Matthew Yglesias » Take Another Little Piece of My Bailout

Sep 23rd, 2008 at 3:50 pm

Take Another Little Piece of My Bailout

Note that even if the strong version of the maybe there is no crisis theory is wrong, it’s doubly unclear why Hank Paulson needs $700 billion this week since he’s clearly not going to spend nearly that much by Halloween.

If congress feels like taking Paulson at his word, they can appropriate some fraction of $700 billion deemed adequate to tide Paulson over until November, add on a second stimulus and some measures to start reorganizing mortgages, and then let everybody keep studying the issue. Then if Paulson wants more money after the election, he can send a request that’s coordinated with the president-elect’s transition team to the lame-duck congress. Why should a rushed process commit us to spending months from now?

Comments
45

45 Responses to “Take Another Little Piece of My Bailout”

blah Says:
September 23rd, 2008 at 3:57 pm
Democrats are chumps. They get played again and again. Bush and Paulson are running this con because they know they have a reasonably good chance of pulling it off.
Don Williams Says:
September 23rd, 2008 at 3:59 pm
1) In my opinion, Paulson’s lying to America.

2) You need liquidity? Send in the fucking 82 Airborne to collect a $2 Trillion Income Surtax on the richest 3 percent of these egotistical motherfuckers.

Then lend the money out to real businessmen and real companies. That gives you liquidity. We don’t NEED these cocksuckers. We don’t need Paulson.

Illiquidity, in contrast, is pissing $Trillions away on unproductive parasites and bleeding people who do real work dry.

3) The Banks are doing Economic Terrorism: Make Good Our Bad Gambling Bets so we continue to collect $Billions for sitting on our ass –or we will destroy the Economy.

4) Fuck them — there are millions of Americans who work themselves to the fucking bone for years just to feed their families — and these lying shitheads want to dump this mess onto us?

About time to show these fuckers what Terror is.
RKU Says:
September 23rd, 2008 at 4:04 pm
Well, I *still* say that Don Williams should be the one running for President…
Don Williams Says:
September 23rd, 2008 at 4:06 pm
1) I shouldn’t have to make the above points –if Obama was a REAL leader, he would be making them.

2) On the other hand, if he is an ass-kissing whore to the Superrich or a coward, then he will suggest we need to fuck our poorest citizens in order to take care of our billionaire gamblers.

3) We need to put a tan on Ralph Nader. Wonder if Sarah Palin would lend us her tanning bed for a day or so?
kafka Says:
September 23rd, 2008 at 4:06 pm
Failing banks = banks run by nitwit Wall Street management teams. There’s plenty of local and regional banks that aren’t failing = good management teams.

And we’re going to bail out the Wall Street banks? Oh wait, they’re the one’s who made the biggest “campaign contributions” to whores like Schumer and Dodd.
jdw Says:
September 23rd, 2008 at 4:10 pm
Matt – you’re mistaken. The whole point of the rush is to blow through this before October and Bush leaves office. This is a Wall Steet stimulus, give the illusion of the economy turning around, raid the Treasury one last time, get out of Dodge and leave this with McCain or Obama… whoever wins.

There’s a reason for Section 8: advance protection for Paulsen blowing through the money instantly.

Look what happened with AIG. One day they were A-O-Kay. The next day they needed $40B of Fed money Right Now or We Die! The next day it was $50B. Now it’s $70-80B, and we know that’s a drop compared to how insolvent they are.

That’s just one firm eating up what would be 10% of this.

You don’t think every major bank in the country/world, along with the shadow banks, aren’t carrying chunks of the Shitpile like this?

Paulsen could blow through $700B in a *day* if he wanted to. From here to Pumpkin day is nothing for him. Hell, they can do it in a PR fashion of “saving” a different firm a day to create another round of Wall Steet mojo.

John
nukev Says:
September 23rd, 2008 at 4:10 pm
I agree. Take time to get “any” plan right. Remember that Bush and Paulson will be gone in a few months. Somebody else will have the same authority soon. If it’s not necessary, it won’t be spent. My guess is that LOTS of people will be looking for government largesse soon.

Or… bet that everything is just fine and fore-go a chance to avert impending catastrophe. Sounds like denial of global warming to me but… I could be wrong
Don Williams Says:
September 23rd, 2008 at 4:17 pm
As I noted in an earlier thread, there’s over $40 Trillion of Tangible Wealth in this country — most of which is held by a small percentage of the population.

And last time I checked , there were several million rounds of amno in the Army’s lockers.

There’s your liquidity.

I call dibs on three of the Cezannes.
Matt Conn Lee Says:
September 23rd, 2008 at 4:19 pm
Schumer asked Paulson if he could take 150 billion rather than the 700 billion. Paulson said no. He wanted it all. Schumer should have gotten up and walked out. Why didn’t he?

Here’s how it will work out. The Dems will put some provisions onto the bill. Bush will threaten to veto it and blame the Dems for the financial troubles. The Dems will panic and pass the bill as is with a provision for oversight that is acceptable to Bush/Paulson. But this will just be a rubber stamp for Paulson’s actions but will give the cowardly Dems some coverage.

It would be easy to require Paulson to post weekly on a web site all his activities under this bill that could be scrutinized by all of us. Simple things like, “I hired X at 50,000 per week to help, or, I bought 1 million dollars of bad notes from Washington Mutual for five million bucks.” Sadly, like with the war time expenditures, we’ll never know how many of these people will get rich helping out us taxpayers.
tomj Says:
September 23rd, 2008 at 4:20 pm
One thing is clear: it will take some time just to setup the system, so when will the first dime be spent?

Why not appropriate enough money to last a month. Setup a three member committee made up of congressional leaders. Empower them to release funds when the administration has a full plan and an actual ability to run the auction. Set guidelines for the plan and give the committee authority to okay it until it can be voted on by the full congress.
Don Williams Says:
September 23rd, 2008 at 4:25 pm
1) Ah, I get it. George the Whore still has command of the Army. So he can keep them in barracks while this financial coup d’etat is executed.

2) 4 months later and it will be too late. This crisis is happening now because it’s “use it or lose it”.
Don Williams Says:
September 23rd, 2008 at 4:30 pm
Paulson and Bernanke are wrong. We don’t need the “System” –just as Russia didn’t need the thieving Oligarchs.

The US Government can create its own bank –which will lend directly to US businessmen whose loans pass the laugh test.

And this whole malignant cesspool we have today can rot. Goldman Sachs. Morgan Stanley. The Federal Reserve. etc etc. Fuck them.

It’s stupid to feed financial aid through some of the most greedy, most crooked motherfuckers on the planet.

Destroy them.
rea Says:
September 23rd, 2008 at 4:46 pm
Why should a rushed process commit us to spending months from now?

Some questions just answer themselves. If it isn’t a rushed process, we might not commit to spending months from now.
Barbara Says:
September 23rd, 2008 at 4:47 pm
It would also be nice to remember that there are banks that didn’t do this. A relative of mine is on the board of a small regional bank that makes loans the old fashioned way, and holds almost all of them (I think it does sell mortgages on the secondary market). It has a small rate of defaults.

I don’t know whether it risks illiquidity if it can’t get money through larger banks. But this whole proposal is premised on the idea that if if the pigs at the trough have constipation from eating too much junk food, we should give them an enema so that they can eat some more. What’s to stop them from being as reckless and irresponsible as they were previously?
jdw Says:
September 23rd, 2008 at 4:48 pm
There Is No Crisis-Summary by Chris Bowers of OpenLeft
http://www.openleft.com/showDiary.do;?diaryId=8451

As Atrios points out, not a bad summation of where we are at. Things are fishy as all hell, and Paulson & Co’s testimony isn’t clearing up a thing other than their Must Get Cash Now Or Die! mentality.

John
nobi yuno Says:
September 23rd, 2008 at 4:49 pm
Mark Krikorian: Bailout the fault of blacks, hispanics.

http://corner.nationalreview.com/post/?q=ZDE5M2FlZmI1YzdhN2Y1MWUxZGFiOTM1ZDEwYjMxNjg=
kafka Says:
September 23rd, 2008 at 4:51 pm
Yahoo headline:

Bernanke: Approve bailout or risk recession

Back alley mugger:

Give me the money and you won’t get hurt.
nobi yuno Says:
September 23rd, 2008 at 4:51 pm
Newt Gingrich: Oppose the Paulson Plan, then blame it on Obama (as predicted)

http://www.usnews.com/blogs/capital-commerce/2008/9/23/newt-gingrich-kill-the-paulson-plan-hard.html
pseudonymous in nc Says:
September 23rd, 2008 at 4:55 pm
The Dems will panic and pass the bill as is with a provision for oversight that is acceptable to Bush/Paulson.

In which case, you call up your congresscritter and say that a vote for this piece of shit will have you holding your nose and campaigning for the opponent.

While Daniel Davies has recused himself from comment, Paul Krugman is quoting one of his general maxims from the days of the Iraq War: “Good ideas do not need lots of lies told about them in order to gain public acceptance.”
blah Says:
September 23rd, 2008 at 4:58 pm
Could it be the that bailout is actually needed to save the Fed?

http://www.dailykos.com/story/2008/9/23/8405/76980/887/607281
nukev Says:
September 23rd, 2008 at 5:03 pm
jdw- Bowers brings up some great points. But like global warming experts, many economists beleive in “tipping points” Apparently, Paulson, Bernanke, the POTUS, congressional leaders and many economists beleive that we are there, or past there, or near there. Delaying action for three or six months COULD lead to catastrophe. I don’t know, but I defer to people that have more information than I do. Hey, everything may be just fine. On the other hand, we may be wasting the opportunity to avert Great Depression II. ya plays ya money and ya takes ya chances… Good Luck
Peter K. Says:
September 23rd, 2008 at 5:04 pm
While Daniel Davies has recused himself from comment, Paul Krugman is quoting one of his general maxims from the days of the Iraq War: “Good ideas do not need lots of lies told about them in order to gain public acceptance.”

Krugman is quoting Davies? I doubt it.

What would be funny is if there was no bailout and then there was the Mother of all Great Depressions in the global economy. That would be hilarious at the expense of both loudmouth rightwingers and this-is-Iraq-all-over-again leftwingers.

Bernanke does know what he is talking about. He has studied past economic crises.
nukev Says:
September 23rd, 2008 at 5:07 pm
What would be funny is if there was no bailout and then there was the Mother of all Great Depressions in the global economy. That would be hilarious at the expense of both loudmouth rightwingers and this-is-Iraq-all-over-again leftwingers.

Thanks Peter, I thought I was the only CRAZY one.
blah Says:
September 23rd, 2008 at 5:22 pm
Bernanke does know what he is talking about. He has studied past economic crises.

“At this juncture, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.”

- Fed chairman, Ben Bernanke, Congressional testimony, March 28, 2007

http://www.federalreserve.gov/newsevents/testimony/bernanke20070328a.htm
jdw Says:
September 23rd, 2008 at 5:36 pm
Apparently, Paulson,

Who proved himself to be a liar today and has had his head up his ass since the day he was sworn in:

http://tpmcafe.talkingpointsmemo.com/2008/09/23/quotations_of_chairman_hank

Bernanke,

Same as above.

the POTUS,

You’re not actually offering up George W. Bush as knowing what he’s doing on the economy? That kind of shoots your credibility right there.

congressional leaders

Has over the years helped us get into this via deregulation. You think they got smart over the weekend?

and many economists beleive that we are there, or past there, or near there.

Many economists think we are at a crisis.

Not a lot of them are coming forward supporting the Paulson Plan. I also don’t see a lot of them saying we need to hand over $700B Right Now Or The World Ends.

Delaying action for three or six months COULD lead to catastrophe.

Which crisis have you been paying attention to for the past several years? We’ve been delaying action for *years*. We already are at a catastrof*ck. What do you call handing over $700B of _our_ money? Nationalising Freddie, Fanny, AIG and Bears? Come on… we went past the catastrophe point years ago. The Wise Men you cited buried their heads to it while guys like Roubini laid out exactly what was happening, why and where we were headed. Dozens of times, and at each step of the process.

So now we trust these same Wise Men when they come screaming at us, “Give Us $700B Right Now Or We’re All Going To Ecomonically Die!!!”

Like many are pointing out, I’ve seen this movie before. It doesn’t end the way they promise.

I don’t know, but I defer to people that have more information than I do.

Again, I’ve seen that movie with this same cast of lead characters but a different group of Very Special Guest Stars.

You can buy their bullshit if you want.

John
John Says:
September 23rd, 2008 at 5:43 pm
Bravo Don Williams (comment #2 above)!! Absolutely right. Beautifully expressed. Truth and beauty…
Sisyphus Says:
September 23rd, 2008 at 5:45 pm
If Paulson gets $700B next week, he can probably spend a good chunk of that by January 20. No matter what happens, it ties the hands of an Obama Administration because there won’t be any money to do anything. “Starve the beast” on steroids.

One question I’ve seen elsewhere that interests me: If we have to get the $700B out there to keep credit markets from freezing up and we’re going to borrow the $700B, doesn’t that mean that the credit markets aren’t really freezing up?
Don Williams Says:
September 23rd, 2008 at 5:53 pm
Re Peter K’s comment “Bernanke does know what he is talking about. He has studied past economic crises. ”
————–
1) Yeah, right. He’s probably also studied the strippers in Washington’s titty bars. That would make him an authority on nursing babies.

2) Some of Chairman Bernanke’s Wit and Wisdom from the Past
is at http://www.bernankepanky.com/quotes.php , with citations.

An example from 10/14/2005:

“In light of the announcement the President has just made, it’s especially gratifying to have Chairman Greenspan here. In more than 18 years at the helm of the Federal Reserve, Alan Greenspan has set the standard for excellence in economic policymaking. I am personally grateful to Chairman Greenspan for his collegiality and support during my time as a member of the Fed’s Board of Governors.

“Our understanding of the best practice in monetary policy evolved during Alan Greenspan’s tenure at the Fed, and it will continue to evolve in the future. However, if I am confirmed to this position, my first priority will be to maintain continuity with the policies and policy strategies established during the Greenspan years.”

(From the press conference held by President George W. Bush to appoint Ben S. Bernanke, Chairman of the Federal Reserve)
———-

Nice to know that Bernanke and Alan were looking after us all these past 8 years.
EL Says:
September 23rd, 2008 at 5:55 pm
If congress feels like taking Paulson at his word, they can appropriate some fraction of $700 billion deemed adequate to tide Paulson over until November….”
Maybe, $7000,000,000 is just some fraction. Greenspan is reported to have called $700,000,000 “Chicken Feed” when dealing with this meltdown. The Financial Times thinks $2,500,000,000 is about the right amount (and 3-4 year recession for icing).
nukev Says:
September 23rd, 2008 at 6:06 pm
jdw- I think Roubini has been spot on. I distrust the current administration as much as anybody. I have never advocated the “Paulson Plan” I have suggested a choice. A) do nothing or B) Create a plan with as much oversight, taxpayer equity, executive pay caps, reduction from $700 bil, and … as we can get. I agree with Paulson,POTUS, etc. AND Roubini. There IS a crisis looming. Do something or nothing. I say try- but in the end my guess is that Great Depression II is going to happen either way.
fletc3her Says:
September 23rd, 2008 at 6:06 pm
I would like to see us do as little as possible to see us through until we have a leader in charge of this country again.
Don Williams Says:
September 23rd, 2008 at 6:06 pm
Bernanke has been on the Fed’s Board of Governors since 2002 –Chairman since Feb 2006.

His middle name is “Shalom” — which is Hebrew for “Nothing Missing, Nothing Broken”.

Which is pretty fucking hilarious under the circumstances.
nukev Says:
September 23rd, 2008 at 6:29 pm
I sincerely hope the “screw these liars and their bullshit plans” people are right. From what I’ve read, there may be more existential issues to discuss in the very near future.
nukev Says:
September 23rd, 2008 at 7:05 pm
jdw- Here’s some Roubini for you…

http://finance.yahoo.com/tech-ticker/article/41423/Roubini-More-Than-1-Trillion-Needed-to-Solve-Housing-Crisis?tickers=FNM,FRE,XLF,WM,WB,WFC,BAC

and here’s some more neat perspective…

http://www.usnews.com/blogs/capital-commerce/2008/9/22/bailout-prevents-great-depression-20.html

I really hope y’all are right
rwxiwantmybailout Says:
September 25th, 2008 at 6:23 am
screw wall street
if we have 700 billion
buy mexico and canada they have the resources to pay back the money
and all the housing the homeless need from the bad mortgages
as the man on the street said i want my bailout
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Matt Yglesias

Take Another Little Piece of My Bailout

45 Responses to “Take Another Little Piece of My Bailout”

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