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Who is to blame for the bailout paralysis?
September 30, 2008
This was not a good moment to be reminded that the separation of powers, and the hypersensitivity of the US Congress to public opinion, sometimes have drawbacks. It would have been better to pass an imperfect bailout plan promptly than come up with an improved version after a delay of days or, heaven forbid, weeks–always assuming that it is improved, in the end, and does eventually pass. (I say more about this in a recent column for National Journal.)
Whatever gets voted through is not going to be the last word on the subject in any case. Nothing like it. The plan will be revised on the run for months and maybe years. Prompt and basically sound action with broad political support was the order of the day. The country’s politicians were incapable of it.
All the principals deserve a share of the credit for this truly astonishing shambles. The administration, in the first place, failed to prepare Congress for legislation of this kind. The possibility that something like TARP would be needed was easily foreseeable once Bear Stearns collapsed–which was months ago–if not long before. Yet the bailout plan was thrown together in a matter of hours and presented to Congress in an absurdly abbreviated form that said, in effect, authorise us to spend $700 billion as we see fit, or else. That was ridiculous–but no more ridiculous than embarking on a debate about the details of the plan, let alone about basic principles, as the credit system stood on the verge of complete breakdown.
It was an even graver mistake to take public opinion for granted. The implications of the meltdown for ordinary Americans were not promptly or persuasively spelled out. In another tactical miscalculation, the administration also talked up the scale of its rescue, the better to reassure the markets, rather than talking it down–as it could have done, by pointing out to the general public that the eventual cost of the action would likely be far less than $700 billion, and that there was at least the possibility that the taxpayer would come out ahead. This was a nicety left to the financial press to explore.
The president’s intervention–his almost comical attempt to exercise leadership–was worthless, at best. When George W. Bush recommends a course of action, you can feel support for it leaching away as he speaks.
The presidential candidates and their respective surrogates utterly failed to respond to the urgency of the situation. They put politics first, using the crisis to underline their campaign talking-points and to put the other side at a disadvantage, rather than uniting to back a plan that both candidates appeared to support (well, I think they supported it: this was not always clear). If they had appeared alongside President Bush and had passionately affirmed the need for the plan without equivocation or political point-scoring, I dare say the outcome would have been different. It was more important to the Obama campaign to underline the failures of the Bush administration, and to associate McCain with that failure. It was more important to the McCain campaign to distance itself from the administration and find things in Obama’s position to disagree with.
Facing a public unconvinced of the need for action and boiling with rage at the idea of using taxpayers’ money to help the bandits of Wall Street, Congress too capitulated. By the time the vote came round, both party leaderships in Congress were backing the deal. Yet 133 Republicans and 95 Democrats voted against it (with 65 and 140, respectively, voting in favour). Many of the members voting against face difficult re-election battles in November.
The Republican leadership blamed Nancy Pelosi’s stridently partisan speech recommending the measure for the strength of Republican opposition. On one level, this is a ridiculous complaint: in the end the Republicans are responsible for their own votes. Yet as I listened to Pelsosi’s speech my heart sank. I do think it remarkably disingenuous to say (as Barney Frank, Larry Summers and many other Democrats subsequently did) that it would be outrageous for a Congressman to change his mind on the substance of a bill just because he was embarrassed by a speech. Good heavens, that would be to behave like…like a politician. Don’t tell me a Congressman might sink that low.
Wavering Republicans, like wavering Democrats, needed cover to vote for a bill they did not like and that many of their constituents were objecting to. Pelosi chose to rub the Republicans’ faces in the mess. Twelve votes needed to switch to get the thing done. If Pelosi had struck a bipartisan note, I bet the measure would have passed.
Who is to blame? All of the above. It is a comprehensive failure of leadership. And Washington wonders why much of the country holds politicians in contempt.
Did Senator Obama persuade a single voter in the House? His contribution was to continue his political campaign and “going to have to get my dry cleaning going too” in the middle of the negotiations.
JBP
Posted by: John Powers | September 30th, 2008 at 8:05 pm | Report this commentAll of the above reasons (Clive Crook’s, that is) for the bailout failure are valid. But the most important of all, as in the case of last year’s failed bipartisan comprehensive immigration reform bill (which John McCain, to his great credit, played a crucial role in putting together and promoting, along with Democratic Senator Ted Kennedy and a good deal of support from the White House) was the fact that all too many Congressmen were unwilling to stand up against angry voters looking for scapegoats, whether Latino immigrants last year or Wall Street “fat cats” now.
McCain, of course, has now given into pressure from the nativist, intolerant far right wing of the Republican party (and, to be fair, many conservative Democrats as well) and renounced his previous support for the hated “amnesty for illegals” proposal. The equivalent would be if Paulson were suddenly to make a speech announcing that there will be not one penny of bailout money for the “crooks on Wall Street”. Of course, this will never happen, for the simple reason that, unlike McCain, Paulson is not running for president.
Posted by: algasema | September 30th, 2008 at 8:21 pm | Report this commentHaving read all the columnists — Clive Crook, Martin Wolf et al — it now seems to me a plausible possibility that the end result of yesterday’s vote in Congress and the turmoil it has engendered will all turn out for the better. If I correctly understand the commentators, the Paulson plan is defective and much of its ‘populist’ criticism is not without foundation.
A famous French novelist (Beaumarchais) once said that books were like the fruits of the womb: their conception is blissful, their pregnancy is sorrowful, their birth is in pangs. Probably the same holds true for the bail-out scheme. Furthermore, the more difficult it is to agree, the better the end result will be.
Posted by: RCS | September 30th, 2008 at 9:19 pm | Report this comment“hypersensitivity of the US Congress to public opinion”
No, it is minimally expected sensitivity to the knowledge that many of the Representatives’ constituents are very angry about a terrible proposal that they will be on the hook for financially and to the fact that the Representatives are all up for re-election in about a month.
Blame should be assessed as a by-product to evaluating other proposals which perforce have to provide some analysis of why the situation is what it is and therefore identify the failures of government that led to the current circumstances.
The immediate blame for the failure of passage of the bill lies with the Bush Administration entirely. Senator McCain did not help matters, but his phony intervention was an irritant at most.
The secondary blame now lies with Congressional “leaders” of both Parties who still cannot seem to understand that the electorate wants to hear alternatives, not see minor tweaking of any unacceptable proposal. How dense can the Bush Administration and the Congressional powers-that-be be?
What has to be done to ameliorate the financial uncertainty and appease voters could not be any clearer.
It does not help that President Bush is a nitwit and that his record of providing a rationale for any proposal is abysmal nor that Secretary Paulson benefited enormously from this recklessness in his prior position. But those two facts only add fuel to the existing fire that the proposal inherently is.
Posted by: Wendell Murray | September 30th, 2008 at 10:31 pm | Report this commentRCS: Read any of the comments in Nouriel Roubini’s website as well as his short essay in the Guardian. He is one of the most knowledgeable analysts out there. Some very good proposals and concise analysis in the Berkeley Electronic Press.
The issues and therefore solutions are straightforward once one reads a few of the proposals. The existing bill in Congress is not one of the good proposals however.
Posted by: Wendell Murray | September 30th, 2008 at 10:38 pm | Report this commentI was at a Republican luncheon last week and there was quite a discussion about why businesses needed to be responsible for their own business and the firmly stated belief, of more than one person, that sometimes businesses needed to fail. The group seemed in agreement that propping up failing businesses was a wrong thing to do and would only prolong the agony.
Coming from a Democratic Party background it was an ear-opening discussion and not something I’ve ever heard stated so clearly. I’m not familiar with all the people who were in attendance, but they seemed to be predominantly small business owners.
The group was asked to understand that the failure of the TARP bill would have grave consequences by the speaker, who also said he agreed with them but reluctantly was backing the bill. If this group is a sampling of the voters who contacted their Representative, it is easier to understand the messages that Congress people received before voting on the bill.
Posted by: annetta | September 30th, 2008 at 11:05 pm | Report this commentClive, you write: “The presidential candidates and their respective surrogates utterly failed to respond to the urgency of the situation. They put politics first, using the crisis to underline their campaign talking-points and to put the other side at a disadvantage, rather than uniting to back a plan that both candidates appeared to support (well, I think they supported it: this was not always clear). If they had appeared alongside President Bush and had passionately affirmed the need for the plan without equivocation or political point-scoring, I dare say the outcome would have been different.”
On Thursday at 8:30am, Senator Obama telephoned Senator McCain, proposing a joint statement on the need for a bail out, including principles which would be acceptable to both candidates.
At 2:30pm, Senator McCain returned Obama’s call, and suggested suspending the campaigns, postponing the debates and returning to Washington. Senator Obama said he’d consider this, but suggested agreeing on a joint statement first.
Twenty minutes later, McCain stood before TV cameras announcing his plan. An anodyne joint statement was later released, stripping out any specific principles proposed by Obama.
I could go on. But it’s not obvious that Obama’s first instinct was to maximize partisan advantage last week. Others can comment on his rival’s actions.
Posted by: Andrew | October 1st, 2008 at 12:06 am | Report this commentThe SEC just suspended the disastrous Mark to Market accounting, something that probably wouldn’t have happened if the original bill was accepted.
There is something to be said for partisan bickering rather than authoritarian “leadership”.
George Bush’s weak popularity might have just rescued capitalism from the clutches of the state.
JBP
Posted by: John Powers | October 1st, 2008 at 2:15 am | Report this commentI largely agree with Andrew re Obama’s record on this. But as a larger point, it is this administration and this congressional leadership that have the actual responsibility for governing. The two candidates only have responsibilities– as of now– inasmuch as they are members of the Senate. But neither is in a leadership position on banking and finance issues. So I think asking or expecting them to play any kind of a leadership role was (a) inappropriate and (b)actually quite dangerous, as that would necessarily inject campaign politics into the deliberations on the whole business.
McCain’s absurd “Superman to the rescue” act was counter-productive and risible. And it turned out he didn’t even know much about the details of the plan before he started weighing in.
For the two candidates to have a joint statement of principles– issued from a place other than Washington– would have been the best posture for them to assume. But the real crisis of leadership was that exhibited by those currently in charge. Bush was evidently out of his depth, having apparently subcontracted all aspects of the response to Paulson, who is not a leader in the kind of skills required of politicians (consensus-building, public visioning and public persuasion, etc.) But I think the Democratic leadership in Congress also acted very unwisely, leaning far too heavily for advice and input on their many friends and hefty campaign contributors from the banking and financial fields without looking at the country’s broader interests.
Posted by: Helena Cobban | October 1st, 2008 at 3:43 am | Report this commentThe plan was disasterously bad. Badly presented. Badly sold. Congress were right to reject it.
The administration should have talked to congress before coming up with a plan that was effectivly a “get out of jail free” card for Wall street and a blank check for Paulson to build a personal empire.
The administration have now negative credibility. Even if they come up with a good plan it will be rejected, and, any plan that gives any responsibility or control to Paulson will be (and should be!) rejected.
Posted by: James Anderson | October 1st, 2008 at 8:08 am | Report this commentJohn Powers,
Suspending mark-to-market is no call for rejoice. It is an opening for an ‘anything goes’ accountancy. And when anything goes, then there are no rules, no laws, no faith in the markets. It is a short-term expedient made at the cost of the long-term integrity of accountancy rules. Possibly the SEC had no choice, but that does not mean we should rejoice.
Sarkozy’s interventionist statements on the issue are even more dangerous. This man is a bag of hubris, previously he weighed in at the ECB. Does anyone believe that one person should be allowed to override and ruin the meticulous work of committees of experts, either the ECB policy committee or the IASB, at the whim of his tongue? Firstly, the rules and policy decisions of such groups are based on decades of experience. Secondly, if rules can be changed at the whim of one French president, we have anarchy, we might as well give up on making rules. The IASB has no powers of enforcement. If its rules are allowed to be tweaked any which way every country or business perceives is beneficial, then they will clearly be made useless. Imagine anyone could revert the meaning of the red and green traffic lights, or that these become mere suggestions.
On a different issue: why is no one seriously tackling the proposal put forward by George Soros on this paper to recapitalise the banks, instead of the idea behind TARP? He points out very interestingly that direct injections of equity are far more effective then playing around with liabilities. This also has the added benefit of creating an automatic penalty on shareholders, whose shares would be immediately diluted. No need to suspend accountancy rules, with all the long-term dangers that that entails, let the toxic assets reach rock-bottom, recapitalise the banks and nationalise them, and have the Wall Street fat cats pay for their actions. This is in effect what the Europeans have been doing. This was also the approach of the Israeli authorities during that country’s banking crisis in 1983: in those days a bubble burst in the price of the banks’ shares, after these had been manipulated by the banks themselves — they were continuously purchasing cross holdings in each other’s stocks which had artificially inflated their prices. When the bubble burst the potential ramifications were severe since wide swathes of the public were invested in these shares. The government acted quickly and decisively (after failing in the first place in its regulation) to nationalise the banks. The oligarchic families and investor groups which owned the banks were penalised in that they lost their posessions, whilst the taxpayer was in due course reimbursed for this intervention — the government sold off the banks a decade later at a great profit.
Posted by: RCS | October 1st, 2008 at 9:14 am | Report this commentAgree with RCS on this.
“This also has the added benefit of creating an automatic penalty on shareholders, whose shares would be immediately diluted”
Of course this is one major cause of opposition, but the owners and lenders to banks should bear the brunt of the losses. This is the forced debt-to-equity conversion suggested a week ago by Prof. Buiter in his column. Immediate equity capital and no or little debt. Dilution of shareholder interests, but so it goes.
The mortgage assets will recover in value over the next few years as the collateral recovers in value and as the incomes of the mortgagors improves, so shareholders and bondholders (converted to equity holders) can minimize losses by waiting those few years while retaining earnings in the interim on on-going operations.
No sign that the powers-that-be in Congress will consider anything other than the existing bill with apparently only worse additions to it by the Senate. The Republicans as usual continue to be mostly to blame. They have a golden opportunity to force consideration of better plans, but the Republicans who revolted have so far offered nothing positive, while the Republican “leadership” continues to utter nonsense and attack their Democratic colleagues for no reason.
Minority Leader McConnell is about as dishonest a politician as one can find on any policy proposal. Neck and neck with Roy Blunt in the House for level of venality and dishonesty. On the other hand, the Democrats in either the House or Senate are not showing any imagination or thought whatsoever. That is what continues to disgust people. Suggestions from the Administration are worthless.
Posted by: Wendell Murray | October 1st, 2008 at 10:34 am | Report this commentPaulson’s plan is lacking at many levels. As Clive rightly noted, it seemed to have been pieced together at the last moment in reaction to some unsettling developments. Contingency scenarios seem not to be of interest in US management.
De facto, Paulson writes off the viability/credibility of existing US laws and financial regs, which have formed the basis of confidence in the US system for generations.
Denial has triumphed over a long and poorly regulated run of opportunism. US lawmakers are visibly incompetent–and, more importantly, lacking sound professional staff support–in addressing the longer term dimensions of this relatively massive funding proposal.
The underlying structural issues in US housing markets cannot be ignored in setting forth a plan to nationalise toxic mortgage assets. I see a high risk that real value–far lower than notional values–will not be recovered in a reasonable timeframe. Time does not permit, however, a rethink of housing economics in the days ahead. Therefore, calls for an immediate recapitalisation of the financial system seem the more sensible direction.
Meanwhile, as for blame, some hard questions need to be put forth loud and clear on the value of the business models of the ratings agencies and Big Four audit firms. One of the latter is already showing operational strains (layoffs) due to the loss of some big name audit clients in recent headlines. Conflicts of interest will impede independence at the new mega banks. One sees not reason to think better auditing is to be expected. Rather one should discount the existence of any sound early warnings from auditors or ratings agencies.
So, who is on watch for the uncertain nights ahead?
Posted by: wcm | October 1st, 2008 at 11:08 am | Report this commentPermit me to call that “co-dependent opportunism’ in my third paragraph. We now have co-dependent denial.
Posted by: wcm | October 1st, 2008 at 11:11 am | Report this commentI agree with those, like RCS above and George Soros in the FT, who feel that Congress has actually improved the original Paulson plan by adding a “capital infusion programme in which the government invests and stabilises weakened banks and profits from the economy’s eventual improvement” (George Soros).
Taypayers will be acquiring not only toxic financial instruments but also stakes in functioning enterprises. That has not been sufficiently explained by the US media.
Living in Geneva, I have also been following the crisis over the French media: France-info (radio) and Euronews (tv). In reporting the support given to some European banks, there is greater emphasis on the equity acquisition aspect. This also adds to depositor confidence. An elderly man interviewed on Euronews said he would not be withdrawing his money from Dexia, now that the Belgian and French governments held stakes.
To start with, those who support the Bill could stop calling it a “bailout plan”. It could be called a “buyout plan” or a “security and restructuring plan”.
I am glad that at least one Senator is explaining the Bill in these terms. Washington Post, 1 October ‘08: Sen. Judd Gregg (R-N.H.) tried a new analogy, describing the crisis as a car wreck. “So what we’re going to do as a government is take that accident off the highway and let the commerce flow again, and then we’re going to take the cars that were in the accident, those cars that are all mangled, we’re going to repair them a little bit and we’re going to resell them.”
The Bill’s provisions for homeowners could still be strengthened, perhaps along the lines suggested by George Soros or by giving insolvent homeowners bankruptcy protection, as proposed by the IHT/New York Times. That would add to public support and help stem the proliferation of toxic assets.
Yes, Clive, people may hold politicians in contempt, but they don’t feel much better about Wall Street and the media. Never forget the “glass houses” rule.
Posted by: Edward S | October 1st, 2008 at 11:14 am | Report this commentWith each bailout the public has been assured that the action taken was absolutely necessary to restore confidence to the markets and ensure the smooth functioning of the financial system. I realize that we Americans have a short attention span, but many of us do remember that Paulson implied before committees in Congress that by granting Treasury unlimited funding to prop up Fannie Mae and Freddie Mac, such action would actually preclude the need for a full-blown bailout. The Congressional Budget Office (CBO) stated at the time that there was only a 5% (five percent) chance that a total rescue would be required that would cost taxpayers more than $100 billion. And, the official estimate was that as little as $25 billion would do the trick.
Why is this relevant to the current situaton? Because what we had were the Administration, Congressional leaders and the luminaries on Wall Street all mouthing the same steadfast, self-congratulatory assurances that Paulson’s authority was unlikely to ever be needed, and even if it were, it might not actually cost the taxpayers a cent. CBO stated at the time that under its rigorous risk analysis, there was better than a 50% (fifty percent) chance that no rescue would needed whatsoever.
“Not to worry” was the message. Having armed Paulson with unlimited and unquestioned authority to prop up the behemoths behind half of the $12 trillion domestic mortgage market, we could safely go on summer holiday, enjoy our picnics and Olympics and just relax.
Congress stepped up and collectively accepted that the implied government guarantee behind Fannie/Freddie paper could in fact become real. Americans did what was right.
Then, right on cue, the dominoes began to fall, and here we are today with Secretary Paulson now insisting that we fork over $700 billion because all of the other financial system rescues including Fannie and Freddie haven’t actually worked as advertised, and we again find ourselves on the precipice. Allow me to provide some insight into how most Americans feel right now: Yes, we’re mad at Wall Street and the financial Masters of the Universe, the “smartest guys in the room” who created their perpetual motion machine and brilliantly siphoned off the profits from this contrivance. Yes, some of us are engaged in partisan sniping over who did what to whom, and why was Pelosi so vitrolic, and why was McCain dramatically dashing about, and why isn’t Obama more engaged, and why do hard-core Repubicans keep railing against socialism when we’ve been living in a mixed economy for over a hundred years, and why does the Left believe that foreclosures can be halted indefinitely and the dole is the ticket to a bright future? It goes on and on.
But the key question we are also asking is, if all of the rescues and expenditures to date were designed to prevent the end of the world as we know it, may we please have our money back because the end is again now at hand? In other words, how can commentators and political leaders simulataneously argue that a deeply flawed plan filled with glittering generalities (other than the glaring $700 billion figure) will now be just the salve that not only heals the wound but also completely reinvigorates the patient, like Ponce de Leon’s Fountain of Youth?
Can’t we just save the money and instead just have the President stand in front of the New York Stock Exchange and wave a magic wand? It will do about as much good. You see, deep down, there is a not unjustified sense that the party is over for America.
Underlying the animosity to the TARP plan is the unmistakable impression that we’re shoveling additional money down a rathole, and that this mother of all bailouts will simply be a down payment on the next bailout, and the one after that. If we’re going to eventually be tapped out, why not just stop it — right here, right now — and accept the fact that fiat currency isn’t worth the paper it’s printed on, that social security really is a Ponzi scheme, that we really can’t have guns and butter and giant SUVs filled with cheap gas, comfy chairs with 497 channels on a giant screen, free meds, low-cost holidays, endless job security, an always-rising market and an easy retirement? The manic phase is slowly giving way to the reality that we can’t have it all, and Americans, who for so long have postponed making critical policy choices under a creaking and ancient government structure that holds no single actor accountable for anything, are now being called upon to step up and play Superman. Hate to be the one to tell you, but we’re not up to it. We can’t even admit that the Iraq war is in our budget. I know that’s a surprise to many of you, but Google “off-budget financing” and you’ll see what I mean.
We don’t have a failure of leadership to get the TARP plan passed. What we have is an almost primordial sense that the party is over and we’re going to be facing a future where we really have to pay for what we want, we really have to learn math and science and history — all the things the experts have been telling us to learn, work harder, spend less, stop praying for some stupid revival and create our own luck.
The bailout, with whatever bells and whistles ultimately are attached to it, won’t solve the problem of crashing asset values, nor will it prevent credit spreads from widening futher. We’re going to need to print so much money that it forces the dollar to finally sink to the level it should have been all along, and we’re going to have to learn how to do what we’ve resisted for so long — shut down the warfare-welfare machine and start making responsible personal and policy choices. TARP is not the answer.
Posted by: Brian | October 1st, 2008 at 11:33 am | Report this commentIt is noticeable how the ECB and the EU have not asked for €700B to bail out banks in Europe.
There have been different ways of dealing with toxic debt on banks’ books in Europe. Germany in the case of HRE (a mortgage bank in the Dax index) has simply given a “state guarantee” for the time being, and Steinbrück (finance minister) hopes for minimal, even zero, damage to the taxpayer. France, Belgium and Holland have acted together to increase capital in a couple of cases.
There’s no question that regulations covering the finance sector as a whole are going to be greatly tightened up the EU. Sarkozy has said on TV already that banks are there to aid the economy, and not to “feed speculation” (”alimenter la spéculation”).
On ZDF German TV some likely measures were mentioned a short time ago:
- banks should increase their “Eigenkapital” - own capital base
- there should be a European banking “watch-dog”
set up, with each EU country sending a representative.
- introducing regulations re the passing on /selling of toxic debt
- a minimum percentage (to be fixed) of risk must be kept on banks’ books at all times.
Imo, from now on, investment bankers, P/E, hedge funds etc who do not want restrictions on their activities will seek opportunities in countries where there is as little regulation as possible.
Posted by: J.J. | October 1st, 2008 at 11:46 am | Report this commentRCS,
Fixing regulation won’t resolve the underlying issue of people paying too much for houses, but it will fix the death spiral that killed banks with plenty of cash but no credit, such as Wamu or Merrill Lynch.
Along with booting Obama/Dodd’s ACORN from the bailout, it is a step in the right direction towards financial sanity.
I see former Freddie Mac Board Member Rep. Rahm Emmanuel (D-Illinois) is lobbying to prevent prosecution of his colleagues from the GSE’s. Maybe if Bush offers amnesty to Jamie Gorelick, Bill Daley, Jim Johnson, Franklin Raines etc.. some legislation can be passed.
JBP
Posted by: John Powers | October 1st, 2008 at 12:48 pm | Report this commentEdward and Brian–some good insights!
The party is over in the US, but not because the parents came home. They were in the house and unclear of their responsibilities. Obama and McCain–and their respective economic and foreign policy teams–are not looking as though they should qualify to take over the mortgage on the house. Even at firesale prices.
When this storm is passed, the US needs to drop its fierce pride in its Constitution and rethink governance fit for the 21st century.
Posted by: wcm | October 1st, 2008 at 12:49 pm | Report this commentClive Crook,
You should know the answer to this.
No one is ever responsible for anything in the United States. Americans are all victims.
America’s divided government has proved perfectly suited to the attitudes and ethics that have evolved there. You cannot fix responsibility on anyone for anything.
I think the perfect illustration of this is American behavior under some of its free trade treaties.
Treaties are supposedly on a higher level so that local laws do not interfere in international affairs.
But in fact the opposite happens all the time. A set of national trade laws, highly flexible to the need and thus effectively protectionist, allow local interests and politics to override international treaties regularly.
And with whom does a treaty partner deal when this happens? It is never clear, but in the end those local political interests will be satisfied before there is a resolution.
Much of the governing of the United States works this way. It is a poorly governed country because Americans are a people who essentially do not like government.
The real source of all these economic problems is a people living beyond its means, of wanting it all and wanting it now, and a set of governments which accommodate their doing exactly that.
Posted by: JOHN CHUCKMAN, TORONTO | October 1st, 2008 at 12:59 pm | Report this commentSoros’ campaign announcement for Sen. Obama is very questionably placed in the “Comments and Analysis” section of the FT.
Seems a better fit with a small print “advertisement” at the bottom of the page.
JBP
Posted by: John Powers | October 1st, 2008 at 1:17 pm | Report this commentBanks/companies that are Regulated are not experiencing any econimic crisis, just the investment banks/companies which are not regulated or de-regulated and have no oversight! “One of the regulations meant to keep insiders from driving down the prices of their own company’s stock so that they could sell short at will to make a quick million whenever they felt like it was called the “uptick rule”. The “uptick rule” is another one of the FDR Era regulations which the Heritage Foundations was talking about when they said that they wanted to roll this country back to the days of Herbert Hoover. They succeeded. The Bush administration got rid of this safeguard last year—with predictable results.
The uptick rule is fairly simple. ”
http://www.investopedia.com/terms/u/uptick…
Posted by: Angellight | October 1st, 2008 at 1:50 pm | Report this commentAngelight,
“Banks/companies that are Regulated are not experiencing any econimic crisis”
You may want to mention that to the shareholders and employees of WaMu.
JBP
Posted by: John Powers | October 1st, 2008 at 3:49 pm | Report this commentAs Marc Faber said in Hong Kong last week: Paulson is “coincidentally synchronising his interventions to time with falls in the Goldman Sachs stock price.”
http://www.financeasia.com/article.aspx?CIaNID=85437
Posted by: Cynical Observer | October 1st, 2008 at 5:48 pm | Report this commentWhy not a small fee, 0.05 % to 0.1 % , on every professional trade to pay for insurance and future “bail-outs” ?
Posted by: financialtools1@gmail.com | October 1st, 2008 at 8:32 pm | Report this commentFrom memory: Read on Germany ZDF teletext this morning that the toxic debt will be replaced by “new debt” and the situation will be reviewed again after ca. five years. Also that it’s proposed that there will be several committees, not just one, overseeing the execution of the Paulson plan.
Anybody confirm the above?
Posted by: J.J. | October 2nd, 2008 at 4:45 pm | Report this commentThe implications of the meltdown for ordinary Americans were not promptly or persuasively spelled out.
Probably because the bailout will make very little difference in the end. To argue otherwise one must prove:
1. We’re screwed if we do nothing
2. The bailout will prevent us being screwed.
3. The bail-out legislation won’t screw us even worse (i.e., layering a $700bil slice of borrowing on teh debt is not a neutral act).
4. The bail-out legislation will be ably administered in accordance with the legislation by our present leaders so that we’re not screwed.
On how many of these can you offer a “more likely than not” opinion? You’ll have an easier time convincing E&Y that our securities are worth more than they say.
Posted by: Bababooey | October 3rd, 2008 at 12:41 am | Report this commentBailout!
Posted by: Smith | October 4th, 2008 at 2:40 am | Report this commentWe’reSaved!
Hahahahahaha!
[…] In regard to Pelosi’s speech note this comment from Clive Crook:- The Republican leadership blamed Nancy Pelosi’s stridently partisan speech recommending the measure for the strength of Republican opposition. On one level, this is a ridiculous complaint: in the end the Republicans are responsible for their own votes. Yet as I listened to Pelsosi’s speech my heart sank. I do think it remarkably disingenuous to say (as Barney Frank, Larry Summers and many other Democrats subsequently did) that it would be outrageous for a Congressman to change his mind on the substance of a bill just because he was embarrassed by a speech. Good heavens, that would be to behave like…like a politician. Don’t tell me a Congressman might sink that low. […]
Posted by: Contributory factors to the current crisis « The Inquiring Mind | October 7th, 2008 at 10:00 am | Report this comment