Bipartisan Bailout Plan Isn't Playing in Peoria

[iNow]

I can't say whether this helps or hurts my case, but it appears Barney Frank agrees with my sentiment above:

 

 

 

For those who don't like the youtube:

 

"[T']hink about this. 'Somebody hurt my feelings, so I will punish the country.' That's hardly plausible. And there are 12 Republican members who were ready to stand up for the economic interest of America, but not if anybody insulted them. I'll make an offer. Give me those 12 people's names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they'll now think about the country."

 

 

 

h/t

[ParanoiA]

 

"[T]hink about this. 'Somebody hurt my feelings' date=' so I will punish the country.' That's hardly plausible. And there are 12 Republican members who were ready to stand up for the economic interest of America, but not if anybody insulted them. I'll make an offer. Give me those 12 people's names and I will go talk uncharacteristically nicely to them and tell them what wonderful people they are and maybe they'll now think about the country." [/quote']

 

Another way to look at it is that those 12 republicans, presumably like the rest of the respresentatives, received calls from their constituency not to go forward with the bailout - but that didn't change their minds, only their pride and personal feelings changed their minds. So not only did they put their pride ahead of the country's problems, but also ahead of the constituency's direct charge.

[john5746]

I put most of the blame on Pelosi. She is the leader of the house, not Bush. She was practically smiling as if she had won a contest when it failed. She better get less than 50 no's on the democrat side and get that damn thing passed. I will be more than happy to give Obama a republican congress to work with next time. It worked with Clinton. I left that message with my democrat congressman, I'm sure it will get lost under the opposed crowd.

[ParanoiA]

I hope they botch it up again and again. And I hope they keep pointing fingers at Barney Frank and Bush - dems and repubs all fully invested in the competition, rather than their jobs. Maybe, then, they will inadvertently do the best thing and stop repeating the same printing press treatment that has yet to cure our ills thus far.

 

I was thinking about this at lunch. It's funny how we carry a national debt, the implication being that at some point we'll have a surplus and can pay it off? Because we all know how there's usually nothing going on that needs money, so there is reason to believe we'll actually pay it off right? We'll just wait until the economy is going great, right? We'll just do it during a year when the "entitlement" division doesn't need any money. Or when there's no bankruptcies to contend with. Or when national defense doesn't need any money. Or when Healthcare becomes free so we don't have to worry about paying for it. Or something like that.

 

It just seems so stupid to worry about paying the debt, when clearly the past has shone we'll have lapses in the need for funding something in the government, that there's always plenty of "down time" to cover this debt.

 

So yeah, print more money, and stop worrying about the skyrotting debt and devaluation of the dollar - we'll catch up next year when nothing is going on...like in previous years....right?

[Pangloss]

I can't say whether this helps or hurts my case, but it appears Barney Frank agrees with my sentiment above:

 

Bascule posted that same quote yesterday and I already responded to it. And I think you missed my whopper post above -- did you put me on ignore or something?

 

I'm acknowledging your point earlier -- I'll take the blame for bringing it up, I shouldn't have mentioned Pelosi at all, and it's taken us off track here when I think we basically agree. This is not about Democrats or Republicans being wrong. Like I said above, I think most intelligent Americans are willing to accept that the bailout may be necessary. The problem is that they don't trust the government to handle it.

 

I'd appreciate any thoughts you might have on my post #73 above, in particular how incredible it is that Paulson's original plan may actually be the "least bad" of the bunch.

[iNow]

Like I said above, I think most intelligent Americans are willing to accept that the bailout may be necessary. The problem is that they don't trust the government to handle it.

I just don't know what the best way is.

 

I think Paulson's plan fails because it doesn't address the housing issues.

Sure, it would help things in the short-term, but it would all come back and bite us in the ass again in a few years since the root cause is being ignored.

 

Investors won't be willing to place their money into the arena until they feel confident we've already hit bottom. By putting forth a bailout, we are simply displacing the point (pushing into the future the time) where we ultimately bottom out (I'll gladly pay you Tuesday for a hamburger today).

 

I'm slowly becoming more and more convinced that we need to let the correction keep going without flooding the market with money and dropping the value of our currency to 20 cents on the dollar. If we flood the market now, we'll simply have the same problems in a few more years.

 

Let it correct. It will be pretty bad, but not as bad as if we keep using bubble gum and tape to hold it together.

 

If some action is taken, let's fix the causes, not the symptoms. Regulation in and of itself is not a bad thing if done properly. Microcorrections here and there, oversight and guidance, etc... That's good to have, as a free market economy we are not.

 

So, if they put a plan together, let's involve the geniuses with MBAs from Harvard and who are known and respected for their understanding on Wall Street. Let's get them together to hammer out a plan which takes a long view and incorporates knowledge from multiple arenas.

 

 

I'm tired of them trying to force a plan down our throats which focusses on the symptoms, and Paulson's plan is included in that set of proposals which I above deemed as misguided and short sighted.

[Pangloss]

Hehe, well I can think of one particular Harvard MBA you'd rather not have any further involvement in the matter! But he's a partisan as well and has clearly demonstrated a complete and utter lack of real leadership on this or just about any other issue during his tenure, just doing whatever his partisan advisers think will hurt Democrats the most. (sigh)

 

Yeah I agree with all of that, let's get the smart people into the game and take the partisan idiots out of it. Well said, and thanks for the reply.

 

I personally think they should pass the measure, but I'm not at all convinced they'll be able to follow through on it without screwing it up.

[swansont]

Authority 1 (Paulson):

- Cannot profit from the endeavor in any way

- Has his entire reputation riding on the success of these measures

- Has a very small chance of actually being a secret Halliburton employee in disguise

 

Cannot personally profit, right now. True. But the original plan handed the keys, pink slip and paid-up no-fault insurance over to the administration, who would be free to pick and choose who got what in the bailout, so there would be opportunity to funnel more money toward favored institutions. (Who would all happen to have open seats on the board of directors next year.)

 

Authority 2 (the 535 elected members of Congress):

- Most currently running for re-election by popular vote

- Bringing money home for your district has a big impact on voting

- Actions based largely on popular perceptions of issues because of the above

- Currently harboring a single digit approval rating

 

Congress as a whole has low approval ratings. But I think it's viewed by the various constituents as "Our guy/gal is good, but the rest of them losers should be voted out"

[bascule]

Cannot personally profit, right now. True. But the original plan handed the keys, pink slip and paid-up no-fault insurance over to the administration, who would be free to pick and choose who got what in the bailout, so there would be opportunity to funnel more money toward favored institutions. (Who would all happen to have open seats on the board of directors next year.)

 

Not to mention no provisions against "golden parachutes" for CEOs and other C-level executives, one of the things that showed up in Congress's version.

 

Given this administrations penchant of handing government money to their friends (e.g. Halliburton) I certainly don't trust them not to use the money to make their friends rich while everyone else suffers.

[Realitycheck]

I hope they botch it up again and again. And I hope they keep pointing fingers at Barney Frank and Bush - dems and repubs all fully invested in the competition, rather than their jobs. Maybe, then, they will inadvertently do the best thing and stop repeating the same printing press treatment that has yet to cure our ills thus far.

 

I was thinking about this at lunch. It's funny how we carry a national debt, the implication being that at some point we'll have a surplus and can pay it off? Because we all know how there's usually nothing going on that needs money, so there is reason to believe we'll actually pay it off right? We'll just wait until the economy is going great, right? We'll just do it during a year when the "entitlement" division doesn't need any money. Or when there's no bankruptcies to contend with. Or when national defense doesn't need any money. Or when Healthcare becomes free so we don't have to worry about paying for it. Or something like that.

 

It just seems so stupid to worry about paying the debt, when clearly the past has shone we'll have lapses in the need for funding something in the government, that there's always plenty of "down time" to cover this debt.

 

So yeah, print more money, and stop worrying about the skyrotting debt and devaluation of the dollar - we'll catch up next year when nothing is going on...like in previous years....right?

 

Right on, Paranoia. Look at it this way. The value of a company is determined by taking its assets and subtracting its liabilities. The more debt that the country incurs, the less worth it becomes, hence the fall in the dollar, as evidenced by money traders' opinions around the world? Unfortunately, the correlation is not so easily depictable on a graph, though for the past 16 years it matches, at least.

Edited September 30, 2008 by agentchange

[Pangloss]

Not to mention no provisions against "golden parachutes" for CEOs and other C-level executives, one of the things that showed up in Congress's version.

 

Given this administrations penchant of handing government money to their friends (e.g. Halliburton) I certainly don't trust them not to use the money to make their friends rich while everyone else suffers.

 

I agree with Swansont's points as well, but I'm not sure I agree that the bill needed to address executive compensation. It's just a different subject, and pretty trivial compared with the mess we're actually trying to straighten out at the moment. It's fiddling while Rome burns.

 

There may be a certain tactical aspect to it that makes sense, along the lines of embattled CEOs running up debts just before they dump the company at our doorstep. But what's to stop them from setting the stage for that, then taking their payouts just BEFORE we step in for the bailout?

 

There may be an answer to that problem that I just haven't read yet, but it seems like an obvious loophole.

[bascule]

But what's to stop them from setting the stage for that, then taking their payouts just BEFORE we step in for the bailout?

 

One would hope: the board, which would care a lot less about executive compensation when there's billions of government dollars in the bank

[Pangloss]

Hope? You've lost me. Why would they do that?

 

It looks to me like they get the bailout anyway, whether they pay each other massive dividends or not. After all, they're "too big to fail", and cute lil' Katie Couric is interviewing nervous employees at the doorstep three weeks before Christmas. Why wouldn't they take the money and run? Who says they can't? They have a signed contract, after all. Nobody said they couldn't pay their CEO millions BEFORE it went to bailout. So as far as I can tell they can simply pay them off, then apply for a bailout. Why not?

 

And okay, you're telling us all about corporate greed affecting the executive branch, but do you think the legislative branch would be immune? Perhaps because it's controlled by your Democrats? Maybe they can get William Jefferson to explain to us how that works, right after he makes a trip to his freezer for some "ice".

 

Again, what is to stop boards from paying off those CEOs before they apply for bailout aid from the government?

 

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Apparently Congress has been so flooded with constituent emails after the fiasco yesterday that they had to implement caps on the web sites so they wouldn't go down. That does not sound to me like a population voicing its approval! Bear in mind that the legislation failed, and yet look at the outrage. People are smarter than the idiots in Washington give them credit for.

 

http://thehill.com/leading-the-news/house-limits-constituent-e-mails-to-prevent-crash-2008-09-30.html

Edited October 1, 2008 by Pangloss
multiple post merged

[Mr Skeptic]

One of the things they've been touting about the bailout is that the money will be an "investment" that they say has a good chance to be returned with a profit. But if that were so, shouldn't investors be jumping at the opportunity to make that investment?

 

In any case, does anyone have an explanation as to why we can't let these companies sink? I thought letting nont-competitive companies go out of business was one of the most important aspects of the free market.

[Phi for All]

In any case, does anyone have an explanation as to why we can't let these companies sink?

Someone else said it here, Americans are fundamentalist businessmen. We're the Al Qaeda of the market economy and we're paying for our extremism.

[bascule]

The American people don't seem too big on the bailout. Congress is getting bombarded with phone calls and e-mails telling them not to do it. So how do you sugar coat such a bitter pill?

 

http://www.reuters.com/article/bondsNews/idUSN0147494320081001

 

With tax cuts! Want some lower tax revenue with that $700 billion in new debt? It's like taking a pay cut and putting more on credit.

[swansont]

Again, what is to stop boards from paying off those CEOs before they apply for bailout aid from the government?

 

Probably nothing. But if they did do that, I'd expect they'll want the pool boy to start the car every morning, because there will be a lot of pissed-off shareholders. (This is assuming they actually drive themselves anywhere)

 

One of the things they've been touting about the bailout is that the money will be an "investment" that they say has a good chance to be returned with a profit. But if that were so, shouldn't investors be jumping at the opportunity to make that investment?

 

This is the US government, though. They'll find a way to screw it up. (The republicans through greed and the democrats through incompetence, with some corruption thrown in on both sides)

[padren]

But what's to stop them from setting the stage for that, then taking their payouts just BEFORE we step in for the bailout?

 

Include in the bailout that the financial solvency of any company is assessed as of being frozen per the date the bailout was first called for (the "Crisis Date"). Any company that pushes several million dollars to a CEO after Crisis Date will be left with the tab for that CEO, since their share of the bailout would only take into account the funds they had as of that date.

 

I don't know if this can completely work as these companies are probably swinging around a lot even now, but if the compensation expenses can be assessed as of that date it may be able to work. Since the public has already called for the blood of any company allowing CEOs to make out on their money, those companies should be pretty wary of handing out golden parachutes right now, and expect any compensation tricks they may employ could hurt them severally when the money starts to come in.

[Pangloss]

Just as an aside, tonight's bill going before the Senate includes incentives for alternate energy, breaking the earmarks (or at least "unrelated incentives") taboo for the first time, as far as I can tell.

 

Probably nothing. But if they did do that, I'd expect they'll want the pool boy to start the car every morning, because there will be a lot of pissed-off shareholders. (This is assuming they actually drive themselves anywhere)

 

Well that's already the status quo. I think we need more info on this.

 

GovTrack has a line-by-line comparison of the current House and Senate bills here:

http://www.govtrack.us/special/econstimbill/changes.xpd?id=4

 

This section seems to be the one we're talking about:

"Sec. 111. Executive compensation and corporate governance."

 

© a prohibition on the financial institution making any golden parachute payment to its senior executive officer during the period that the Secretary holds an equity or debt position in the financial institution.

 

There's also a clause in there about recovery of such assets later, but only if they are proven to be "materially inaccurate", whatever that means.

 

Bear in mind of course that I'm no lawyer and haven't read the entire document.

 

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In case anyone missed it, the Senate passed the bill tonight by overwhelming majority. Both McCain and Obama voted for it, but I haven't seen the rest of the votes posted yet.

[john5746]

One of the things they've been touting about the bailout is that the money will be an "investment" that they say has a good chance to be returned with a profit. But if that were so, shouldn't investors be jumping at the opportunity to make that investment?

 

In any case, does anyone have an explanation as to why we can't let these companies sink? I thought letting nont-competitive companies go out of business was one of the most important aspects of the free market.

 

If a bailout is not realized, everyone will run to cash or gold, because....everyone will be running for cash or gold. Buying a house on the cheap does no good if your cash flow is zero. If you allow banks to go under, who is going to have money to buy anything?

[npts2020]

Two things from the last 2 posts. Firstly, I thought earmarks were added after the bill had already passed and was in conference? Secondly, how can anyone buy cash or gold in significant amounts but not be able to buy real estate?

[Pangloss]

You're correct, those weren't earmarks. I believe the word I was looking for there was "amendments", but really any number of terms would suffice.

[ecoli]

forgive me if I'm mistaken, but wasn't Barbara Boxer talking about putting health insurance pork into the bill? How is she getting away with that?

[Pangloss]

Right, they're throwing in the kitchen sink in a last-ditch effort to get it passed because that's what they think the people want.

 

I think they were very disturbed by the fact that the polls showed the people didn't want the bailout and then when the bailout failed the people called to complain even further. They don't understand that; it doesn't make sense to them. And they don't like things they don't understand happening a month before the election. It scares them.

 

And when they get scared, they spend.

[ecoli]

there is no clear consensus that a bailout bill would help, and therefore people don't know how to respond to it.

 

People want the government to be doing something, but there's no clear message on what that should be. Politicians are taking advantage of this, and the result will hurt us.