That seems to be today's talking point among our elected representative. Their constituents are "unhappy" with the "rescue" plan that needs to be done and done soon. It isn't about unhappy. We the people are telling them "no!" If they push this through then we expect them to fall on their own sword after doing the deed. Finally, he [Brutus] spoke to Volumnius himself in Greek, reminding him of their student life, and begged him to grasp his sword with him and help him drive home the blow. And when Volumnius refused, and the rest likewise ... grasping with both hands the hilt of his naked sword, he fell upon it and died.
Heck, I'll hold the sword.
As the housing bubble inital shock blast passes we find ourselves in a classic recession (with the heat blast and debris blast still coming). In one of those employment and consumer spending drives GDP and recovery. The JPMorgan scenario puts the worst case unemployment figure at 8.0%. Sorry, that's just wholly unrealistic. CA is already at 7.7%. We'll be ucky to escape an honest 10% nationally and 12% California. Only 12% because our population is so mobile. Expect a population decrease. This is another of my wacky predictions that 6 months from now everyone will say is obvious.
On the plus side; I've a feeling manufacturing capacity hardware in the US will be a lot more attractive in the very near future between targeted stimuli and dollar weakness. Even if that means boxing it up and sending it to Chindia. [p.s. I live about 5 miles from Haas Automation.]
All I'm saying is enough of the Bush bashing. Of course he doesn't know what he's doing. NONE of them do. We tested the limits of financial engineering to the breaking point. Guess what? It broke. This is all new territory and the only people with half a brain who have given this scenario any thought are blogging.
Given the current terms of the bailout I think there is a serious new hazard being created. Yeah, just what we need, new hazards. Every deal has been progressively less generous than the preceding deal. There might be a rush for the exits before the terms get even worse. Banks might start lining up at the confessional talking down their position rather than risk being late to the window. Some points on the bailout bill:
• The servant of multiple masters serves none.
• The profits go to debt except those that go to subsidized housing.
• "Establishes strong oversight board with cease and desist authority" and "Establishes an independent Inspector General to monitor the use of the Treasury Secretary’s authority."
• "Maximize and coordinate efforts to modify mortgages for homeowners at risk of foreclosure." Seeing what mischief has been promulgated within the commerce clause imagine what this loophole will spawn. It doen't even limit this to mortgages that the Treasury buys fergawdsake.
They won't even tell us who ordered or why they must pass by Sunday. The two things that stick out are the need for a recess to campaign and the opening of the Asian markets. What's the hurry? We don't even have single digit accountability. $100b for x, $200b for y. How tough can it be to get it right to the nearest one hundred billion dollars? No deal.
Mission creep; And still no major HB bankruptcies? Banks are one thing but when these guys go tango uniform unemployment will skyrocket. You think $2500 per person is expensive? Wait until underfunded unemployment funds are recapitalized at the state level. Scuttlebutt is that the HBs are trying to get in on the deal. The automakers already got their raw meat. Remember when $25 billion was worth mentioning?
I'm not afraid of a much needed recession. I am very afraid of the efforts to prevent it.
8 comments:
The FIRST draft Paulson came to Congress with was three pages long... for $700 BILLION. It also had the nice wording where his actions / disbursments were not subject to review by ANYONE. Nice...
Ya think he might have been planning to get cozy with a few of his buddies?
Oh well - just glad that WaMu isn't going through the FDIC - partially because I'd rather not have it on the taxpayer dime, but also because it'd be a hassle for me personally. Much happier with the buyout.
I wonder what JPM will accept for a buyout present value of my WaMu HELOC? I can write a check, they can get a cash infusion and a problematical loan off their books. Win-win. 20¢, 30¢? WaaaaHoooo.
if you happened to listen to Micheal medved yesterday, he had on a great depression era historian that made the point that it was not so much the crash that caused and maintained the depression, but the government meddling to try to end it.
any bets on when Wachovia goes down for the count? It's being hammered today. It costs about 5 times as much to insure their debt as yesterday(up front costs is 2.5 million or there about for every 10 million plus 500k a year). ouch.
I didn't think it was Wacovia's turn. Must be something about the Democrat bill that the Democrats seem afraid to pass despite having the votes.
Anyway, the Democrats have enough votes to pass whatever deal they want. What prevents them is that the Democrats have enough votes to pass whatever deal they want. We talk about Bush's low rating. We don't talk about Congress's lower rating. Democrats are cowards that lack the strength of their convictions. Don't get me wrong. The Republicans in the same position would do the same.
Personally I can think of nothing more dangerous than groundbreaking legislation or emergency legislation or opaque legislation. All three combined have an absolute guarantee of nasty unintended consequences never mind the unsavory intended consequences.
I think one thing many americans don't understand or maybe they do and that's why so many are against this plan is that the purchases and resales of the debt to new holders is just going to give new bondholders a higher yield.
Something does seem fishy that the Dems aren't putting this through despite their majority in both houses and supposed by in from some GOP politicians. Sen. Shelby may be foghorn leghorn but the guy isn't holding the bill up himself.
Rob, I'm sorry but you don't qualify for an "adjustment" unless you are a card-carrying member of ACORN and wear the requiste commie-red t-shirt.
The 700 (billion) Club.
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