Reporting indicates that a "deal" has been essentially crafted for the Wall Street, so-called "Bailout." Although this type of statement has been made before - without leading to an actual piece of legislation, it seems that the compromises being discussed would seem to be enough to please all sides.
In my view, this proposal could cause damage in the markets tomorrow. This plan would reduce the original plan, which was a fast, simple injection of $700 billion for bad debts and over-valued assets to keep our credit market functioning, to a complicated and nuanced piece of...
"legislation [that] would disburse the $700 billion in stages. The first $250 billion would be issued when the legislation is enacted while another $100 billion could be spent if the president decided it was needed. The remaining $350 billion would be subject to congressional review, said a statement issued by Pelosi's office early on Sunday morning."
Wall Street will view this plan, just on the financial details, as a $250 billion plan. Maybe one could be confident that the President will "decide it is needed" and add his $100 billion making the total plan $350 billion. That number is well short of the $700 billion Wall Street reacted to positively last week and will more than likely cause a selloff tomorrow, even if it is the "right" amount of money to put into the crisis.
This entire situation is all about sentiment. A plan that is less than the original proposal will be viewed very negatively.
Unfortunately, I'm not confident that ANY legislation and/or "bailout" will stop the calamity in our credit markets from causing pain on "main street." The overvaluation of assets in America and the excessive use of and access to credit will cause a contraction, affecting everyone. Our banks will continue to fail, if they were not as prudent as a JPMorgan Chase. But at least we know we are not alone.
In my opinion, the people of this country will view this bailout as a failure and anyone getting out in front of this thing is playing a dangerous game. Liberals are getting nervous. Some Republicans are starting to use the negative bailout sentiment in thier campaigns. It becomes clear why the GOP was backing away from the "deal is done"-thing at the end of the week. Yet the GOP is starting to sound somewhat like Herbert Hoover and, as a student of history, makes me concerned that no action could lead to a run on our financial institutions.
I'm curious to see who made what demands regarding the releasing of only $250 to start and then having Congressional approval for the next batch.
i know who wanted this provision...
"The plan also would let the government buy troubled assets from pension plans, local governments and small banks."
Protect those pension plans in California, huh Nancy? New York as well, Chuck, yes?
In any event, the waffling that has gone on by Pelosi - the failed balance she's attempted to create between being responsible AND political - is a further demonstration of her inability to be leader of Congress. If this plan doesn't stop the crisis, Congress will be blamed for not giving Paulson the entire $700 billion in a "no-strings attached" manner.
Hold onto your hats investors. The wild ride continues tomorrow and could get much, much worse...
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written by Jay Golub , September 29, 2008
MORONS!!!
Pelosi deserves every bit of criticism she gets for failing to get this done. She has more than enough votes to do this in her conference WITHOUT GOP support. To blame the GOP is wrong.
Honestly, one needs to look no further than the 2006 pledge by Democrats in Congress to "end the Iraq war." The fact that they not only didn't pass legislation to end the war, they never ever proposed a bill to that end MORE THAN 2 YEARS after they took control of the House.
I'm just barely holding on tight to my hat now...
written by Jay Golub , September 30, 2008
It seems at this point the Dem's will end up having to pass a "bailout" bill that is much more to the Left's liking. There is little reason for the GOP to compromise at this point and Pelosi can't allow her majority's failure to act lead to the economic calamity of our generation.
In many ways, this benefits McCain and the GOP because if the plan doesn't stop the problems in the stock and credit markets, the Dem's can be blamed for not passing a more moderate or conservative solution to the problem.
Pelosi is truly the gift that just keeps on giving...
written by Sword of Truth , September 30, 2008
Bruce Layman, write-in candidate for the 22nd Congressional District stated, “I would have voted against the bailout bill before Congress because it does not protect the taxpayers and there is no plan to recoup tax payer’s dollars.
There was no effective oversight and accountability built into the plan; to have the heads of HUD, SEC and the Secretary of the Treasury, as the overseers, they got us here in the first place.
Remember we were all told this in 2004, this was ripe for imploding.
The bailout still allows the Wall Street executives to continue to make millions while taxpayers foot the bill.
This plan was rejected because Paulson was protecting his cronies and Pelosi called Republicans “unpatriotic” and even her own Democrats rejected her, time for her to go too.
Congress must break its miserable record of failure and make responsible decisions that Americans deserve.
We need to look for a real plan that will make the markets function in the way that they should, not reward bad behavior, and we should prosecute those have milked the system.
Congress needs to stay in Washington and work toward a better solution. It’s time we end the contentious gridlock that is hurting our country and work to reach a consensus that will bolster our economy, but not burden working class and middle class families with additional taxes.
We need Congress to create a fair plan which protects retirees, homeowners, and small businesses.”
written by Jay Golub , October 04, 2008
http://www.cnbc.com/id/27012699
"The S&P 500 and the Nasdaq had their worst week since September 2001, and the Dow had its worst week since July 2002."
The Dow was down 7.3% this week alone - or 815 points - and this WITH passage of the rescue plan by Congress.
Some were arguing that the Dow dropped so badly on Monday because the plan didn't pass, and although this may be partially true, the real reason for the selloff on Monday and the overall terrible week on Wall Street was that the markets recognized that the rescue plan is not the solution to our central problems.
The reconstructed plan will not address the credit market difficulties that have persisted for the last few weeks and will not address ANY problem quickly enough to stop the upcoming economic recession and/or the perception that the economy is tanking.
The most important place to look for the potential success or failure of this plan is to the credit markets, which have never been worse. Small and large businesses alike cannot get capital to continue or to expand business activity.
although i'm not ready to predict a similar week this upcoming week, i'd still keep a tight grip on my cap this week. Recession is inevitable now. How long it will last is the next question for the country...
written by Jay Golub , October 06, 2008
the Dow is now down 815 points since the passage of the "bailout" bill. This is a failed plan as it doesn't directly and, more importantly, quickly deal with the problems of the credit markets.
Dow 8000 here we come...
written by alice Lemos , October 06, 2008
possibility of the Demos picking up my seats! nobody seems to want to connect them to our credit crisis - they are getting a pass! Barney Frank should be thrown out of office.
written by Jay Golub , October 06, 2008
Barney Frank has, whether we like it or not, been a constructive factor in this crisis. Unlike Pelosi, he's made the environment less partisan and has worked dilligently to help America avoid a full-scale depression.
On the other hand, Democrats in Congress have much blame to take - especially those in the Senate who were so in favor or almost every aspect of banking deregulation and the forced offering of mortgages to those who are in default today. Chuch Schumer is the poster-child for those sentiments.
This crisis is functionally NON-PARTISAN. Both sides deserve blame.
But just like the Iraq War, it is IRRELEVANT who is blame for how we got to where we are. What the country needs are answers for the future.
The Democrats, like with the Iraq War, have no solutions - they only offer villians for the public to scapegoat. The hearing today where the CEO of Lehman was basically forced to appologize for how much money they made in the past are a perfect example of what is wrong with the Democrats.
If the GOP had just been as financially and fiscally conservative as it has historically been, the GOP would be in a great position to capitalize on the Democrat's demagoguery. Unfortunately, our side has been reckless and has no leg to stand on in this regard.
But being forward thinking, it's time for the GOP to get back to it's traditional roots and argue for transparency in financial markets and lower, less wasteful spending out of DC...
written by alice Lemos , October 07, 2008
interview with Bill O'Reilly in which the tape is rolled of his terlling the audience that "Fannie and Freddy are essentially sound"!!!!!!!! Frank and Chris Dodd, who received a sweetheart deal from Country Wide, are part of the problem. They should both be tossed out/indicted and right now Dodd is being investigated. Frank must go: I would not let him manage a popsicle stand.
written by alice Lemos , October 07, 2008
which took root under the Clinton administration with Clinton and ANDREW CUOMO insisting that people of little or no means be allowed to obtain high risk mortgages (and that is a tautology). This is predominantly a Democratic party created problem. And yes, Maxine Waters' fingerprints are in this also.
written by Jay Golub , October 07, 2008
unfortunately, people are too often buying the false argument that McCain = Bush and that Bush and the GOP are to blame for everything.
this is a difficult obstacle to get past at this point. McCain desperately needs to express a different view of this "crisis" and it's root causes tonight in the debate. This may be his last chance to change the momentum on this thing.
McCain was gaining widely before the crisis took hold. It's up to him to point out some of the points made here a UE if he wants to win this election and save us from an Obama Presidency...
written by Jay Golub , October 09, 2008
seems that the more the government gets involved, the stock market goes lower. They need to stop.
In the coverage of the markets today, a reporter - i don't remember which network - said, "every time someone from the government comes out to speak to calm things down or announce a plan, as soon as they are done speaking the markets tank. I wish they'd just shut up already."
I couldn't agree more...
written by Jay Golub , October 11, 2008
http://www.nypost.com/seven/10...133100.htm
again, governments around the world are jointly working to scare more people out of the markets.
Will this sure up the bank to bank loans? Possibly, but there is little reason for the banks to not be doing this right now.
It doesn't seem to me that banks aren't lending because they are unsure whether or not they will get paid back by another bank. They are not lending because they don't know if they will need the capital themselves in the near-term.
All the banks need to hold onto their cash right now to sure up their assets enough to overcome continued price reductions in all asset classes around the world.
These leaders should just go on vacation or something. The more they talk, the more money they promise, the faster the roller coaster ride goes down...
written by Jay Golub , October 11, 2008
http://www.nypost.com/seven/10...133107.htm
I think this report is also wrong.
Oil sold off yesterday, not essentially because of demand issues, but because people needed to raise cash levels to balance out the cost of their debts and to raise cash to pay for mutual fund redemptions.
As people sell out of mutual funds, fund managers need to raise cash. They can do this by selling stocks, but when stocks are so low in value, it is better to sell those things that have performed much better over recent days and weeks.
It was redemptions that led to this sell-off in oil - and all the other major commodities as well.
The media spreads misinformation sometimes and saying that oil sold off "amid fear of a worldwide recession and further signs of slumping energy demand" is just a DANGEROUSLY wrong thing for the Post to do...
written by Jay Golub , December 08, 2008
http://www.cnbc.com/id/28115624
"After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent.”
As predicted in this thread, the 'bailout" isn't working to stabilize the credit market enough to allow consumer and mortgage credit markets to make a turn-around.
by not allowing Paulson et al to have a blank check to be used to simply purchase assets, the loans and injections of liquidity are just not working.
Sadly, the Fed's will be back at this again next year and i hope they do it right next time, which will be where the Fed's directly purchase these bad debts to get them completely off the balance sheets of these banks and financial institutions...
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