Bipartisan Bailout Plan Isn't Playing in Peoria

[Phi for All]

Did anyone notice how there was bipartisan agreement on the plan BEFORE McCain showed up in Washington, but then things fell apart once he got there?

Well, Obama was at the table too. And I suspect it was their required presence that changed the landscape somewhat.

 

I'm really concerned that the politicians want complete agreement on this deal, even though many think it's not specific enough and gives too much power away, and at the same time their offices are being flooded with constituents telling them not to do it. Why aren't they telling us why their representation is at odds with those they represent?

[iNow]

I'm really concerned that the politicians want complete agreement on this deal, even though many think it's not specific enough and gives too much power away, and at the same time their offices are being flooded with constituents telling them not to do it. Why aren't they telling us why their representation is at odds with those they represent?

That, my good man, is a very powerful and profound question that deserves a solid answer.

[ParanoiA]

I'm really concerned that the politicians want complete agreement on this deal, even though many think it's not specific enough and gives too much power away, and at the same time their offices are being flooded with constituents telling them not to do it. Why aren't they telling us why their representation is at odds with those they represent?

 

I don't think this is that hard to answer. I might be wrong, but it seems really simple. Most folks see this as a bailout for fatcats on wall street. Most are too intellectually lazy to ponder the peripheral downstream damage this can cause, because most don't appreciate the complexity of economics.

 

While the representatives and senators DO appreciate this complexity and feel they are duty bound to cancel the "ignorance" of their constituency.

 

That doesn't mean the folks are wrong, (I sure as hell agree with them) I just think they are actually too polarized by class envy to have a thoughtful reason to be against it.

 

If our congress actually believed the constituency understood the breadth of the issue, then I think they might take the complaints more seriously.

[iNow]

That's a reasonable postulate. I think it is only one side of the equation, though. You mention that the representatives might take the consituents concerns more seriously if the constituency appeared to understand the breadth of the issue and down stream impacts. I quite agree.

 

The other side of that coin, however, is that constituency would not be any where near as concerned if they felt that the representatives understood the down stream impacts of their actions. They electorate doesn't trust the reps to do the right thing, nor to take the most intelligent and well thought out action.

 

There's a lack of trust across both groups, IMHO, and for good reason.

[bascule]

Did anyone notice how there was bipartisan agreement on the plan BEFORE McCain showed up in Washington, but then things fell apart once he got there?

 

Did anyone notice McCain suspended his campaign and went to work on the financial crisis shortly after it was revealed that McCain's campaign manager had received nearly $500,000 from Freddie Mac?

[ParanoiA]

Yeah, that's a reasonable conclusion too. There are plenty of smart folks that do get it, and they're being ignored too.

 

However, I didn't comment on the first part of Phi's quandry. This sudden insistence on everyone agreeing on this fix. It's...creepy. It would be a welcomed change if it weren't so isolated and obviously political.

 

I think we have to admit we're staring directly at the weakness of our political system. All systems have them, and this is ours. A crisis - which always serves those looking to gain power - being handled during the most intense pandering window available, the presidential election.

 

The parties are not focused on solving this problem, rather they are focused on dealing with it. Appearances trumping substance. I think their campaigns are achieving more focus than the problem is.

 

Of course, to me, this goes straight to credibility. This demonstrates that these adults are not fit to run the country. They cannot put the country first. And that was even McCain's slogan at the convention.

 

Did anyone notice how there was bipartisan agreement on the plan BEFORE McCain showed up in Washington, but then things fell apart once he got there?

 

You mean, did anyone notice how there was bipartisan agreement on the plan before McCain AND OBAMA showed up in washington? Why yes, I did notice that. And thank god. Or Thor.

 

I heard Rush going on about the meeting, referencing some blog on American Spectator. I haven't bothered looking, yet. I'm sure it will be vetted before long. According to this blog, Obama received his talking points and the room lit up in anger as he went through them. The democrats are saying the republicans blind sided them with their own plan, while the republicans are calling bullshit, noting that the democrats don't even need them to pass their own bill.

 

So, for drama's sake, it will be interesting how this plays out.

 

It seems fairly obvious this is all about both parties and their candidates getting their fingerprints all over this bailout so neither can use it against the other. That would seem to explain all of this political weirdness, at least in my mind. Could it really be that simple? And dispicable?

[Realitycheck]

Hypothetical Situation A - The two parties figure out a coalition deal. .7 trillion dollars gets allocated to this buyout. It must be added to debt, period. The Fed scrambles to find lenders to make up such a vast amount. The Feds credit rating drops from AAA to A, because too much outstanding balance just does that to your rating. At this point, additional borrowing should be frozen, but there is really no way to know, right now, what crisis will develop next year. This is what they have been witnessing for the past 8 years. The future value of 6 trillion dollars at 5% over a 30 year period is 26 trillion dollars. HELLO!

 

I was going to say more, but I have to run

 

You're supposed to bite the bullet. (You're supposed to chew it before you swallow.)

[swansont]

The part that really insults is that they don't even think they should have to. They actually bitch and cry that the government isn't doing it for them. That's how we're becoming a socialist country. Politicians pandering to crybabies that abdicate their basic, survival responsibilities.

 

We generally can't establish the connection between taxes paid in and government services. "Let the government pay for it!" (or substitute "insurance companies," or whatever)

 

Cognitive dissonance is our birthright.

[Pangloss]

Did anyone notice McCain suspended his campaign and went to work on the financial crisis shortly after it was revealed that McCain's campaign manager had received nearly $500,000 from Freddie Mac?

 

No, that story came out quite a lot earlier (two weeks?) than the campaign announcement, which was actually prompted by the events of the preceding two or three days. Political move, yes. An effort to misdirect people from some sort of shenanigans? No evidence.

[swansont]

Did anyone notice how there was bipartisan agreement on the plan BEFORE McCain showed up in Washington, but then things fell apart once he got there?

 

I was under the impression it started falling apart before he and Obama arrived. Like people started reading the fine print and realized it was a pig in a poke. No oversight. No restrictions on CEO pay and bonuses. Little things like that.

[Pangloss]

I still think they'll make a deal, regardless of whether it's a good idea or not. This is politics, not economics. We're 39 days from the election -- they're not going to do nothing. I think the way the major players are looking at it is that the people are opposed to a pure business bailout, but won't be opposed if it includes safety nets for homeowners and their investments.

 

Anyway it looks like McCain will be at the debate tonight. The Obama supporters are saying he caved and the McCain supporters are saying he did the right thing, yadda yadda yadda.

[bascule]

No, that story came out quite a lot earlier (two weeks?) than the campaign announcement, which was actually prompted by the events of the preceding two or three days.

 

Actually, the timeline goes a bit like this:

 

Sunday: McCain denies links between his campaign manager Rick Davis and Freddie Mac

Tuesday: The New York Times runs a story on Rick Davis receiving $500,000 from Freddie Mac

Wednesday: McCain suspends campaign

 

Political move, yes. An effort to misdirect people from some sort of shenanigans? No evidence.

 

Who says it was anything malicious? Maybe McCain just can't run his campaign without his campaign manager.

 

There's no direct evidence, but it is rather odd timing.

[Realitycheck]

The future value of 6 trillion dollars at 5% over a 30 year period is 26 trillion dollars.

 

Not really sure what kind of compounding they have on this kind of debt or if they just pay interest on it, but I was just throwing this out.

[john5746]

Anyway it looks like McCain will be at the debate tonight. The Obama supporters are saying he caved and the McCain supporters are saying he did the right thing, yadda yadda yadda.

 

I was thinking it was a bad move by Obama at first, but now it looks like it might be a good thing for him to have shown some backbone.

[ParanoiA]

I think McCain is caving and is thankful there's enough progress on this that he can use that as an excuse to show up to the debate. I thought that whole ploy backfired on McCain once Obama stated they should be able to do more than one thing at a time.

[jackson33]

Fanny and Freddie are basically government entities backing loans they make and are under the oversight of the Congress, no less than any government entity. You can argue, donations made to Senators which are all primarily Democrats (who happen to control Congress and there operations), the presidential candidates last seen at McCain 169k vs. Obama 16k or the Rick Davis angel (payment for service) but in the end the money has gone to the individuals in control, no less than any business would do...Remeber those two Corporations came from government, Fanny was an agency of government 1938-1968 and in 'privatizing' an obligation, remain responsible for those duties performed.

 

Having said that, the problems seen by the Administration, IMO are further down the road and probably in the 'faith' of the American Dollar or the ability for investment and/or loans from investors to American Business. Tens of thousands of folks have money in the American Banking System, globally, even some governments. FDIC backs these deposits to 100k and all above is based on that faith in the institution. This flow out of Banking has been going on for weeks, maybe even near over now, but the ability of those systems to continue to do business (to make money) has been stopped in there tracks.

 

There is plenty to worry about, but I do not believe any bail-out, however constructed will correct the actual cause for the problems. That is the people that made loans, which have been defaulted on or will soon (not all poor people) will still have the problems that caused them (not all interest rates) and the new investors (where ever from) will not pay the original inflated values for years to come, if ever in the life of the product (homes and they will devalue short of maintaining/paying due taxes and so on).

Then no one bailed out the hundreds of tech firms that lost many trillions in value, cost hundreds of thousands of jobs and hundreds of small company's and additional trillions to the larger firms, many still no where near their high market cap...ie, what happen then has to happen in the housing and financial markets.

 

This is my personal overview, but I have no idea what they should do...Congress or the Executive branch. I sure don't like what I am hearing, but based on my overview. Postponing an outcome to influence an election (either direction) make no sense....

[ParanoiA]

You can argue, donations made to Senators which are all primarily Democrats...

 

Actually, between 1989 and 2008 it's worked out to 209 Democrats and 143 Republicans and 2 Independents.

 

That's more dems that repubs, but it's hardly primarily democrats.

[bascule]

I thought that whole ploy backfired on McCain once Obama stated they should be able to do more than one thing at a time.

 

That was a brilliant response on Obama's part.

 

I think McCain got caught in a bit of say-one-thing-and-do-another. He skipped his interview with Letterman ostensibly so he could return to Washington DC. However, rather than doing that he gave an interview with Katie Couric. Then rather than go immediately back to Washington, D.C., he spends the night in New York. By the time McCain got there, nearly a day after saying he suspended his campaign, the deal had begun to fall apart.

 

If this was as important as McCain was making it out to be, why not join together with Obama to work on the problem together, rather than singlehandedly taking it upon himself?

 

The McCain campaign really feels like all strategy and no substance.

[ParanoiA]

Yeah, I completely agree with all of that. I didn't know that about the Couric interview, that's pretty shitty.

 

I wonder if this is something Arizona residents are used to from him, come election time, and it's just new to me, but his campaign behavior just seems entirely opposite from what his reputation would seem to imply.

[Pangloss]

That was a brilliant response on Obama's part.

 

(re: multitasking Presidents)

 

I agree, and I think when we look back it will stand out as one of the pivotal moments on the campaign trail.

 

(And you know, after adding the parenthetical above, the word multitasking maybe touches on something -- Americans are said to be multitasking more than ever before. It's something we're sensitive about, ala "if we have to multitask so should he!")

 

 

I think McCain got caught in a bit of say-one-thing-and-do-another. He skipped his interview with Letterman ostensibly so he could return to Washington DC. However, rather than doing that he gave an interview with Katie Couric. Then rather than go immediately back to Washington, D.C., he spends the night in New York. By the time McCain got there, nearly a day after saying he suspended his campaign, the deal had begun to fall apart.

 

You could be right, but to me it feels more like mismanagement and screw-ups. Or possibly a case of McCain laying down the law either against advise or before getting it or listening to it. Which, hey, can sometimes be a positive (deciding against advise), but you really need to at least hear what they have to say, and if you do decide the wrong way you'd better wise up quick when you do. It doesn't feel like he is -- it feels like he's hiring better advisers but then ignoring them half the time.

 

(But then I look at an adviser like Fiorina and think maybe I'm just completely wrong in the above.)

[Realitycheck]

The older you get, the more holier-than-thou, self-righteous, know-it-all, and intolerant you become.

[swansont]

Sweden had a similar bank crisis last decade. They demanded equity from the banks, like the US has done with Fannie, Freddy and AIG.

 

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?em

[iNow]

They demanded equity from the banks

 

And if we fail to demand something similar, it is further evidence of just how ignorant, incompetent, and uninvolved both our populace and representative government have become.

 

From your link:

 

But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

 

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

 

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

[Pangloss]

Good points.

[npts2020]

IMHO the U.S. federal government is the biggest cash cow in the history of the planet and this is just another attempt by those that control that cash to see just how much milk they can get out of that cow before it runs dry. The biggest problem is there is no second party to represent the majority interest, both republicans and democrats are strong business proponents, so if you are not a businessman......... The real question is whether individuals in congress can be made to feel enough pressure to keep the treasury from losing every dollar it puts up.