3 Oct

What a “rescue”… we’re “bailing”, but the boat’s still filling with water. And it’s just the beginning

                                       

Within hours of the House passage, Bush had the more than $700 billion “rescue” bill signed sealed and delivered into the law books.

President Bush says the legislation is meant to keep the Wall Street crises from widening… tho you wouldn’t believe that if you watched the numbers tumble following the bill’s passage. All of which, of course, everyone blamed on the new unemployment numbers.

Nonfarm payroll employment declined by 159,000 in September, and the unemployment rate held at 6.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and retail trade, while mining and health care continued to add jobs.

~~~

The unemployment rates for adult men (6.1 percent) and blacks (11.4 percent) rose in September. The jobless rates for teenagers (19.1 percent), whites (5.4 percent), and Hispanics (7.8 percent) were essentially unchanged. The unemployment rate for adult women declined to 4.9 percent, partly offsetting an increase in August. The unemployment rate for Asians in September was 3.8 percent, not seasonally adjusted.

I happened to catch a part of the hearing where they said the industries most hit were construction, retail and some financing/real estate industries… all entirely logical with the housing slowdown.

Fat load of good it’s doing so far, right?

Of course, both Obama and McCain had to weigh in on the job numbers.

Obama: Today, Americans woke up to the sad news that 159,000 jobs were lost last month alone, making September the ninth straight month of job loss. With three-quarters of a million jobs lost this year, and millions of families struggling to pay the bills and stay in their homes, this country can’t afford Senator McCain’s plan to give America four more years of the same policies that have devastated our middle-class and our economy for the last eight. Instead of Senator McCain’s plan to give tax breaks to CEOs and companies that ship jobs overseas, I will rebuild the middle-class and create millions of new jobs by investing in infrastructure and renewable energy that will reduce our dependence on oil from the Middle East. I also call on Congress to pass an immediate rescue plan for our middle-class that will provide tax relief, save one million jobs, and save our local communities from harmful budget cuts and painful tax increases.

McCain: Today’s report of another 159,000 lost jobs confirms what America’s working men and women have understood for months: our nation’s economy is on the wrong track. It is imperative that Congress act to address the financial crisis while protecting taxpayers and being good stewards of their dollars. But we must do more.

America’s middle class needs help from a government that is truly standing on their side and not in their way. I am committed to getting to the roots of this crisis — reforming Washington and cleaning up the mess created by the greed and crony capitalism of government-backed mortgage giants — Fannie Mae and Freddie Mac. I will reverse out-of-control spending, end the wasteful and corrupting practice of earmarks, and get the government budget back to balance. I will reform health care to control costs and better serve American families, open markets around the globe for our products, cut taxes, and expand domestic production of energy to eliminate the ability of international oil markets to hold our economy hostage. I will create jobs and get the economy on the right track.

Unlike Senator Obama, I do not believe we will create one single American job by increasing taxes, going on a massive spending binge, and closing off markets. Our nation cannot afford Senator Obama’s higher taxes.

Tons of happy DNC Congress types today, tho… all posing and grinning like ghouls. Pelosi and her ecstatic progressive pals? Very quick to promise more of the same socio-economic changes for the future.

Following the passage of the economic bailout bill Friday, House Speaker Nancy Pelosi said congressional hearings are planned to find the causes of the crisis and to determine “where we go from here.”

“We were dealt a bad hand; we made the most of it,” Speaker of the House Nancy Pelosi said Friday.

She said Congress will shine a new “light of scrutiny and accountability” on the nation’s financial system to try to prevent a replay of the problems that plunged the nation into an financial crisis.

Reps. Barney Frank, D-Massachusetts, and Henry Waxman, D-California, plan to hold hearings to increase scrutiny of the financial system, Pelosi added.

“We want to take our country in a new direction for the middle class,” Pelosi said.

Frank told reporters Friday that starting in January, Congress will “have a major role.”

“We have to rewrite housing in America. … It would be highly irresponsible if we were to stop here,” he said. “Now we have to perform more serious reform.”

Does anyone else besides me get that queasy feeling in their stomach hearing this?

According to MarketWatch, nervous analysts – pacing the halls like expectant fathers – are quite frankly worried if this particular economic baby will even grow up to be a success….. now don’t that make you feel better?

The plan engineered by Treasury Secretary Henry Paulson calls for the government to buy so-called “toxic” mortgages and other securities from banks for more than their current distressed-market values but less than the government hopes they’ll be worth someday.

The idea is to give banks and their counterparties confidence that they are on solid footing so they can lend their surplus capital to each other and to the public.

~~~

But many experts wish Paulson had devised a plan along the lines of billionaire Warren Buffett’s investment in Goldman Sachs Group, accepting preferred stock and affording him the ability to profit on the upside in return for capital.

“An intervention based on preferred-stock injections into banks would be preferable to the Fed-Treasury TARP proposal of government purchases of bank assets,” said Charles Calomiris, a professor at Columbia University Business School. TARP stands for Troubled Asset Relief Program.
Some observers are genuinely upset at the thrust of Paulson’s program.

Desmond Lachman, analyst at the conservative American Enterprise Institute, called it a “stupid plan” and said Paulson should have directly injected capital into banks instead. At a minimum, he said, the plan should have been targeted to banks in dire need of capital.

Others won’t go as far as Lachman in their criticism.

For them, a strong point of the program is that Paulson has sweeping power and tools at his disposal to craft the plan. Accordingly, Paulson will be able to adapt it based on experience.

Yeah yeah… but we already know that Congress refused to look at any other solution but a government buyout. And between their fear of God, and the abject failure of the media to provide ample alternative solutions via their communication lines, a nation – adamantly against this – was railroaded anyway… ignored by our elected officials, and passed off as too stupid to know any better.

But as these experts are openly admitting, this new spendy law is no panacea for the economic fix. And all agree that the next POTUS is going to have to spend even more money to put a “floor under the housing market.”

~~~

On other fronts, CitiBank’s whining that Wells Fargo slid in under the wire, and sealed a deal for Wachovia for $15.1 billion complete takover… making their Citi’s partial takeover of the banking operations only for $2.1 bill (and brokered by the FDIC) seem pale by comparison. Mostly which shows me that if government stays out of it, banks seem more than perfectly able to broker their own deals… and better ones at that.

And of course, Citi is not being a gracious loser, saying they had “exclusivity”, and are now threatening a lawsuit. That’ll help a bunch, eh? Wall Street behaving badly… could be a new reality show.

~~~

But this is only the beginning. The government has ignored the opinions of “we, the people” and interfered “for our own good”. There’s no going back now. And if Pelosi and gang’s promises for further government intervention aren’t giving you the willies yet, there’s more to make you afraid… be *very* afraid. The government welfare line has started to form already – all with their proverbial hands out.

The latest (and certainly not to be the last) in line would be the Governator, Arnold Schwarzenegger, calling the newly rich moneybags, Henry Paulson, peddling California’s bad debt for the steal of a deal price of $7 billion.

California Gov. Arnold Schwarzenegger has told U.S. Treasury Secretary Henry Paulson that the most populous U.S. state may need the federal government to buy $7 billion of debt the state is unable to sell due to weak credit markets- and that California may not be alone.

The $7 billion issue of revenue anticipation notes would raise cash to tide California over the near term until it gets expected revenues, but the plan to sell the debt is in peril because the municipal debt market is frozen, State Treasurer Bill Lockyer said earlier this week.

“This is not a normal year,” said Lockyer spokesman Tom Dresslar on Friday, adding that the state was preparing the issue but that markets were in turmoil: “The paralysis lingers.”

~~~

Lockyer, a Democrat, and Schwarzenegger, a Republican, have warned that California may have to delay payments for essential state services such as law enforcement, and in his letter to Paulson the celebrity governor said his state is not alone.

“Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing,” Schwarzenegger said in a letter to Paulson dated October 2 and provided to Reuters on Friday.

Uh… you listening to this, Curt?

Which brings us full circle to those nervous nellies who were pacing the halls of Congress I mentioned earlier…

Apparently they should have been more in fear of it’s passage than failure, considering the most immediate fallout in just the hours since passage. They warned Paulson’s program could be opening the door to faciliting industry consolidiation. The banks would offload their assets to the government, the smaller banks won’t be able to survive, and will be consumed by the stronger, larger survivors.

And they warned of more California’s as well…

And even as many more financial firms are bound to fail, state and local governments find themselves in perilous financial shape, said Roger Kubarych, economist at Unicredit Global Research.

“We’re going to have further failures — not just in the banking area but in other types of financial institutions, finance companies and insurance companies can’t all make it,” said Kubarych in a television interview.

And on the municipal side of things, the prospect that Jefferson County, Ala., may go into default could be just the tip of the iceberg, Kubarych said.

Jefferson County, which includes Birmingham, would be the biggest municipality to go bankrupt since Orange County, Calif., in 1994. “They are not they only state and local authority having problem paying their debt, ” Kubarych said, adding: “You can’t get foreign money into municipal bonds.”

But all their alternative suggestions and warnings fell on Congressional deaf ears. And worse yet, a narrow focused Paulson… the lone recipient of all these funds and power… never had a Plan “B”!

Nice going, Congress… you’ve really opened Pandora’s box now. The elected elite are not only responsible for this mess… and lying about it daily to us to boot …. but now they’ve really proven they are not to be trusted with the taxpayers hard earned bucks. And our POTUS appointed Fed Secy’… confirmed by Congress? I don’t know what to say… I dare say he may go down as the worst Bush appointee in both his terms.

Perhaps the most insulting to “we, the people” is having them look right into our eyes and promise us all these overpriced bad notes they bought will make a profit in the future. Not only is that doubtful, but if it does, don’t expect any profit sharing checks from a permanent fund to us… the taxpayer/bank. Nope… they say it will pay down the debt… unless, of course, a new sitting POTUS eyes it for another “needed” pet project.

What a deal…

Congress? Do us a favor next time… don’t help. Because all I can say is, with a “rescue” like this, I think I’d prefer treading water for a long time instead.

About MataHarley

Vietnam era Navy wife, indy/conservative, and an official California escapee now residing as a red speck in the sea of Oregon blue.
This entry was posted in Economy, Real Estate & Lending. Bookmark the permalink. Friday, October 3rd, 2008 at 9:18 pm
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18 Responses to What a “rescue”… we’re “bailing”, but the boat’s still filling with water. And it’s just the beginning

  1. thebronze says: 1

    Exactly!

    If the Fox is still in charge of the hen-house…

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  2. Craig says: 2

    This is a nightmare! Get together and kick out all Democrats out of your government and your country. Then abolish the stupid bailout plan and let the economy heal itself… there is no other solution.

    If you don’t have the guts to do this… than elect Obama and let the United States become a new Cuba. Only two choices here as I see it.

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  3. Craig says: 3

    Mata, here’s something for you:

    The MSM should take a good look at this. All the work is done for them. The dates and all the warnings are listed here very precisely and clearly. Take a look.

    Just the Facts: The Administration’s Unheeded Warnings About the Systemic Risk Posed by the GSEs
    http://www.whitehouse.gov/news/releases/2008/09/20080919-15.html

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  4. We should have never, never, EVER have spent $700 billion on this.

    We have now socialized a vast segment of our economy and we will soon see that there is nothing to show for it.

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  5. Missy says: 5

    Fear not folks, Waxman’s on it! How many investigations has he presided over during the last two years? Experienced need only apply……right? Trouble is, how to get the old hound dog off the scent of Bush/Repubs, he needs to clean up his own pen, can he do it? pffttt!

    And Frank and Pelosi from the House, got Dodd promising investigations in the Senate, how could we go wrong? Can they investigate themselves? Don’t you feel like Alice falling and spinning, and what a tea party we will have with those clowns.

    I fear the dems will run the elections before the majority of the public figures out who to dump. Their answer will always be, more money, trouble is they will spend it on the wrong stuff. We’re sunk.

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  6. Missy says: 6

    Interesting? Far left Firedoglake is blaming Obama for making this his bill and pushing it hampering all of his giveaway promises. This link is a former Hillary supporter, she links to FDL, I won’t go there.

    http://edgeoforever.wordpress.com/2008/10/04/obama-rescues-himself-from-all-campaign-promises/

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  7. ChrisG says: 8

    Neo,

    The bad thing is, no matter how much it is show, again and again, that the leftists are the ones who created this mess and now are using this bill to give kickbacks to their big ticket fundraisers, the leftist drones who follow their power-lusting leaders will never hold those leader accountable.

    Now if any republicans are so much as seen at an event that happened to be down the block from these hacks, then that republican’s career is over and the media and democrats will do everything they can to ensure it is. Dems can have $90k in their freezer, get $40+ million from Freddy and Fanny (and have them on their presidential staff), have the same people they sued give lavishly to leftist causes and candidates and NOTHING will ever happen to the dems.

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  8. Noah Vaile says: 9

    I am terrified at the lack of spine on the part of the Republicans. McCain’s ecumenical approach to politics is a sure loser as he agrees with his critics and insists that Palin spout his line. It seems that the Republicans, as a general rule, are more interested in hunkering down and keeping their jobs than standing strong and saving their country.

    The democrats do the damage. They blame the republicans. Then they do more damage, say it is salvation, and take all the credit. And republicans help them at every turn.

    I really believe that McCain is running with the agenda of destroying the republican party and leaving nothing in its place. I really don’t believe that he wants to win. He continues to blame his own party for everything that is wrong.

    What other state is he going to stop campaigning in? Illinois? Ohio? Florida? Arizona??

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  9. Timothy says: 10

    They’re laughing at us folks. To them, we’re just a bunch of suckers. Now fork over the money and nobody gets hurt. STAND AND DELIVER!!!

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  10. MataHarley says: 11

    Yep, Neo… Curt did a post on that video yesterday called What Just Happened? I, and others here, have spoken about how the CRA got the ball rolling, and the ensuing events created the perfect storm for this fiancial crash.

    It was as far from a “surprise” as you could get. Rather it was a disbelieving Congress, refusing to recognized what they had begat.

    As far as Obama/ACORN and the lawsuit…. this is all stuff that was reported in December of last year. Obama, himself as an attorney, has only appeared in court once to represent Calvin Roberson against Citibank (1994). The firm he worked for represented ACORN and many other public interest groups in various lawsuits. But the only one where Obama performed as a lawyer in the courtroom was the Roberson case.

    None of this is new news… but it is news that everyone chose to ignore 11 months ago. I assure you, with this cult-like movement, they will choose to ignore it today as well.

    Obama is as transparent as Pella glass windows. He and the DNC are tightly wrapped up in the CRA/redlining debacle… so they blame this on deregulation of securitization. To that I can only say being able to bundle and intersell products is not the problem. The problem is creating back (risky) products to bundle. But it’s a line that apparently is working for the DNC and media, as everyone seems to thing the GOP is responsible for the risky loans on Wall Street…

    Obama’s out there today, still proposing spending programs on the campaign trail. The faithful are lapping it up… where’s the cash coming from? Obviously not from the 30% of Americans that don’t pay any income tax. But rest easy… we’ll all be in that category soon if Obama has his way.

    Obama’s choice of business advisors, his friends and associates are all distressing signs of his Chicago political mentality. His designs for the nation – even he and his wife’s speeches – are peppered with leftist socialist heroes like Saul Alinsky.

    Now… to those who open their eyes, Obama is showing us who he is. The problem is, there is a large portion of the US who is willing to go down the road to socialism. And when they have reached the tipping point for an election… as it may go this time… socialism is where America will go. Undoing that damage man not be possible, once it takes hold.

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  11. MataHarley says: 12

    Missy, I’m actually glad to see FDL open his eyes on Obama. He’s only PO’d that he won’t get his other welfare programs, of course…. but that he sees this as the cork in the bottle for all that Obama promised is at least progress.

    This might be one the ‘october surprise” that equally kicks the butt of both candidates. This bail out has created a unity of many former adversaries. As I said, it’s a rare day when I find myself agreeing with George Soros.

    The one unknown in these last weeks is what this bail out will do to each candidate and the numbers. Both have tried to dance the fine line… neither for nor against… in order to bolt to the appropriate corner when they are with Joe Q. Public.

    Obama should be more vunerable with his direct ties to ACORN, Fannie/Freddie donations, and the DNC’s culpability for the CRA. McCain, however, doesn’t approve of “political torture” and won’t use these tools. Afraid that it will appear racist, I guess. We are speaking about the primary loan packages for minorities.

    Obama also has a problem with his attitude… quoted suggesting Americans are too stupid to know what’s right for the country.

    “To the Democrats and Republicans who have opposed this plan, I say this– step up to the plate do what’s right for the country even if it’s not popular, because the time to act is now.”

    In this single statement, Obama has revealed his arrogance towards the US citizen. He has just instructed Congress to ignore the common man’s opinion because we don’t know sheeeeeet about it.

    McCain should be hammering this home… but he can’t. He voted for that piece of shit bill too…. ‘scuse my language. But, ya know, you can dress up a turd and give it a speaking role on South Park… but it’s still a turd.

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  12. Noah Vaile says: 13

    Bottom line here is the Republicans took a giant scandal out of play with bipartisan anti-solution. This will just, certainly in the long-run and let’s see the short, make things worse. On top which McCain supported it and voted for it and will only look like an even bigger fool than he already does (and I fear is) if he says anything against it or any of its provisions. The Dems didn’t need McCain to pass the bill- he voted for it all on his own.

    Once again we see the use of earmark and general “pork” for the purpose of getting another terrible bill signed in to law.

    ReplyReply
  13. BarbaraS says: 14

    Wonderful. Let’s put Barney Frank and Henry Waxman in charge of these investigations. Let’s put the foxes in charge of which hens get executed. I wonder how they will handle their own testimonies especially since Frank is one of (if not the) the authors of this crisis? Will he indict himself? Let the DOJ and the FBI investigate although I expect no better results. Both these organizations are littered with Obama fans who will do their best for the dems and blame the republicans.

    According to Biden Obama wants the government to not only adjust the ARMs and other high interest rates on these mortgages they purchased yesterday but to adjust the principal also. I am too late and the wrong color. No one ever adjusted the principal of any of the 7 houses I bought in my lifetime. I paid them all myself and fail to see why these people can’t do the same. Sure, I would have liked to buy larger houses I couldn’t afford but something stopped me. Personal responsiblity maybe? Or was it the idea that I would be in a heap of trouble if I couldn’t make my mortgage payments? It was both.

    And as far as California is concerned repeal their $3 billion stem cell research boondoggle before they get any federal money. Remove that cap on electricity Californians have enjoyed for years. I am totally opposed to giving federal money to these idiots who don’t have a clue how to run a lemonade strand much less a populous state. California is well on its way to becoming a socialist state. Let them wallow in their bad decisions. And if all these states are going bankrupt it is time to pull in their belts and do away with some if not all of their give-away programs.

    ReplyReply
  14. Pingback: Flopping Aces » Blog Archive » Countering the DNC blame game on the bail out, and the financial crisis

  15. Noah Vaile says: 15

    Hi angelgirl: I’d like an Obamahide wallet and a set of Biden briefs delivered on November 5th. Thanks

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  16. Rob says: 16

    The unemployment rates for adult men (6.1 percent) and blacks (11.4 percent) rose in September. The jobless rates for teenagers (19.1 percent), whites (5.4 percent), and Hispanics (7.8 percent) were essentially unchanged. The unemployment rate for adult women declined to 4.9 percent, partly offsetting an increase in August. The unemployment rate for Asians in September was 3.8 percent, not seasonally adjusted.

    ReplyReply
  17. Noah Vaile says: 17

    At the moment Frank and Waxman ARE in charge.

    And where are they getting this $850B, not a mere $750B, from? Now I know it’s US but how are they wringing it out of us?
    They haven’t even passed a budget and have all gone home until next year.

    ReplyReply

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