Cavalorn ([info]cavalorn) wrote,
@ 2008-09-29 19:08:00
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wait
Did I dream it, or did the US just say 'no'?

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For now
[info]mr_rubix
2008-09-29 06:10 pm UTC (link)
Sadly the folks who said "yes" are the same ones who decide when Congress adjourns. So expect to see another bill voted on in a day or two.

But, for today, we said no.

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Re: For now
[info]paulrhume
2008-09-29 07:13 pm UTC (link)
According to John Boehner, Congress has left the building. Barring some extraordinary parliamentary process, they are out until after the election.

(Hmmm - image of Congressional deputy sergeants-at-arms chasing Reps and Senators all over their respective districts and states to arrest them for flouting a quorum call and compel their presence on the floor of their respective chambers. This could be one of the hotter reality shows. "Dog - The Quorum Hunter")

So if we go into a depression by November, the vote-againsts may be crucified at the polls. If not, the yeas might be the goats.

Always wondered if we'd be watching the breadlines on broadcast TV, live webcams, etc.

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I've watched for the report
[info]mr_rubix
2008-09-29 07:18 pm UTC (link)
There was a motion to reconsider on the table - so far as I can find online, outside of personal statements, there is no mention of official adjournment of the sitting Congress yet. But I am open to the notion that I simply missed the notice or that it could happen at any moment.

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Re: For now
[info]hikari_neko
2008-09-29 07:20 pm UTC (link)
Didn't that happen in some state once?

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Re: For now
[info]paulrhume
2008-09-29 07:31 pm UTC (link)
I don't know - but it would be better on C-Span. C-Span might even get ratings for once!

If they are still in session of course, a motion to reconsider would be in order, but more boring. So at least one No vote had to be willing to move to reconsider, unless Congress changed that rule for reconsideration (only a member of the winning side in the previous vote can so move).

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Re: For now
[info]brock_tn
2008-09-29 08:13 pm UTC (link)
The Democratic delegation in Texas beat feet over the state line on two occasions a few years ago, once to Oklahoma, and once to New Mexico. In both cases the intent was to deprive the Republicans of a quorum.

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Re: For now
[info]hikari_neko
2008-09-30 04:47 am UTC (link)

I think that's what I'm thinking of - didn't they go to some hotel just over the border in the OK case? And there was something about sending someone to bring them back who didn't actually have the power to do anything outside of TX...

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[info]oxfordgirl
2008-09-29 06:17 pm UTC (link)
fuck me. If you dreamed it, so did I.

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[info]etcet
2008-09-29 06:23 pm UTC (link)
so it would seem.

lotta folks just remembered that there is a referendum on their continued employment in five weeks, and most of their employers are not too keen on the bailout.

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[info]sjo
2008-09-29 06:30 pm UTC (link)
Holy crap!

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[info]deviblue
2008-09-29 06:43 pm UTC (link)
yes they just said no....and even after the vote they were hanging on trying to pursuade them to change thier minds.

might just be me, but isn't that kind of against the point of a free vote

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[info]rapier1
2008-09-29 06:56 pm UTC (link)
yeah. we're likely fucked. by we I mean everyone. welcome to the global village goat fuck.

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[info]aidan_skinner
2008-09-29 06:58 pm UTC (link)
No, this is a good thing. The deal on the table was abysmal, but better than Paulson Sack Lick v1. Whatever they come up with has got to be better, and might even use grown up language.

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[info]rapier1
2008-09-29 09:29 pm UTC (link)
Explain. Especially how any follow on bill will address liquidity concerns.

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[info]faux_pseudo
2008-09-29 10:35 pm UTC (link)
The vast number of those that voted NO were freaked by the idea that the calls into their offices were 20 to 1 against the bill. America doesn't want to bail out the banks, they want to keep their houses. We a need bottom up not top down fix.

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[info]rapier1
2008-09-30 02:22 am UTC (link)
The vast number of Americans, are fucking idiots. Of course, this is a universal condition shared by all mankind but it does explain why I'm always skeptical of anything the majority think is a good idea. I read the full text of the bill (it was 107 pages but there were only 26 lines a page with wide margins so it wasn't very much). There were provisions in there to unbundle the mortgages and restructure the mortgage debt to the advantage of the homeowners.

"(a) RESIDENTIAL MORTGAGE LOAN SERVICING
STANDARDS.—To the extent that the Secretary acquires
3 mortgages, mortgage backed securities, and other assets
4 secured by residential real estate, including multifamily
5 housing, the Secretary shall implement a plan that seeks
6 to maximize assistance for homeowners and use the au-
7 thority of the Secretary to encourage the servicers of the
8 underlying mortgages, considering net present value to the
9 taxpayer, to take advantage of the HOPE for Home-
10 owners Program under section 257 of the National Hous-
11 ing Act or other available programs to minimize fore-
12 closures. In addition, the Secretary may use loan guaran-
13 tees and credit enhancements to facilitate loan modifica-
14 tions to prevent avoidable foreclosures."

There is the bottom up fix. However, to implement that fix they first have to purchase the instruments that contain those loans. That was what the money was for. If it had worked out well the value of these mortgages would have actually increased leaving the tax payer with a profit at the end of the bill.

Everybody looked at this as a "bailout for wall street" but in the long run it was actually a bailout for home owners.

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[info]mochi_tsuki
2008-09-30 12:11 pm UTC (link)
Nope. That's not a bottom up fix, it's waffly language that would allow the Treasury Secretary to do jack.

The only requirements there are to "implement a plan that seeks to maximize assistance for homeowners" and "encourage the servicers ... to take advantage of the HOPE" program.

The first is vague beyond description. Neither the plan nor the implementation are required to actually do anything, just to "seek" to do it. It would be ridiculously easy to come up with a plan that fulfills the letter of the law but accomplishes nothing. The second is meaningless, feel-good dribble.

There was a proposal to put in meaningful mortgage reform by empowering bankruptcy judges to alter the terms of mortgages, but the repubs shut it down. What was in the bill was a bunch of face-saving twaddle that allowed the dems to claim some kind of accomplishment without actually granting anything meaningful.

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[info]aidan_skinner
2008-09-29 11:31 pm UTC (link)
V1 was basically "We will take all that nasty stuff off your hands for a decent bit more than you've been getting on the open market for it". Many prominent economists were bitterly opposed to this idea. It would create immense incentive for the banks to jack up the prices of the Mortgage Backed Securities beyond their current (admittedly fire-sale) level. It would leave the tax payer holding a possibly dead, possibly filled with explosive, baby. It would create an expectation in the financial industry that if they felt sad, the government would cheer them up with a giant sack of money.

The one that was voted down was somewhat better, but lacked specificity. It needs to be clearer about how the instruments are to be purchased, which CEOs compensation is to be limited etc. It was hopelessly vague. Warren Buffet's intervention in the market was not vague, it was conducted on standard business terms. He gave Goldman Sachs lots of money, in return he got high quality shares. The US government was offering vastly more money, and needs to drive a vastly more hard headed bargain. Paul Krugmen has good analysis here and here.

What should happen is this: preferential stock in weakened, but not terminal, banks should be purchased, recapitalising the banking system; the Federally owned mortgage companies should facilitate renegotiations of home owners who are on bad deals to allow them to continue to service their debts, making junk mortgages functional again; some banks need to fail due to their mistakes. This would take a while to play out, but there are no quick solutions, and this addresses the fundamental issues.

Yes, Wall Street is on fire. The current solution is, however, like pouring water on a fire in an electrical substation. It seems like a good idea at the time, the flames go out but it makes things much, much worse. You really want to take the time to go get a pile of sand. Really.

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[info]rapier1
2008-09-30 02:27 am UTC (link)
I agree that more specificity would have been good. However, I don't think the banks would have jacked up the prices on the instruments either - especially being that the purchasing would have been as a reverse auction. Obviously the banks would have sought to maximize their sale price but at the same time, in a reverse auction there would have been strong incentive not over value the price or end up being left holding these assets.

Personally, I'd rather wait 6 months and take the time to lovingly craft the perfect bill. I don't think we have that time though. Business lines of credit are already being restricted and thats going to have an immediate impact on people's jobs, ability to pay mortgages, and help sustain the economy as a whole.

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[info]aidan_skinner
2008-09-30 09:08 pm UTC (link)
The reverse auction is a good mechanism for acquiring them, but I don't see how it allows the 'hold-to-term' value to be assessed, which was the stated goal. I'm not clear on how it will do other anything than land the government with however much it wants to buy at a price either equivalent too or slightly above the prevailing market rate (which should rise a bit due to the increase in demand but there's so much of the stuff that I doubt it will have a major impact).

I don't think there's a lot of time either, and getting a perfect bill is clearly not going to happen with the electoral cycle either. I do think that taking a few days to get a better bill is the right result, and I think it's fortuitous that Rosh Hashanah is giving them an enforced break. The markets seem to be responding relatively well too.

The impact on business lines of credit is unfortunate. It certainly is going to have a negative effect. I do not, however, think that any descendent of this bill is going to help in the short to medium term. There is going to be a profound slowing of the American and British economies while this lubeless clusterfuck is sorted out. Time to go back to missionary for a while.

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[info]aidan_skinner
2008-09-29 06:59 pm UTC (link)
They're lips said no. I think the Treasury dept and the banks will look into Congress's eyes and see that they meant yes though.

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[info]hikari_neko
2008-09-29 07:19 pm UTC (link)
So it would seem. It was even his own party.

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[info]ihcoyc
2008-09-29 07:31 pm UTC (link)
I am amused by this. The hardest right of the Republicans were the biggest critics of the bail-out. They were pushing instead for some kind of "free market" plan that involved buying insurance against defaults on bad debts.

In other words, while piffling on about "free markets", the Republicans will send the financial markets into free-fall. Eventually everybody will notice the fallout from this. And their ideological blinkers will be exposed as the cause.

I personally think that a good stiff depression right now would be good for the nation's moral and political fiber.

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[info]ashbet
2008-09-29 07:53 pm UTC (link)
You have no idea how happy I am that I don't own stock right now. (I have about $4K in a retirement fund, but since I can't touch it until I'm 55, I'm not overly concerned about it at the moment.)

I'm ALSO glad that I have that extra travel voucher -- I don't want to think about how much it's going to cost to fly in the near future.

But, yeah. Very uncertain times right now.

-- A :/

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[info]brock_tn
2008-09-29 08:16 pm UTC (link)
I'm 53, and expect to continue to work for another ten or 15 years. Fortunately, only about 25% of my retirement planning is wrapped around the stock market. Although, for some savvy fund managers, this would be a good time to look at buying certain stocks...

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[info]kellydamnit
2008-09-30 12:33 am UTC (link)
I lost a quarter of my 401K so far from this mess. I HAD about 4K at the end of August.
I shuffled it all into bonds, if I hadn't it would be down to nothing by Christmas.
It will recover, sure, but that may be in five, ten, fifteen years. And I don't want my savings to dwindle down to ten dollars in the meantime.

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[info]individuation
2008-09-29 07:57 pm UTC (link)
Partisan politics.. that's all.

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[info]webcowgirl
2008-09-29 08:23 pm UTC (link)
So what do you think about that?

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[info]cavalorn
2008-09-29 10:15 pm UTC (link)
The only metaphors I can come up with right now involve hangovers and being sick. I'll put something more coherent and less disgusting together in the morning.

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[info]kilinrax
2008-09-30 12:51 pm UTC (link)
If they'd said yes, all the money would have ended up in energy/metals/food futures (those being the only assets with any real potential for growth), so I very much doubt it would prop up anything except hyperinflation.

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[info]michaleen
2008-09-30 02:47 pm UTC (link)
They - meaning the bat-shit-crazy wing of the House Republican caucus - said "no", but rumor has it their intent was not necessarily to kill the bailout.

Best-case scenario for the Republicans was for the bill to pass by a vote or two, with the overwhelming majority of those votes being cast by Democrats. That way the former could paint themselves as populists and blame a relatively unpopular plan on their opponents in the upcoming election.

Worst-case was basically what happened yesterday. The Dow-Jones Industrial Average plummeted 780 pts as a result of the Republican gamble. Instead of falling for the ploy, the Democratic leadership rather uncharacteristically refused to allow this political albatross to be fastened around their collective necks. They'd been warned, but the Republicans understandably assumed that the Dems were bluffing.

The reality, of course, is that the TARP, even in its modified form, was barely acceptable, like administering a placebo to a patient with massive arterial hemorrahaging.

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