session.
Just watching Sen. Kay Bailey Hutchison say on the floor of the Senate that we can use the profit from the bailout to pay down our debt. Whoopee!
All this is really, is an extreme game of shorting which uses Paulson to help game the markets, so that Goldman can get things cheap, then run it back up in a few years. We need a serious internal investigation here with conflict of interest and corruption!!
Paulsen's argument is the same that an armed robber makes. "Give me $700B dollars or you will suffer dire consequences!"
Look a-hole, I think your bluffing.
Well I called my 2 Texas Senators and 7th District Congressman. The Congressman's office said he is going to vote against the bailout. All three offices seemed very receptive and interested in what I had to say, noting that Paulson still owns GS stock, that things have been going uncannily well for GS in all this, that time should be spent and hearings held, and that it would be best to scrap this plan and, say, buy new equity at current market price from any banks that want to be bailed out.
I don't see Paulson as being motivated by anything dubious. I just think as an I Banker he has an overinflated sense of the importance of preserving the exisiting system.
We are supposed to let businesses collapse and weak hands give way to strong hands. This is nothig more than an intervention to thwart free markets. It is being justified by scare tactics that no one can really quantify or justify.
This is similar to bailing out the airlines in the name of national security or stability. All we do is subsidize bad businesses.
If we let more businesses go belly up, we would probably get better at reforming new ones with what is left over.
Alas, legacy has its cost.
"Tranches would be a mistake because the next Treasury Secretary may not be from Goldman Sachs." - Hank P.
The missing sentences:
I resign because I helped cause this. I missed every sign that it was being set up; I've been wrong at every turn about the scope and the consequences. Any action you take on this proposal should be taken on the recommendation of persons other than me because I cannot speak objectively on this matter.
answer should be, this is an emergency, congress will stay in session.
joe shmoe | 09.23.08 - 12:23 pm
A-freaking-men. Exactly.
I'm so bummed. I just talked to my US Representative's local office (Mike Thompson). They wouldn't give me a clear indicator what his position is, merely that he's currently 'deliberating.' Which I can only take to mean that he's actually in the process of figuring out how to justify his yes vote.
Given that we're likely to maintain a Democratic majority, Republicans are going to spend the next four years running against this bailout as though it were the Democrats' idea. I utterly fail to understand how any Democratic officeholder doesn't see this clearly. How can they even be seated at the negotiating table? This this is so absurd on its face that they should all walk out the door en mass and refuse to come back until November 5 at the earliest. January 21 would make a lot more sense.
Schumer cornered him. Congress can be called back.
Keep Paulson on a short leash
ice... schumer stuck him with the bazooka comment
Quick update from down in the engine rooms: CP spread even wider: 568/216.
Did they fill in the n.a.? Fed report doesn't have 30-day AA for Friday.
From NYT: "Vice President Cheney was on Capitol Hill Tuesday morning, trying to round up support for the administrations package."
All you need to know.
jeez, enough with "the american taxpayer is already on the hook"
all your taxpayers belong to us!
If:
The american unqualified homeowner is augutus Gloop
Wall Street IB's are Varucca Salt
Bush is Tommy Teevee
paulson is Violet
Roubini is Willie Wonka
Bloggers are oompah loompa's
Who is Charlie?
please think beyond current candidates!
Schumer- " why not just ask us for 150 billion now and when we come back in January AFTER we see how this works...you can ask for the rest?"
Paulson- " Because we think we need the FULL authority now. This is about market confidence... yada yada yada"
Schumer- " But what if it doesn't work over the next few months? The markets will determine how well it works NOT by how much money you throw at it."
Paulson- " With all due respect Senator, 700 billion is the minimum we need."
What a load of garbage. Bravo Schumer!
What is implied here, is that if we DONT do this, there is no way you can offset any of the pain to the taxpayers, which frankly, is just not true. I think the only taxpayers he is worried about are the ones that pay a lot of money (assuming they dont pay lawyers to evade taxes), basically his buddies who make tons of bank. But seriously, he makes this statement that if this isnt done, taxpayers are screwed. As in, the economy has problems, and those problems fall on taxpayers, and at that point, well, we'll just have to sit and watch, because, like, ya know, we dont have a trillion dollars or anything THAT WE DIDNT ALREADY spend, to help out those taxpayers who might see some pain.
So, what you are seeing here, is a GIANT insurance policy, with the taxpayers paying the premiums, and the insured being the very same players who f-ed the taxpayers in the arse.
This is heresy - didnt they burn people for this kind of stuff? HOw is it that we as a nation are too stupid to see the flaw in this logic? As far as I can tell not one legislator has mentioned this.
Or am I missing something?
Hagel. Now I'm psyched. Treat it like Bush on Iraq, Chuck. Show they are totaly full of shit.
Yeah Schumer was fun.. - can you do it with less ? do you really need 700B in your pocket, right next to your BAZOOKA !
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA
-K
"Could you live with less?"
Go Chuck.
"I just think as an I Banker he has an overinflated sense of the importance of preserving the exisiting system."
Quite true. You'd hear the same dire predictions from a homebuilder, an automaker, a real estate agent, a wind-power advocate, a health care professional....
Hagel: tell me how this works - same question for Iraq and the bailout
Paulson is Mark Foley in drag?
From NYT: "Vice President Cheney was on Capitol Hill Tuesday morning, trying to round up support for the administrations package."
Did he bring his bird hunting gun with him ?
Question: How do you discover the value of an asset in the absence of a market
Paulson: It is a complex problem. Translation:"I will make up numbers"
Question: Will this plan work?
Answer: Alternatives are worse.
Question: Why did you not warn us earlier, weeks or months ago?
Answer: Er I mean, ...
Question: What about punishing fraud and incompetence of executives?
Answer: Outmoded regulations caused the problems
If I hear once more all four parrots (Pauslon, Bernanke, Cox, Lockhart) utter the words "outmoded regulation" I will have to write letters requesting their removal.
HP getting grilled on ~ Why not in tranches
$150 and come back for more!!
He wants it ALL NOW (despite his reply)
Something is scaring the crap out of Paulson.
The Chinese?
If he dosen't get this money NOW the dollar is toast.
I'd be happy for this hearing to go on for the next 2 years.
The debt collectors have come to hte USA
"Did they fill in the n.a.? Fed report doesn't have 30-day AA for Friday."
Don't know; these are current rates from Bloomberg;
You can use
Bloomberg.com:
Personal Finance
and H15S030D:IND
Go Hagel - "I understand that, but that's not really the question"
HOw is it that we as a nation are too stupid to see the flaw in this logic?
Geoff
Please read Jas's comments above...
....
Hagel just got him to say he can't say how it will work
now he's going in for the kill
I wish Obama had chosen Hagel as his VP
Something is scaring the crap out of Paulson.
He sure changed his tune fast in the last few months, it seems.
I am a taxpayer, and I am not convinced that I am "already on the hook".
I do feel the hook starting to dig in, however.
"pretransparency" wow.... good job CR!
Oversight? HuffPo reported this yesterday, from Section 9 of the bailout plan: "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."
Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter
Oversight?
hp reminds me of a tongue tied don rumsfield.
Paulson just said he doesn't know how it will work.
But give him the money anyway.
Paulson backpeddling on oversight is a big sign that his house of cards is folding.
Recently I find myself remembering Bernake's testimony a year ago where he said this was "contained to the subprime" markets or something to the like...
My things have changed.
....
"I believe we need oversight. We need protection. We need transparency. I want it. We all want it."
...
I think it's a bit late but fine.
Please start by disclosing how the OTC derivatives such as CDSs are leveraged and more importantly disclose who all the counterparties are. What are the procedures involved in the event of a Default being triggered on a CDS, and what happens if one or more counterparties are bankrupt or have ceased to exist.
"I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion."
...
I put forth another alternative, let the banks fail and go bankrupt and set up new banks in their place with the 700B supporting CLEAN assets. Market confidence would be greatly improved no doubt.
"I'm frustrated. The taxpayer is on the hook. The taxpayer is already on the hook. The taxpayer is already going to suffer the consequences if things don't work they way they should work. ...The best protection for the taxpayer is to have this work."
Well that's the best protection in your opinion. What if it does not work? Can you please tell us what you would do then or do you think it would be solved by the time you leave next year...
Thank you.
THE TAXPAYER IS ALREADY ON THE HOOK!?
Henry Paulson in a loud, you-can't-handle-the-truth voice
Which Senators (esp. on the Finance Committee) are up for election this year?
All the Representatives are up for election!
That's why this is actually good timing, if Paulson were able to stampede them sometime in March, they would not even listen to voters!
Paulson: we'll tell you what we've done after we've done, and that's all I can tell the American people!
Maybe we should consider outsourcing some of these myopic turds to India where they can face some real accountability?
"CEO murdered by mob of sacked Indian workers"
CEO murdered by mob of sacked Indian workers - Times Online
What is scaring Paulson?
He doesn't want to end up getting Cayne'd and Fuld'ed.
The man, HP, is sweating... I feel pity for him for a moment - I've been in such uncomfortable positions, when marketing crap - WPS+ wordprocessing s/w when WordPerfect was the competition.
But only for a moment, HP deserves all he gets.
-K
I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures...
What have these financial institutions that we need to save done besides run ponzi schemes and scam investors?
Isn't this kind of like saving the mafia because they contribute to the economy?
sound slike Paulson used to cold call for Countrywide, offering cash back refis..... you can make money with this!
Angelo Mozilo for Secy Treausry
joe shmoe writes:
"Paulson backpeddling on oversight is a big sign that his house of cards is folding."
You're right joe.
The debt collectors are here.
Can't let the taxpayer know whose going to get the $700
That was a doozy...
"It's not an expenditure, it's an investment (by the taxpayers)". -HP
I think I'll pass on that investment.
Something is scaring the crap out of Paulson.
The Chinese?
If the Chinese (or the Russians or one of the SWFs) said something ominous to Paulson, he really should come clean and spit it out. If there are people holding a 'sword of damocles' over our financial system, its only fair that the citizens know this.
Some takeaways thus far:
"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."
What about me. Can i review them. I think everyone should be able too...
"The taxpayer is on the hook. The taxpayer is already on the hook."
Yes, for tax payers that's the problem with the Federal Reserve system. It is one of the first things that bankers learn.
I agree w/ Krugman. No ownership, no cash bailout. We know the MBS are unworthy of purchase. All we could conceivably really buy is a piece of the companies that made them.
"Isnt' the election... That's why this is actually good timing, "
I disagree completely, but concede that I'm guessing wildly. The only reason this plan has even gotten to a Hearing and not laughed out of the building is because an election is weeks away.
This would make a fantastic thread in itself.
Link to watch the hearings
http://banking.senate.gov/public/index.cfm?Fuseaction=Hearings.Detail&HearingID=7a41ae9e-30b2-4d7f-8f1b-4ef2e8ae28f7
SEC COX SKR on shorts "downward spiral, needs narrow regulation"
all your free markets belong to us!
i can find no better reason for why the rich should pay a higher percent of taxes than everyone else than this current fiasco.
I agree that China is the real story here. If they turn off the spicket we're done.
So far Paulson isn't selling me on why we should go through with this plan.
I'd say flat out: Paulson has not made a case.
So they pulled the 700 billion number out of their asses?
Shocking.
This reminds me of the bunker scene in Downfall where the question of Army Detachment Steiner is brought up.
If this is about confidence in the system, what are they doing about derivatives?
If Paulson really believes the MBS purchased will turn a profit, then he should accept the provison for an equity stake by warrants .... If the MBS turn a profit, warrants will never be called. warrants portect only if the securities purchased fail to break even.
Call them on the BS. Call the bluff.
If Paulson is that bad a poker player, then we've got to get in a game of draw with him in Vegas. Jeez.
How can he possible get away with this?
Paulson, "We want oversight."
WHAT THE FFFFFFFF ARGHHHH!#!@$#@QE$%XCGFHDTRC
@Alo:
I'm still here.
I'm also watching CNBC.
It looks like this is going to pass. Nobody is debating whether or not to do it, they are debating HOW to do it.
However: i think we're going to see some meaningful changes to the original proposal.
1) I think the taxpayer IS going to get some equity. Many of the senators posed questions about why equity isn't/shouldn't be involved. Equity is going to happen. Hank looks pissed about it, but I think it's going to happen.
2) Paulson may not get the whole $700B in one shot
3) there may be some restrictions on WHO can get the money
-as example: people asked about whether or not banks could sell distressed assets in this for a PROFIT (for example, institution buys distressed assets for pennies on the dollar, then sells for more to the Treasury)
-whether or not it needs to be REGULATED industries that get the money
-there may be more transparency than Hank wanted.
I think that the Senators are nervous about this one. Watching them, there is considerable pushback here. And not just from the estimable senator from Alabama.
None of the senators disputed the grim possibilities if Congress should do nothing...
The possibilities are grim either way. This is not a black and white choice where one path leads to good times and one path leads to bad times.
At best one choice might guarantee a brief respite, but at what long term cost?
Nobody asks these questions in this country.
I say that's our whole problem.
He is the thief of thieves, the crook of crooks and the liar of liars. He needs to be fired and charged with treason.
I remember Paulson was acting nervous like that about six months ago, don't remember exactly what the precipitating event was. But yes he gets very nervous.
Well we have to drive to discover the cause of his nervousness. Think of this hearing as therapy for poor Hank!
Troy writes:
This reminds me of the bunker scene in Downfall where the question of Army Detachment Steiner is brought up.
Was that the scene where the Hitler character was screaming?
Paulson - His last 2 answers, on oversight and conflict of interest started with, "We can't design this here"
Comrade Clueless Dufus writes:
Link to watch the hearings
www.senate.gov - This page cannot be found. 4ef2e8ae28f7
Why am I not surprised it uses RealPlayer...
WTF....
(thanks for the link tho)
......
Paulson says: "If housing prices correct the way we think they should, then the taxpayer will profit from this plan."
Is he crazy? Does he think we're that stupid? Housing prices ARE correcting...DOWN! As they should!
I'm ready to deliver a solid uppercut to his chin so he bites off that damn flicking tongue of his!
Damn - "the need to go quickly " LOL
want want want .... will evolve ... may evolve ... need to get up and running ... dam
If this will turn a profit why aren't private companies lining up to buy this stuff?
"As this develops, I'm sure it will evolve" HP
Did I just here we need to balance the need for speed with the potential for conflicts of interests?
"I want strong oversight, strong protections, create transparency...." - Paulson
I just sharted.
I don't think they are going to pass the plan as it is. They have uncovered his bluff. Paulsen hasn't done enough to justify his position.
Working in engineering, I have to say that any program manager who pitches his program in such a manner like this will not get his money at all. Maybe if he included some type of BS consequences instead of waving his hand and saying "monsters are going to eat you if you don't give me my money!". Lay out something like Dow 8k, housing down 75%, etc. etc... we don't even know exactly how his plan is going to help out as well.
If Congress passes this... well we already know they are idiots...
Bilbo writes:
"I agree that China is the real story here. If they turn off the spicket we're done."
Yes.
But there are those who believe that that would amount to China bitting off its nose to spite its face.
Not true.
They American consumer is toast.
The mortgage market is STILL toast after this.
China might want to cash in its dollar chips for real estate and minerals in Africa & South America
"As this develops, I'm sure it will evolve"
INTO WHAT?
Paulson just admitted he's going to have to 'experiment' to get things done.
700B experiment.
The markets are sure instilled with confidence now.
Unbelievable. Bernanke wants us to pay "hold-to-maturity" prices. That 700 Billion is going to get eaten up mighty fast.
If "we can't design this here" then take a step back and design it properly.
Paulson- the Mad Scientist.
Paulson believes that executives won't participate in the bailout if their compensation is limited. But otherwise, they would participate because the bailout is in the company's interests. So what I hear him saying is that executives will disregard their fiduciary duties to shareholders in order to further their own interests.
Look, if you own shares in a company and the execs put their interests ahead of yours, you have a good cause of action against them. Breach of fiduciary duty class actions could lead to extraordinary liability. Why not take the risk? If execs do wrongfully forgob the plan, fine - shareholders can sue the execs, and that leaves taxpayers out of the entire mess. Why is that bad?
Also, Rep. Barton said of this bill: "Just because God created the world in seven days doesn't mean we have to pass this bill in seven days." That's scary. Bad data makes for bad policy. Barton should know that God created the world in six days. God blessed the seventh day and hallowed it, because on it God was so busy covering his shorts that he didn't have time to focus on Creation.
Kiran Chetry: You know talk about waking a sleeping giant -- we have almost 2,000 blog posts on CNNMoney.com about this bailout alone. Many people are outraged about it. They feel the government is spending $700 billion or more to reward bad behavior. What can you do to assure people that this is the right thing?
Sen. Christopher Dodd: Well, I'm not sure it is at this point. That's why we're having this hearing this morning. We'll have Secretary Paulson and Ben Bernanke, the chairman of the Federal Reserve, before the banking committee to explain this plan, why it's necessary and where we go from here. They basically have asked for a blank check of $700 billion for the next several years here to buy a lot of bad instruments out there in these institutions. See what power Paulson would have if the bailout is approved »
If "we can't design this here" then take a step back and design it properly.
set up 10 independant teams of economists !
--
"Please read Jas's comments above... "
Thanks, nades. Appreciate it very much.
Jas
Can't we just agree to ignore him unless he returns $499M of his personal half billion , as a gesture of good faith?
CR, I'm rather shocked you highlighted THOSE quotes from his testimony.
The man is blatantly trying to ram through a shock&awe bailout package, and you find the pablum he threw to the ravenous dogs on the floor of the Senate?
He is a traitor and should be tarred and feathered. Instead, the best we can hope for is the Senator from Vermont who demands all bailout recipients are made NOT too big to fail.
yeah he's frustrated. coming from a man who dumped 500 million in evil empire stock tax free
You just know that Bush is pulling another bait and switch on the hapless Dems. They're arguing for the bailout now, then we'll discuss regulations later. When later comes it's going to be "We can't interfere with the free market and saddle American businesses with all these regulations."
But he didn't want to be there! He didn't want to have 700 billion dollars! He didn't!
better approach? --- doesn't want to be here ---- better than alternative --- we're going to learn --- minimize ultimate cost to taxpayer ---
"The possibilities are grim either way."
ac,
I don't see where either Paulson or Bernanke has made a case for that. Lots of generalities, lots of woo-woo talk.. but no case, no specifics, no linkages, no logic, no explanation for the amazing reversal of opinion. No justification of the amount, of the means, of picking particular targets, no definition of 'success', no exit strategy. Nada. Nothing.
Did you hear any of that in his testimony?
The Committe want equity.
Paulsons GRAND PLAN is toast.
The Grand Old Secretary of the Treasury
He had 10000 men
He marched them up to the top of the hill and he marched them down again
And when they were up the were up
And when they were down they were down
But when they were only half way up they were neither up nor down.
Paulson DOES NOT INSPIRE CONFIDENCE
"It may evolve in various different ways"..
I think Palin may have some objection to that plan.
Who is "Kiran Chetry", please?
On the question of how to rescue the system versus whether to rescue the system (or to bailout or not to bailout, if you prefer):
Remember that if you think Roubini, Krugman, Conjure, and so many other esteemed economists and trans-millenial creatures (Conjure) are right that there is a financial systeme meltdown in progress, then the question is what to do about it.
Rejecting Paulson's plan (hey, give me $700B and watch what I do) doesn't answer the question of what to do.
So far, the best possible plan seems to be the Dodd/Frank plan, more or less. In a better country I think we could have sweish style nationalization, but we're not a better country. We're the worlds first sub-prime superpower.
Sounds like these hearings are fluff, Paulson is saying nothing,
and this bill will still pass?
I say no
(202) 224-3121
Its a good thing the economy has slowed down and we're not building much.
If not I could never keep up with this tread...
......
Austin Tex writes:
Who is "Kiran Chetry", please?
The only reason to watch Fox. The Queen of Hawt.
http://i6.tinypic.com/1zcnuiw.jpg
http://img2.timeinc.net/people/i/2008/news/080428/kiran_chetry.jpg
I agree that Paulson and Bernanke are failing to make their case.
They repeatedly have to fall back to vague generalities while exposing that they haven't even thought their own plan through.
hp about CDS "we've all known the risks since i came to DC". oh really?
all the debt belongs to you!
Nobody freakin asks.. Why are you working to prevent the CDS's from triggering ? People wrote the CDS willingly - let them freakin' pay.
Ohhhhh they are YOUR buddies who'd have to pay huh ?
Creep. Thief.
-K
"Rejecting Paulson's plan (hey, give me $700B and watch what I do) doesn't answer the question of what to do."
Easy answer - get some other economists to weigh in - i'm not an expert - but others are - besides the current team ---
You are watching the biggest televised clown show in U.S. history.
Watergate and Clarence Thomas pale in comparison.
Dr. Strangelove goes to Wall Street.
Banks stocks down. Mkt hates this debate. "Just bail us out already. (But no dilution!)"
Mozillo is going to be next head of FDIC
hearings are also on c-span 3 and c-span radio, WM option:
"http://c-span.org/Listen/C-SPAN-Radio_wm.aspx"
At the hearing, it was Republicans who at times leveled the sharpest attacks on the proposal. Kentucky Sen. Jim Bunning said the plan amounts to "financial socialism, and it is un-American." Wyoming Sen. Mike Enzi said the plan would cost every individual in America $2,300.
The panel's top Republican, Sen. Richard Shelby of Alabama, said he doesn't believe "we can solve the crisis by spending a massive amount of money on bad securities. It is time that the administration and Congress do the hard work of devising, as quickly as possible, a comprehensive and workable plan for resolving this crisis, before we waste $700 billion of taxpayer
I called Schumer's office & told him not to back off the idea of tranches. That is our only hope here - a Dodd bill, giving them no more than $150 b now. Then everyone can get to work crafting a regulatory regime.
Oh - and why can't Congress appoint Volker to oversee an independent fund? Why does the money go to Paulson, given his obvious conflict of interest?
Wrong.
All superpowers become subprime before they are no longer superpowers.
Rome, France, Spain, England, Russia
I support reinstatement of crucifixion for crimes of state and I'd charge high admission fees and use those to pay off the bankers. Watching these guys writhe in the wind would be a good start toward educating them about the consequences of abuse of power.
Crucifixion was almost never performed for ritual or symbolic reasons outside of Christianity, but usually to provide a death that was particularly painful (hence the term excruciating, literally "out of crucifying"), gruesome (hence dissuading against the crimes punishable by it) and public (hence the metaphorical expression "to nail to the cross"), using whatever means were most expedient for that goal. Crucifixion methods varied considerably with location and time period.
I agree that China is the real story here. If they turn off the spicket we're done.
More generally the problem is the possibility that the world will begin to reject the dollar in terms of trade and as a reserve currency.
If the dollar were to suddenly lose it's reserve currency status the results could be very sudden and catastrophic from a financial perspective.
Today's theme song:
YouTube -
Paulson: Congress should avoid setting auction rules
Paulson opposes proposal to get equity in return for help
They let him continue?
HP's plan: Give me $700B and I'll figure it out.
That's not leadership, that's panic! This guy is convincing him that NOTHING should be done, except the mop up operation after the fact.
sc writes:
"Dr. Strangelove goes to Wall Street.
Banks stocks down. Mkt hates this debate. "Just bail us out already. (But no dilution!)""
Corrrect.
But the Committe has to be seen to do its job.
In the process market confidence will evaporte as the truth comes out.
Even if it is only a small part of the truth.
OK let me get this...
"we dont know exactly whats going toxic"
"we dont know exactly where it is"
"or who has it"
"we dont know the value"
But we need 700 BB yesterday?
Paulson totally avoided Dole's OTC derivatives question. The amount outstanding of these instruments has doubled since June 07...step one is to stop the levels from increasing.
I have never been a fan of Chuckie Schumer, but today he scored a few points in my book.
If we MUST pay the pigmen, why not limit it to $150 billion now?
"The day i came here, my very first meeting i talked to the president on these issues"
Man that was a waste of time wasn't that.
SUBJECT: REQUEST FOR URGENT BUSINESS RELATIONSHIP
DEAR AMERICAN:
I NEED TO ASK YOU TO SUPPORT AN URGENT SECRET BUSINESS RELATIONSHIP WITH A TRANSFER OF FUNDS OF GREAT MAGNITUDE.
I AM MINISTRY OF THE TREASURY OF THE REPUBLIC OF AMERICA. MY COUNTRY HAS HAD CRISIS THAT HAS CAUSED THE NEED FOR LARGE TRANSFER OF FUNDS OF 800 BILLION DOLLARS US. IF YOU WOULD ASSIST ME IN THIS TRANSFER, IT WOULD BE MOST PROFITABLE TO YOU.
I AM WORKING WITH MR. PHIL GRAM, LOBBYIST FOR UBS, WHO WILL BE MY REPLACEMENT AS MINISTRY OF THE TREASURY IN JANUARY. AS A SENATOR, YOU MAY KNOW HIM AS THE LEADER OF THE AMERICAN BANKING DEREGULATION MOVEMENT IN THE 1990S. THIS TRANSACTIN IS 100% SAFE.
THIS IS A MATTER OF GREAT URGENCY. WE NEED A BLANK CHECK. WE NEED THE FUNDS AS QUICKLY AS POSSIBLE. WE CANNOT DIRECTLY TRANSFER THESE FUNDS IN THE NAMES OF OUR CLOSE FRIENDS BECAUSE WE ARE CONSTANTLY UNDER SURVEILLANCE. MY FAMILY LAWYER ADVISED ME THAT I SHOULD LOOK FOR A RELIABLE AND TRUSTWORTHY PERSON WHO WILL ACT AS A NEXT OF KIN SO THE FUNDS CAN BE TRANSFERRED.
PLEASE REPLY WITH ALL OF YOUR BANK ACCOUNT, IRA AND COLLEGE FUND ACCOUNT NUMBERS AND THOSE OF YOUR CHILDREN AND GRANDCHILDREN TO WALLSTREETBAILOUT@TREASURY.GOV SO THAT WE MAY TRANSFER YOUR COMMISSION FOR THIS TRANSACTION. AFTER I RECEIVE THAT INFORMATION, I WILL RESPOND WITH DETAILED INFORMATION ABOUT SAFEGUARDS THAT WILL BE USED TO PROTECT THE FUNDS.
YOURS FAITHFULLY MINISTER OF TREASURY PAULSON
What Treasury Secretary Paulson is trying to do now is no different from what Rumsfeld did during the run up to the Iraq war. Same bs. Give us the authority and the money... we know what we're doing... we'll get it done...
Yeah right! Don't buy it for a second.
This sort of behavior, what Naomi Klein calls "Disaster Capitalism," is a hallmark of this administration.
Chris Dodd is a disgrace.
ust how did that "friends of Angelo Mozillo" loan scam get buried so quickly?
WTF! He should be impeached for being on the take.
If we "can't design this" right here and right now, and know we're doing the best we can for the country, then we'd better put the markets on holiday while we take the time to get this right.
There is too much at stake to be doing this on a wing and a prayer.
Serious question.
Does asking for $700b and saying it's required so that it can be broad based
really inspire more confidence than
asking for $150b and saying it's required so that it can help those institutions at risk?
Dingo- thanks.
--
A very important question to ask:
Why were Burn-ass-ke, an expert in Great Depression, and Hanky Panky (from Goldchain Silverknife) were appointed at the time they were?
Some must have known what was in store, no?
Jas
PS: Despite some clear disagreements with CR, I am very appreciative of his efforts. Sorry for not making it clear earlier. I am a self-proclaimed critic and, therefore, I focus on criticism.
Subcommander Doom :
Good one, nigerian plan 101.
Paulson makes me laugh.
Talking about how the unregulated CDS market needs to be addressed, but added that the CDS market helps stabilize things.
That brought a smile to my face.
The only stability that CDSs brought is that JPM had to pick up BS with the taxpayers, rather than just laying it all on the taxpayers.
Subcommander Doom--
Priceless.
anything yet on curbing executive and CEO compensation for firms that have to beg for money from the taxpayer? or was HP's little speech at the start about CEOs getting ousted at Fannie/Freddie considered enough?
Aren't you rich?
Or in despair?
Paulson is making a sound,
Lies in the air.
Send in the clowns.
Isn't it bliss?
Don't you approve?
Pigmen keep raping your ass,
Wall Street can't lose.
Where are the clowns?
Send in the clowns.
Market has gone red
PUHLEAAZE.... they need 700 billion NOW.. not 0 or 100 or 200 but 700 billion.
And Paulson has not made one convincing argument why. Not ONE.
The Chinese or Saudis or Russians must have threatened to stop buying Treasury bonds. Maybe this is the flip-side of screwing those Mideast Sov. Wealth Funds and is just one more reason why they want to avoid dilution.
This, along with GSE bailout, is all about saving the biggest borrower of all...
there are other plans on the table.
Frank's plan is something like 30 pages long (can't remember the exact number) versus Paulson's 2 or 3. Who has done their homework.
I think paulson's plan was dead on arrival
Even paulson, for example, includes oversight now.
It won't be Paulson's plan, but some version of Frank/Dodd...I hope with Schumer's amendment to stage it in steps.
It will include oversight, equity stake, CEO pay caps, claw backs, and mortgage cramdowns in bankruptcy.
It already includes new regulations and will include more.
calling Schumer's office is a great idea..... going to do it now.
call Frank's office yesterday to voice my support for him. also wrote my home conrgessman (Waxman) and Senators over the weekend warnign about the Patriot act/Iraq War like qualitity of the Paulson proposal
call, e-mail, write
New Jersey Senator nailed him
DOW moving down, glod down, dollar up slightly (oddly). i wonder what the volume is?
Dodd is still a tool.
My wife keeps asking me how we (the US government) can borrow our way out of trouble. Being one of the little people, I can only see this ending badly.
The first rule of being in trouble of any kind is stop digging yourself deeper into trouble.
YEAH - "Flying by the seat of our pants"!!!
Does the bazooka weigh down the pants?
Jas Jain writes:
Why were Burn-ass-ke, an expert in Great Depression, and Hanky Panky (from Goldchain Silverknife) were appointed at the time they were?
Answer: Amero.
I agree with other commentators. Bernake tipped his hand that we will be vastly overpaying for this garbage by paying "hold-to-maturity" pricing. He thinks the rubes (us) should pay MSRP + markup to recapitalize his banker buddies. Someone needs to ask the FMV of the Bear Stears portfolio that we took on in March. I bet its down double digits.
"The Nigerian Plan"
Yes, a much better name than "The Paulson Plan"
Just ask Hank what happened to the hundreds of billions that we ALREADY have commmitted to this little clusterfuck?
How's all of that going so far? Hmmm?
Riiiiiight
Can anyone explain why our existing system cannot be allowed to work?
The wealthiest 1% of U.S. citizens own 60% af all U.S. assets. Let them take haircuts. Dumping this pile of bad debt on the taxpayer is a travesty.
High house prices are the problem. Prices must fall, or money supply must increase.
Simple.
The auction is just like Sotheby's!
So no prob.
Yeah Mr Paulson..
But what if it doesn't. Then you will be staying up at night wondering. "maybe we should really have free markets after all".
Paulson I believe my house is worth 2 Billion so buy it and after you buy it figure out what it is worth.
BB frowns.. crosses his arms.. Interesting passive-aggressive body language..
-K
heh.... and he gets to talk to the House tomorrrow.
I need to ask a question of those who understand these issues better than I do.
Paulson said "I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures..."
Ok. Please, explain to me what the cost to my family will be if there is a continuing series of institutional failures. It's a for real question. I have not seen the alleged consequenses explained and my background does not provide me with an easy answer. I've only seen the phrase about the price of failure trotted out as magical mantra that deflects questions.
The emperor's bailout has no clothes.
It's too bad we don't have a long holiday weekend coming up. Last weekend clearly wasn't long enough to put a decent plan together.
All this fury unleashed against the financial industry, the Fed chair, and the Treasury secretary, yet nobody's talking about the two states that virtually precipitated this mess: California and Florida. The problem loans and weak housing prices are still heavily concentrated in those two states.
If their citizens and their mortgage-enablers hadn't behaved so recklessly and irresponsibly, I don't think we'd be in the fix we're in now, but literally nobody is talking about cutting them loose. The discussion is virtually 100% about evil/stupid/reckless bankers, with zero accountability expected from the people who got the mortgages and bought homes they couldn't really afford.
So my idea: Segregate the bad debt by state, and let California and Florida homeowners take it on the chin as they ought to in a free-market economy. You play, you pay.
As to Michigan and other Rust Belt states that are having trouble, my vote is to give them a pass, because it's not the fault of their citizens if good high-paying automobile and other manufacturing jobs have gone away. Homeowners in the worst housing bubble states knew what they were doing and should bear their share of the responsibility.
Sebastia
broad markets just turned modestly negative.
BB frowns.. crosses his arms.. Interesting passive-aggressive body language..
I saw that "we're wasting time here"
I've only seen the phrase about the price of failure trotted out as magical mantra that deflects questions.
ding ding ding.
Oh wait Paulson... what's this clause on the back of your three page proposal about 'Amero'?
Don't you love farce?
Followed by fear.
You will be homeless and poor.
Sorry, my dear.
But where are the clowns?
Quick, send in the clowns.
Don't bother, they're here.
Good to be rich.
The end is near,
Losing my 401k
And my career?
And where are the clowns?
There ought to be clowns.
Well, maybe next year.
is the root cause "...regulatory structure" or "housing market?"
Which one Hank?
"Look me in the eye..."
If you haven't got good credit and aren't capable of paying off the loan, you won't get a loan - the system of loans despite crappy credit ends. A failure would do YOU a favor !
-K
Ok, Bernanke gave the first reasoning for extending this beyond just failing institutions.
So, that those that are not failing will also want to participate in the auction and to help ensuring the price discovery is more market based than fire sale.
BB = "can't quantify the risk"
How about a surtax on those in financial industry that is on an exponential scale to pay for this?
BB evades the question about impact on the US$ - does NOT look the Senator in the eye.
-K
I called both my Senators today (NJ).
I'm not optimistic. The staffers I spoke with said their offices had fielded 50 to 100 calls about the mortgage bailout plan.
We're going to reward the bad financial actors and get bigger and more intrusive government.
who is this bennet guy? he rocks.
hell yeah you can not quantify the risk. I want a hell of a return for my $2300
Look me in the eye
THIS WILL NOT COST THE TAXPAYER
Canyou quantify the risk?
BB says NO
One of my Senator's (Patty Murray-WA)office staffer said calls are coming in about 80% opposed to this. I asked him if the other 20% were realtors, bankers and WAMU staffers. He just laughed.
Something is scaring the crap out of Paulson.
The Chinese?
If the Chinese (or the Russians or one of the SWFs) said something ominous to Paulson, he really should come clean and spit it out. If there are people holding a 'sword of damocles' over our financial system, its only fair that the citizens know this.
Comrade RayOnTheCollective | 09.23.08 - 12:33 pm | #
Comrade Ray:
Assume that there is something in the back room going on. The key, I think, is that they're opening the spigot for the foreign entities.
This has become a financial MAD exercise and the chinese will also suffer for it. they have their own problems and are in the process of making them our problems.
And it would be hell to pay for the political/financial classes to pay if the general public were to find out.
So, let's play the Great Depression scenario to scare the crap out of people and jam it through.
I prefer to think of it as a $1.5T shakedown which commenced with the F^F bailout.
ha ha - we are "not making an expenditure" we are "buying assets, holding assets and reselling assets."
oh and he doesn't like being in this position. he states. again.
Do we have protection plan for TARP too?
JEEZ hank, enough with the taxpayer is already on the hook response!
i think the taxpayer may have a long sharp hook for you down the road. a metaphor for rule of law of course.
all your taxpayers belong to us!
If you can't quantify what the risk of doing this is, and you can't quantify what the risk of not doing it is, how can you say one is better than the other?
At the hearing, it was Republicans who at times leveled the sharpest attacks on the proposal. Kentucky Sen. Jim Bunning said the plan amounts to "financial socialism, and it is un-American." Wyoming Sen. Mike Enzi said the plan would cost every individual in America $2,300.
It's worth noting that the Republicans have been such a mess the past couple of decades precisely because they've abandon the tenets of fiscal conservatism that they claim to support.
Madness like "deficits don't matter" runs counter to everything we know about having a stable financial system and economy, yet these very words have come out of the mouths of Republicans.
Both political parties have good and bad ideas. The real world isn't so simple that one party is completely wrong and the other party is completely right.
It's just worth recognizing that the Republican party has basically abandon their ideas that have historically had the most merit ("don't try to live life off borrowed money").
The flip side is that if some of the republicans out there do return some of these ideas that do have merit in experience, they might start to sound a bit more sensible.
Try to look at the ideas being expressed, not what party they're coming from. It's going to be tempting for people to dismiss anything the Republicans say at this point because they rightfully don't have much credibility, but again I think viewing any of this through a partisan lens obscures the real problem and is a mistake.
So my idea: Segregate the bad debt by state, and let California and Florida homeowners take it on the chin
Segregate the federal taxes and send them back to the states and you've got a deal.
--
For full disclosure...
My take from shorting Goldchain Silverknife is $50K+ for the past six months. I derive enormous satisfaction from the profits from shorting Fraudsters and Goldchain Silverknife, the most powerful of the Fraudsters, happen to be my favorite.
I remember Galbraith's treatise on the crash of 1929: "In Goldman Sachs We Trust."
Jas
It is obvious that THERE IS NO PLAN.
They are FIREFIGHTING.
NEITHER of them can give a straight answer to the pertinent questions except to say " we are focused on this" and "this will preserve the system" and "we have the taxpayers interest".
Ok, Cox is afraid of a run on banks.
lemme get this right: the system is almost broken because citizens owe too much on their houses. The debt to income ratio of the average american taxpayer is just too high.
Solution: increase the debt by an average of $7000 per taxpayer, and hand this money over to the banks.
Brilliant!
I don't want to be protected by government. I want to be protected from government.
Paulson goes back to his 'taxpayer on the hook' argument.
Subcommander Doom -
Very funny. Problem is, your English is too good.
The investment banking firms have experienced the same shock as homeowners; It's not worth what you think it's worth, no matter how much you paid for it. It's worth whatever the market bears. Sell the securities at "fire sale" prices, which is what they're worth, and get on with it!
ac,
True. "Republican" and "Democrat" mean completely different things than they did just a few years ago. This particular issue is really scraping the veneer off and getting to the core.
Either they are firefighting, or they are puppets whose strings are now being exposed.
So my idea: Segregate the bad debt by state, and let California and Florida homeowners take it on the chin
I say send everybody in CA and FL to debtors prison and have them work off the costs of this mess for the rest of the nation.
Sorry CR, but that's the fairest possible solution here.
Good afternoon ladies & gentlemen
My name is Bruce Lee
Chairman Mao asked me to drop by and collect something.
DO YOU HAVE IT
Did paulson just get a phone call??
BTW- I keep hearing no one knows what the crappy paper is worth. BS. It's their business to know. And they do know. It's just not the number they want to hear.
"Something is scaring the crap out of Paulson."
If you were sitting there and lying your ass off and it became clear that everyone knew it you might be a Little afraid yourself. This bastard needs to be in prison.
ac, even if we are not debtors?
Mr. Paulson - No SOUP for YOU!
Do you guys need me?
Hank Paulson, US Chief Asset Allocator for the American People -
"this is not an expenditure, this is an investment"
"I don't want to be protected by government. I want to be protected from government."
The government is a ship without a rudder, the taxpayer is the coal-shoveler.
Warm up the old fastball, Senator. Bail Four low and inside, please.
Comrade Bagholders,
Wow, so Hanky doesn't have a plan?
Or he doesn't want to disclose it?
Something is clearly up. Just what? Yen carry trade imploding?
Nostrovia,
S&P 3rd battle for 1200 now commencing.
1200 held in July, failed last week. Can it hold now?
O btw, you can cut to CNN2 when CNBC goes to ads..
-K
Sebastian:
Segregation of debt by state an interesting idea. Unfortunately, senators from Florida and California would nix that faster than you can say "accountability."
"this is not an expenditure, this is an investment"
sounds like a 2005 home purchase
Rusty Can of Whoopass writes:
Do you guys need me?
Brings a can opener.
I'm sorry Hank, I see your lips moving, but your not telling us anything.
Krugman post on Bernake's Balance Sheet Baloney, ie evading the questions of price for the assets and the need to recaplitalize . . .all to escape from including an equity stake.
Balance sheet baloney - Paul Krugman Blog - NYTimes.com
Wow, so Hanky doesn't have a plan?
Or he doesn't want to disclose it?
He doesn't have one. There would have been so many ways to communicate that there is a plan, if there were one.
I say again: Hank Paulson's plan: "Give me $700B and I'll figure it out." He's panicking.
Banks getting hammered.
WB -12%
C -5%
BAC-5%
GS -5%
Bush Mouthpiece Admits: Theyve Been Sitting on this Plan
Emptywheel » Bush Mouthpiece Admits: They’ve Been Sitting on this Plan
Can't anybody see that Paulson and Bernanke ARE the problem.
Seriously. What incentive do bondholders have to institute changes at banks as long as the treasury will always make them whole.
It's far easier for Pimpco to cry wolf and manufacture a crisis and then let the government and taxpayer foot the bills.