Bailout Bill will Allow FDIC to Borrow Unlimited Amounts from Treasury
Submitted by
CalculatedRisk on Wed, 10/01/2008 - 7:32am (206 comments)
Shopping at Amazon?
Wait! If you click on the Amazon banner link at the top of the page first, HCN will get a percentage of anything you purchase for 24 hours!
Open predictions
Our local book authors
User login
Who's online
There are currently 38 members and 177 guests online.
Currently online
- DCRogers
- GDD9000
- Mike in Long Island
- Speed
- Tim waiting for 2012
- sporkfed
- Comrade Kristina
- 1 currency now -yogi
- photon
- REBear
- tg
- km4
- wafdof
- splat
- Mr Slippery
- josap
- Basel Too
- Substace Over Form
- curious
- TJ and The Bear
- HomeGnome
- kratovil1
- Homer
- gruntled
- steelhead
- CitizenPither
- dreamer
- lineup32
- Tom Stone
- merchants of fear
- aleister perdurabo
- RATM
- poic
- Boinga
- fried
- Antipodes
- robj
- Rajesh
Recent Recommendations
I'll take 10 Trillion please!
Pretty please!
First useful thing I've seen in the plans.
3rd version a charm?
Can we just do that and and raising the FDIC limits to 250k ? Cheap Debt caused this problem more cheap debt will not fix it .
endless money eh?
i'm still focusing on the longer term repercussions based on the assumption that some drek of a bailout will be passed.
i disagree with krugman regarding quantity and functionality of the funding due to the size of the derivative risk worldwide compared to worldwide GDP. although he uses the qualifier "for now".
Where Will the Money Come From? - Paul Krugman Blog - NYTimes.com
the ability of a sovereign state to prevent being downgraded by moody's, etc. is partially based on the ability to tax it's people enough to come up with the moolah, among other criteria found in Standard & Poors Sovereign credit guidelines. the US has advantages with the dollar being the current standard, but not much more.
which leaves the options of defaulting, printing or argentine style confiscation deflation for that scenario.
They are moving in the right diresction. Now if they can only remove the mark to fantasy accounting section I will stop calling the senators.
Where is the Treasury going to get all this money? Issue T-bills to Neptunians?
Seventh?
And still waiting for the first unintended consequence in our 'no consequences economy.
It's not the bailout but rescue bill
Free ponies for everyone!
I want mine!
Self-delusion. Charter a bank. Bank takes in deposits. Bank gambles the money. When they win, it's bonuses and dividends galore. When they lose, the taxpayer will make it up.
FRAUD
Another plan:
FT.com / Comment / Opinion - Recapitalise the banking system
ot sure the link made it, but go to Financial Times
and click the Soros link at top
In Soviet Amerika, bailout bill allow Treasury to borrow unlimited amount from FDIC
See page 91. $250K expires December 31, 2009
Check out page 160.
The bill added $250M for coal gasification tax credits.
Just bought a few far out of the money options on coal companies.
The new plan has something in it about medical necessity and is 451 pages long.
Do you think this is the add on to the other Senate bill?
increasing fdic limits has a moral hazard as to deposit rates BUT its the most intelligent way to go (if modified to reduce said hazard) cause its a recap of banks, but puts the govt ahead of even senior debt in event of a problem.
how come ICELAND is smart enough to see this and act that way (temporary unlimited insur on some bank deposits) and roubini gets it but we cant?
obviously paulson wants closet way to bail out funds and all other entities other than depository institutions.
presumably they know what would happen if the crap were revealed, the marks, etc.
"for the greater good"
reichstag fire (wachovia) didnt work so now they try this?
Wow, creeping socialism has quickly progressed to galloping socialism.
We will be done as a country in two years, at most. Let's hope that we rebuild it as a Republic, again.
From Previous Thread:
Comrades,
Quit praising Seb. He's full of shite. He states CR NEVER reports ISM and only did so because it's bad.
Wrong OH SEBASTIAN.
ISM - Google Search
F*Tard.
Nostrovia,
Misean, Burnside, and anyone else looking at this issue from the previous thread of whether Treasury (not FDIC) will be able to revolve or "churn" the $700B.
I went and dug this up. The Senate bill is now up on the Senate Banking Committee website:
http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf
Alas, Misean, you are right. Sec. 115 of the bill authorizes up to $700B at any one time, but Sec. 118 of the bill is where the action is. It says:
SEC. 118. FUNDING.
For the purpose of the authorities granted in this
Act, and for the costs of administering those authorities,
the Secretary may use the proceeds of the sale of any secu-
rities issued under chapter 31 of title 31, United States
Code, and the purposes for which securities may be issued
under chapter 31 of title 31, United States Code, are ex-
tended to include actions authorized by this Act, including
the payment of administrative expenses. Any funds ex-
pended or obligated by the Secretary for actions author-
ized by this Act, including the payment of administrative
expenses, shall be deemed appropriated at the time of such
expenditure or obligation.
Whoever drafted that syntax should be shot. But hat I take away from that is that proceeds from the sale of TARP-owned assets go back under the TARP. And because Paulson is limited to $700B at any one time, but not in total, this amounts to an unlimited blank check.
To go to the metaphor that CR used a with a gambler at a slot machine, the there is no limit to how much money the gambler can put in his cup; the limit only applies to how many coins he can put in the slot machine at any one time.
I would very much like to be proven wrong here....
C'mon people...it's to protect the Bank savings of the little guy, the man on the street. Get with the spirit of this progrom!
No provision for a bankruptcy judge to modify a mortgage?
consequences.
We are all Irish now
The Fed better put an order for a million new printing presses.
I wonder if we will be able to spend them faster than they can make them?
@JG
HUD Section 8 vouchers for everyone!
I just changed my etrade sweep account from the default, to a NY muni bond fund, effective yield 8.5% ... I'll take that over stock picking any day!
(for those interested in chasing higher yield CDs)
The recycle aspect of the failout adds yet another cost to the monstrosity. Paulson could potentially cycle all the remaining debt limit to Wall Street, leaving the Fed and the FDCI unable to cope with a major bank failure.
Page 142:
New clean renewable energy bond limitation of 800M
Just bought some calls on PBW expecting siliness.
The new plan has something in it about medical necessity and is 451 pages long.
Do you think this is the add on to the other Senate bill?
It is 113 pages--the rest is the other bills that were already scheduled.
PTDBD writes:
C'mon people...it's to protect the Bank savings of the little guy, the man on the street. Get with the spirit of this progrom!
PTDBD | 10.01.08 - 11:54 am | #
you mean, get with the pogrom, hee hee.
The "$700 billion bailout" is going to end up costing $2-3 Trillion with all of these add-ons...as expected.. NO BAILOUT!!
I do agree: raising FDIC limits and insuring MMF is a step in the right direction.
If by delaying passage we get a better bill, I'm all for it.
Paulsons impressive interest conflicts
The actions of Treasury Secretary Paulson since the first outbreak of the Financial Tsunami in August of 2007 have been directed with one apparent guiding aimto save the obscene gains of his Wall Street and banking cronies. In the process he has taken steps which suggest more than a mild possible conflict of interest. Paulson, who had been chairman of Goldman Sachs from the time of the 1999 Glass-Steagall repeal to his appointment in 2006 as Treasury head, had been one of the most involved Wall Street players in the new securitization revolution of Greenspan. Under Paulson, according to City of London financial sources familiar with it, Goldman Sachs drove the securitization revolution with an endless rollout of new products. As one London banker put it in an off-record remark to this author, Paulsons really the guilty one in this securitization mess but no one brings it up because of the extraordinary influence Goldmans seems to have, a bit like the Knights Templar order of old. Naming Goldman chairman Henry Paulson to head the Government agency now responsible for cleaning up the mess left by Wall Street greed and stupidity was tantamount to putting the wolf in charge of guarding the hen house as some see it.
Paulson showed where his interests lay. He is by law is the chairman of something called the President's Working Group on Financial Markets, the Governments financial crisis management group that also includes Fed Chairman Bernanke, the Securities & Exchange Commission head, and the head of the Commodity Futures Exchange Commission (CFTC). That is the reason Paulson, the ex-Wall Street Goldman Sachs banker, is always the person announcing new emergency decisions since last August.
Two weeks ago, for example, Paulson announced the Government would make an unprecedented $85 billion nationalization rescue of an insurance group, AIG. True AIG is the worlds largest insurer and has a huge global involvement in financial markets.
AIGs former Chairman, Hank Greenberga close friend of Henry Kissinger, a former Director of the New York Fed, former Vice Chairman of the elite New York Council on Foreign Relations and of David Rockefellers select Trilateral Commission, Trustee Emeritus of Rockefeller Universitywas for more than forty years Chairman of AIG. His AIG career ended in March 2005 when AIG's board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism and legal action for cooking the books, in a prosecution brought by Eliot Spitzer, then Attorney General of New York State.[1]
In mid September, in between other dramatic failures including Lehman Bros., and the bailout of Fannie Mae and Freddie Mac, Paulson announced that the US Treasury, as agent for the United States Government, was to bailout the troubled AIG with a staggering $85 billion. The announcement came a day after Paulson announced the Government would let the 150-year old investment bank, Lehman Brothers, fail without Government aid. Why AIG and not Lehman?
What has since emerged are details of a meeting at the New York Federal Reserve bank chaired by Paulson, to discuss the risk of letting AIG fail. There was only one active Wall Street banker present at the meetingLloyd Blankfein, chairman of Paulsons old firm, Goldman Sachs.
Blankfein later claimed he was present at the fateful meeting not to protect his firms interests but to safeguard the entire financial system. His claim was put in doubt when it later emerged that Blankfeins Goldman Sachs was AIGs largest trading partner and stood to lose $20 billion in a bankruptcy of AIG. [2] Were Goldman Sachs to go down with AIG, Secretary Paulson would have reportedly lost $700 billion in Goldman Sachs stock options he had, an interesting fact.
That is a tiny glimpse into the man who crafted the largest bailout in US or world financial history some days ago, the failed TARPTroubled Asset Relief Programa proposed $700 billion financial stabilization scheme which, in Paulsons original version would have allowed him or his Treasury successor to use $700 billion, with no oversight or accountability, to buy bad or worthless assets from financial institutions he deems worthy of help
And this from the AP:
Majority Leader Harry Reid and GOP Leader Mitch McConnell say, however, that they're going to add a tax cut package already rejected by the House on Monday.
The bipartisan move caps a day of behind-the-scenes maneuvering on Capitol Hill over what sweeteners to add to the bill to attract votes from House Republicans.
Reid and McConnell's move may prove popular with Republicans, but it risks a showdown with House leaders insisting that a popular measure extending certain business tax breaks be financed by tax increases elsewhere in the code
BINGO...something for everyone.
Where's my pony?
Mortgage Applications : The weekly MBA mortgage applications index plunged 23.0% last week with refis falling 34.7% and purchasing applications down 10.9%. The fixed 30-yr mortgage rate dipped to 6.07% (-1 basis point) while the 15-yr went down to 5.82% (-2 bps) & 1-yr adjustable rate mortgages popped to 7.19% (+18 bps).
What time does the Senate vote on this?
Around page 205, credits for PHEV
This bill is loaded with goodies from both sides of the aisle.
Comrade Margin Call of Cthulhu,
Good pull on the churn. New that would be the case. If Paulson had to come back every other day for more funds, the serfs might think they're getting shafted.
Nostrovia,
FDIC should have had full explicit backstop all along. This would have stopped the silent runs that contributed greatly to recent bank failures which have greatly complicated the job of the Fed in trying to secure some kind of stability.
Serial bank failures of this magnitude and frequency WILL kill the real economy and bring about severe recession. If bad banks have to fail then let them fail one at time, months apart so that there is no undo systemic risk.
This measure is long overdue.
section 112
I called my senators about it this morning
Section 112 allows the Treasury Secretary to buy bad foreign loans from foreign corporations. In other words it allows chinese banks, Indian banks, Japanese banks, German banks to dump their garbage loan on the taxpayer
"To the extent that such for17
eign financial authorities or banks hold troubled assets as
18 a result of extending financing to financial institutions
19 that have failed or defaulted on such financing, such trou20
bled assets qualify for purchase under section 101."
The main problem with this is that the FDIC will probably charge too low an insurance premium.
The December 31, 2009 sunset is a fraud. It'll be made permanent before 2Q2009.
i'm going to set up my own bank now that i know this. how lengthy is the process for getting a bank charter? anyone know
Is it me or does everyone lose a little faith in the system when these huge changes are made. I don't doubt I will get the money back. I just wonder if it will be worth the gas money to go to the bank and withdraw it. Any advice on moving money overseas would be greatly appreciated.
The great enemy of the truth is very often not the LIE, DELIBERATE, continued, and DISHONEST, but the myth: Persistent, Persuasive, and Unrealistic. JFK
While they are at it, why not change CURRENCY...How about RICE? Put the mass's to work, building holding banks for the much needed RICE Currency.
"And still waiting for the first unintended consequence in our 'no consequences economy.'"
You are seeing it...this economic pullback is the "unintended consequence" of an absurd credit orgy, both to consumers and businesses.
Forget the "credit tightening" meme. This Sucker is going down due to overextended consumers pulling back.
I'm calling my Congressman again to ask how Paulson will value credit default swaps that are in default. I know his methodology, but when you take on the obligation of a defaulted security, how do you resell it and obtain future cash flow?
Congressman Norm Dicks
Peter-san writes:
Around page 205, credits for PHEV
This bill is loaded with goodies from both sides of the aisle.
I think that it only goes to page 113--the rest are the bills that were scheduled to be voted on before they added this on.
Folks, there is more to it
YouTube - **FLASH** The REAL REASON For The Bailout (Hint: FOREIGNERS)
Era of cheap credit is over. I love watching these monkeys hump a football.
Can we get a leader, please?
jeremy writes:
Is it me or does everyone lose a little faith in the system when these huge changes are made. I don't doubt I will get the money back. I just wonder if it will be worth the gas money to go to the bank and withdraw it. Any advice on moving money overseas would be greatly appreciated.
jeremy | 10.01.08 - 12:01 pm | #
depends on your net worth. lichtenstein banks are the best, but big dough required. panama is very safe and a money hub for many. plus great snorkeling and nightlife!
AMT min tax exemption raised to $69,950 from $66,250
It is easier to read the bill by searching for '$
"Revised Bill"
451 pages!!!!!!!
!!!!!!
!!!!!!
I hope they pass this one. At 451 pages, it has unintended (and INTENDED) consequences written all over it.
This is going to be fun!
Ah... that makes much more sense. Phew. Thanks for pointing out my error.
All these add-ons are a great excuse for House to kill the bill. I think they are larding it up to ensure failure... hope, pray...
Anyone?
Ok, this is the last time i will post this:
I think that it only goes to page 113--the rest are the bills that were scheduled to be voted on before they added this on.
Am I right or not????
The bailout is actually only the first 100 or so pages. There are other initiatives and amendments on mental health, energy policy, etc. attached.
You know how these things work. Everyone puts their own pet projects on something that can't/won't be voted against.
Called bundling. It's been used to by corporations for years to push unwanted crap on taxpayers.
D writes:
Folks, there is more to it
that guy kdenniger is the Mrs. Frabopple of the youtube world.
snoozer! get to the point. it's an online world, get with the program, pick up the pace a little.
.
.
D,
That guy is funny, he found a suit!
How can the asset be priced after purchase on a held to maturity basis, but yet remain, and expected to be sold??
I know the answer, but I'm asking the question to relieve it from my mind...
Mortgage Pig is now masquerading as a House bill (i.e. pork aplenty)
I said this while all the celebration was going on when the bill was firet "defeated". They'll throw a bone to the left (Dems), a bone to the right (Reps) and this thing passes on Thursday, essentially unchanged but more expensive.
Probably over a trillion $$ in its final form.
""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"
Call and fax your representative and tell them to vote NO on the bailout.
Oh...and isn't this add-on crap just what McCain was flouting at the debate? Let's see how that asshole votes tonight.
Comrade girlbear,
Nice pull on Paulson. I'm smitten.
Nostrovia,
Video of the day:
Kill Bill Vol. 1 Final Fight
YouTube - Kill Bill Vol. 1 Final Fight, NO SPOILERS!!
"You know how these things work. Everyone puts their own pet projects on something that can't/won't be voted against.
Called bundling. It's been used to by corporations for years to push unwanted crap on taxpayers."
Actually, it's "wanted" not "unwanted" additions. Most of the additions passed the Senate already by 92-3 because they're good additions. It's really just a chance to give people some basis to say why their vote changed, no that it's clear that a majority of people want something done.
girlbear,
Really? I knew if I dug through enough of that, I'd find mention of the Trilateral Commission. What happened to the paragraph on the Illuminati?
They can guarantee you'll get your money but what is more important is what they can't guarantee and that be it's purchasing power.
Unlimited is the new black.
The Insult to Injury bill will pass. Monday was just for show.
I love watching these monkeys hump a football
Line of the day so far.
@David in NY
Thanks for the info/correction.
Monday was just for show.
no, monday was a huge embarrassing mess, now the overlords are straightening the storefront up again.
girlbear,
Got a link for that quote?
TIA
FORD SALES Fall 35%
Volvo sales Fall 52%
Guaranteed toilet paper what will they think of next.
What about raising the SIPC limits to a million or better 2.5 million per account? Or do you want investors pulling their stock out of brokerage accounts en mass? News out about what has happened to hedge fund accounts with Lehman's: assets frozen and unrecoverable for the immediate future at least, sending hedge funds into bankruptcy:
Lehman Hedge-Fund Clients Left Cold as Assets Frozen (Update3) - Bloomberg.com
Pretty fix we're in.
Comrade Fair Economist,
Failout bill...
Nice one.
Nostrovia,
well, Dr. Setser agrees with Krugman on the source of funding, mostly -
Brad Setser: Follow the Money » Blog Archive » Dark flows
worth the read, amazing work as always.
but, the bottom line from this data seems to point to treasuries being the safe haven for sold assets and transfered funds, reducing the need for Chinese and petrodollar funding.
guess the question is, will treasuries maintain their safe haven status for the duration?
H. R. 1424
TROUBLED ASSETS.The term troubled
assets means
(A) residential or commercial mortgages
and any securities, obligations, or other instruments that are based on or related to such
mortgages, that in each case was originated or issued on or before March 14, 2008
(1) IN GENERAL.If the Secretary establishes
the program authorized under section 101, then the Secretary shall establish a program to guarantee
troubled assets originated or issued prior to March 14, 2008, including mortgage-backed securities.
http://online.wsj.com/public/resources/documents/senatebillAYO08C32_xml.pdf
yogi writes:
Self-delusion. Charter a bank. Bank takes in deposits. Bank gambles the money. When they win, it's bonuses and dividends galore. When they lose, the taxpayer will make it up.
FRAUD
Hey, it's not fraud when it's legal.
Illegal is the new legal.
So if this thing passes is it time to use my money to buy a house? I sold in 2006 and have been renting and watching. I want to be sure to buy something before my dollars are worthless...
I am serious. If this passes should I get serious about looking and buying?
$25B for the auto industry will let them evade BK for... oh, about 3 weeks.
A concise roundup of all the numbers can be found at Autoblog (Sept stats aren't up yet, but should be this afternoon).
By The Numbers — Autoblog
Ford just announced that it didn't sell any cars in September. That may have been part of the problem in the ISM report.
Misean says:
Comrade Fair Economist,
Failout bill...
nice one
I can't claim credit. I saw it somewhere, don't remember where. Probably here actually.
FORD SALES Fall 35%
Guess what? Too big to fail. Stock is only down 13% so the market has factored in bail out, err, buy-in.
Roubini:
I will elaborate later today on the rising risk of the "mother of all bank runs", i.e. the risk of a run on the uninsured deposits in the US banking system. In Q2 of 2008 the FDIC reports $4462bn insured domestic deposits out of $7036bn total domestic deposits; thus, only 63% of domestic deposits are insured. Thus $ 2574bn of deposits are not insured.
Given the risk that many banks small, regional and national may go bust (as even large ones such as WaMu and Wachovia went recently bust) there is now a silent run on parts of the banking system. Deposit insurance formally covers only deposits up to $100000. Thus any individual, small or large business and/or foreign investor or financial institution with more than $100000 in a FDIC insured bank is now legitimately concerned about the safety of its deposits.
Particularly at risk are the cross border short term interbank lines of US banks with their foreign counterparties that are estimated to be close to $1 trillion.
Also news that the Chinese government told Chinese banks NOT to lend any money to US banks until further notice. Not much attention paid to this, but very important development.
Stretch,
Home prices are local. Mortgages are global. You need to look at what homes in your target area are doing to figure out whether you need to be looking at homes in your target area. You can get a mortgage quote in a minute. Getting a feel for local price trends takes longer.
Volvo sales Fall 52%
Remembering the good old days when declining auto sales were the big news on CR.
Forget ponies, where's my moose and squirrel?
So if this thing passes is it time to use my money to buy a house?
I'm not a financial planner, but I think if this thing happens it's time to use your money to buy anything of usefulness. Not sure if housing has completely crashed, but if our worthless dollars are going to be used to prop up the stock market so millions of baby boomers feel good about stocks... I suppose stocks wouldn't be a bad investment?
Personally I'm thinking of buying oil or precious metals... just anything to hedge against the coming inflation. Maybe even wait a bit until stock market really "crashes"?
I think everyone trying to hold onto their nut is wondering what to do with it... and people trying to build a nut are trying to figure out how to... I'm part of the latter...
ford didn't sell any cars because the arteries of this great nation are blocked! Banks would love to underwrite no money down no payments for 12 months 3% APY auto loans, but they are unable to because of these temporarily illiquid assets they have!
If you care about replacing that 3 year old ford with the latest model then you will call your congress person today and tell him how important it is that this fat is purchased by paid experts, bottled, and stored until it ripens in the fullness of time.
link to chinese no lending?
Moose: Rocky, watch me pull a bailout out of my hat!
Squirrel: Again?
Paulson just announced the purchase of 700,000 Ford Expeditions at sticker price. They'll be driven around by army troops stationed in the US for five years then sold for a profit.
(c) ELIGIBILITY OF FDIC.Notwithstanding sub-
sections (a) and (b), the Corporation
shall be eligible for, and shall be considered
in, the selection of asset managers for residential mortgage loans and residential mortgage-backed securities; and shall be reimbursed by the Secretary for any services provided.
(b) DISCLOSURE.For each type of financial institutions that sells troubled assets to the Secretary under this Act, the Secretary shall determine whether the public disclosure required for such financial institutions with respect to off-balance sheet transactions, derivatives instruments, contingent liabilities, and similar sources of potential exposure is adequate to provide to the public sufficient information as to the true financial position of the institutions. If such disclosure is not adequate for that purpose, the Secretary shall make recommendations for additional disclosure requirements to the relevant regulators.
Ford sales dowm 35% - Dow up 100 points!
Makes perfect sense.
Bulls need more matador speers.
This is a bill that has already passed the House, that is the only way that the Senate could "vote first" on an appropriation bill. See original bill here:
H.R. 1424 [110th]: Emergency Economic Stabilization Act of 2008 (GovTrack.us)
The tax credits for energy,business etc. were an add-on to get conservative members to vote for it, and of course the TARP was an add-on.
I have been following my local market for the past two years. It is declined by about 15%-20%. It seem sas if it will keep declining. The reason I am thinking of buying despite the fact it should continue to decline is this financial crisis. Everyone talks about "printing money" and rampant inflation if this bill is passed. If that is the case won't housing jump up in cost again? I do NOT want to lose my chance at a house...again.
So if this bill passes will I need to buy a house fairly quickly to avoid losing my purchasing power due to massive inflation?
Are these "bank runs" really about whether the depositor has greater than $100,000 or whether the place is run by hoodlums or fools and you wouldn't want to risk a $1 there and don't believe in patronizing dens of thieves?
Looking ahead...if this bill passes the Senate (as expected) but the House fails to pass, does that mean the original bill (before the "Rescue text got added) will also fail to be approved by both houses?
Lots of egg on faces in that event; makes it even more likely that some form of it will pass both.
Symbolic that the most important legislation in the worst financial crisis of our lifetime is an add-on.
You guys don't feel used, totally manipulated? Section 132 is exactly the same:
SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET AC19
COUNTING.
The bill now has 4x more pages/junk attached to it.
And now, apparently you folks calling/writing/faxing only represent a small minority of Americans. Ask FL. Sen. Mel Martinez. He now receives overwhelmingly POSITIVE calls.
The FDIC stuff uneventful/unpolitical language, NOBODY would oppose.
This is total manipulation of public sentiment. Rediculous!
Raising the limits, now, is just a confidence game. Even at $100k they can't cover what's coming. Witness the deals that were done for WM, WB, and others that did not make the FDIC officially take them over, just cover a % of losses.
This is just like the capital reserve ratio change...that was just changed to reflect what has already happened.
Nothing burger....
Ciao
MS
Here's a brutal video of how BAD Southen Ca housing market is now...
http://corgiguy.gohds.net/?ch=1.0.143.0.SOCAL:FORECLOSURE-ALLEY.
The more I think about this bill the less I like it. I agree with Misean it will suck credit out of the market but it's even worse than that. It's targeted to suck out precisely the most important capital.
What we're running desperately short of - and what we can't do without for any length of time without catastrophe - is working capital loans, which are typically 3 months. The treasury is going to issue 700 billion in securites, and it's going to be 3 month securities because that's what the market wants. Once this gets out there will be NO working capital lending, except to a few companies with AAA or government guarantees. Who's going to be numbskull enough to loan to a business with a real risk of going under when they can get T-bills, probably at a semi-decent rate what with the flooding?
The moneys will go into MBS. So, effectively we have a 700 BB market manipulation to draw money from where it's most desperately needed to where it's most completely wasted. This will make the money blunders of the Hoover Fed look like small potatoes.
If this passes, we are heading straight for a Greater Depression, and immediately.
Three questions.
1) Does the plan include public disclosure and transparancey to what in fact is being bought and at what prices ??
2) Is the governement getting any warrants or preferred stock in return for buying these toxic assets ??
2) Are they still pushing to get rid of the "mark to market" accounting ??
It's extremely difficult to keep up on what's in, what's not, and where we stand. Regardless I hope this gets voted down. Nothing good ever comes out of rush decision.
I like the alternative GOP bailout bill (Defazio?).
Look at what happened in the House. The majority in the House are those who voted against Congressional leadership. Therefore the ones who need to be flexible and switch their vote; or switch the bill is the House leadership.
The leadership failed, therefore the people who won the Monday vote are now holding all the cards. If they can get together and come up with a bill that they find acceptable, than they can push that through without leadership and force the Senate and Bush to agree to that bill since they won't be able to pass anything else.
Duh! Isn't this politics 101? So why is everyone still working on the old bill?
I hope the House holds and blocks the Paulsen plan that American people rejected and go forward with the Defazio plan. I hope Defazio is working with the people on the left to make sure they get what they want in a bill as well. I don't know if this is how Congress works, but it appears we are seeing the manifestation of a silent majority who have rejected their leaders! Even the Presidential candidates!
Quite amazing!
SEC. 114. SPECIAL RULES FOR REFUND OF THE COAL EXCISE TAX TO CERTAIN COAL PRODUCERS
AND EXPORTERS.
SEC. 602. TRANSFER TO ABANDONED MINE RECLAMATION
FUND.22
Has anyone looked at all the shit attached to this???
Smoke and Mirrors. If Fannie and Feddie had implied backing all along, the FDIC had complete unquestioned backing.
They put this in the bill because it sounds good and people will focus on it rather than the theft of taxpayer money.
Stretch002 writes:
So if this thing passes is it time to use my money to buy a house? I sold in 2006 and have been renting and watching. I want to be sure to buy something before my dollars are worthless...
I am serious. If this passes should I get serious about looking and buying?
Stretch002 | 10.01.08 - 12:20 pm | #
relax, you've got a minimum a few years, at max -ish, 10yrs for a bottom. keep reading the blog and watch the rent to own ratio in your hood.
Business Man writes:
""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS.
Well you did sell us your crap after all. And if you don't bail us out, our banks will fail and then we'll cause the US to fail wilth us. So a global effort is needed.
It's kinda a "you break it, you pay for it" policy, just with very big numbers.
From: Bailout Bill Executive Compensation Provision: Lipstick on a Pig - Credit Slips
Let me just illustrate what a fraud the executive compensation limits proposed are. Currently, businesses may deduct all salaries under $1 million from their corporate income. The proposed bailout bill would lower that deduction to $500,000 for certain executives at certain companies. Already, not a real big penalty for excessive executive compensation--the tax deduction gets limited by $500K/executive. But here's the catch: the deduction cap only applies to the top 3 executives at companies that have over $300MM in dealings with the Treasury under the bailout program, excluding direct sales.
Stretch002:
NOOOOOO! Do not buy. You are NOT losing your chance. I do not know where you are, but the housing market in general still has much room to fall. Look back through CR's post on housing. Look at the JP Morgan estimates of future losses.
Wait this out. The wait may be long (years, not months). Be patient. Do not allow yourself to jump into this market based on the fear that you will "lose your chance." NOT GONNA HAPPEN.
Save your money, sit back, and chill.
kona, it's how you make sausages!
in australia it's called "mystery bag".
I ended up buying calls on KOL (coal ETF) and PBW (clean energy ETF) to help ease my pain in case this thing passes.
STRETCH,
One more point. When this market finally hits bottom, it is not going to immediately start a zoom back up to the top. Things will languish. You have time. Much time.
Anon,
You sure are working hard to get your bailout passed..
what happened to owning a car for 10 years? They run fine, they look nice if kept up and thier's no reason to get into debt trap again. Plus you lose 40% when you leave the lot..
Used cars are the only thing selling...As one in the industry...
your blowing smoke up the wrong crowds ass's..
Go back to paulson to get a better rant together...
I'll write and call because I'm against this bill, but if you throw in a free toaster, then I'm fine...go ahead...never mind.
A new show for HGTV is in order:
Flip this Bank starring Sheila Bair
ew treads for old cars.
umm, new thread.
Here's a brutal video of how BAD Southen Ca housing market is now...
http://corgiguy.gohds.net/?ch=1.0.143.0.SOCAL:FORECLOSURE-ALLEY
Everyone should watch this one. It shows the "trashout" of a foreclosed house. All the family's possessions - knicknacks, toys, clothes, decorations, photos - their lives, really, - are smashed up and hauled to the dumpster. It shows the losses from the housing catastrophe go far beyond even the massive mortgage losses - you see tens of thousands of dollars of stuff hauled off and even more meaning destroyed in all the personal value that no longer exists. Multiply this by millions and you have the pain that passes human understanding.
the positive calls are because of things like the NAR campaign to their members. The blogs were much faster, but these big organizations have been running hot button don't-think-just-do campaigns for a lot longer.
Pure self-interest is at work, but (again) our press has let us down because there is no investigative journalism worth a damn in the main stream media. At least none that can react quickly enough when something is rushed past their noses.
The people aren't stupid but they are misled on a number of different levels. I guarantee most callers either only have the vaguest idea of what they are calling about or have been told that the economy is suffering (true) and this is the fix (false).
Why isn't Topic A here the Sherman interview? If the general public were aware of what they intend to do with this money, I don't think too many people would be for the bailout.
Re: Picosec
Dude that was all in the SIFMA phonecall 3 nights ago...
Can someone explain why the "equity stake" kick in at $100M but the Executive Compensation kicks in at $300M?
It was so hilarious listening to that treasury guy repeat over, and over, "We don't want to reward failure". Dude the whole banking system failed, and this bill is the reward! So your point is kind've lost on someone simple-minded like me who doesn't see things the same way!
So even if this bill passes it will not cause immediate and rampant inflation? Housing will continue to decline as before?
I just want to be sure I haven't saved and sacrificed for nothing...
Anon,
You sure are working hard to get your bailout passed..
Are you blind to sarcasm? it appears so!
Comrade Whereismyretirement,
"This is a bill that has already passed the House, that is the only way that the Senate could "vote first" on an appropriation bill."
AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!
Nostrovia,
(2) LIMITATIONS ON EQUITABLE RELIEF.
(A) INJUNCTION.No injunction or other
form of equitable relief shall be issued against
the Secretary for actions pursuant to section
101, 102, 106, and 109, other than to remedy
a violation of the Constitution.
(B) TEMPORARY RESTRAINING ORDER.
Any request for a temporary restraining order
against the Secretary for actions pursuant to
this Act shall be considered and granted or denied by the court within 3 days of the date of
the request.
SEC. 121. SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM.
(a) OFFICE OF INSPECTOR GENERAL.There is
hereby established the Office of the Special Inspector General for the Troubled Asset Relief Program.
(g) FUNDING.(1) Of the amounts made available to the Secretary of the Treasury under section 118, $50,000,000 shall be available to the Special Inspector General to carry out this section.
stored until it ripens in the fullness of time
like a corpse
Duffman
the bill voted down monday did not suspend mark to market.
It did include transparency. All purcahse had to be posted publicly.
it did include warrants when purchase were to be made at above market value.
The new alternative plans being proposed by some Dems (DeFazio) on one side, other plan by repubs (like Cantor) on the other do call for the suspension of mark to market.
The end result will be a modifcation of the Paulson concept of buying MBS that includes suspension of mark to market.
My views are like Krugman's, for the most part. The original Paulson plan was absurd and impossible. The Congressional modifcation of Paulson considered on Monday was very flawed, but worth passing. What we're going to get now is worse.
Well you did sell us your crap after all. And if you don't bail us out, our banks will fail and then we'll cause the US to fail wilth us. So a global effort is needed.
It's kinda a "you break it, you pay for it" policy, just with very big numbers.
sterlingerl | 10.01.08 - 12:32 pm | #
As an citizen of the USA, I agree with you, we should take back our defective products. But that is not why we are going to bail you out. We're going to bail you out so that you trust us and have the money to buy our exports. We save you from the junk we sold you so that you can save us from a commodities collapse. Pure self interest. Have a great day!
they have it both ways:
Senator Jon Kyl of Arizona said on CNBC that the Senate's bill is a pretty strong package, and the that market sell-off makes the case for the bill more compelling
if the market was green, as it might be, the line will be "the market rise in anticipation of the bill passing makes its case more compelling".
SEC. 122. INCREASE IN STATUTORY LIMIT ON THE PUBLIC DEBT.
Subsection (b) of section 3101 of title 31, United
States Code, is amended by striking out the dollar limitation contained in such subsection and inserting
$11,315,000,000,000.
SEC. 123. CREDIT REFORM.
(a) IN GENERAL.Subject to subsection (b), the
costs of purchases of troubled assets made under section 101(a) and guarantees of troubled assets under section 102, and any cash flows associated with the activities authorized in section 102 and subsections (a), (b), and (c) of section 106 shall be determined as provided under the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et. seq.), as applicable.
Don't buy houses, folks. Yes, it'll prop up MBS prices and that may hold up house prices but any subsidy will be totally overwhelmed by the depression it will cause by sucking everything out of the working capital markets.
Well you did sell us your crap after all. And if you don't bail us out, our banks will fail and then we'll cause the US to fail wilth us. So a global effort is needed.
It's kinda a "you break it, you pay for it" policy, just with very big numbers.
sterlingerl | 10.01.08 - 12:32 pm | #
ge
What time is the vote ?
C-SPAN Live ?
Jim-
I would really like to have confirmation on the China connection. This has been speculated on, but do you actually have a news report?
On the 3mo vs MBS maturity mismatch-
It seems like a concern, but don't most banks finance with cheaper daily repos? Won't the Fed have another $700B to play with?
Hmmm, but we have end of year covering and that will be spectacular. If there is one thing that I wish I could get the congress-critters to realize, it's how mad people are going to be when the problem keeps getting worse... after they've been fleeced.
joe, what improvements did Dodd/Frank have? I can't find anything that hasn't been sabotaged except maybe for Congressional oversight, which won't mean much. They can whine but they can't stop him and Congress works too slow to stop Paulson from draining the Treasury dry.
Apologies for hitting the enter key early.
Well you did sell us your crap after all. And if you don't bail us out, our banks will fail and then we'll cause the US to fail wilth us. So a global effort is needed.
And you bought it, sucker. So much for due diligence.
It's kinda a "you break it, you pay for it" policy, just with very big numbers.
sterlingerl | 10.01.08 - 12:32 pm |
And who'll buy the debt that pays for that debt? Look down, she's standing very close to you, she's IN YOUR SHOES.
Ponies all the way down.
The vote is set for 7:30 ET. CR, are we live blogging? We'll behave;)
It seems like a concern, but don't most banks finance with cheaper daily repos? Won't the Fed have another $700B to play with?
$700B in toxic mortgage securities. Totally worthless for any liquidity purposes (probably totally worthless, period, but that's another story).
joe schmoe,
where is there a difference in the 2 bills regarding mark-to-market? Section 132 is exactly the same language, starting on the same page, pg88.
(b) RESTRUCTURING OF TRUST FUND DEBT.
(1) DEFINITIONS.For purposes of this subsection
(A) MARKET VALUE OF THE OUTSTANDING
REPAYABLE ADVANCES, PLUS ACCRUED INTEREST.The term market value of the out-
standing repayable advances, plus accrued interest means the present value (determined by the Secretary of the Treasury as of the refinancing date and using the Treasury rate as
the discount rate) of the stream of principal
and interest payments derived assuming that
each repayable advance that is outstanding on
the refinancing date is due on the 30th anniversary of the end of the fiscal year in which the advance was made to the Trust Fund, and that all such principal and interest payments are
made on September 30 of the applicable fiscal
year.
Joeblo-
I saw it as well..
China stops its banks from lending to U.S. banks | Gold Anti-Trust Action Committee
coincidence?? we'll soon see
Ciao
MS
7:30 PM New York Time ?
Why this late ?
Johnc -
Dirt on AIG / Goldman
Behind Biggest Insurer's Crisis, A Blind Eye to a Web of Risk - NY Times
I know the answer, but I'm asking the question to relieve it from my mind...
I will definitely use that in the near future
7:30 PM New York Time ?
Why this late ?
Rosh Hashanah observance ends at sundown.
I fully expect this new expensive FDIC backstop to prove more costly to taxpayers than anything else that is done now. Talk about a blank check and believe me FDIC will use every penny and more given the opportunity.
Welfare for pseudorich. Let the housing prices fall.
(D) TREASURY RATE.The term Treasury rate means a rate determined by the Secretary of the Treasury, taking into consideration current market yields on outstanding
marketable obligations of the United States of
comparable maturities.
(E) TREASURY 1-YEAR RATE.The term
Treasury 1-year rate means a rate determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding marketable obligations of the United
States with remaining periods to maturity of
approximately 1 year, to have been in effect as
of the close of business 1 business day prior to
the date on which the Trust Fund issues... blah blah blah, bullshit
(F) TRUST FUND.The term Trust
Fund means the Black Lung Disability Trust
Fund established under section 9501 of the Internal Revenue Code of 1986.
@ Stretch
Save your cash. If you have cash you are the King.
This situation will only become more true over the next few years.
Anyone know the location of the Banker Dome? I've got a get feeling I'm going to need a safe secure place to lay low for a while soon.
jg writes:
Wow, creeping socialism has quickly progressed to galloping socialism.
It is NOT socialism; it is Fascism.
If you don't have the concepts clear, you will be wrong on everything you do to respond to it.
Thanks Rowen.
Its a gr8 crowd here at CRs blog. I jush wish to say THANKS
Yah know, that may be a talking point:
TREASURY 1-YEAR RATE.The term
Treasury 1-year rate means a rate determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding marketable obligations of the United
In this day of gottcha journalism, Hank .. what does this imply?
" taking into consideration current market yields on outstanding marketable obligations"
Forgive me if this gets l;ong, but I have to respond to several items.
First, to those thinking about it, DON NOT BUY, YET! Deflation is in the cards for housing. People making 75-100K cannot afford and never could afford much more than 300K homes. We've been sold a bill of goods.
On the other hand, has our gooberming gone completely nutso? Unlimited money for Paulson. Bailout everyone and everything? There comes a point at which the rest of the world is gonna have to say, "Your money is Monopoly money and is no longer good anywhere!"
At which point, you will see serious inflation in oil, therefore gas, and food. I know I went off on this Monday night, but storable food is not a bad hedge against inflation, especially hyperinflation.
What I see is a country that thinks it can print its way out of this mess. Sure, you might be able to pay off 10 Trillion with worthless dollars, but those same dollars are going to be needed to pay the rent and the utilities and the food. Good luck to all when Campbell's Pea Soup is going for $10 a can or a 24-pack of bottled water is $15. That is gonna leave some serious marks and a world of hurt.
So, wait on the house, the car, anything like that. On the other hand, store up on food/water, clothing, gas, if possible, and some coins/precious metals. Just remember you can't eat the coins/metals and I am not trading my food for gold.
alba
you are right that the Monday bill and the bill today both give the authority to suspend mark to market.
giving the authority and doing it are not the smae thing. last Sunday night on the Treasury conference call with analysts treeasury specifically said bathere would be no purchases for weeks and banks would be failing during that time. I read that as indicating no intent to suspend mark to market in the near term and an indication of intent to let mark to market weed out weak players for a few weeks before treasury would intervene with purchases.
my argument in the prior post and now is not about the current version of the Senate bill, but about the dem and repub alternative bills that, as I understand, seem likely to declare a suspension of mark to market, rather just authorize it.
I don't think the draft in the senate now is the endgame. I think the dem and repub alternative bills will force another round of revision. I think a mandated suspension of mark to market is on its way . . .
suspending mark to market is not necessarily bad, depending on how it is done . . . but it probably will be done badly.
of course, I have been wrong before.
(B) REPAYMENT OF OBLIGATIONS.In the
event that the Trust Fund is unable to repay
the obligations that it has issued to the Secretary of the Treasury under subparagraph
(A)(i) and this subparagraph, or is unable to
make benefit payments and other authorized expenditures, the Trust Fund shall issue obligations to the Secretary of the Treasury in such
amounts as may be necessary to make such re-
payments, payments, and expenditures, with a
maturity of 1 year, and bearing interest at the
Treasury 1-year rate. These obligations shall be
in such forms and denominations and be subject to such other terms and conditions as the
Secretary of the Treasury shall prescribe.
Ahh huh, yah...
Stretch:
Dollar inflation and asset deflation are NOT mutually exclusive.
The housing values are going to continue to decline. The prices will be lower next year, and the next year, and the .... In both real and nominal terms.
I would also like to add that I live in South Orange county. I used to live in the Inland Empire and that video linked above was scary.
That one guy pays $3100/month for his home. Assuming some impounds, he has to be around $2500/month on the loan itself, meaning he is paying off a $400K loan + another 600/month in impounds!
OUCH!
And to think, he said the house up the street went for $189K after repoed. That has got to sting.
Anyway, the BIL and SIL are closing in Temecula on a 2600 sq. ft. monster at about 290K. Tried to tell them to wait, but no. BIL had to buy his castle. And this after HE declared second BK and had his current home foreclosed (maybe shortsaled). He used his wife only for this mortgage and now she commutes about 58 miles a day up the I-15.
I told them to wait another year and that house will be 225K, but nooooooo. Had to have it now. Wouldn't even rent to see if the commute was worth it or the town was worth it.
Just went with what the realtor said.
This is a long way from over.
And the kicker. He doesn't work. Disabled.
Should add the BIL disabled only on the one knee. He could get a desk job easily if he wanted to or could find one. I thiknk he prefers the at-home life, though!
(C) AUTHORITY TO ISSUE OBLIGATIONS.
The Trust Fund is authorized to issue obligations to the Secretary of the Treasury under
subparagraphs (A)(i) and (B). The Secretary of
the Treasury is authorized to purchase such obligations of the Trust Fund. For the purposes
of making such purchases, the Secretary of the
Treasury may use as a public debt transaction
the proceeds from the sale of any securities
issued under chapter 31 of title 31, United States Code, and the purposes for which securities may be issued under such chapter are extended to include any purchase of such Trust
Fund obligations under this subparagraph.
(3) ONE-TIMEAPPROPRIATION.There is hereby appropriated to the Trust Fund an amount sufficient to pay to the general fund of the Treasury the difference between
(A) the market value of the outstanding
repayable advances, plus accrued interest; and
(B) the proceeds from the obligations
issued by the Trust Fund to the Secretary of
the Treasury under paragraph (2)(A)(i).
Hmmmmm???
Everyone should watch this one. It shows the "trashout" of a foreclosed house. All the family's possessions - knicknacks, toys, clothes, decorations, photos - their lives, really, - are smashed up and hauled to the dumpster.
It's really a shame that a lot of the usable stuff (e.g., clean clothes) doesn't end up with Goodwill.
Ok, back to square one:
(b) RESTRUCTURING OF TRUST FUND DEBT.
4
(1) DEFINITIONS.For purposes of this sub-
5
section
6
(A) MARKETVALUEOFTHEOUTSTANDING
7
REPAYABLEADVANCES, PLUSACCRUEDINTER-
8
EST.The term market value of the out-
9
standing repayable advances, plus accrued in-
10
terest means the present value (determined by
11
the Secretary of the Treasury as of the refi-
12
nancing date and using the Treasury rate as
13
the discount rate) of the stream of principal
14
and interest payments derived assuming that
15
each repayable advance that is outstanding on
16
the refinancing date is due on the 30th anniver-
17
sary of the end of the fiscal year in which the
18
advance was made to the Trust Fund, and that
19
all such principal and interest payments are
20
made on September 30 of the applicable fiscal
21
year.22
And who'll buy the debt that pays for that debt? Look down, she's standing very close to you, she's IN YOUR SHOES.
Ponies all the way down.
Tadeusz Kościuszko
Absolutely. Personally, I cheered out loud when congress voted it down, to my children's embarrasment. But the mood in my office (London) was bleak - that the vote was a disaster, the banks must be saved, why can't the US get its act together and fix what it has wrought, etc.
There is a lot of animosity towards the US over this disaster and lots of finger pointing. We have not pointed any fingers at the rating agencies in a while, and I think that they should also be at the top of the FBIs list.
Anonymous- As Boris Badenoff said " first we kill moose and squirrel"
Yet another Republican Senator Bennett saying now that they give every citizen a free toaster as part of the deal, the sentiment is "starting to turn".
It has obviously turned here as well.
yay.
I heard there's a provision in there for individuals to borrow unlimited amounts of money from the treasury at 0% with no minimum payment. No credit history required either!
This is one sad day in the history of this country. Way I look at it, the game is over. Things will continue to ROT until they eventually collapse.
Oops...I forgot. There's one hitch to sheeple getting all the free money -- it has to be approved by Paulson! Go be friends with him.
Whack - a mole.
The more these clowns do trying to stop it the worse this is going to get.
I'm really interested in this concept of 30th Anniversary
Is that why The republicans voted the first round down?
Yet another Republican Senator Bennett saying now that they give every citizen a free toaster as part of the deal, the sentiment is "starting to turn".
Bennett's been a vile shill through the whole process. He was trying to fluff Paulson harder than anybody during the hearings.
"AH SHIT! Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote. This is PURE BULLSHIT!"
that's right..and that is why this is a done deal. Folks, we only have one option at this point. Take your money out of these "chosen" banks and find a sound, community bank. Kill the beast by removing the feeding tube. I personally will close my checking account at BAC
This is Whack-a-Mole!
WTF???
(2) REFINANCINGOFOUTSTANDINGPRINCIPAL
7
OF REPAYABLE ADVANCES ANDUNPAIDINTEREST
8
ONSUCHADVANCES.
9
(A) TRANSFER TO GENERAL FUND.On
10
the refinancing date, the Trust Fund shall
11
repay the market value of the outstanding re-
12
payable advances, plus accrued interest, by
13
transferring into the general fund of the Treas-
14
ury the following sums:
15
WTF is this all about, when I look for refianancing related to 30t anniversary, I get this shit...
SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX;
17
FUNDING OF BLACK LUNG DISABILITY TRUST
18
FUND.
19
No shit, this is what they have:
SEC. 113. TEMPORARY INCREASE IN COAL EXCISE TAX;
17
FUNDING OF BLACK LUNG DISABILITY TRUST
18
FUND.
19
(a) EXTENSIONOFTEMPORARYINCREASE.Para-
20
graph (2) of section 4121(e) is amended
21
(1) by striking January 1, 2014 in subpara-
22
graph (A) and inserting December 31, 2018, and
23
162
O:AYOAYO08C32.xml S.L.C.
(2) by striking January 1 after 1981 in sub-
1
paragraph (B) and inserting December 31 after
2
2007.
3
(b) RESTRUCTURINGOFTRUSTFUNDDEBT.
4
(1) DEFINITIONS.For purposes of this sub-
5
section
6
(A) MARKETVALUEOFTHEOUTSTANDING
7
REPAYABLEADVANCES, PLUSACCRUEDINTER-
8
EST.The term market value of the out-
9
standing repayable advances, plus accrued in-
10
terest means the present value (determined by
11
the Secretary of the Treasury as of the refi-
12
nancing date and using the Treasury rate13
This Proposal, this Bridge to nowhere, is bullshit again! Im calling my Congressman, Norm Dicks to see what he thinks about this provision related to Black Lung Disabilty! WTF?
Comrade Misean: Why didn't I realize this before. If this passes the Senate it goes to conference committee. No house floor vote.
No. If one house of Congress passes a different version of a bill than the other house, a conference committee consisting of members of both houses proposes a version that resolves the differences in a way it hopes will be acceptable to both houses. The conference committee version then goes to the floor of both houses for a vote.
YLSP: I like the alternative GOP bailout bill (Defazio?).
Peter Defazio is a Democrat.
Thank you pastafarian...it was time for a civics lesson.
DeFazio is a Dem, but many Republicans are supporting the same idea. Basically the same alliance that stopped the Paulson plan is now pushing for RTC II. It's way better than Paulson although I wish it was explicit on whether the "mark-to-model" is FDIC model or bank model. The text implies FDIC model, but it's not explicit.
First, to those thinking about it, DO NOT BUY, YET! Deflation is in the cards for housing. People making 75-100K cannot afford and never could afford much more than 300K homes. ...
What I see is a country that thinks it can print its way out of this mess. Sure, you might be able to pay off 10 Trillion with worthless dollars, but those same dollars are going to be needed to pay the rent and the utilities and the food. Good luck to all when Campbell's Pea Soup is going for $10 a can or a 24-pack of bottled water is $15. That is gonna leave some serious marks and a world of hurt.
You do realize the contradiction inherent in those two statements, don't you?
If we're bound and determined to print our way out of this mess, a 30-year FRM may never again be as cheap as it is today. In which case, who cares if housing has another 15% to fall? By the time it starts coming back up, today's 6% mortgages may be offered at 9% - if you can get them at all! - in which case the added interest costs would more than offset the lower principal.
Or housing may fall another 40%. But the impetus for that might be that the mortgage market completely implodes ... in which case our protagonist still won't be able to buy, even at those lower prices, unless he can pay cash out of pocket.
I'm not saying either scenario is where we're headed. Honestly, hell if I know. But our original poster needs to look at the big picture - judge whether he thinks it means inflation or deflation over the horizon - and plan major purchases (e.g. a house) accordingly.
Search for and read all of mp's posts from last week. Then re-read them.
Clearly the economy will collapse without the bailout of the wooden arrow industry.
(B) EXEMPTION FOR CERTAIN WOODEN
4 ARROW SHAFTS.Subparagraph (A) shall not
5 apply to any shaft consisting of all natural
6 wood with no laminations or artificial means of
7 enhancing the spine of such shaft (whether sold
8 separately or incorporated as part of a finished
9 or unfinished product) of a type used in the
10 manufacture of any arrow which after its as11
sembly
12 (i) measures 5⁄16 of an inch or less in
13 diameter, and
14 (ii) is not suitable for use with a bow
15 described in paragraph (1)(A)..
Mook, you do not want to owe a big mortgage heading into a depression. Housing might be a good gamble on inflation, but don't owe on it. Cash only.
I'm out, I give up, I've got myself spread eagle and wait for the deed: -- Not attributed to Congress
Meanwhile @ Google, the search for: "you can't make this shit up" Results in a traffic count of 1,460,000 pages, which will be more informative than this shit!
Opinion:
The purpose of this vote is to put up a count - to show the House that the Senate has the votes - for the next version of whatever emerges from the House. If it fails, there will be no giveaway bill passed in any form. If it passes, a new round of negotiation and pressuring begin.
The question is whether the costs outweigh the benefits. The last time the ceiling was raised was in 1980, from $40,000 to $100,000. This led to rapid growth over the 1980s in large, brokered deposits of $100,000 denomination, whose interest ceilings had been removed in 1970. The point is that such an increase in the insurance cap can cause wide swings in the flow of funds. In today's crisis, if investors were to pull a lot of money out of money market funds and into bank deposits, a sharp reduction in the demand for commercial paper by those money market funds would squeeze the commercial paper market even more and drive up short-term yields even further. And if the outflows were particularly abrupt, a money market fund might need to tap the new Treasury facility to avoid breaking the buck amid redemptions.
Mook understands my dilemma.
On the one hand housing appears to be deflating with potential to fall even more in my Socal market.
On the other hand, it appears this bailout will cause big time inflation.
No matter what we appear to be heading into tough economic times.
So if you had hundreds of thousands of dollars in cash, but could not yet purchase a house outright (that you would want to live in), what would you do?
Investment wise, everything appears to be risky. Shaky stock market, inflated PM costs, deflating RE, global market following US, what to do with your nest egg? Safety is the current theme but if that means US Treasuries what about the bailout and ensuing inflation risk?
Quite a problem...
Currently thinking that holding cash in CD's/treasuries and watching the inflation of goods and deflation of RE might end up being the best play. I am looking at a one year time horizon.
What is your opinion?
Mook, you do not want to owe a big mortgage heading into a depression.
Did I say that? (scrolls up) I didn't say that.
If we are heading into a period of prolonged double-digit inflation, then residential real estate, at reasonable multiples of income financed at sub-6% rates, will be seen as a steal 10 years from now.
If we are heading for a liquidity trap and deflation, however, then yes, buying today would be an atrocious move. (To your specific point, however, I'd say that if we get a yes-Virginia, no-holds-barred depression along with it, the big mortgage might not matter as much ... as preserving one's credit rating will probably come in pretty low on the priorities scale.)
I don't have a clue what's going to happen.
My point was that just saying, "don't buy now, housing still has room to fall," isn't answering the right question. It may be true. And yet it may be irrelevant. (Or, it may be critically important.) It's up to the person thinking about plunking down the cash to do the analysis for him- or herself.
This is the wild wild west of bail outs y'all!
girlbears post about goldman, protecting its friends on wall street and the banksters gettin back at spitzer for blowin the whistle on greenberg cookin the books at aig...
can be found at global research by an author named F William Engdahl
i have no idea if this author is a reliable reporter of fact but the story does hang together well...thoughts?
One thing to add about conference committees and bills:
The conference committee can add things that were not in either bill and send it back to both houses for passage. That is how concepts such as the REAL ID Act, which failed a vote in both houses, got passed when they were added back in to unrelated conference committee bills.
So don't watch what the Senate passes--watch what the conference committee adds to the bill (or takes out), and bet that the conf. committee bill gets rushed through even faster than the original bills.
Mook, one of the reasons you gave to buy is that interest rates are 6% now and may well go higher later. Shouldn't matter, because if you can buy cash you don't have a mortgage and don't care about interest. If you need a mortgage, you shouldn't be buying a house because you can't count on anything as an income source.
A little humor goes a long way:
Failout Fun - The Troll Blog - Newsweek.com
On the one hand housing appears to be deflating with potential to fall even more in my Socal market.
On the other hand, it appears this bailout will cause big time inflation.
The consumer needs to divide his income in order of priority:
1) Food
2) Transportation to work
3) Health care
4) Savings
5) Education
6) Housing
7) Other necessities
8) Luxuries
Housing is pretty far down that list, so when paychecks become pinched housing can & will go down because the higher priorities can become more expensive.
Really Fair Economist? Don't buy a house if you cannot pay cash? Sitting here in Southern California that sounds ridiculous. Have you seen our housing market?
I understand about worrying about an income source. Hopefully having a 100k set aside in an emergency fund in case both my wife and I cannot work will help off set that. I would assume neither of us would be out of work for more than a year.
If we all think inflation is going to be terrible then why not go ahead and get a large mortgage assuming that inflation would "catch us up"? Locking in a 30 year FRM and then investing the extra money in CD's at a higher rate would be a good choice.
On the other hand, some folks are talking deflation in which case jobs are tough and incomes and housing crater. I can see in that scenario that buying is a bad idea. Better to wait and buy a house cheaper and keep a nice savings in case of trouble.
Big problem is nobody seems to know which way this thing is going. I am not willing to rent and wait another five years to find out!
given a one year timeline, where would YOU place your bets?
You would think that Paulson would want the public to get as good a deal as Warren Buffett gets when he invests in shaky companies. After all the Treasury has even more money than Buffett. Buffett gets preferred stock with a hefty (10%) dividend for his capital injections. Why doesn't Paulson do EXACTLY the same thing for the public (US Treasury)? Is he crooked or dumb or what? What's good for WBuffett should be good for the US public.
I might add that Buffett isn't stupid enough to buy toxic waste at artifically high prices to help out these companies (GE is the latest). Whey should the US Treasury do it?
i was of the belief that if it goes into conference committee what comes out must be voted on again by each house separately unless there are no changes which by definition cannot be in this case.
"Law of Unintended Consequences"
If this bill passes the consumers are going
to walk from their debt. Tit for Tat. Cars,
boats, cards and homes.