Harry’s Place

One of our Republican lunatics in the House of Representatives.
http://www.cbsnews.com/stories/2008/09/29/politics/politico/thecrypt/main4485790.shtml
(The Politico) Rep. Thaddeus McCotter (R-Mich.), a vocal opponent of the Wall Street bailout bill, just gave a rambling speech outlining his reasons for voting against the legislation.

McCotter referred to President Andrew Jackson and the battle over the Bank of the United States, Fyodor Dosteovsky and “The Brothers Karamazov,” and finally, Lenin and the 1917 Russian Revolution.

McCotter’s point was that the bailout was an infringement on the freedom of individual Americans and a threat to majority rule in the United States, although his reasoning was somewhat hard to follow. But it sure was quotable.

“In the Bolshevik Revolution, the slogan was ‘Peace, land, and bread,’” McCotter said. “Today, you are being to choose between bread and freedom. I suggest the people on Main Street have said they prefer their freedom, and I am with them.”

Christ, they as bad as UK far leftists for harking back to times gone by.

Nobody knows what the fuck is going to happen where most political decisions are concerned. They still have to be taken, though. In essence, the US political system has taken an enormous bet on a particular ideology of capitalism that says that the market must be allowed to do its work of ‘creative destruction’ and that something stronger and better will rise from the rubble. There’s something in this - if weak, arrogant and damaged financial institutions go to the wall, the system should ultimately benefit. But does the short and medium term chaos, misery and suffering (because that’s what there will be if this package isn’t ultimately passed) justify this approach? Not to me.

So, is this a sting by McCain allies to put him in the fore to broker a deal?

You couldn’t have a worse time to try to get a deal with everyone up for election in a few weeks.

If the US government doesn’t come in and buy these bad debts, foreign governments will make the most of these cheap prices and use their national sovereign funds to buy up most of wall street.

It’s better that the American government owns stocks than places like China and Saudi Arabia. That’s how the people trying to sell the deal should frame it.

Alec.
McCain made a speech in Ohio, an hour before the vote, trumpeting his role in finding a solution.

It would only have led to the Servile State, anyways.

And with regard to Britain, Andreas Whittam Smith is absolutely right.

Lots of stock market chartists say whatever happens we are in a bear market and this is the third leg down from the highs last year. They say we will eventually get down to 8700 on the Dow - which is another 2000 points even after today’s 600 point sell off.

So has it back-fired on him and did Obama, for once, watch his words, Tim?

I need HP to tell me what to think.

A lethal brew of ideological freemarketeers and some who did not want to reward Wall street’s particular irresponsibility.

It was a tough gulp but some sort of buy-in / bail-out was in order. The problem may be that today’s House vote may be the closest we get to a bill that might pass. Any further amendment would likely lose votes on one side or the other.

Wow, selling has been allowed after the close and the markets have gone down another 200 points.

The futures are down 600 points, which is started from 9pm UK time, so that means tomorrow’s market is already down 400 points.

On the Demutualisation - a good friend of the family, who used to be one of the heads of Norwich Union back when the Tories allowed demutualisation, said that we should not vote for demutualisation as it was a con. The shareholders took a bribe to give up both control over the board of the society AND to give up far more valuable future revenues.

The problem with the bailout was that the proposal was created by sheer panic in the US Treasury (they plucked the number out of the air during a Forbes interview) and that there was no indication that it would actually help the US banking system.
The chief culprit is Fanny Mae, Freddie Mac. Those two institutions should be dismantled and a regulatory framework put in place to govern mortages. The trouble with FM/FM’s accounts and executive leadership became apparent four years ago. You can find a video of the congressional hearing on this subject from 2004 and listen to all the Democrats attacking the questions about FM/FM and Franklin Raines as a political witchhunt.

The barking Left and the barking Right - save us from both (and the cadaverous Peloski’s one of the former).

That futures number is wrong since after the bell selling has screwed up the futures trading. I think it’s flat.

Where there is heavy trading near closing it can take up to 10 minutes to record all trades. I don’t believe there are trades actually conducted after the bell.

When it comes to blame for all this it has to be said a large % of the population have benefited over the last 10-15 years from BS demutualisations and rising house prices. The greed wasn’t just with the bankers.

What is most astonishing is that its become apparent we’ve all fallen again for the old asset price boom and bust scenario. A student of human psychology is probably as much use now in analysing the disaster as an economist.

Sarah Palin statement on Capitalism

The capitalism will end when I go to Washington.
No one shall be discriminated against because they don’t live in the capital.

BTW has anyone been following the Irish stock market. If you thought the UK was in a bad way …..

http://news.bbc.co.uk/1/hi/northern_ireland/7642979.stm

“As of Monday, the index had lost 72% of its value since reaching its record high of 11,815 17 months ago. “

Unless there is good news overnight, I’ll guess the selling will continue tomorrow.
Dow 7500 anyone ?

Tim, she’s so dim I could almost fancy her.

Ha ha, is that quote for real?

Richard, I couldn’t find the video. Could you help out with a link?

Neil.
Its not for real, I drank lots of Old Speckled Hen while watching the news and morphed into Palin interview speak.

Market crashes nearly always happen in October. Black Monday, the crash of 1997, the Wall St Crash of 1929 - every one in October. I think four of the five biggest single-day market falls have been in October and the fifth in November. So the worst could et be to come…..

Laughably McCains camp were trying to claim credit for a deal.

The Wall Street Journal is laughing at him (and Steve Schmidt)

http://blogs.wsj.com/washwire/2008/09/29/mccain-blames-obama-and-democrats-despite-lopsided-vote/

The Democrats have a majority in Congress; in order for this bill to fail, some of them must have voted against it. So why is everyone talking exclusively about Republican sabotage?

http://www.politico.com/news/stories/0908/14088.html

Leadership.Experience.Maverick.Stupid Twat.

SimonH,

always at the end of a decade as well.

Colin -

I used to read your blog. Where did you go ? ?

What happened was that the legislation was requested by the Executive branch. Didn’t commence in Congress. The President couldn’t get his party behind him. To the extent that the Dem leadership supported the final bill, it’s their failure too. The three page proposal from Paulson would have been overwhelmingly voted down by the House Dems.

That quote from Tim had the same degree of veracity as everything else he has posted here of late.

(Old Speckled Hen? Hmm. One advantage of living in a neighbourhood largely populrated by Southern Europeans - and with palm trees along the main street that slopes down to the shore - is that one can get good red wine of various kinds for very reasonable prices around here)

I don’t understand what the hell is going on in Congress

Although - it would be quite wrong for someone baptised “Thaddeus” NOT to start ranting about socialist antheaps and quoting the great Fyodor Mikhailovich. Tomorrow- the gaderine swine episode referenced in “Becy” (The Devils/The Possessed, depending on the translation) - I’m still mystified as to why David T thinks that is “one of the moments of vicious cruelty in the new testament” or whatever he misdescribed it as

Chris Mathews cites McCain’s leadership failure.
http://www.crooksandliars.com/2008/09/29/chris-matthews-bailout-failed-because-mccains-leadership-failed/

Oh, I’m loving seeing Ven having to defend Palin. This is going to get very very funny indeed.

listening to US talk new programmes it seems clear that they are still just waiting to fall in line, once a deal is done

sure they’ll moan and bitch a bit, and many politicians are playing to the gallery, providing themselves with some coverage against attacks but they’ll rally behind it, once the ink is dry.

Venichka: ‘I don’t understand what the hell is going on in Congress.’

I don’t think even congressmen understand what is going on in Congress!

On a related note, it might be worth discussing Andreas Whittam Smith’s final point a bit more:

‘Providing mortgages to homebuyers is a simple business. It is not an activity that requires whizz kids. It is akin to a public utility. It is best done by traditional building societies and that is where the whole activity should eventually end up.’

As Whittam Smith notes in his article, building societies which have maintained their mutual status seem (at the moment) relatively safe - demutualised building societies, along with other financial institutions over-exposed to the capital markets, have been walloped.

If people are looking for alternative financial models, than maybe building societies are it. Owned by the members and broadly run for their benefit and doing a good job or providing basic financial services (principally savings and loans). Maybe that’s what we’re returning to.

Distributism!

…would be a start

Well to be fair Ven’s understanding of economics and US politics is about that of Sarah Palin’s.

Meanwhile Congress has just voted to cut off its nose to spite its face. As for the Democrats and Republicans who voted against it, some of them are flat-earthers (and some of them don’t care what everyone suffers, just so long as the bankers suffer too), some of them are just holding out for a little inducement (behaviour which is so utterly contemptible under the circumstances that we need not say more) and some, I hope, are trying to strengthen the terms of the package in terms of getting more equity and safeguards from the bankers.

The demutalisation certainly plays a part in Britain’s woes. As does the fact that plenty of people were happy to rack up massive debts to buy stuff and were willing to take on massively inflated mortgages to buy enormously overpriced properties (especially the buy-to-let crowd). In other words, the whole thing is caused by avarice and stupidity – and the public is not wholly blameless in all this.

Of course, none of this excuses the financial institutions that lent the money to the public to do this, nor the government that oversaw this orgy of greed and irresponsibility.

The Democrats have a majority in Congress; in order for this bill to fail, some of them must have voted against it. So why is everyone talking exclusively about Republican sabotage?

40% of Democrats did not vote Aye.

Rep John Culberson (R-Texas) - “Bill Unaffordable”

Rep Sheila Jackson Lee (D-Texas) - “Unbridled power to Treasury Sec. Paulson, little for Main Street, little enforceability”

From Interview by Davis Gregory - MSNBC

David Gregory

Although international forces are obviously creating the current downturn, the pace of economic decline is entirely due to the policies pursued by Gordon Brown. Unless he comes up with some miracle over the next year, it is likely Labour will be out of power for at least a decade if not a generation. In the future, people will associate the current crisis with Labour in the same way as the Winter of Discontent hung over the party in the 1980s. There are two words that sum up the Labour governments since 1997: missed opportunities.

Rescuing banks from their own self-inflicted problems is not socialism, it is crisis management. This isn’t the time for ideological dogma. Hundreds of millions of people across the world will suffer terribly if the Americans do not restore confidence to the banking system very quickly. If free market fundamentalists can’t understand this, then they have been reading too much Ayn Rand and are not living in the real world.

Clinton Labor Secretary Robert Reich - Deep recession through next year. Bail-out or no bail-out. Emails to Congress, 20, 30 to 1 against bail-out.

World confidence in the dollar will plummet without buy-in / bail-out.

Oh - Reich says there won’t be financial Armageddon

That figure (40%) was taken from BBC News, though by my calculations 32% of Democrats voted against, with zero abstentions.

http://projects.washingtonpost.com/congress/110/house/2/votes/674/

60% of Democrats voted for it.

75% of Republicans voted against and then blamed Nancy Pelosi for being mean and partisan.

What is clear is that the Majority of Congressmen would be unable to describe Capitalism as anything other than the American way.

This reduction of Economic intelligence to radical free market literalism parallels Christian conservatism and its increasing millenarianism.

For the source of this ideological fanaticism that would make an experiment of Americas future we shouldn’t look to socialism but the Christian Right and the ascendancy of the political influence of Dominionism and end times theology.

Not only will the rapture bring peace and justice on earth but it will be a free market paradise too.

Oh well the Apocalypse will be tough but the Market will correct itself afterwards.

Well I guess you would have to have an unshakeable faith in something supernatural to consider that divination can replace reasoned economic pragmatism.

The far right and far left share a fanatical life hating eschatology the crypto-religious nature of which (bereft of reason) is revealed by the convergence of each with Christian Conservativism and Islamism.

Then the Apocalyptos will be happy, such types haven’t been at the centre of events for a thousand years or so.

Its not cowardice and, stupidity, spite and partisanship that is to blame (though there is plenty enough of that), its delusional madness.

I was doing some research today for an article I am writing and came across the following, by chance in a book published in 1850:

:”the park and mansion house of Esher, which had been separated from the manor were disposed of to Peter de la Porte one of the directors of the South sea company. He possessed it only for a few years. for on the breaking of that splendid bubble, the estates of the principle directors were seized and sold under an Act for the benefit of those owners of South sea stock who had been deprived of their property by the nefarious practices of the general board. ”

If only……

should read ‘majority of conservative congressman’

Indeed Mrs Ben, the London borough of Islington was largely built on the credit generated by that little bubble.

When it burst the housing Market collapsed so those grand town houses were divvied up into rooming houses for the lower middle classes.

Many of them did not become grand single homes again, until hippies moved in, in the 70s, and gentrified them.

Now I have never subscribed to the idea of capitalism as anything other than a designed system, and not one created or intelligently designed by God.

It has been a puzzle to me though, for the last two decades or so, that those economists who have insisted that economics is a rigorous positivist science and that it is, therefore, subject to laws of nature, should have engaged in such hubris to have imagined that their lifetimes should witness the easy transcendence of such previously binding laws, as boom and bust.

It’s not really about socialism. Bush Junior’s fiscal record could be described as recklessly Keynesian. Keynes was a liberal, not a socialist. Whether Bush understood this, I wouldn’t know but this is what the record shows. Apart from this, under Bush we’ve seen a huge increase in spending - on education and particularly health care. The increase in spending on Medicare, for example, represents the largest expansion of any federal programme since the New Deal. But it has been reckless because it has been combined with tax-cuts - a mixture that has led to the fastest fiscal deterioration in American economic history.

Clinton, on the other hand, was much more monetarist. Apart from his fixation with reducing the deficit - he also abolished one of the major planks of the New Deal, which was federal responsibility for the welfare of able-bodied families with dependent children.

But why talk about this when we can bang on about really important stuff to do with culture wars - creationism, Sarah Palin, what church Obama goes to, who’s afraid of the big bad wolf - shit like that?

In the short term the vote this evening will create a wave of misery for ordinary people: bankers, as always, will emerge laughing.

In the long term, the brave (mostly Republican) congresspeople who voted again the proposed resolution, prevented US economy to be nationalised-in-part by the US government. Instead, it will be nationalised (in much greater part) by the Chinese government. Turkeys have voted for Thanksgiving, followed by Christmas.

Shuggy, bit of a moronic point at the end there. No not just the criticism of Clinton’s successful welfare to work programme (Obama says his opposition to this programme at the time was his biggest mistake in politics, since it turned out to get a lot of African Americans back to work), but the swipe at HP for not covering the big topics.

This whole bailout/crash thing is the subject of the post and is one of the biggest issues of our time, dumb nuts.

I don’t think Senate majority leader Harry Reid had any intentions of resolving this matter before wednesday anyways. They’re much more deliberative in the Senate, bunch o’ long-winded gasbags that they are.

If the US government doesn’t come in and buy these bad debts, foreign governments will make the most of these cheap prices and use their national sovereign funds to buy up most of wall street.

Or maybe the US should use the money to set up its own sovereign wealth fund which it would then use to buy up profitable companies abroad.

The bailout was an attempt to steal the most money ever.

save us from both (and the cadaverous Peloski’s one of the former).

She could be president by January or February. All it would take is for McCain to do a long acceptance speech in the rain then die of pneumonia, and for Sarah Palin to freak out and, er…abdicate.

robertus, i haven’t seen you post here before. Been reading this blog for long?

As an American citizen, I’m very happy the Billionaire Bailout Bill failed.

I don’t see why I, as a responsible citizen, should have the government borrow $700 billion against my assets to hand over to the moron speculators who undermined their institutions.

Those guys weren’t dividing up the profits and sending me a check — where do they get off demanding a bailout now?

The banks that made poor lending decisions will collapse. The great debt-bubble society of people living beyond their means in the US, Canada, Australia, and most of Europe will collapse. And hopefully, the profligate will learn a lesson that they won’t soon forget.

The bill takes out CEO’s golden parachutes, excessive pay, and it will save the credit markets for the little guy who can’t feed his kids.

Mike Savage is ranting on about how he and he alone, with the might of the US public stopped this proposal (whilst taking a poke at Hannity, Limbaugh and O’Reilly), last I heard Savage was muttering about Communists, with his assistant wiping the foam from his mouth

what a noble society the US is

no where else in the world would someone as completely derange as Savage ever get such a very well paid job, still less be allowed near a microphone, that shows true patience and charity

still if Savage wasn’t such a shit stirrer on other issues then it would almost be funny?

If Frank denied the claims, they must be true.

And what happened to the Democrat House majority, anyway?

What Frankie Five Angels is doing here is damage limitation. Pelosi KNOWS she fucked up big time. It’s not a case of them thinking “how can we mess up the country”, it’s probably a case of “well if she can’t show a shred of non-partisan humility, why should we?”. Pelosi’s political Tourettes, pissed off the Republicans, but this time she realises it.

“Socialist” plan? As if “socialist” were a dirty word. It was unalloyed free market capitalists that helped get the US into this mess, by refusing to regulate the mortgage industry.

no where else in the world would someone as completely derange as Savage ever get such a very well paid job, still less be allowed near a microphone

George Galloway?

uptight, please give us the name of even one Republican who voted against the bill because of Pelosi’s speech.

It was unalloyed free market capitalists that helped get the US into this mess, by refusing to regulate the mortgage industry.

Nonsense. It was government guarantees over most of the mortgage industry that got the US into this mess.

Had bad mortgage losses been passed on directly to banks themselves, rather than on to Fannie and Freddie, most of the bad mortgages in question never would have been made.

However, since the government provided a guarantee if the mortgage payments stopped rolling in, why not lend $800,000 to a guy making $12,500 a year?

It also didn’t help that the government decided to facilitate crap mortgages through Fannie and Freddie in order to “make home ownership more affordable.” All we got instead was a massive housing bubble and lots of dumb borrowers who borrowed way beyond their means to buy at bubble prices.

And those of us who were responsible and sat on the sidelines are being told we’re naughty naughty bad bad for not wanting to fund the bailout out of our shrunken incomes and depreciating savings.

Party politics is meaningless in this dispute, my Britannic friends.

Take a look at which politicians have received large campaign contributions from banks and financial institutions.

Cross-reference it with support for the bill.

Now look at those who have received little or no Wall Street money.

Whoa, matey! Isn’t that neat?

Bonus points — take a look at the 40 largest contributors to Obama and McCain. Both of those candidates are also owned and paid for by Wall Street.

Hence all the “bipartisan” support for this “stimulus bill.”

Those guys weren’t dividing up the profits and sending me a check — where do they get off demanding a bailout now?… The banks that made poor lending decisions will collapse.

Because if your employer (or your own business) banks with them it means no more pay cheques for you if they collapse. And that’ll have a knock-on effect for goodness knows how many other businesses, many of which may be owned by or run by responsible citizens.

But if you end up sleeping in a cardboard box, I’ve no doubt you’ll be glad to do so because it taught the profligate billionaires who are now just millionaires a lesson.

Because if your employer (or your own business) banks with them it means no more pay cheques for you if they collapse.

I don’t work for stupid employers, and my savings are already insured by both the FDIC and Liberty Mutual.

if you end up sleeping in a cardboard box, I’ve no doubt you’ll be glad to do so because it taught the profligate billionaires who are now just millionaires a lesson

Ironically, I’ve seen no explanation of how the government borrowing $700 billion to give to bankers will somehow prevent that threatened meltdown anyway.

In fact, most of the economists who don’t live in Manhattan point out that the credit lockup isn’t due to a lack of liquidity, but rather the simple truth that most people are already overleveraged. They’re not credit-worthy.

So all your bill is going to do is accelerate my trip to the cardboard box that much faster, by taking more of my income before everything crashes anyway.

Of course, we’ve been in a credit lockup for a year without such dire threatened consequences, and I’m employed. And my bank and employer were both responsible and didn’t make dumb loans, and lo and behold, they’re doing very well.

So you’ll excuse me for rejecting “oh my god we’re gonna DIE” statements — especially from the same crew who has used this argument repeatedly over the last six years from Iraq to Afghanistan to the Patriot Act.

Mike Sewage gets radio time because people buy the products advertised on his show.

Savage has almost no reach. I’m confused by the constant references to him.

That Barney Frank clip is a corker!

Thank you Gene.

In fact, most of the economists who don’t live in Manhattan point out that the credit lockup isn’t due to a lack of liquidity, but rather the simple truth that most people are already overleveraged. They’re not credit-worthy.

But Brian, I have good credit. I’m not over-leveraged unless I lose my job. Then me and my creditors are fucked. Wouldn’t it make sense to keep me working?

How does $700 billion in borrowed federal money distributed to a handful of banks keep you working?

D’oh, forgot about that little wrinkle eh? ;)

This bill would “save jobs” like fish paste cures cancer.

10:20 pm EDT
Nikkei is down 4.63%
Hang Seng is down 4.8%

So you agree that it is borrowed, and not given Brian? I’ve been in a pinch where I had to borrow money. Haven’t you?

You still haven’t explained how the feds borrowing money to give to banks is going to magically fix an economy teetering due to overborrowing.

And no, I’ve never been in a situation where I’ve needed to “borrow” $700 billion.

Incidentally, the money is borrowed by the feds, but HANDED to the banks in question, who owe no debt.

The losses on the “securities” purchased by the government are passed on to taxpayers, who get to pay much higher taxes to carry the hundreds of billions of dollars in additional debt — as well as higher taxes to pay on the principle.

Responsible Americans also get to see further erosion in the value of the dollar — and our savings — while the fat cats who bet it all and lost remain comfortable and happy thanks to Washington largesse.

I still don’t see how that “helps” the economy, especially when the debt “crisis” is due to overleveraged consumers walking away from their obligations.

More debt to solve a crisis caused by debt is like giving a crack cocaine addict more crack in the hopes that he’ll eventually “settle down.” It kills the patient.

I just had a funny thought. Wouldn’t it be delicious if the government put in all those fucked up disclaimers that credit card companies put in their cardholder agreements? You know: “We reserve the right to change the agreement at any time” etc.

Why would they do that? Wall Street’s campaign donations bought them a compliant and docile group of patsies in Congress.

Hell, Hank Paulson, the primary architect of the bailout, is former CEO of Goldman Sachs, the investment bank that was largely responsible for the financial crisis in the first place!

Talk about failing upwards…

The way I understand it is, they fucked up. They have to pay back every fucking penny they borrow from the government (you and me) with interest.

Is there a problem with this?

The US should wake up to what it looks like from the outside. It’s crony capitalism and corruption has succeeded in helping screw up the entire global financial system, as it prepares to fight more wars financed by debt. Meanwhile wages stagnate, infrastructure crumbles, and inequality rockets. I fathom the ‘American dream’ has turned into an American nightmare for many.

Brian Miller:
Nonsense. It was government guarantees over most of the mortgage industry that got the US into this mess.
Had bad mortgage losses been passed on directly to banks themselves, rather than on to Fannie and Freddie, most of the bad mortgages in question never would have been made.
However, since the government provided a guarantee if the mortgage payments stopped rolling in, why not lend $800,000 to a guy making $12,500 a year?
It also didn’t help that the government decided to facilitate crap mortgages through Fannie and Freddie in order to “make home ownership more affordable.” All we got instead was a massive housing bubble and lots of dumb borrowers who borrowed way beyond their means to buy at bubble prices.

The problem with this theory is that the British mortgage market has been doing exactly the same thing for 15 years - allowing people to borrow way beyond their means, actively fuelling a massive housing bubble - but without anything along the lines of the FMs, or any reason to think that it wouldn’t have to shoulder the losses if those mortgages went bad. So I think it’s safe to say that the FMs are not the cause of this market “correction” - they’re just another casualty.

I know who is behind this vote: Newt Gingrich.

The way I understand it is, they fucked up. They have to pay back every fucking penny they borrow from the government (you and me) with interest.

That is incorrect.

Under the plan, the government borrows the money. Then it uses the money, under the sole discretion of the Treasury Secretary, to purchase crap mortgage collateral at face value.

Most of that crap collateral is only worth 20 cents on the dollar, but the government would use it to buy it for the full dollar.

The banks thus shift the crap off their books and get cash. The presumption is that they’d then turn around and lend this cash out and all will be well, but that’s far from certain.

Taxpayers absorb the losses, and the banks get to pay out big bonuses as the losses from writedowns on the bad loans cease due to the government stepping in and buying the mortgages.

Meanwhile, you and I get to pay the higher taxes that come from the borrowing and the big losses, which are shifted to the government.

The US should wake up to what it looks like from the outside. It’s crony capitalism and corruption has succeeded in helping screw up the entire global financial system

You seem to be under the blissful illusion that the UK is insulated or somehow different.

It’s quite bad here, but it’s even worse over in Merry Olde England, where one in three jobs is in “financial services” rather than productive activity, and the property bubble and resulting mortgage funny business makes the activities at Washington Mutual, Wachovia, and IndyMac look like sound accounting.

The bust and collapse will be far more painful in most of Europe than in the United States, due to the overreliance on government employment in the Old World and the much greater appreciation in real estate prices in most European cities.

the British mortgage market has been doing exactly the same thing for 15 years - allowing people to borrow way beyond their means, actively fuelling a massive housing bubble - but without anything along the lines of the FMs, or any reason to think that it wouldn’t have to shoulder the losses if those mortgages went bad.

Two words: Northern Rock.

An implicit government guarantee is an implicit government guarantee. Whether it was through a vehicle called “Fannie Mae,” or through the fact that the government will not allow a major British bank to collapse, the result is the same.

The UK, where banking is far more centralized and less competitive, will not allow any of its major institutions to fail, and the big banks over there understand that thoroughly.

As the housing bust continues to claim more British financial institutions, those who don’t get sold off through government intervention (HBOS) will get bailed out through government intervention (Northern Rock). The big banks in Britain know the likelihood of a full shutdown being allowed due to their stupidity is next to nil.

Brian,

Let’s say the government takes no action. What do you see happening? Give me your best and worst case scenario.

Brian

That all relates to the fundamentals of the banking system itself. Money is not lent by banks but actually created through debt. The system revolves around debt. The fault lies not in government itself, but the very long collusion between private banking and government. A healthier system and more sustainable would be one which is not based on debt.

Let’s say the government takes no action. What do you see happening? Give me your best and worst case scenario.

I don’t think there is a best or worst case. I think they’re one and the same.

There will be a painful unwinding of a great deal of the “exotic” finance schemes popularized over the last 10 years or so. Exotic “AAA-rated securities” created out of sliced-and-diced subprime debt will fail to find a market and will disappear.

A great deal of the perceived credit worthiness of the US and EU will disappear as we’re unveiled to be deadbeat countries who borrow to spend and consume on an individual and societal level. That consumption, be it on wars, or new cars, or government welfare programs, will prove to be unsustainable.

Government employment will be sharply reduced, since the crunch in credit will make deficit spending untenable.

Credit will be harder to come by and more expensive. More people will rent, and those people will probably be financially better off for it. People who want to buy a house will need 20% down payment to get a mortgage, dramatically reducing the number of people in the market for a house, resulting in the next trend which is…

Housing prices will decline dramatically. In “bubble areas” like London, New York, and San Francisco, prices will plunge by over 50% from peak — up to 80% from peak in many areas. The result will be more affordable housing.

Unemployment in the US will spike for a while, to between 7% and 10%. Lots of “luxury” industries based on easy credit, such as high-end car dealerships, high end furniture stores, vacation resellers, etc. will downsize and/or go out of business.

When the smoke clears, banks that were prudent lenders will be able to pick over the best assets of dumb banks. We’re seeing this already with JP Morgan Chase’s acquisition of WaMu, and Citi’s acquisition of Wachovia.

Individuals who save their cash and don’t consume beyond their means will have exceptional opportunities to get great bargains on everything from housing to cars to lightly used furniture as profligate spenders desperately sell for whatever price they can get to raise cash.

Three or four years hence, people will view the Great Debt Bubble Economy with the same incredulity that they now view the Dot Com bubble. They’ll ask “what were we thinking?” and “how could people be so stupid?”

Fortunately, lots of innovation in the US economy is happening right now, and that provides plenty of fuel for economic growth when the pain ends. GM and Chrysler are world leaders in electric vehicles now, and that will create huge opportunities for US-manufactured products worldwide. Tech remains headquartered here and will continue to sell well across the world. And there’s plenty of potential around academia.

Wall Street will end up much smaller and much less influential than it was. The era of New York City as “the place to make it” will be over — a similar process will likely happen in London as well.

Beyond that, my crystal ball gets foggy. In a nutshell, we’re going to have a painful but ultimately healthy recession that cleanses out a system loaded with bad debt and overconsumption.

That all relates to the fundamentals of the banking system itself. Money is not lent by banks but actually created through debt. The system revolves around debt. The fault lies not in government itself, but the very long collusion between private banking and government. A healthier system and more sustainable would be one which is not based on debt.

Cannot argue with you there, although without inflationary economic policy and a debt-based “economy,” a great deal of the socialist central planning ethos of “New Labour” and the US Democratic and Republican parties will evaporate.

Inflation is one of the more insidious taxes used to fund big government. A system of stable money, sans inflation, with a big government apparatus supported by direct taxation, would lead to citizen revolt against a government taxing 60% or more of their incomes to pay for “services” of dubious value.

Well doing nothing may result in what you say, Brian, which will cause an enormous amount of pain to folk who do not deserve it - which is problematic in a democracy.

Meanwhile, the bankers (those in charge) will take yet more rich pickings and the whole cycle will start again.

You blame government for intervening in the cycle. However, the problem is not government itself, or welfare programmes and the like - its the collusion between private banking and government to simply create money based on debt. This is the root of the problem.

There are various solutions to this. They are, of course, revolutionary, and unlikely to happen; however, if you don’t change the banking system, exactly the same problems will happen again.

Government did indeed create the situation.

Government cannot solve a situation that it created, through pursuing the same things (debt, bailouts, corporate welfare) that landed us in the mess in the first place.

The economy is cyclical. Delaying economic corrections that are caused by excess does little other than prolong the pain and ensure that the downturn is both more severe and more painful.

We will have a recession. Recessions are natural and to be expected. The real question is — do we allow the correction now, or undertake a ridiculous and expensive government plan to forestall it for the benefit of a few and “enjoy” a depression later?

People who want to buy a house will need 20% down payment to get a mortgage, dramatically reducing the number of people in the market for a house, resulting in the next trend which is…

We were just talking about this yesterday at work. If you don’t have 20% down, then you ain’t buyin’! If you fork over 15, 20, 25 thousand of your own hard earned money, it puts your ass on the line, too.

This should be taught early on.

I really think Americans should stop this “shock horror” stuff about socialism, as if state handouts and subsidies were not deeply ingrained in the US system of capitalism. State support “un-american”? Pull the other one:

“Any subsidies eventually given to the monster banks of Wall Street will be as American as apple pie and obesity. The sums demanded may be unprecedented, but there is nothing new about the principle: corporate welfare is a consistent feature of advanced capitalism…

One of the best studies of corporate welfare in the US is published by my old enemies at the Cato Institute. Its report, by Stephen Slivinski, estimates that in 2006 the federal government spent $92bn subsidising business. Much of it went to major corporations such as Boeing, IBM and General Electric.

The biggest money crop - $21bn - is harvested by Big Farmer. Slivinski shows that the richest 10% of subsidised farmers took 66% of the payouts. Every few years, Congress or the administration promises to stop this swindle, then hands even more state money to agribusiness. The farm bill passed by Congress in May guarantees farmers a minimum of 90% of the income they’ve received over the past two years, which happen to be among the most profitable they’ve ever had. The middlemen do even better, especially the companies spreading starvation by turning maize into ethanol, which are guzzling billions of dollars’ worth of tax credits.

Slivinski shows how the federal government’s Advanced Technology Program, which was supposed to support the development of technologies that are “pre-competitive” or “high risk”, has instead been captured by big businesses flogging proven products. Since 1991, companies such as IBM, General Electric, Dow Chemical, Caterpillar, Ford, DuPont, General Motors, Chevron and Monsanto have extracted hundreds of millions from this programme….

The government runs something called the Foreign Military Financing programme, which gives money to other countries to purchase weaponry from US corporations. It doles out grants to airports for building runways and to fishing companies to help them wipe out endangered stocks….

Another report, by a group called Good Jobs First, reveals that Wal-Mart has received at least $1bn of public money. Over 90% of its distribution centres and many of its retail outlets have been subsidised by county and local governments. They give the chain free land, they pay for the roads, water and sewerage required to make that land usable, and they grant it property tax breaks and subsidies (called tax increment financing) originally intended to regenerate depressed communities. Sometimes state governments give the firm straight cash as well: in Virginia, for example, Wal-Mart’s distribution centres receive handouts from the Governor’s Opportunity Fund.” George Monbiot

Socialism is alive and well in the USA. Okay, a suppose a few traditionalists my quibble that its just going to the rich…

How the US ever made it this far without Benjamin’s guidance, I’ll never know. :D

Free market capitalism is like football without a referee.

Oh - WalMart, some of their employees make so little money, they qualify for Medicaid.

Brian Miller @ 4:42 am

That’s the bright side.

Wow. Wal-Mart employs 2,000,000 people. Better they’re on the dole, I suppose.

“Socialist” plan? As if “socialist” were a dirty word. It was unalloyed free market capitalists that helped get the US into this mess, by refusing to regulate the mortgage industry.

It’s not just that it wasn’t free market or that the government was subsidizing loans, the government was threatening (and actually punishing) companies that did not give out stupid loans to people it had good reason to think would not be able to pay them back. Republicans and Democrats competed to give out the most bad loans.

btw, quoting Barney frigging Frank on this is hilarious. I wouldn’t assign more than 3% of the blame to any individual, but Barney here is probably the person closest to that number.

Anyway, this was maybe the most cynically voted bill of my life. Of the 24 people who won’t be running for election in 5 weeks, 1 of them voted against it. They all traded their votes for people who need to vote against it. Almost everyone running for reelection in a close race voted against it.

Hoping, this is the end of a free-market - supply-side - monetarist era that began with USA’s Carter in 1977. Farewell Dubya’s “ownership society”.

On the other hand, I should be careful what I hope for.

Democrats Scupper Bill

Mad Witch Pelosi, who’s approval rating as congress leader is about 18%, and the Democrats scuppered this bill, There is absolutely no doubt.

Pelosi’s inaugral acceptance speech said she would reach across the floor in bi-partisanship. The calling together of both parties to get this bill passed was called a bi-partisan effort. But Pelosi played dirty politics.

She called tthe Republicans “unpatriotic” because they didn’t attend the meeting she held where she didn’t invite them anyway.

Then, just when she thought she had the bill in the bag, immediately before the vote, she pre-empted her victory with another vile partisan speech where she accused Republicans and Bush for the whole crisis over eight years. It was a deliberate ploy to affect the presidential race and promote Obama.

The Republicans rightly reacted badly to such a statement that made it seem the Republicans weren’t acting in a bi-partisan way.

She lost the vote because Republicans voted No rather than abstain,

But that doesn’t matter if Republicans made a protest vote. 95 Democrats voted against Pelosi. The Democrats can carry that bill becauyse they have a majority. So its Democrats who scuppered the bill

Also, it seems that polls of Average Joe reveals that the public is against the bill that rewards greed by using their money. Democrats feared losing their seats in November if they voted for the bill.

Forget the CRAP from DEMOCRAT Barney. He would say that - wouldn’t he.

“There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people’s money.” FDR in 1933.

Alec.
McCain made a speech in Ohio, an hour before the vote, trumpeting his role in finding a solution

Quite right too. Then 50 minutes later Mad Witch Pelosi makes her damaging partisan speech that owed more to electioneering for Obama and so the vote failed. Even she felt so confident of it passing that she took this opportunity to crow about how it was the Democrats who saved the country from the evil Republicans - then 95 Democrats voted against her.

The Democrats backed down on several amendments, including help for homeowners and money for affordable housing.

Folk from the left or right have good cause to scupper the plan. Kucinich voted against it, and does a good job criticising it in his clinical way at 14.34 minutes into Monday’s Democracy Now broadcast:

http://www.democracynow.org/

Excellent analysis.

http://uk.youtube.com/watch?v=NU6fuFrdCJY

I know its a shill for Republicans but its also a rapid history of the Fannie Mae story and its connections to Obama and Barney Frank.

Its the Dems who created this problem with their compulsory social housing act and Fannie Mae (which is support Obama Inc) who lied about the strength of their sub-prime lending. Lasts 10 mins

I hear Sonic’s little corner of the world is in recession. I knew that asshole was bad news.

Maven

Yes, I’ve seen it. Clearly the Republicans are trying to pin it on the Democrats, and the Democrats are trying to pin it on the Republicans. Ho hum.

Curiously the video does not mention the repeal of the Glass-Steagal Act, Gramm, Greenspan, etc. You are deluded if you think its only Democrats who are to blame for this.

Kucinich at last mentions the debt based economy, banks creating money out of thin air on fractional reserves, debt quadrupling over 20 years under Greenspan et al, the 1913 Federal Reserve Act. Well, I’m glad someone’s thinking.

BTW - I don’t believe ONLY Democrats are responsible. There were Republicans in the pay of Freddie and Fannie and in States where there were many people relying on social housing.

I am pointing out that Democrats are MORE in the pocket of the social housing scandal and Obama is up to it to his neck, Having been a lawyer who sued companies for not making enough social housing and tring to legally force comp[anies to do suicide deals or lose their license

Social Housing - which led to this collapse is mainly a Democrat sponsored and supported programme. The Dems resisted calls for regulation to take place.

After proven Fannie Mae fraud why has Obama endorsed the two executives at the centre of that fraud? Why is he the second highest recipient of their money despite only being a senator for three years?

I am sure there are Democrats who warned about this crisis but when you get a Witch like Pelosi and her chief Warlock Harry Reid gate-keeping this to make political capital out of it then you know it stinks.

Here’s a brilliant Biden gaffe about FDR going on television in 1929 about the Wall Street Crash. http://wire.factcheck.org/2008/09/24/biden-fdr-and-the-invention-of-television/

There are several things wrong with that statement. First, the stock market crashed in 1929. FDR wasn’t the president; Herbert Hoover was. He served as president from 1929 until 1933, when Roosevelt, who went on to be elected to the top office four times, was inaugurated to his first term.

Second, if FDR had been president in 1929 and wanted to make a public statement on the state of the economy, it likely wouldn’t have aired on television. Because no one had a television yet. The TV was introduced to the public at the 1939 World’s Fair in New York, almost 10 years after the crash

Its amazing how dumb Biden is - isn’t it? Maybe he was right. Hillary would have been a better VP pick than himself. But don’t worry, Biden will be providing that on-the-job training to Obama if he becomes President. Laurel and Hardy in the White House.

http://wire.factcheck.org/2008/09/24/biden-fdr-and-the-invention-of-television/

Kucinich at last mentions the debt based economy, banks creating money out of thin air on fractional reserves, debt quadrupling over 20 years under Greenspan et al, the 1913 Federal Reserve Act. Well, I’m glad someone’s thinking.

Well, if he did say that he’s talking bunkum, banks can’t create money out of thin air, they can only borrow money and lend money and make a profit from the difference in interest rates between the two - else why would a bank ever go bankrupt? Banks don’t create money, unless they have a mint attached.

Social Housing - which led to this collapse is mainly a Democrat sponsored and supported programme. The Dems resisted calls for regulation to take place.

Well, America is some sort of democracy. In that sort of set up you generally get a party who is more inclined to support social housing than another (actually its not really social housing but anyway). Someone has to respond to the millions having their wages squeezed, health care costs rocketing etc; this puts pressure on folk to shoulder more debt etc.

Well, if he did say that he’s talking bunkum, banks can’t create money out of thin air, they can only borrow money and lend money and make a profit from the difference in interest rates between the two

:-)

Is that the Small Party of Good Boys speaking?

The Republicans rightly reacted badly to such a statement that made it seem the Republicans weren’t acting in a bi-partisan way.

She lost the vote because Republicans voted No rather than abstain,

So the super sensitive Republicans voted no because of hurt feelings not that they thought the bill was bad for America. That those mullahs have very sensitive feelings we have learned but now also House Republicans. Guess they have to be pampered more.

As so often, Maven has cut through the crap and hit the nail on the head.

Look, two thirds of Republicans and 40% of Democrats voted against it, so if you are salivating to get the thing passed, you should allocate blame accordingly.

Franks characterised that as ‘overwhelming’ Democratic support - but I think 40% is a pretty big minority. Pelosi made an electioneering speech, but what do expect this year? The notion that Reps could vote the other way because of such a speech is absurd.

Maven.
If the root cause is as you say, could you explain two things to me.
1.Why the huge variation between states on foreclosures.
2.Why the same levels of foreclosures in 2000/2001 did not lead to a financial meltdown.

Someone has to respond to the millions having their wages squeezed, health care costs rocketing etc; this puts pressure on folk to shoulder more debt etc.

Since money cannot be created or destroyed then the money has to be somewhere. That somewhere is in teh pockest of teh excutives who made millions.

All they need to do is pass a bill that forces executives with wages or bonuses over $1m to return teh surplus to the government pool to fund teh people who can’t pay their mortgages. That should appeal to the socialist model of re-distribution of wealth. They should certainly ask the Democrat George Soros to contribute a few million and ask Obama’s financial advisor to return most of the $90m

They can suspend all mortgage debt for three months and then fix a repayment rate of 1%.

They should weaken their dollar to encorage inward investment from overseas.

They should immediately pass the bill for unlimited drilling for oil and gas so they can stop paying out several billions to the Middle East in oil revenue.

They have the power to close the Stock Market to freeze trading. They could do that along with all other stock markets. Why they didn’t take this most obvious move is beyond me.

Next, I would only provide mortgage parachutes on a sliding scale so that under a certain income you pay zero and on higher incomes you pay an increasing percentage. Again, I know its a socialist like policy but people who were greedy in buying $2m homes should suffer for their greed. Their need for a house didn’t have to be to the limit of financial credibility. ie those who deliberately over-stretched as a life-style statement should pay. Those who struggled to get onto the housing ladder should not.

See, even for someone with a neo-con-like heart I still have a socialist soul.

Pelosi made an electioneering speech, but what do expect this year? The notion that Reps could vote the other way because of such a speech is absurd.

I heard several Republicans say that they voted against BECAUSE Pelosi was trying to make political capital out of it.

How absolutely fucking stupid is Pelosi to have opened her mouth BEFORE the vote when she could have waited an hour and crowed about her triumph.

The American people didn’t want this bill passed and 95 Democrats didn’t either.

Pelosi introduced partisanship into a bi-partisan bill. How come 95 of her own people didn’t want it? If you can’t even support your own party then you don’t deserve to get the opposition to support you.

Maven,

Yes, I was just commenting on the pressure that builds up when wages stagnate and expenses rise. Obviously this translates into debt in a debt fueled economy. Then, the more debt there is, the more money flies around. It’s a vicious circle.

I heard several Republicans say that they voted against BECAUSE Pelosi was trying to make political capital out of it.

Okay, that means they are absurd then. I respect those on the left and the right who voted this thing down because of principle or concern over content. But to do so because - shock, horror - a politician tries to make political capital out of it (sharp intake of breath!) is absurd. Why, I never. In an election year? Blimey. Whatever next?

If some of the Republicans really voted against the bill for a reason as superficial as “Nancy upset me”.
Can we rule out the possibility that some, who hate McCain, did so to piss on his campaign?
After all, in his latest act of genius, he and his supporters spent yesterday claiming he was responsible for the deal that would go through.

Who is to say that the Government won’t end up making money off this? I was under the impression that the banks’ panic was more due to the uncertainty of what is in these bundled stocks rather than that too many people are actually defaulting.

So if the Government buys these “bad” debts, and most end up being paid back after all, that could be a nice windfall for the US taxpayer.

Also, as someone else pointed out above, all this talk about Fannie Mae and Freddie Mac causing this is nonsense. You only have to look at the situation in Britain, which has no such institutions, to see this. Aside from anything, there has been a worldwide property boom over the last ten years. It’s not just confined to the US and Britain, even though it has to some extent been funded by the irresponsible lending of US and UK banks.

uptight, please give us the name of even one Republican who voted against the bill because of Pelosi’s speech.

http://www.breitbart.tv/html/184803.html

Short Order Cook,

You may be proved correct but I think it very unlikely as the following analysis shows:

This is based on data from the Census Bureau (for 2007) and First American CoreLogic at the end of 2006. Although some of this data is a little old, it provides us with an estimate of the number of Americans household underwater (with negative equity).

According to the Census Bureau’s 2007 American Community Survey there were 51,615,003 households with a mortgage in the U.S. at the end of 2007.

For prices, using Case-Shiller, by the end of 2006 U.S. home prices had fallen just over 1% from the peak, but a number of homeowners were already underwater because they bought their homes with more than 100% LTV financing.

By the end of 2007, prices had fallen 10% from the peak, and 8.2 million homeowners owed more on their mortgages than their homes were worth.

As of Q2 2008, prices had fallen almost 18% from the peak, and for the graph, I estimated that prices will decline about 22.5% from the peak by the end of 2008. (this seems conservative). This means about 15.4 million households will be underwater or already foreclosed on by the end of 2008.

The last two categories are based on various estimates for the price bottom (peak-to-trough). The 30% decline was suggested by Paul Krugman in December 2007: What it takes). The 35% decline is close to the “severe recession” case presented by JPMorgan last week.

Not every homeowner with negative equity will default, in fact many of these homeowners will only be underwater by a few percent. But if we estimate one half of homeowners with negative equity will eventually default, use a 50% loss severity, and a 35% price decline (23.6 million households with negative equity), and use the median house price from the Census Bureau of $216 thousand, we get $1.3 trillion in mortgage losses for lenders.

I think this is probably high (probably fewer than 50% will default), but this does give a general idea of the potential losses. If we use one third of homeowners, the mortgage losses with a 35% peak-to-trough price decline would be about $840 billion.

So Pelosi attacks the White House,and to defend the White House, a RFepublican votes down a White House Bill.

SO Cook.
Point well made.
The reason this mess has spread is the bundling up and selling of poorly credit rated toxic securities.On a Republican watch.

As for the Fannie Freddie argument, of course there’s some truth to it, but given the percentage of toxic mortgages backed by them was a small percentage of the market, its overplayed by Maven and co.

Tim,

The analysis shows that losses will be $840 billion to $1.3 trillion. This is where the problem is and it is caused by lax lending driven by the refinancing policies largely of Fannie Mae and Freddie Mac. This has occured on both Democrat and Republican watches.

That really is a worst case scenario though, if the economy drops into a severe recession and half of all people in negative equity default. The idea is (if this bailout works) that the economy won’t go into recession, and the lending market restarts (hopefully with some safeguards this time), in which case the number of defaults could be far lower.

Maybe the Government could consider bailing out homeowners rather than banks.

it is caused by lax lending driven by the refinancing policies largely of Fannie Mae and Freddie Mac.

Do they refinance foreign loans, because there has been a worldwide boom in property prices and cheap finance?

Stu.
The piece you posted is so shot through with poor logic, you should be embarrassed.

1.It presumes all 51million homes were sold at the peak of the market.
2.It presumes Default rates for negative equity are 50%. Are you serious? at the peak of UK negative equity in 1993 in the UK reposessions ran at 3.5% of those in negative equity
1,360,000

Do they refinance foreign loans, because there has been a worldwide boom in property prices and cheap finance?

Foreign lenders have been following similar policies to the US and have supported a similar housing price bubble.

Tim,

Point 1. It assumes no such thing.

Point 2. We are talking about the US not the UK. Try and keep up.

The other issue is money market interbank liquidity, from what I understand of the problem, it’s that these financial packages of bundled mortgages are the problem. Banks lent to people who could ill afford the rate adjustments associated with 5 year ARMs, and at crazy LTV levels, bundled everything together, sold them as AAA rated investment vehicles and ran away with the commissions. Add in the fact that nobody bothered to do the math on whether or not these bundled mortgages were actually worth anything and the fact that other financial institutions, mostly AIG and the defunct monolines, decided that these ’safe’ investments were worthy of being covered by insurance and all of a sudden, the financial sector is going to hell in a hand basket because nobody knows who has how much of who’s money located where and nobody wants to loan money to any other entity for fear that the company they loan to may be trying to desperately cover themselves from impending collapse.

The State with the highest foreclosure rate is Nevada, where it runs at 2.5%

The remedy is not regulation as everybody seems to be suggesting but supervision and transparency. An inspector is way better than a rule book. The FSA in the UK has been particularly hopeless in this regard. In the US, supervision has been hamstrung by politicians in the pay of the financial institutions.

That is a foreclosure rate as a percentage of ALL mortgages not just those in negative equity. You are comparing apples with oranges. Secondly it takes months for the foreclosure process to go through so there is a time lag.

It would be nice if you are right and that this is not a big problem. But is think it is a trillion dollar problem at least.

According to Forbes:

In Las Vegas, Nevada, in August one in every 75 households received a foreclosure filing, up nearly 14 percent from the previous month and up 83 percent from August 2007.

1 in 75 households! In the words of GWB this sucker is going down.

nobody knows who has how much of who’s money located where and nobody wants to loan money to any other entity for fear that the company they loan to may be trying to desperately cover themselves from impending collapse.

Exactly. Which is what the bailout is supposed to sort out. There is no evidence that the amount of loans defaulted on overall is going to reach unacceptable or unsupportable levels, there is only the uncertainty caused by these securities that no one knows exactly what is in them.

And that is a one month figure. It is also a rapidly growing number. I dont know where you got your 2.5% figure from but it seems quite the underestimate.

There is no evidence that the amount of loans defaulted on overall is going to reach unacceptable or unsupportable levels

That is plain wrong. Look at foreclosure figures:

‘We’ve seen fewer and fewer properties go through the auction process because there’s either little equity in them or even negative equity. So there’s no incentive for people to buy them at the auctions,’ said RealtyTrac senior vice president Rick Sharga. He added, ‘Bank repossessions continue to grow at a pretty rapid clip.’ The highest foreclosure rate in a metropolitan area was reported by Stockton, California, where one in every 50 households got a foreclosure filing during the month.

That is a one month figure. Multiply it up for the year and see where it takes you.

Maven

So Nancy behaved in a nasty partisan manner and just to show her the Republicans responded to the greatest crisis in US banking for 70 years by the overwhelming rejection of a bill that they said should be totally bi-partisan, so they voted in a highly partisan manner to show how much contempt for partisan behaviour they had, by a huge party majority totally voting against partisanship?

Have I got that right ? just checking?

Now the only reliable bi-partisan behaviour ever shown in Congress is that approximately 25% of democrats routinely vote with Republicans on every conceivable issue. OK it is a bit up from that minority of a quarter to something over a third (40% is questionable) but hey there is an election just around the corner.

Politics couldn’t have something to do with it could it?

Later in this thread you say;

‘Since money cannot be created or destroyed then the money has to be somewhere.’

What do you think money is governed by the 3rd law of thermodynamics (matter cannot be created or destroyed)?

Talk about reification, naturalising the most arbitrary of symbols created by human culture to represent a unit of debt and turning it into a thing!

I know that on US dollar bills it says that the federal reserve guarantees it as legal tender, whereas the UK pound still has the Queen promising ‘to bay the bearer on demand the sum of’ but it is still an ‘I owe you’ promissory note, a debt a cowrie shell offered in exchange for other debts.

Of course money can be created its easy, its called more debt and creates inflation.

All the new kinds of exotic financial derivatives, are just ever more exotic promissory notes offered in exchange for future possibilities of debt and exchange.

Of course the 3rd law of thermodynamics also implies that while matter cannot be created or destroyed it can change in form into energy.

Like hot air so in an endlessely expanding financial universe of crony capitalism, the exponential ballooning of ‘wealth’ through ever more ingeniously flexible debt as you say it must be somewhere!

Lets all have a look shall we?

Where to start?

S.O mufffin provides a good clue as to where it will be soon, lets check.

I must say I have never enjoyed reading Benjamin so much on HP before ever.

All is explained he is a thwarted left of centre, social and economic liberal that has sat smarting over the abuse dolled out by years of neo-liberal monetarism (lets not call it partisan though as this is the only thing that has received genuine bi-partisan consensus in the UK and the US).

You know the most worrying thing about all this economic libertarianism that is based on a natural philosophy of society as governed by a natural law market?

When the economic system goes down the tubes, shattering the political economy, politics has to take over where economics (and the politicians in thrall to its siren calls) fears to go.

This has happened a few times in history and the results are not pretty.

When the economy collapses and millions of people are suffering and a popularists and nationalists and religionists come calling with their anti-capitalist protectionist agendas, blaming the economic libertarians for their woes, then frightened people witnessing their lives deteriorating before them listen and in a democracy vote.

But to do so because - shock, horror - a politician tries to make political capital out of it (sharp intake of breath!) is absurd. Why, I never. In an election year? Blimey. Whatever next?

But Pelosi could have kept her evil trap shut. Had she done so she could still make her point AFTER the vote.

But why are people ignoring the simple fact that the DEMOCRATS could have passed this billo despite the votes by Republicans. Why couldn’t Pelosi carry her own party votes. What was it about this bill that EVEN Democrats couldn’t vote for it?

But to do so because - shock, horror - a politician tries to make political capital out of it (sharp intake of breath!) is absurd. Why, I never. In an election year? Blimey. Whatever next?

But Pelosi could have kept her evil trap shut. Had she done so she could still make her point AFTER the vote.

But why are people ignoring the simple fact that the DEMOCRATS could have passed this billo despite the votes by Republicans. Why couldn’t Pelosi carry her own party votes. What was it about this bill that EVEN Democrats couldn’t vote for it?

Stu.

You’re making a number of mistakes.
1.A house price decline of 22.5% in the two years since the peak cannot put 1/3 of all housing stock into negative equity.Think about it.
2.The figure of up to 50% of those in Negative equity foreclosing is truly bizarre. 3% is more likely on past and current trends.
3.Paper losses do not result in foreclosure.Ability to pay does.
4.You are picking the area with the highest rates of foreclosure and multplying them statewide.

amongst other things.

I think it was this line of Pelosi’s that pissed Republicans off:

“… Democrats believe in a free market … but in this case, in its unbridled form as encouraged, supported by the Republicans — some in the Republican Party, not all — it has created not jobs, not capital, it has created chaos.”

I cannot imagine it made much difference but it does seem a little pointless and unpleasant. But from Pelosi what would anyone expect?

Brian Miller
Two words: Northern Rock.

But bankers and shareholders have had to shoulder those losses. All that government intervention has done is ensure that depositers and borrowers haven’t suffered from NR’s collapse.

An implicit government guarantee is an implicit government guarantee. Whether it was through a vehicle called “Fannie Mae,” or through the fact that the government will not allow a major British bank to collapse, the result is the same.

But NR did collapse, as has B&B. Only in the case of HBOS has the government acted to prevent a collapse (by setting aside its own merger regulations - I suspect unwisely).

The UK, where banking is far more centralized and less competitive, will not allow any of its major institutions to fail, and the big banks over there understand that thoroughly.

Certainly, the financial sector is used to getting its own way, after nearly three decades of light-touch regulation and with a political class that is entirely enthralled by the myth of free-market capitalism. But it didn’t lend recklessly because it thought the government would bail it out - it did it because thanks to de-regulation it could, because it believed in the market, and because it believed it could make money.

The bust and collapse will be far more painful in most of Europe than in the United States, due to the overreliance on government employment in the Old World and the much greater appreciation in real estate prices in most European cities.

Unlikely. Most Western European countries didn’t have the bonfire of regulations that Britain and the US did in the 80s and 90s. Of course they won’t completely escape the effects of global recession, and in particular banks that have invested (directly or indirectly) in the British and American housing bubbles will suffer. But they retain strong systems of financial control, so don’t face the same bleak picture as we do. Their national economies will remain buoyant because they aren’t founded on credit, as Britain’s is today (not sure about the US). Banks in most EU countries still do most of their business in retail banking rather than investment and speculation, while individuals haven’t been able to take on the levels of personal debt that those of us in Britain have (either through over-extended mortgages or through using credit to fund household spending).

Where real estate has boomed (and that’s primarily in Spain), it hasn’t been fuelled by reckless lending; meanwhile, house prices have remained restrained in France and Germany - certainly compared to the UK, and I suspect compared to the US as well. Most importantly, those countries have maintained a manufacturing base in their economies rather than relying on the service industries, and so enjoyed frequent trade surpluses over the past 20 years. I can’t speak to America, but far from the purported prosperity or even mere stability, Britain has effectively been in recession throughout that period as it has suffered a trade deficit in 20 of the past 21 years, last year reaching the worst level in at least three centuries. It was only a credit bubble that has allowed us to pretend we weren’t at an all-time economic low throughout the past two decades, and short of credit replacing money the way money once replaced barter, we were going to have to pay the price of Thatcherite economic stupidity eventually.

And most bizarrely you seem to believe that foreclosure notices are cumulative.A house in foreclosure gets a notice each month, they’re not all new houses.
Otherwise 30% of Nevada would’ve been foreclosed in the last 12 months..

Tim,

Point 1: a decline of 22.5% can cause losses of a third on foreclosed properties in negative equity. Easily. Do you not understand even that?

Point 2, 3 and 4. In Nevada do you think most mortgage lending is out in the Desert? Or in the gleaming new developments of LV? (Heres a clue: according to Nevada State 86 percent of the Nevada population reside in major population centers) And if “3% is more likely on past and current trends” why did 1 in 75 Las Vegas households receive foreclosure notices in August alone?

The Democrats have a majority in Congress; in order for this bill to fail, some of them must have voted against it. So why is everyone talking exclusively about Republican sabotage?

Too darn right, anyone bleating about Republican wrecking might like to take a look at this. There’s one heck of a lot of Democratic names, from Hawaii to Maine, from Wisconsin to Texas. Even the NYT is featuring Democratic objections to the package.

And Europe’s reaction? Peter ‘Trouser Mountain’ Mandelson, the twice-failed British minister, talking about ‘political partisanship.’ Well, perhaps he didn’t read what happened when The Guardian tried to influence American voters by that sort of talk.

As for mutuals, of course AW-S is right and I voted against every one in which I was affected. This wasn’t just public greed; there was a lot of self-serving rhetoric from a lot of public figures. While not excusing Brown’s manifold failures as PM and Chancellor, John Redwood in particular has much to answer for.

And hopefully, the profligate will learn a lesson that they won’t soon forget.

It’s not just the profligate who get to learn the lesson. Sometimes it’s not even the profligate. The failure of Creditanstalt might teach a few lessons here.

Meanwhile, you and I get to pay the higher taxes that come from the borrowing and the big losses, which are shifted to the government.

That is, unless there’s no one around to pick up the pieces, and we’re not taxpayers any more because our businesses have failed.

Individuals who save their cash and don’t consume beyond their means will have exceptional opportunities to get great bargains on everything from housing to cars to lightly used furniture as profligate spenders desperately sell for whatever price they can get to raise cash.

Unless they hide their cash in a matress, individuals who save their cash and don’t consume beyond their means are called ‘investors.’ It appears they are shortly to be known as ‘creditors.’ For those with access to large amounts of valuable land, assets, foreign currency etc., it’ll be just as you describe. For the ‘middle class’ and the ‘hard-working family,’ it’ll be the same soup kitchen as everybody else.

Cannot argue with you there, although without inflationary economic policy and a debt-based “economy,” a great deal of the socialist central planning ethos of “New Labour” and the US Democratic and Republican parties will evaporate.

Debt has functioned as part of public economics since the days we gave up bimetallism. Heck, we could relive those good old days of 1893, with 1890s levels of wealth and consumption.

Banks don’t create money, unless they have a mint attached.

Er…do you have a bank account? I only ask, because they might have explained a bit about banking to you when you opened it…

All told, if you’re not interested in a rescue package, buy gold.

Tim,

And most bizarrely you seem to believe that foreclosure notices are cumulative.A house in foreclosure gets a notice each month, they’re not all new houses.
Otherwise 30% of Nevada would’ve been foreclosed in the last 12 months..

The monthly thing is nonsense. So losses are in fact pretty high and you have inadvertantly made my point. Now do you understand? Here is the law to help you:

The primary method of foreclosure in Nevada involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly calledforeclosure by advertisement. When thetrust deed is initially signed it will usually contain a provision called apower of sale clause which upon default allows atrustee to sell the property in order to satisfy the underlying defaulted loan. Thetrustee acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain thepower of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:
Prior to initiating a foreclosure the lender must serve anotice of default where a borrower has 35 days to cure any default. This must be sent by certified mail and the defaulting borrower has 15 days prior to the sale and after receiving this notice to cure any default. The foreclosure will stop if anintent to cure is filed with thePublic Trustees office within this time frame.
Anotice of foreclosure sale must be made within 21 days of the date of the sale and at a time, place and manner as stated in thenotice of default. Sale must take place in the same manner as an execution sale would occur in a judicial foreclosure.
In Nevada, thelenders can also go to court in what is known as ajudicial foreclosure proceeding where the court must issue a final judgment of foreclosure. Usually if the deed of trust does not contain thepower of sale language, the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known alis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

Stu.
Of those who bought houses in the last five years, 1/3 are in negative equity

Not the entire mortgage market.
Obvious really.

Timm, still believe that foreclosure notices go out monthly? Or will you ‘fess up that that was just another thing you made up?

Why would we multiply it up for a year? The level of defaults on subprime loans in the US at least is levelling off now. The percentage of loans in arrears in the level above subprime is 12%, and in the prime market is 2.7%. The total amount of these loans is $12 trillion, of which the vast bulk is prime mortgages. So to reach your $1.2 trillion figure, it requires 10% of all mortgages to be defaulted on, which as you can see we are nowhere near.

The thing which is going to cause a recession is the banks refusing to lend any money, not mortgage holders defaulting on their loans.

Obviously 10% of the value rather than 10% of the number of mortgages…

Tim, out of total mortgage outstandings how much would you think refers to loans made in the last five years? Factor in the effect of ARM’s and you’ll see that the number is well over half and probably more than three quarters.

Foreclosures are running at 1 in 27 Mortgage holders. Less than 2 Million per year.

Stu is working on a total of 7 million.
And thats not including those without negative equtiy.

I can’t be bothered any more.

And anyone taking Stus figures seriously, needs to believe that 50% of people with a paper loss in the last two years will default on their mortgage.

Something too bizarre to contemplate.

Can’t you read Tim? Truly you vex me…

What about you monthly foreclosure statement? Was it a lie?

Tim, your figures make no sense at all, and seem to prove the opposite of what you claim. Why do you feel that there is no problem with foreclosures? Do you not realise how foolish you seem?

Stu.
You are right.
I should have said they’re not all new houses.
We can agree on that.

And we can agree that ALL your figures were wrong.
And if you believe negative equity leads to a fifty percent mortgage default rate then, really I don’t know what to say.

One in every 416 U.S. households got a foreclosure filing in August, affecting 303,879 properties nationwide, for increases of 12 percent from July and 27 percent from August 2007

Given that foreclosure normally occurs in stages, starting with the initial notice of default, followed by a notice of sale at auction, and finally bank repossession, I hardly think this is any kind of peak. Tim and SOC, this really is a big problem and I do not understand why you are both so keen on downplaying it.

I’m not downplaying anything.
But your claim of 7million is ludicrous.

Blunt is now backing away from blaming Pelosi

Tim, I am not sure if you are aware of this but 24 of the States have “give the keys back” laws which allow a borrower to stop paying his mortgage and move out with no recourse from the bank. This is why there are much higher default levels in the US compared to the UK where banks can continue to chase you long after they have foreclosed. The states that have these laws - such as California - have much higher default levels because there is little penalty for default and no reason to keep paying if a home owner is in a negative equity position.

More and more borrowers are sending their keys back to lenders and walking away from their mortgage obligations. New reports show that this is happening much more frequently as an increasing number of homeowners find they are underwater in their mortgage. Fitch Rating is claiming that borrowers’ apparent willingness to simply give up on their mortgage has contributed heavily to the high default numbers we are seeing now

Foreclosure used to be a rare thing, typically resulting from job loss, illness, or a death in the family. But changes in the mortgage industry in recent years have altered the how and why of foreclosure. Most of the borrowers who are walking away now are doing so because of increasing payments and depreciating assets. There is also the fact that the majority of the borrowers now have nothing to lose–they didn’t put anything down and therefore have very little invested.

Walking away can make sense for them because it can be less costly than going bankrupt in an attempt to save a single asset that is losing value by the day. Of course, this depends heavily upon where the borrower lives. Different states have different rules for borrowers and lenders. For example, the state laws in California make it difficult for lenders to collect additional money after foreclosing and selling a property. In other states, like Michigan, lenders are allowed to go after the borrower for the difference.

Wachovia and Bank of America have both discussed the issue in recent conference calls and say there is a definite change in the mindset of borrowers. Wachovia CEO Ken Thompson noted that some of the borrowers had the ability to pay, but weren’t willing to so since they have lost so much equity.

Most of the banks have no real desire to take the homes back as it will be very difficult to recoup all of the money that it is owed. A large number of borrowers overpaid for the home, didn’t put anything down, and didn’t make enough in payments to dent the balance. The chance that banks will break even on these sorts of properties, let alone make a profit, is slim to none.

MarginalRevolution puts the possibilities pretty well:

The best case scenario: The bad banks continue to be bought up, there is no run on hedge funds next Tuesday, only mid-sized European banks fail, money market funds keep on buying commercial paper, and the Fed and Treasury continue to operate on a case-by-case basis. Since Congress doesn’t have to vote for something called “a bailout,” it can give Paulson and Bernanke more operational freedom than they would have otherwise had. The American economy is in recession for two years and unemployment does not rise above eight or nine percent.

The worst case scenario: Credit markets freeze up within the next week and many businesses cannot meet their payrolls. Margin calls cannot be met and the NYSE shuts down for a week. Hardly anyone can get a mortgage so most home prices end up undefined rather than low. There is an emergency de facto nationalization of banks to keep the payments system moving. The Paulson plan is seen as a lost paradise. There is no one to buy up the busted hedge funds, so government and the taxpayer end up holding the bag. The quasi-nationalized banks are asked to serve political ends and it proves hard to recapitalize them in private hands. In the very worst case scenario, the Chinese bubble bursts too.

I still think some version of the best case scenario is more plausible, but I wish I could tell you I am sure.

For the source of this ideological fanaticism that would make an experiment of Americas future we shouldn’t look to socialism but the Christian Right and the ascendancy of the political influence of Dominionism and end times theology.

There is an element of that, but this crisis is due to greed, pure greed.

Party’s over, but it’s hardly the end of the world.

It sure looks like a deep and prolonged recesssion for the next few years, but then seeings the ‘irrational exhuberence’ that’s been on display for the past 6 or 7 years, it’s not too surprising.

I heard several Republicans say that they voted against BECAUSE Pelosi was trying to make political capital out of it.

Names?

I do understand why some people think a severe decline in house prices is a good thing but it also destroys the wealth of a lot of lower-middle and working class families, the type of people the left is supposed to champion. Many of these people (and those families that don’t own a house) are also having the value of their pension funds reduced because every pension fund of any size had investments in banks.

It also destroys the wealth of a lot of lower-middle and working class families… Many of these people (and those families that don’t own a house) are also having the value of their pension funds reduced because every pension fund of any size had investments in banks.

You don’t say. Huge numbers of folk are suffering through no fault of their own. ‘Free market’ addicts who talk blithely of “market corrections” and seek to protect the guilty (markets and governments are made up of people, some of whom are greedy, shortsighted and irresponsible), will never for one moment think of the little people.

‘Free market’ addicts = straw men

little people = NEVER greedy, shortsighted or irresponsible

The point is Benjamin that it isn’t ‘free market addicts’ that have been welcoming the so called price correction in the housing market. It’s those (often of the left) who bemoan how expensive houses are and how ordinary folk can’t afford them.

little people = NEVER greedy, shortsighted or irresponsible

They certainly can be. But those people, who say, want to buy a car when they can’t really, or buy a house, when they can’t, are under enormous social pressure to do so, or continually bombarded with offers to do so (because the system is fueled by debt); moreover, stagnating wages and rising expenses puts pressure on people to slip greater into debt.

little people = victims of social pressure (poor dears)

“The seizures and convulsions we’ve experienced in the debt and equity markets have been the consequences of a sustained orgy of excess and reckless behavior, not a too tight monetary policy.”
Dallas Federal Reserve Bank president, Richard Fisher

Section 8 from Bush/Paulson first proposal:
“Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.“

So Bush/Paulson wanted $700 billion, a carte blanch and impunity. One wonder if there was someone in the Senate and Congress that wanted to give them that. Typical con trick that it’s very, very urgent so there is really no time to control what’s actually in the deal.

One does wonder how the commies and blacks suddenly became so irresponsible and started a real estate bubble in the 1990s that is now endangering the global economy.

Housing cost in relative terms had been very stable since WWII despite business cycles. Home ownership didn’t really explode, raised from 63-65% to 68-69% and peaked 2004.

Was the housing boom primarily an asset value boom and to what extent was it an building boom, how much have the housing stock increased, is there a big surplus related to population.

People have to live somewhere, it is not in an general way to cheaper build maintain housing for renting than it is if people own their own homes.

Is there anything in the bill about general oversight of the system, what was FEDs role, and other institutions that is supposed to monitor the economy. How will the fraudulent ratings institutes be punished.

Maybe they would listen to Milton Friedman that ones said:
“The only two alternatives that do seem to me feasible over the longer run are either to make the Federal Reserve a bureau in the Treasury under the secretary of the Treasury, or to put the Federal Reserve under direct congressional control. Either involves terminating the so-called independence of the system. But either would establish a strong incentive for the Fed to produce a stabler monetary environment than we have had.”

little people = victims of social pressure (poor dears)

Not necessarily poor dears. However, as wages stagnate in the economy, there is huge pressure to get into debt. There are ever increasing costs - schooling, health care - and as the whole system is fueled by debt, its little wonder that more people sink into debt.

These people do not control the system, but live under it. Government and the banking industry reduced regulation, and in some cases encouraged greater debt. In a democracy - certainly until recently - the people expected their government to regulate to avoid the worst excesses: this is what FDR did.

However, as with much of the New Deal, these regulations were scrapped. The people now wake up to the reality that ‘their’ government cannot be trusted to regulate the banking and financial industry. The best they can hope for now is a huge injection of corporate welfare to at least get back some liquidity so that everybody can get back on the debt gravy train, and then, perhaps, some sensible regulation.

Mr Danger, sorry about delay in responding. Here’s a link to a site hosting the video.
http://www.powerlineblog.com/archives2/2008/09/021644.php

The hapless McCain campaign is all over the place regarding the Bail Out.

http://www.cnn.com/2008/POLITICS/09/30/bailout.candidates/?iref=hpmostpop

The hapless McCain campaign is all over the place regarding the Bail Out.

As is Obama in this interesting piece from the Telegraph:

Amid the chaos and fear on Wall Street and around the world, with banks toppling like ninepins, two further losers beyond Fortis and Hypo have registered on guttering screens: Barack Obama and John McCain have both been rejected by their parties in Congress in favour of None of the Above. Both candidates supported the $700 billion bail-out that has just been battered to death on the floor of Congress by 228 votes to 205.

It is not unprecedented for a president of the United States eventually to lose the confidence of his party in Congress, as has now happened to George W Bush. What is unprecedented is for a presidential candidate to lose control of his party even before he has been elected, as has just happened to both Obama and McCain. Obama backed the bail-out, only to see 94 Democrat representatives tell him where to put it. McCain, more reluctantly, supported the proposal: 132 out of 199 Republicans told him to spin on it.

Representatives chose to listen to their constituents rather than to party managers - a messy, democratic outcome unimaginable in Britain. But the $700 billion question is: where does this leave the two candidates? Do they claim their party rebels are mavericks? In McCain’s case that uncomfortably paints him as a conformist. Do they trash Main Street in favour of Wall Street? Obama has already issued a limp-wristed statement claiming that Congress will come round: “I’m confident we’re going to get there, but it’s going to be rocky.”

Will all those principled taxpayers change their stance if the economy goes into meltdown? Or is this a real-life face-down of creeping socialism and the return of American capitalism to its non-negotiable roots? The majority against the deal was so solid, it is hard to believe Nancy Pelosi’s infamous speech was responsible for provoking it. Nevertheless, it was a classic of irresponsible partisanship and a dramatic illustration of how poisonous the Democrat soul has become.

Her hysterical attack on “the Bush administration’s failed economic policies - policies built on budgetary recklessness, on an anything-goes mentality, with no regulation, no supervision, and no discipline in the system” ignored the deadly Clinton regulations denounced in my previous blog, whereby the Federal Reserve compelled banks to accept welfare and unemployment benefit as income sources for mortgages for borrowers who should never have been regarded as eligible. As an across-the-aisle exercise in bi-partisan conciliation, in the style promised by Barack Obama, Pelosi’s speech somehow lacked efficacy.

This presidential election has lost its centre of gravity - everything is in free-fall.

Is there an option to vote for none of the above in November? Or can I write Chuck Norris’s name in?

I thought you’d been doing Palins VP prep on Economics and Medical History.
Stay Loyal Stu.

Benjipedia,
The report says McCain support the bill “more reluctantly”

Well thats not what he said an hour before the bill fell and he was claiming advance credit for its passage.

I thought you’d been doing Palins VP prep on Economics and Medical History.

I wouldn’t mind giving her a medical exam. Fnar fnar.

To call this “Bush’s socialist plan” is pure unadulterated fantasy. The Democrats who voted against the Bill are the most left-wing members of Congress. They are the socialists, people like Dennis Kucinich, Barbara Lee, Ed Poor, Marcy Kaptur, Lynn Woolsey, Hilda Solice, Pete Stark, John Conyers, Sheila Jackson Lee, Jesse Jackson Jr. and Tom Udall. Bush’s plan is a pragmatic proposal to restore confidence to the markets, not socialism which would destroy the market.

But NR did collapse, as has B&B.

Not true.

A collapse would be the shutdown and liquidation of both of those institutions, with the associated depositor and creditor losses and the layoff of all the employees.

Continued operation in “business as usual” is not a collapse, no matter how it’s framed.

Especially when the executives who paid themselves large bonuses up to the so-called “collapse” walk away with their cash and leave the problems for others to clean up.

Interestingly, the CEO of BB&T, one of the largest banks in the USA, is a major opponent of this bailout. He points out, rightly, that the companies now in trouble due to the so-called “crisis” were irresponsible and poorly managed, and he’s opposed to his stupid competitors getting access to citizens’ cash to avoid the consequences of their actions.

He managed BB&T prudently, avoided the shenanigans that landed many competitors in hot water, and is now being punished for his responsibility. Along with every US taxpayer.

Bush’s plan is a pragmatic proposal to restore confidence to the markets, not socialism which would destroy the market.

Excuse my while I laugh my ass off.

Pragmatic proposal, my ass! (Which is presently on the floor because I laughed it off).

OK then, pick up your ass and explain to me if this is socialism why the socialists are opposing it, and why are the pragmatic and moderate members of both parties supporting it?

Bush’s proposal aims to restore business as usual. Some of the Democrats don’t like business as usual. Some of the Reps don’t like the way business as usual is being restored.

The problem with debating this on Harry’s Place is it goes like this

A: The roots of this crisis is the Democrat/RINO policy of using statute and GSEs to increas the amount of loans to uncredit worthy people
B (hysterical leftist): So it’s all poor people and minorities faults huh?
A: Umm no it’s the fault of the Clinton and, to a lesser extent the Bush administration as well as corrupt congressman of the Democrat and, to a lesser extent, Republican (moderate wing) parties
b; Can’t hear you!!! Can’t hear you!!!! Racist!!!!

Rep. Barney Frank:
“I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.”

A true genius

it’s ridiculous to conflate dominionism with end-times theology. Most dominionists are amillenial Calvinists.