Word earlier today was that a deal had been struck between Republicans and Democrats on the response to the financial crisis, but apparently it fell though (at around the time McCain got involved, coincidentally). I haven’t yet been able to figure out why. From what I understand, the Democrats had only offered a portion of the $700 billion that Treasury Secretary Hank Paulson was asking for up front, so maybe that was the sticking point. Or maybe is was that hundreds of respected economists started questioning the efficacy of the bailout.
Whatever the reason, it seems as though they’ve hit an impass, which is probably a good thing. I get suspicious when these folks try to motivate us with fear, as they did about six days ago now, when they said that, if they didn’t get $700 billion in cash ASAP, that the world would collapse. Well, it didn’t end, and today we learned from a Treasury spokeswoman how they arrived at the $700 billion figure. If you can believe it, she told “Forbes” that they, “just wanted to choose a really large number.” And, as I mentioned yesterday, the FBI now has a probe underway. I understand that global markets may be in jeopardy, but I’m inclined to say that we should wait until we get to the bottom of this before we start cutting “really large” checks.
I just called the offices of all my elected officials in DC and requested that they make sure, whatever funding package is approved, that it does four things… I want it to 1) ensure sufficient Congressional oversight, 2) cover no executive compensation, 3) include only funding for what is absolutely necessary at this point, making the Treasury come back to Congress later for additional funds if necessary, and 4) make sure that our investment gives us a reasonable chance of making our money back. That means getting equity in exchange for our investment, and not paying more than the fair market rate for what we’re getting. And, here, if you happen to live in my neighborhood, are the phone numbers for our representatives in DC, in case you want to call:
Senator Debbie Stabenow
Phone: 202-224-4822Senator Carl Levin
Phone: 202-224-6221Representative John Dingell
Phone: 202-225-4071
Would the world end if these banks failed? The reason I hear that they need to be saved is that, if they fail, credit will be harder to come by. And, credit is what fuels our consumption-driven economy. So, yeah, it would suck for a lot of people, especially people who make things that people don’t really need, if credit became harder to come by. People would be less likely to buy new homes and new cars. But maybe that’s not altogether a bad thing. Instead of hopping from house to bigger house every five years, maybe people would put down roots and stay in one community – making an investment there. And maybe they’d discover mass transportation. But, like I said, a lot of builders and autoworkers would lose their jobs. The transition would undoubtedly be incredibly painful. But maybe it’s necessary. Maybe this is something that would have had to happen anyway. The old way, built on ravenous consumption, wasn’t sustainable in the long run, and we knew it. Sooner or later, this day of reckoning had to come.
38 Comments
Great Post Mark – I just wanted to share this email announcing a big Obama Rally in Detroit on Sunday! Lets all go!
Hey,
Join me in Detroit this Sunday, September 28th, for a Change We Need Rally with Barack Obama, Joe Biden, Michelle Obama, and Jill Biden.
http://mi.barackobama.com/DetroitChange
Here are the details:
Rally with Barack Obama
Woodward Ave. in front of the Detroit Public Library 5200 Block of Woodward Ave.
Detroit, MI
Sunday, September 28th
Gates Open: 11:00 a.m.
Program Begins: 1:30 p.m.
For security reasons, do not bring bags and limit personal items. No signs or banners permitted.
Thanks.
I emailed everyone but Dingell (email thingy wouldn’t work) and begged (BEGGED) them not to approve of ANY bailout for ANYbody. I’m more than willing to ride out a recession than temporarily postpone a depression, which is what will happen if the bailout goes through.
Although the matter of who the “free” money is given to is important, it’s not nearly as important as the fact that the Feds don’t have that kind of money in the first place.
Basically there’s been a big revolt by conservative Republicans against the bailout. They oppose excessive government involvement with private enterprise, which is their standard ideology, but ideology wouldn’t normally interfere with loyalty to one’s own administration… so they must be really eager to distance themselves from the unpopular Bush. They’re thinking more about reelection than anything else right now.
It’s sort of funny how the two presidential candidates have faded into the background during the crisis. It seems to have taken them by surprise and they don’t really know what to say. That really inspires confidence. :)
When 911 happened, Bush told the people of America that they could help by “shopping”. The thought was that we could consume our way out of danger. That will be the same message today. Bush will tell us to go out and buy something.
.
Bullshit, bullshit, bullshit. They did it again and they did it to you, Mark Maynard. They turned your fucking head around by making you think about the “best bailout”.
I can’t believe that you’re actually talking about what you want the bailout to do. It’s like when everybody talks about the “best strategy in Iraq”. The best strategy is to get the fuck out. The best strategy here is to do NOTHING.
“Oh, there won’t be any money to lend business.”
Bullshit. Most businesses I’ve heard of lately are started by two guys in a basement. They don’t need your stupid loans. Sure, old style business needs tons of money to keep their inefficient crap afloat. You are stealing from the future to maintain the past. Stop it.
“Nobody will be able to buy a house.”
Bullshit. There are plenty of places to live. Move to Detroit if you can’t afford a cushy suburb and a long commute. Get an apartment if you can’t afford a house. There are a million alternatives to the bullshit farce that everybody “deserves” a home in the ‘burbs.
“The market will collapse.”
Big fucking deal. Most people have no retirement savings anyway. Who really gets hurt here? The people with money will get hurt. Fuck them. Time to pay the piper, people. Time to stand up and be counted.
Don’t start talking about the “best bailout”. There is none. Don’t let them do this to you. This is an attempt to maintain the past against whatever our future will hold. Let the future happen. Let the oil run dry. Let the bastard banks bleed to death. Stop holding us all back. DON’T LET THIS BAILOUT HAPPEN!
The government needs to do something. At the very least they need to institute new regulations so that these kinds of things do not continue to happen in the future. We need a new system from top to bottom. Whether the government needs to invest a lot of cash to make that happen, I don’t know. What I do know though is that we don’t just want to use our hard earned dollars to prop up a system that’s non working.
PaulG, Obama doesn’t seem to be at a loss for words about it.
And though almost everyone wants to dance around the obvious fact, deregulation is what led to this financial crisis. And it didn’t catch everyone by surprise either, despite how the idiot Republicans want to pretend it did…again. Many people have been talking about it for years and years. It’s been no secret that this was coming soon. Now it’s time for the folks responsible to push the phony notion that this is somehow all new to everyone, and time for the rest of the dimwits out there to back up that bullshit notion.
Here are some other things that weren’t really surprises:
– Hurricanes.
– The possibility that planes can be hijacked and flown into stuff.
– Invasions require prolonged occupations.
– Unprovoked attacks CREATE enemies, not eliminate them.
Anybody who doesn’t know these things as fact by the time they reach college age are fucking idiots.
It’s the policy of these con-men to pretend they’re as surprised by things as their mindless supporters are. However, it’s not true at all. It’s just all part of their cons to always leave the taxpayers holding the bag.
Is it too late to get a Social ist candidate in the debate?
This is just more proof to me that American citizens are poorly educated and it’s coming back to bite us in the ass.
It all comes down to education people.
I heartily disagree. While deregulation might have had a hand in it, the lack of trust-busting was a much larger factor here. How in the hell did our government allow these entities to get so big that they can hang us all out to dry when things go bad for them? If you want to call that “deregulation”, go ahead. But it’s a specific type of regulation that has fallen on its ass here.
I can’t think of any other industry where we are so beholden to the people who are robbing us blind. Time to get off the crack. And everybody knows there is only one way to break a habit. Stop. Now.
I am confounded why everybody keeps looking to the same government who fucked this up for a solution. Can someone please explain to me why they trust the thieves to fix this? I don’t get it.
Curt Waugh, yes I include trust-busting a form of regulation, and the unwillingness to do it is therefore a form of “deregulation.” Failing to enforce regulations is a form of deregulation…and a much more underhanded manner of doing things. The Republicans love to pass laws they don’t have any intention of enforcing. It allows them to be on record as supporting something, while actually acting in exactly the opposite manner when it comes to enforcing the laws. It’s a lot like running around saying you’re a Christian, and then fucking your husband’s business partner…just a random analogy.
“But maybe that’s not altogether a bad thing. Instead of hopping from house to bigger house every five years, maybe people would put down roots and stay in one community – making an investment there. And maybe they’d discover mass transportation. But, like I said, a lot of builders and autoworkers would lose their jobs.“
Here’s how the dominoes fall: Credit dries up, making loans more expensive. That means that GM freezes new loan offers on car leases. Which means that fewer leases get made. Which means that, as of August, auto production was down 17% (leading to a 1.5% dip in total manufacturing production, a pretty huge number).
Want a fast way to make Michigan’s economy worse? Prolong the credit crisis.
“Big fucking deal. Most people have no retirement savings anyway. Who really gets hurt here? The people with money will get hurt. Fuck them. Time to pay the piper, people. Time to stand up and be counted.“
God, are you retarded? Yes, people with money will get hurt. Everyone has money. Those who can afford to write off losses will get hurt somewhat, but those who can’t will get hurt worse.
Look, the salient comparison to the Great Depression comes from the attitude prior to the Wall Street collapse—that it was a good and necessary thing for these banks to fail. But that led to a deflationary spiral, where money was “worth” more than goods, so people weren’t spending it. Which made money harder to get, which meant that new investments couldn’t get made, people couldn’t get paid, people couldn’t buy things they needed…
Yes, this current bailout plan sucks balls (in a bad way, not in a gee-I-like-my-balls-sucked way). It allocates too much power to the treasury, it doesn’t have clear goals or transparency requirements, and it’s a lot of fucking money for nothing.
But, say, a bailout like Sweden’s, where companies had to publicly disclose their assets and debts before seeking public money, and where Sweden acquired serious equity for their money, would work fine. (NYT article here.
I understand folks being pissed off, but it’s like hearing liberals say, “Maybe it would be best if McCain and Palin got elected—that’d really screw the right for a generation!” We all know how well that worked with Bush.
So where’s the money come from?
js – “God, are you retarded?”
Clearly I’m retarded. Nice attitude.
How you can sit there and say “this is a bad plan, let’s do it anyway” is beyond me. Maybe you need to ask yourself that question.
Good luck with your bail-out with your shitty attitude. Fuck you.
Tell me more about this ball-sucking. It intrigues me.
“How you can sit there and say “this is a bad plan, let’s do it anyway” is beyond me. Maybe you need to ask yourself that question.“
Clearly, you’re retarded.
I mean, because what I wrote was that the current Paulsen plan was fucked, and we should look to Sweden’s previous bailout for a better plan.
“This is a bad plan” does not mean “Let’s do nothing.”
“We need to have some form of bailout” does not mean “Let’s go with this current plan.”
I have officially swiched from drinking Sam Adams seasonal to Molson Canadian (cases).
It’s saving me about 50 bucks a month.
And Molson ain’t so bad afterall.
Whoa…front page of freep says that state reps are flooded with bailout protest calls.
This really has me believing in the power of local gov and local action. Much respect to MovingOn and MM.com for pushing this forward. Bush hustled me into thinking this bailout was a done deal.
You know, I hope the debates focus on the bailout. If nothing else, it proves we shouldn’t rush into anything, we need to discuss, and isn’t it something that the most conservative Republicans are the ones holding it up. Maybe it proves that we all need to listen to each other.
Egpenet, where have you been? Hanging out with OEC? You warned us of a meltdown like happening, and now year looking like a truthman.
Go Obama tonight, and go blue and go green and white tomorrow. And go Lions on Sunday.
Amen.
I apologize for my earlier outburst. My tone and my words were unacceptable. I’d like to apologize directly to js for my poor choice of language and to mark for disrespecting his blog.
My feelings are strong on this issue, but I can surely find a better way to express them. Sorry everybody.
They charge us chumps import prices for Molson here. I’d rather have Labatt, but neither of them are worth $9 a sixpack.
(I wasn’t offended, Curt. I’ve just seen a little too much nose-to-spite-the-face thinking lately and it annoys me.)
I was happy to hear Obama say last night, during the debate, that he wanted oversight, equity, and no executive compensation in the bailout. He didn’t mention, however, that the $700 billion number was arbitrary. All in all, I think he did OK. He wasn’t stellar, but neither was McCain. I’d call it a tie. Neither man lost any voters, but, based on their performances, there probably weren’t a lot of defections.
I would have liked to have seen Obama show a bit more fire. I felt that most of his time was spent refuting the bullshit claims of McCain. I would have liked to have seen him put his foot down and say to McCain at some point, “John, I’d prefer to debate the issues, and not waste the time of Americans having to explain these claims you keep making, which you know aren’t true. The American people deserve better than this nonsense. They know I support the troops, that I’m a friend of Israel, and that I don’t support corporate giveaways. You can keep wasting our time telling lies, or you can start discussing what we’re going to do to get this country back on track…”
Mark, you see, Obama is playing it smart. He’s being patient. It played out perfectly. He’ll wait, then knock McCain out. This was like two heavyweights in the first round, feeling each other out. Obama knows what he’s doing, you’ll see that fire in the next two, but more so in the last.
I just got tired of McCain’s oddly puppet-like face (bottom lip only in movement), saying over and over again, “Obama just doesn’t understand…” and “I’ve been there. I visited there. I been there twice. I got the tee-shirt…” He also whispers all the time, like Christian Bale. It’s annoying.
Not trying to pee in anyone’s cornflakes or anything, but do keep in mind that the next President is going to inherit an economic shit storm, especially if the bailout passes, and there’s nothing he can do about it. Just saying.
“Most businesses I’ve heard of lately are started by two guys in a basement.”
Examples?
“They don’t need your stupid loans.”
How were the businesses you mentioned above financed?
It is possible to grow a business using a shoestring approach. It takes longer, but it tends to less risky and avoids being big time in the hole right off the bat.
My business was started by two guys in basements, and we never had a loan. And we’ll be celebrating our 5th year this winter – making us one of ten percent who don’t go under. Granted we are small, but we’re still growing and doing better than ever.
We were able to survive without financing by keeping our day jobs, working a ton of hours the first year with no salary, and putting everything we made back into the business. It wasn’t exciting, and it was hard work, but it worked out for us.
This situation we’re in with the credit crunch isn’t ideal, but it will teach us to be resourceful, work with what we have, and appreciate what we accomplish.
Besides, what other choice do we have? Gotta play the hand we’re dealt.
To partially answer my own question regarding where the money for the bailout is supposed to come from, I now know one place it’s not.
This is a serious unraveling we’re watching. You should pay attention.
I predict, if this bullshit bailout passes, a short term stock market jump because everyone figures they won’t be held accountable for their bad investments, followed by a long shitty recession/depression as the dollar becomes worthless and no one will loan shit to the US anymore. Because the market holds everyone accountable eventually.
If it doesn’t pass, a short-term recession as the market adjusts. Provided folks don’t get squeemish about the recession enough to beg the feds for a second chance at a bailout.
Looking forward to being wrong. Probably not, though.
Interesting things going on with precious metals as well, if anyone’s been paying attention. They’re still comparatively low to what they were this spring when the failures started, but seemingly artificially so, since no one seems to be able to find any gold or silver. High demand, low supply, low prices? Something fishy is going on.
I included the precious metals thing because demand for them is usually a good indicator of people not trusting the dollar and the stock market. Kind of a rats abandoning the ship thing. Pay attention, it’s fascinating.
Aha! The reason the precious metals markets are screwy!
Paying attention?
What the New York Times thinks the bailout will do.
Dingell just said he will be voting for the bailout because they threw in free shit for the auto industry. Then he and Barney Franks started 69ing.
Frank. Whatever.
Cousin Geoff, thank you for the story of how you started your business. And good luck with your continued success.
Bruce, not to nitpick, but I specifically said “loans” not “financing of any sort”. Sure, some businesses do need some money to get a jump-start or invest in research or infrastructure. What we are seeing here is not the end of money or the end of financing. It’s a normal (albeit sudden) adjustment when an entire system gets so far out of whack in one direction. I have absolutely no desire, however, to right this ship. I want a new boat.
There is wealth out there. Lots of it. There is money that wants to invest in something. Cutting out these bloated, self-serving, ancient, control-freak, monopolistic banking institutions in favor of modern, nimble financial service options is essential if our country is going to improve as a result of this mess. If we put Humpty back together and just hope like heck that all politicians and bank presidents are going to suddenly turn really honest, we’re screwed.
(BTW: Google, for example, didn’t go to a bank or a financial institution for money. They started — you know, two guys in a dorm room — on the back of public institutional research money in the form of Stanford infrastructure. Their later money came from private sources. Why not put this $700 billion of OUR MONEY in public education. Sounds like a fantastic way to finance new businesses. Market shake-outs call for creative thinking, not brute force.)
Well, looks like it failed. Economic downturns still ahead as the market corrects itself though.
I suspect panic at the stock market will set in soon and congress will try another go at it, with more public support this time.
I for one learned my lesson after 9/11 about not letting panic cloud my judgement when it comes to giving Government unconstitutional authority. Let’s see how many others have learned that lesson.
Probably not enough, but I’m a pessimist like that.
Counterintuitively and to absolutely everyone’s total surprise, the bank bailout did not, in fact, get easy credit flowing again.
Source.
We were told that if it didn’t pass, the economy was doomed, and it was the only thing that would save the day.
While Senator Obama was obviously wrong about the bank bailout which he voted for, President Obama is most certainly right about his stimulus package that must be passed now or else, because if you don’t believe in Obama Hope, you’re a terrorist.
Where’s the money supposed to come from?