What a crock!

As always thanks Ian.

digg

good thing I wasn’t first, ’cause it would have been a lot uglier.

Like I said in the last thread, Krugman nailed it: No Deal.

Go for it! *g*

No one could have foreseen…wait. They did, including Ian.

King Paulson promises to treat the little people well.

I’m starting to wish we’d never elected Paulson. /s

Thanks, Ian. Great analysis. I faxed the basic premise of your proposal from yesterday to Chris Dodd’s office this morning.

SOP. It’s a done deal.

The (former) gold man sucks.

have been trying to contact Senator Dodd in his capacity as Banking Chair, but the damn site isn’t working properly - will call Monday am, but worry that will be too late - as Atrios says, Dems tend to do what the “Big Daddies in Nice Suits” tell them to -

suggestions ?

and has BO given any indication as to which way he’s leaning ?

all right - where are my parliamentary experts?

Assuming this piece of shit passes the house, it still must be passed by the Senate, right?

Can Harry style it so that it goes no further, at least not without a 60 vote threshold?

I used this fax number for his main DC office:
FAX (202) 224-1083

Is Paulson now the “Unitary Loan Officer”?

firedogs, I’m lost in RTC land, trying to discern if that gambit was controlled and executed in the same fashion -

Oversight ?
Power of Paulsen, etc,

it’ll take me a while to read through (hint, hint, wonks) but this jumped out immediately

Wiki

According to Joseph E. Stiglitz in his book, Towards a New Paradigm in Monetary Economics, page 243, the real reason behind the need of the Resolution Trust Corporation company was to allow the United States government to subsidize the US banking sector in a way that was not very transparent and therefore avoid possible resistance from people opposed to the plan. According to Stiglitz, this is supported by the fact that the banks had better information relating to the loans than the RTC.

thanks!

dugg

More on topic for Ian’s Obama thread but …

http://www.marketoracle.co.uk/Article4363.html

Ian, I hope someone is faxing your posts and emptywheel’s to the Black Caucus and to the Unions. We need them to bring their weight to bear in this fight.

He sure did! My congresswoman Pelosi sez:

She says the bailout should include provisions to help families facing foreclosure to stay in their homes, as well as create jobs, extend unemployment benefits and prevent CEOs of failed companies to leave with multimillion-dollar “golden parachutes.”

We need to keep the pressure on.

OMG this is insane! If the dems go along with this they will regret it.

Instability is bad but the moral hazard on this is outrageous. No one involved in this fiasco loses anything? Are you fing kidding me.

We should have a revolution if this goes through. I mean people in the streets demanding change. I mean people demonstrating for our rights. People demonstrating for healthcare and for higher minimum wage.

Taxpayers should get a stake in the companies. CEO’s should be wiped out. The moral hazard is too large. This will happen over and over again unless we put a stop to this now.

Insanity.

i’ve emailed this to all my contacts. i hope something can be done.

Big difference: the RTC bought loans of S&Ls that had failed. Their stockholders were indemnified, and the loans and underlying assets became the government’s.

No banks are failing under Paulson’s plan. And he’s not undoing the 60:1 leverage ratio, or prohibiting any golden parachutes, or requiring anyone to resign. As soon as the balance sheets are cleared by offloading toxin onto the American taxpayer, it’s back to business-as-usual.

A mere interruption in the party. We’ve all been at the party the first time the cops show up, right? When everyone promises to be quieter and not do wheelies in the cul-de-sac? Well, this is that first visit. Nothing but a slap on the wrist. Oh, and more beer and drugs.

I don’t know what is more outrageous, the bailout or that one man by himself gets to decide what the price is.

This is a giant giveaway to his friends. So Paulson can bail out his friends and punish his enemies. Easy.

Companies that donated to Republicans get bailed out. Those that didn’t don’t.

Congress might as well just open the doors to fort knox and allow the CEO’s that are friends with Paulson drive up with an 18 wheeler and take whatever they want.

Shouldn’t we be calling for Paulson’s resignation? It seems that this is at least partially his fault for allowing the biggest of the big to increase their leverage.

He should be persona non-grata. Not welcome at the table where this is going to be fixed.

Excellent summary Ian, thanks for the good work… This thing reeks of corruption. Democrats should at least demand Bush & Cheney’s resignation before they even consider this piece of crap.

It seems to me we have been awfully passive in the face of repeated trauma (9/11, etc).

Time to stop that shit. Give them reason to really worry. People in the streets is just a start.

This is a classic Republican bill. It is awful from every conceivable angle for ordinary Americans and for the country. Paulson has already shown himself to be totally incompetent as Treasury Secretary. If he had the least amount of integrity and competence, he would not have sat on his fat ass for the last year doing virtually nothing to address this crisis. This is just monumentally bad and I’m afraid the Democrats are going to cave on it like they have everything else.

Another great article Ian, as usual, thank you very much.

Congress contact info (phone and fax) to load into your email/fax contacts list:

US Senators
US Representatives

i think they are up to date, but if you find any errors, please let me know and i’ll correct them asap.

I can’t shake the feeling we’re being played,again

This is the most elusive threat since WMDs,
I’ve seen numbers range up to four trillion $ in bad debt floating out there, maybe more. Shouldn’t we have a handle on a finite number before we commit to another hair-brain, quick draw solution, which will once again, look ridiculous in hind sight.

thanks Teddy, just now caught the “failed” thingy - and agree with you.

What in the world is Obama to do ? seriously, there is even more momentum to be had in the coming weeks and he is forced to walk this tightrope

The only way for him to have Ian’s prescribed “FDR Moment” is for the Leadership to back him - loudly and consistently - good effing luck with that Senator - am so afraid this will be just one more item “off the table”

this is the shock doctrine in action. a crisis hits, and the crooks use it has an excuse to rob the country.

Shouldn’t we have a handle on a finite number before we commit to another hair-brain, quick draw solution, which will once again, look ridiculous in hind sight.

amen.

transparency should, imo, be first on a long list of our demands.

Wouldn’t a government in a country with a parliamentary govt. have to quit if something like this happened? They’d face a vote of no confidence, wouldn’t they?

yeppers. Blair admitted so much the other night on TDS :D

That’s encouraging.

I hope Pelosi sticks to her guns and doesn’t let the Blue Dogs run wild.

“as” much - blerggh

Dodd testing the waters for resisting? From an AP article:

“It’s a rather brief bill with a lot of money,” said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. “We understand the importance of the anticipation in the markets, but we also know that what we’re doing is going to have consequences for decades to come. There’s not a second act to this — we’ve got to get this right.”

At least he’s not saying “We have to do everything Sir Paulson says.” In fact, I’m somewhat encouraged.

As written DO DEAL!
Just how is it that the rethuglians seem to think that they are in a position of strength on this issue! Unless Obama steps in and says NO DEAL and tells the Dems in Congress the same thing this country will go down the drain.

sorry - a stupid question is required:

When does the term of the 110th Congress (this one) end?

It is better to die standing on your feet, than to live on your knees.—-Emiliano Zapata

Nancy Pelosi and Harry Reid—-Baaaa, baa, baaaa

from ian’s link:

After a dramatic Capitol meeting Thursday night, Paulson and Bernanke won pledges of bipartisan support. And true to this commitment, House Majority Leader Steny Hoyer (D-Md.) predicted Friday the full House will vote by the end of next week.

wow - How many times has the word “should” appeared in the comments?

Oh yeah, Nancy and Harry, we’ve got all the fucking confidence in the world in the two of you.

What in the world is Obama to do ? seriously, there is even more momentum to be had in the coming weeks and he is forced to walk this tightrope

The only way for him to have Ian’s prescribed “FDR Moment” is for the Leadership to back him - loudly and consistently - good effing luck with that Senator - am so afraid this will be just one more item “off the table”

He needs to oppose this plan for what it is - a giveaway - and propose a better idea. The Dems will fall into line behind him - he gives them someone to blame if it doesn’t work.

It’s a time for Obama to show his real leadership - assuming he has such.

I’ve seen numbers range up to four trillion $ in bad debt floating out there, maybe more.

Just a quick and dirty guesstimate but if we look at the mortgage sector alone and forget about all the other debt out there, the American housing market is (or was) worth $12 trillion. If housing values fall 40%, that is $4.8 trillion that someone or someones, mortgage holders, banks, investment houses, and the buyers of the securitized instruments based on these mortgages are going to have to eat.

damn -

the stench is so bad, it woke up NPR :D

I would guess that this has to be one of the biggest peacetime transfers of power from Congress to the Administration in history. (Anyone know?). Certainly one of the most concise

NPR: Planet Money

we
were
warned

this is the shock doctrine in action. a crisis hits, and the crooks use it has an excuse to rob the country.

Exactly. There is just no way to convey how bad this bill is. It entrusts money and power in the hands of those who deserve neither.

Good read.

The Dems will fall into line behind him - he gives them someone to blame if it doesn’t work.

that’s a huge problem - they wont necessarily fall in line as that would put it “back on the table”

these were the folks so interested in getting Iraq “off the table” they gave Bush more than he asked for last time - even if it meant the continued slaughter of Iraqis and US Military Personnel

some bits from glenn:

One doesn’t have to be an economics expert in order for several facts to be crystal clear:

First, the fact that Democrats are on board with this scheme means absolutely nothing. When it comes to things the Bush administration wants, Congressional Democrats don’t say “no” to anything. They say “yes” to everything. That’s what they’re for. They say “yes” regardless of whether they understand what they’re endorsing. They say “yes” regardless of whether they’ve been told even the most basic facts about what they’re being told to endorse. They say “yes” anytime doing so is politically less risky than saying “no,” which is essentially always and is certainly the case here. They say “yes” whenever the political establishment — meaning establishment media outlets and the corporate class that funds them — wants them to say “yes,” which is the case here. And they say “yes” with particular speed and eagerness when told to do so by the Serious Trans-Partisan Republican Experts like Hank Paulson and Ben Bernake (or Mike McConnell and Robert Gates and, before them, Donald Rumsfeld and Colin Powell).

Second, whatever else is true, the events of the last week are the most momentous events of the Bush era in terms of defining what kind of country we are and how we function — and before this week, the last eight years have been quite momentous, so that is saying a lot. Again, regardless of whether this nationalization/bailout scheme is “necessary” or makes utilitarian sense, it is a crime of the highest order — not a “crime” in the legal sense but in a more meaningful sense.

What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse?

What’s most vital to underscore is that the beneficiaries of this week’s extraordinary Government schemes aren’t just the coincidental recipients of largesse due to some random stroke of good luck. The people on whose behalf these schemes are being implemented — the true beneficiaries — are the very same people who have been running and owning our Government — both parties — for decades,

If there is any “pitchfork moment” — an episode that understandably would send people into the streets in mass outrage — it would be this.

my bolds.

Just emailed Hillary, Chuck and Mike Arcuri. I will fax them on Monday morning. I will also email everyone I’ve got in my address book to contact their people as well.

Commissar Paulson is all over the Sunday gasbag shows, and he will hit Dodd and Frank hard for their “dithering” and “political gamesmanship” in the face of this crisis. Big GOP Daddy in a Suit™ read them the riot act on Thursday night. The Democrats are squirming a little bit now, as they are hearing from their constituents and, perhaps, their standard-bearer.

But Daddy will whip them good tomorrow.

Daddy doesn’t pay their salaries. We do. We also furnish their nice pretty offices.

If housing values fall 40%, that is $4.8 trillion that someone or someones, mortgage holders, banks, investment houses, and the buyers of the securitized instruments based on these mortgages are going to have to eat.

how much will be lost if the speculation is unwound from the commodities markets? is it significant, or does the housing market make everything look small in comparison?

that’s why we have to push from the other direction.

M take is that they give Bush what he wants to avoid blame. If Obama proposes something else, they have another path and can still avoid blame - and claim they were being loyal Dems.

Do you have a different take on their motives?

They have NSA-discovered secrets that have been known to Cheney since forever.

speaking of demands (with transparency at the top of the list) … here’s one from bernie sanders that i like:

We must end the danger posed by companies that are “too big too fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up.”

nahant–regarding my little problem last night–I “think” I have fixed it but would like to know for sure–would you please e-mail me at my screenname at a o l dot com?

also, have you seen CTuttle around here recently?

New Lindsay post

After thinking about this some more, I don’t know why we shouldn’t be pushing the concept of a massive debt-to-equity swap — not for the toxic assets themselves but rather for the debt-obligations of the effected financial institutions. In theory, the marked-to-market toxic assets could sit in place indefinitely, on the balance sheets of these corporations, if the companies’ own debt obligations were small enough to be servicible and their capitalization ratios were manageable.. so swap them out.

And let guvmint take over that swapped equity, translating into board seats and the ability to fire incompetent managers, in return for this recapitalization. As any third world central banker knows, toxic assets by themselves need not bring down the economy if the organizations holding them are, themselves, able to service calls on their own obligations, and that problem is easier to fix than the underlying toxic assets problem. The cancercorps themselves will just have to learn to be smaller, and their shareholders will just have to deal with the dilution.

Then, Congress can get to work on longer term measures to restore housing values/mortgate market problems, unwind the derivatives positions, etc, as non-emergency problems to be solved, say, over the next year.

They will no doubt be reminded of what happened to those who took the lead in questioning the Patriot Act. Quietly, of course.

I do not know exactly…but what I heard this morning is recess is pretty soon for the rest of the year…to campaign + the holidays. Sorry I do not recall the number of days mentioned.

I just sent the following letter to my congressional delegation, the congressional leadership, and the committees with oversight. I urge everyone to send their own.

I just read the administration’s plan for the Wall Street bailout. My initial reaction is, “You are out of your tiny little minds!” This is a monstrously bad plan with no guidelines for dispensing the money, no protections for taxpayers, and explicitly prohibits any oversight. Any member of Congress brain dead enough to vote for this proposal deserves to be tarred and feathered, placed in the stocks, and pelted with rotten produce, before being run out of the country.

If we have learned anything over the past eight years, it is that you never give any member of the Bush administration a blank check for anything. This administration, best noted for gross incompetence and pervasive corruption, cannot be trusted with spare change, let alone $700 billion, without intensive, detailed oversight. It would not be unreasonable given their record to require specific direct congressional approval for each and every expenditure (including for postage). Strict controls and oversight by both Congress and the courts must be in place before even considering any proposal from this administration.

Any acceptable proposal must include detailed guidelines for spending the money including mandatory discounting of financial instruments purchased, replacement of the all senior executives and boards of institutions receiving assistance, implementation of strict regulations and oversight of these institutions, and guarantees that the taxpayers will be the primary beneficiaries of this program. Anything is simply rewards, stupidity, incompetence, and unbridled greed. I urge you in the strongest possible terms to reject this and any other proposal which does not meet these standards.

We need to flood their offices so they are more afraid of us than of Wall Street or the preznit.

The actual amounts in the commodities markets were on the order of $150-$200 billion. Speculators made their profits on the differentials. The increase in the absolute prices exported $500 billion to $1 trillion in profits to oil producing countries some of the most unstable on the planet.

Not exactly, as least as I understand it. Paulsen is providing a floor for them to crawl out of the fire, not a ceiling. They are going to need more liquidity after this bailout and I think they’ll go looking to sovereign funds.

If the deal is sweet enough (larger ownership stakes than what has been offered in the recent past and perhaps even more transparent regulations) I suspect that oil rich countries and China will be willing to be a partner in the commercial/consumere megabanks that are being created.

That’s just my take.

Also drop your bookmarks to Andrew Sullivan “Dish” site. He is insulting us with his right wing bull shit. All that thinking needs to be answered by ignoring them now.

Dave
Viet Vet

excellent letter.

Don’t forget the toll-free numbers for the capitol switch board

1 (800) 828 - 0498
1 (800) 459 - 1887
1 (800) 614 - 2803
1 (866) 340 - 9281
1 (866) 338 - 1015
1 (877) 851 - 6437

Call a number, as for Congressperson X or Senator Y, talk to the staff, hang up then hit redial…. do it over again…. and again…..

The actual amounts in the commodities markets were on the order of $150-$200 billion. Speculators made their profits on the differentials. The increase in the absolute prices exported $500 billion to $1 trillion in profits to oil producing countries some of the most unstable on the planet.

thanks. half a trillion isn’t pocket change, even as bushco hands it out.

i was just wondering how much could be lost by speculators on the down side of the commodities bubble. if profits were leveraged, then won’t losses be also?

Don’t know an exact date myself but I would assume there will be a lame-duck session after the election up until the Christmas recess. The 111th will be sworn in the first week of January I believe and has roughly 2 1/2 weeks before the new president takes office.

New emptywheel post

Josh Marshall is soliciting e-mailed opinions on the bailout for publication at http://www.talkingpointsmemo.com

He’s limited to $700 billion in any one transaction, but pursuant to Section 10, he can increase the public debt up to $11,315,000,000,000. That’s $11.3 trillion.

He, or the Secretary of the Treasury, has this dictatorial power for 2 years. What impact will this have on the new President? Does it make any sense to tie the new president’s hands like this?

None of this makes any sense to me.

what would happen if we could get people to stop witholding taxes from their paychecks? is that even possible?

He’s limited to $700 billion in any one transaction, but pursuant to Section 10, he can increase the public debt up to $11,315,000,000,000. That’s $11.3 trillion.

—-
It was about $10.6 a week or so ago which pretty much limits him to the $700.

Just another transfer of wealth. If Pelosi and Reid let this pig move thru Congress then they are committing treason against all working Americans. You can bet that both are scared shitless because they know that the press will paint them as opposing a solution to the Republican created economic Armegeddon.

The person that should be opposing this Republican bailout is Obama. He needs to come out forcefully against this pig.

The person that should be opposing this Republican bailout is Obama. He needs to come out forcefully against this pig.

the dems in congress need cover to act against the current administration. obama can give it to them.

New post — Is Palin a Bircher?

the dems in congress need cover to act against the current administration. obama can give it to them.

The next few days will show us what Obama is made of. It would be too easy for him to lay low and coast into winning the presidency. There are probably many “advisers” whispering in his ear that he should do just that. However, I think that he is smart enough to know that if he does that and the bailout as structured now passes, his presidency will be hamstrung before he even takes office.

Ironically, McCain is running on “Country First”, but Obama needs to put country first in a very real way and come out with a concrete, fair plan that both addresses the crisis on Wall Street and provides consequences to those who have caused it. He has the opportunity to literally save our country even before he takes office. Will he have the courage? Will he tell those whispering in his ear to STFU so that he can get us out of this?

i was just wondering how much could be lost by speculators on the down side of the commodities bubble. if profits were leveraged, then won’t losses be also?

Commodities markets are leveraged at between 15 and 20 to one.

It would be too easy for him to lay low and coast into winning the presidency. There are probably many “advisers” whispering in his ear that he should do just that.

all the economy needs is a little tweak here, a little nudge there. that’s all.

jim @ 83 - should have said first thing, that i agree completely.

hugh @ 84 - so, if a $150-200 billion dollar market goes down by 25-50% and is leveraged at 15-20 to one, does that mean there is another trillion in losses? sorry to be asking such basic questions, but that just seems like of money have i have no intuition on this to act as a guide.

Humble edit:

Anything else simply rewards stupidity, incompetence, and unbridled greed. I urge you in the strongest possible terms to reject this and any other proposal which does not meet these standards.

Outstanding letter Dr. Dick (from one Dr to another)

/grammar police

;~P

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 in lieu thereof $11,315,000,000,000.

That has just doubled the national debt well within the lifetime of one administration. National debt 09/30/2000 5,674,178,209,886.86 (In the first 9 months of this administration). Have you any doubts the new limit will not be reached by the termination of the administration

National Debt: http://www.treasurydirect.gov/.....histo5.htm

ersatz edit:

This administration has doubled the accumulated debt of 230 years in less than 8 years. This from beginning with a budget surplus. This feature also occurred with Reagan administration which saw the US go from the world’s largest creditor nation to the world’s largest debtor nation within the first half of its 8 year administration, IIRC. Debt always facilitates transfer of wealth with Chicago School of Economics ideology. This should be something to have a true fear of, for real.