Bailout bill fails in the House

Some breaking news from Washington...

The $700 billion bailout package has failed in the House - on a vote of 205 in favor, 228 against.

According to CNN: "About 60% of Democrats voted for the measure, but less than a third of Republicans backed it."

On the news of the vote, the Dow fell 600 points on the news.

Update: Blumenauer, DeFazio, and Wu voted no. Hooley and Walden voted yes.

  • Eric Parker (unverified)
    (Show?)

    I belive someone should tell the republicans that this is not the time to use your party doctrine as a voting tool. To stick to your philosphical guns now is a recipe for deep animosity later on.

  • Fair and Balanced (unverified)
    (Show?)

    The part of me that watches my retirement nest-egg shrink in value wants the bailout to succeed.

    The part that cares about long-term progress for America wants it to fail. The Wall Street Ponzi scheme needs to be smashed, and its perpetrators brought to justice. Unfortunately there are lots of Democrats who have been enablers and beneficiaries. I'm proud of Peter Defazio and Earl Blumenauer for standing up against the leadership on this issue.

  • Buckman Res (unverified)
    (Show?)

    For the record this bill was defeated with bipartisan support, 94 Dems joining 130 Repubs, including our own Rep DeFazio.

    Maybe now they will take their time and craft a less hurried, more intelligent bill that doesn't socialize business losses.

  • (Show?)

    So, here's my question:

    Is this the time to invest a bunch of money in the market (since it's at a low point)? Or is this the time to keep pulling money out (since it's going to keep plunging)?

  • Bill R. (unverified)
    (Show?)

    Hey, purity ideologues, you must be so happy to have joined forces with the right wing in bringing down the country. The Dow is down 700 plus and there is a panic underway. Good job! Warren Buffet was right: CNN and CNNMoney.com staff September 28, 2008: 11:40 AM ET

    New York) -- Legendary investor Warren Buffett warned Congressional leaders Saturday night of "the biggest financial meltdown in American history" if they did not act to secure the financial system.
    
  • mp97303 (unverified)
    (Show?)

    Is this the time to invest a bunch of money in the market (since it's at a low point)? Or is this the time to keep pulling money out (since it's going to keep plunging)?

    The answer depends on your needs. If you are still in for the long-term, buy. I put a big chunk of cash back in today when it dropped. When it has another big drop, I will buy some more.

    If you want to make money in the market, the rules are simple: Buy LOW sell HIGH. It seems simple, but you would be shocked at how many people do exactly the opposite.

  • (Show?)

    Fair or not, Republicans have a convenient scapegoat for the defeat of this measure in Nancy Pelosi.

    With just half an hour left in the debate, she took to the floor and delivered an amazingly partisan speech. She praised the Democratic leaders involved while ignoring the Republican leaders, blamed the whole crisis on "right wing ideology" and promised that Democrats would provide "their share" of the votes and challenged the Republicans to do their part.

    As I listened to this on C-SPAN, my first thought was whether this would cost Republican votes that were unhappy about this bill in the first place. I thought it was a stupid move on her part at the time, and was not surprised after the vote to hear this cited by Minority Leader John Boehner with the loss of the votes they needed to pass this bill.

    Both Majority Leader Steny Hoyer and Banking Committee Chairman Barney Frank were far more gracious and politic in their closing statements, acknowledging the bipartisan leadership that had crafted the compromise. I hoped that would be enough to offset Pelosi's intemperate remarks. Obviously it wasn't.

    At least now Republicans have a new slogan: "Sarah Palin is as qualified to be Vice President as Nancy Pelosi is to be Speaker of the House."

  • (Show?)

    "Hey, purity ideologues, you must be so happy to have joined forces with the right wing in bringing down the country. The Dow is down 700 plus and there is a panic underway. Good job!"

    Something needs to be done, but not the bill that was proposed. Maybe now we can break free of The Mind of Henry Paulson and craft a bill that corrects the errors that led to this mess, rather than simply paying to cover bankers' bad paper.

  • (Show?)

    "Fair or not, Republicans have a convenient scapegoat for the defeat of this measure in Nancy Pelosi. "

    Did you upgrade your fax machine recently Jack? The talking points sure arrived onto your desk so quickly. Is there anything more absurd than suggesting the GOP killed the bailout because NANCY PELOSI convinced them to vote no? Please. They voted no because they fear for their political lives, and they know that voters wanted no part of a massive giveaway.

    Boehner and the Republicans are upset because their plan to flip this onto the Democrats when it passed, out of some faux populist claim, just got blown up and put on THEM instead. I say ha ha, fuck you, and so sorry. Try again, but this time try not to be so blatant about whose cheese you're trying to save...

  • (Show?)

    The bill goes nowhere as far as I'm concerned until it includes a repeal of the repeal of the Glass-Steigel Act. It was G-S which kept the banks out of dealing in securities and it HAS to be returned as part of any "bailout" package. Another feature HAS to be a legislative scheme to arrest, try, convict, and jail the schemers who got us into this mess. A third has to authorize law suits to recover outrageous payouts to robber baron executives. A fourth has to be an expanded insurance approach.

    Whattaya think about that Jack?

  • Randy2 (unverified)
    (Show?)

    Jack Roberts:

    As I listened to this on C-SPAN, my first thought was whether this would cost Republican votes that were unhappy about this bill in the first place.

    *** And apparently some Republicans got their pout on and voted no.

    *** Will someone please find some grown-ups to act, as John McCain is fond of saying, "Country First".

    Sheesh.

    Randy2

  • (Show?)

    Sorry, TJ, no one sends me talking points. I actually watched the last part of the debate and caught Pelosi's screed live.

    You need to understand that the House Republicans are largely free market populists; they aren't Wall Street Republicans. There were a number of them who might have held their noses and voted for the bill but who were not willing to do so if their votes would be characterized as turning their backs on their core principles and beliefs to join someone dismissing those beliefs as "right wing ideology."

    Turn it around: How many Democratic votes do you think would have been lost if a Republican leader had blamed the crisis on poor people and minorities who were defaulting on their obligations? I think a lot of Democrats would have checked out, too.

    Words matter. So do relationships. Pelosi should resign.

  • Peter Bray (unverified)
    (Show?)

    Merkley and fellow anti-bailout Dems should be prosecuted for their recklessness. Merkley shows that he is nothing more than a craven politicaster.

  • Bill R. (unverified)
    (Show?)

    @ Jack Roberts

    Let me get this straight. The Republican House members feelings were hurt do they voted against the best interests of the country. Barney Frank promises he will go and talk nice to at least 12 of those who were willing to vote for it, so they will feel better and change their vote in favor of the Bank Rescue bill. House Republicans.. the Dow is down almost 800 pts, but the important thing is their feelings were hurt. These macho Republicans... they are so manly.

  • (Show?)

    The postings here are unhelpful and uninformed.

    We don't have time to reinstitute Glass-Steagal, and removing Glass-Steagal has little to do with this crisis. Read the business page!

    We can't try and prosecute Wall Street traders--for what?? For making poorly conceived beds on subprime mortgage?

    The problem here was a failure of governmental regulation of the CDO and credit swap market.

    We need a financial infusion into the market NOW or our economy will grind to a halt, and the world economy along with it.

    That's real progressvism, folks--let's create a severe recession. You know who suffers in recessions. Poor folks, the ones we're supposed to be helping.

  • (Show?)

    Peter, I was not aware that Jeff Merkley voted on the bailout in the US House of Representatives. Under what grounds should he be prosecuted? Please elaborate.

  • Bill R. (unverified)
    (Show?)

    @ Paul-"You know who suffers in recessions. Poor folks, the ones we're supposed to be helping."

    Well stated, Paul. There is popular delusion in the progressive blogosphere that the financial and credit markets are removed from our lives. We are going to suffer and the farther down we are in income status, the more we are going to suffer. When credit is frozen, when financial markets lose all their value, the economy of everyday is destroyed. Think on that "progressive" friends! We seem to have lost the cultural memory of the Great Depression. Well I have sat at my grandparents and parents feet and saw the suffering in their stories and on their faces. There is some pretty cavalier thinking here, a lot of whistling past our own graveyard.

    @ Jack Roberts

    More on the Republican blame game from Ben Smith of Politico: "McCain blames Obama, not House GOP, for House vote... It's going to be a hard case to make though. About two-thirds of House Democrats supported the bill. About two thirds of House Republicans -- whom McCain had explicitly returned to Washington to work -- voted against it. And isn't it about time to retire that "phoned it in" line?"

  • meg (unverified)
    (Show?)

    Note to Nancy Pelosi: if you need to woo the oposition to pass 'crisis' legislation, don't go to the floor right before the vote and give a speech railing against the opposition pretending the crisis is all there fault.

    Oh....and try getting your own party strongly on board first.

  • Bill Bodden (unverified)
    (Show?)

    I belive someone should tell the republicans that this is not the time to use your party doctrine as a voting tool.

    These weren't republicans. They were Republicans. Big difference.

    Fair or not, Republicans have a convenient scapegoat for the defeat of this measure in Nancy Pelosi.

    Jack: You're making a jackass of yourself trying to come up with pro-Republican spins to defend the indefensible. Check this link and scroll down to Update III. In case you think I'm saying that because I'm a Democrat you couldn't be more wrong. I've spent a lot of time hammering the Dems on this site over the last few weeks. I have no more use for the Democratic party than the Republican and I have no more use for Nancy Pelosi than I do John Boner.

    This bill should have been shot down and its proponents run out of Washington. It was a ramrod job from the start with senate and house hearings getting input only from its proponents who wanted another blank check like the one Congress gave Bush to go to war while using similar tactics. The committee leaders are all on the banking industry payrolls.

    I'm no economist, but when 400 economists, including three Nobel Prize winners, opposed this bill that's more than good enough for me. I don't have time to provide you with links, but if you want the education you need, Google for "Joseph Stiglitz" and "William Greider" for what they have to say on this attempted ripoff.

  • (Show?)

    "How many Democratic votes do you think would have been lost if a Republican leader had blamed the crisis on poor people and minorities who were defaulting on their obligations? I think a lot of Democrats would have checked out, too."

    That's not a hypothetical, that IS what Republican leadership is blaming it on.

    But that's not really the point, is it? The point is it's laughable that Republican House members changed their vote based on something PELOSI said. It's ridiculous on its face. The GOP was trying to rook the Dems into supporting a giveaway that they could vote no on. In other words, they wanted the Dems to carry the bill. When they balked, the GOP started to whine. It's that simple.

    Paul G, no one is arguing against an infusion; the question is who and where it comes from. Peter DeFazio had a reasonable alternative, which leadership ignored. I'd like to hope that this time around, he might get a little more of a hearing for his (and other) ideas. But rejecting a vague giveaway that places oversight with Paulson and his cronies is NOT the way to go about it.

  • (Show?)

    Sorry, rejecting it IS the way to go about it OR the vague giveaway is NOT the way to go about it.

    You know what I meant...

  • (Show?)

    What a terrifically terrible example of governance.When people such as myself, who have very little grasp on the scope and sequence of the situation we find ourselves in, have no reservoir of good-faith trust in the officials who need to find and create solutions.

    Was there a political advantage to Pelosi making the statements she did today as opposed to after the bill passed ?

    Bill R is right. I may be one of very few people in their 30's who's father was a child in the depression, as was my grandmother.Both of their families lost their businesses. Both had to move. Both grew their own frickin' food so they could EAT -not for the joy of gardening.

    I have no delusions that I would know where to even begin solving these economic issues. I just find myself angry and frightened that I don't know who to look for leadership to in these circumstances.

  • Admiral Naismith (unverified)
    (Show?)

    Don't negotiate with terrorists.

    If you negotiate with terrorists they might let you go this time, but they'll just ramp up the hostage-taking ever after.

    Kudos to the House. Let them kill Wall Street. If not, they'll be back for everything else.

  • Peter Bray (unverified)
    (Show?)

    Jeff Merkley came out against the rescue of our financial system. In terms of prosecution, who knows? Bank robbery?

  • joel dan walls (unverified)
    (Show?)

    Jack Roberts sez: "You need to understand that the House Republicans are largely free market populists; they aren't Wall Street Republicans."

    "Free market populist"? I think this probably means something like "Don't bother me with things like minimum wage, organizing rights for unions, and environmental protections, but do come bail me out when the house I built in a flood zone gets trashed...AGAIN."

    Peter Bray? Whazzup, man? Back from another guided tour of Potemkin villages in Tibet?

  • (Show?)

    Barney Frank's line about Republicans "getting their feelings hurt" misses the point. This wasn't Newt Gingrich getting mad because Clinton made him exit Air Force One from the rear.

    What Pelosi did was blame the problem on solely the Republicans (did they override Clinton's veto in order to repeal Glass-Steigal? On no, that's right; he was FOR it!) and their "rightwing ideology" (which most House Republicans regard as a compliment except when Pelosi spews it at them)and then challenges them to in essence agree with her by breaking with their principles and supporting her bill.

    It was the most feckless example of ani-leadership I've seen in politics. If there are recordings of this available, compare her speech to Hoyer's and Frank's (as well as Boehner's and SencerBaucus's, the ranking member of the Banking Committee).

    They oviously understand how deals are made. Pelosi does not.

  • (Show?)

    Let me get this straight. The Democrats had the votes to pass this bill.

    They did not pass it.

    Why?

    You folks need to stop blaming Republicans for something that was totally and completely within your control.

  • (Show?)

    Jack Roberts, the financial crisis is owned by the Republican administration because of lack of proper financial oversight.

    President Bush via Hank Paulson asked Congress to take the action they did due to Bush and Paulson's view of the threat to the US economy.

    Today House members voted the way they did because the threat of government intervention in Wall Street is greater than the threats seen by Bush and Paulson. The idea that Bush and Paulson would have the fundamental future of the entire U.S. economy in their control is why many House members voted the way they did.

  • (Show?)

    What Pelosi did was blame the problem on solely the Republicans (did they override Clinton's veto in order to repeal Glass-Steigal? On no, that's right; he was FOR it!) and their "rightwing ideology" (which most House Republicans regard as a compliment except when Pelosi spews it at them)and then challenges them to in essence agree with her by breaking with their principles and supporting her bill.

    Even if it were true that Pelosi had said something egregious, the desperate smack by Republicans to blame her speech is exactly as Frank says: they would have decided not to vote for the good of the country cuz Nancy hurt their feelings. Its ludicrous. Even the hacktacular Rich Lowry agrees that Frank is correct on this one.

    The Republican caucus didn't deliver their votes. That lands square on Boehner. Personally,I think this was a crappy bill and I don't like that Dem leadership supported it in the first place. And not pushing back on Bush's meme of panic last week should have happened as well. But if this bill were crucial to the GOP..its their fault for not delivering their own party's votes.

  • Greg D. (unverified)
    (Show?)

    I am neither a politician nor an economist, but from what I can see the wheels are coming off the US banking system and nobody on Wall Street or Capitol Hill seems to care. I hope to retire in 10 or 15 years and like tens of millions of people I am relying on my rapidly disappearing 401k plan to fund my retirement. Politicians, Wall Street bankers and voters all need to grow a pair and do what is necessary to fix this mess now. Quit bitching about who, what, where and when and DO SOMETHING INTELLIGENT!!!!

    Thank God my wife is a PERS Tier I participant or we would really be up the creek, but I have to wonder how badly the Oregon taxpayers are willing to be screwed in order to prop up public pensions in the face of Wall Street panic and collapse. Paying a guaranteed 8% return in the face of massive market losses probably can't go on forever.

  • Oregon Bill (unverified)
    (Show?)

    NPR's "Talk of the Nation" devoted hour one to the bailout failure, and hour two to churches involved in political advocacy (mostly, of course, on the Republican side).

    Made me think...

    Let's just tax church property to pay for a bailout! I think it's what god would want.

  • Bill R. (unverified)
    (Show?)

    When the stock market goes down another 2-3 thousand points, and the credit system is even more frozen than it is, so that the remaining banks and financial institutions stop lending to each other, and businesses no longer can get the line of credit they need to function, none of this argumentation will really matter. Because we will be screwed, all of us. And that is where we're headed as the far right and left wing massage themselves with their delightful and righteous ideology.

  • Tom Civiletti (unverified)
    (Show?)

    A few thoughts:

    The government should not allow short term stock market fluctuations to be used as extortion. The government should choose policy with the long-term health of the economy in mind, along with other important societal values.

    We do not know what may have occurred before Pelosi's floor speech. She may have already known that the Republicans leadership would not come up with the negotiated 100 votes in favor, so she took the opportunity to scold the GOP. Perhaps her speech was to communicate this to Democratic members, freeing them from the necessity of coming up with the 117 votes to uphold the Dems' side of the bargain.

    Though this plan is far better than Paulson's original, it is still a giveaway to the folks with he most responsibility for creating the mess. Though the House Republican ideas to eliminate capital gains tax and deregulate even farther must be opposed by Democrats, a better plan can be constructed. Perhaps negotiations will go forward between the Senate and the House Dems, who can supply all the votes needed there if the plan suits them.

  • (Show?)

    oh my goodness, Coyote has such a strong and intelligent point to make: all Dems must always vote the same way on every bill. they must never have disagreements, especially when it's super-duper important. after all, this is not a democracy anymore: it's Roveworld, and the thoughts and actions of meaningless minions (like constitutionally elected representatives of the people) should not vote as they think best for their constituents. they should do like the good little Rs do & check their brains at the Capitol door and let their leaders tell them what to do.

    for shame, Peter DeFazio.

  • (Show?)

    Just as an aside, right after this happened, Obama shot up in the prediction markets by almost 5 points -- we may just end up with a president that can get us out of this mess in an intelligent and reasoned manner.

  • YoungOregonMoonbat (unverified)
    (Show?)

    Democrats and Republicans are to blame for this lack of consensus.

    Nancy Pelosi put on an exemplary showing of weak leadership. When you have 95 in your own party voting against it, you are not a respectable, admirable leader.

    Republicans are to blame for their economic philosophy which propagated deregulation for so long that the provision in the Glass Steagall Act barring investment banks from buying stake in retail banks was gutted in 1999.

    This gutting under the Gramm-Leach-Bliley Act in 1999 allowed an investment bank like Washington Mutual to buy ownership in local, retail banks that handed out all these bad loans to individuals who couldn't pay it back.

    These local, retail banks defaulting and going belly up in turn caused the investment bank to hold bad debt which caused runs on these banks as investors pulled their money out as fast as they could.

    Both sides are to blame. The Democrats for not having the balls and influence in their own party to hold their own members to line and the Republicans for their failed, irrelevant economic philosophy.

  • David from Eugene (unverified)
    (Show?)

    This blame game needs to stop now!! There is a crisis that needs to be dealt with before it sinks the Nation. Please note that is NATION not Wall Street. Like it or not this Nation depends on the availability of credit to function, without available credit our Nation will stop functioning.

    At any given time there is roughly a 3-5 day supply of food in most Metropolitan areas. Normally that is not a problem as there is also an existing system that replaces food sold from the shelf with fresh stock so smoothly that the public does not realize how small the in store inventory is. But that system runs on credit. Take away that credit and the existing system stops working and the food stops moving. While it is possible to convert the system to run on cash, I do not believe that can accomplished before the shelves go bare and the food riots start. Yes, this is an extremely pessimistic prediction and is somewhat unlikely, BUT it is possible.

    So lets, deal with the crisis now and assign the blame later during the investigation of why which should be the next step, AFTER the credit system is patched up.

  • (Show?)

    For the record, video of Pelosi's speech is available here.

    And while I'm not sure if Republicans are blaming the crisis on poor people and "minorities," the right wing think tanks and Libertarian economists are.

  • Tom Civiletti (unverified)
    (Show?)

    YoungOregonMoonbat wrote:

    Democrats and Republicans are to blame for this lack of consensus.

    Since almost everyone in the House is either Democrat or Republican, this does not add much to the discussion. The Paulson plan, even as ammended, is a gift to the rich and a reward to poorly run business. The House Republicans, genuine moonbats, support even less regulation of the market and further give aways to the wealthy in the form of elimination of the capital gains tax. No one with any sense who cares about the American people could reach consensus with the wrong-headed minority caucus.

  • Greg D. (unverified)
    (Show?)

    It seems as if the OR Dem delegation has just send a giant "FU" to those of us with 401k plans or investment accounts. I would be happy to participate in a socialist economy where we each give according to our ability and we each receive according to our needs, but so far I don't see that happening. Until that utopia is reached, I would like to see every politician make intelligent choices that are not based upon party politics. Crashing the capitalist marketplace may be a worthy and intelligent goal for Oregon Dems, but I would like a little advance notice, please!

  • Tom Civiletti (unverified)
    (Show?)

    If business cannot provide credit enough to keep the economy moving, government should. I know where we can find $700 billion to get started.

  • (Show?)

    paul g: Read the business page!

    If the business page were such a reliable source of wisdom then how did we end up where we're at?

    Peter Bray: Jeff Merkley came out against the rescue of our financial system.

    That's a flat out lie, Peter. He came out against giving this administration a blank check, not against doing something about the problem.

  • (Show?)

    To take a short break from partisan bashing, let's remember this plan did not call for the federal government to give anybody $700 billion. The plan was to spend up to $700 billion to buy these heavily discounted loans and securities backed by these loans from the banks and financial institutions which held them.

    The difference is that while the sellers would receive cash they could then loan out and thus unclog the credit markets, the government as purchaser would be able to collect on loans or assets securing the loans.

    Barney Frank estimated the total risk was no more than 20% of the total bail-out, while Warren Buffet (one of Obama's biggest supporters) predicted the government would actually make money on these assets once markets stabilized and their values went up. It's a lot of money to risk, no question. But as we just saw today, the risk of not doing anything is not cheap, either.

    A lot of the opposition to this plan was fueled by ignorance (or crass political calculation based on the ignorance of the voters). And that is true in both parties.

  • (Show?)

    For those of you supporting the bailout, do you think $700 billion will be enough to unwind the bad positions in the credit default swaps market, which is estimated to be a $62 trillion market? If so, what gives you this confidence?

    If $700 billion isn't enough, where do you draw the line?

    JP Morgan is buying Washington Mutual for $1.9 billion, and has said it may need to absorb $31 billion in losses. In return, it picks up $310 billion in assets--a massive loan portfolio, most of it mortgages.

    Paulson is clearly talking about paying a lot more than 10 cents on the dollar--for just the distressed assets!! Morgan got the thing, healthy assets and all, for 10 cents on the dollar.

    I don't why people are so insistent that Paulson's plan is either a good idea or necessary. I'm for swift and assertive government intervention to keep credit markets healthy, but I don't see the proposal as the best way to do that.

  • artsasinic (unverified)
    (Show?)

    Good for Defazio and company. What we were being offered was the chance to bail out the loan sharks to save the casino. And putting the Mafia in charge of the whole thing.

  • (Show?)
    Jack Roberts: "Fair or not, Republicans have a convenient scapegoat for the defeat of this measure in Nancy Pelosi."

    The irony of BARNEY FRANK being the one to tell the Republicans they're being hyper-sensitive, by holding up a financial bailout because Nancy Pelosi hurt their feelings has me rolling on the floor.

  • Tom Civiletti (unverified)
    (Show?)

    Eric Janszen authored a piece titled The next bubble: Priming the markets for tomorrow's big crash in February 2008's Harper's, which claims that a burst bubble tends to deflate until realistic valuation is reached. Janszen estimates real estate will deflate for another six years, and that the FIRE economy will require $12 trillion to reach stability.

  • Chuck Butcher (unverified)
    (Show?)

    Let's see, the REPUBLICAN President comes to the Democratically dominated House to ask for a bail out of REPUBLICAN crafted mess (I know BC signed a piece of it) and you "Democrats at fault" folk think the Democrats should have eaten the discredit alone? Pelosi/Hoyer delivered their half of the Party, the REPUBLICANS did not. THEIR mess, THEIR President and it is the Democrats job to bandaide it with an upopular action all alone? Boehner promised 50% and did not deliver and that is Pelosi's fault?

    Fine, screw it, write a Democratic Bill and dare BushCo to veto it, it won't be what he wants or the Repubs want, so make them eat it. Simply seize them, all the plutocrats lose, if you're gonna do socialism - do it. Then coyote can howl, until then, shut it puppy.

    Po, Po Flack Roberts, somebody said something mean about his Republicans on the House floor - well, she could have said the absolute truth about them and that would've been mean. Right Flack, Bill Clinton signed that piece of crap (since you think Hillary is so great) but it was written and passed by your beloved Republicans or would you have that inconvenient fact ignored with your Flackery? You get funnier and sadder with the passage of mere days as you keep bringing silliness to a pretty informed site - try RedState, they're ignorant tools.

  • (Show?)

    "When the stock market goes down another 2-3 thousand points,"

    Shouldn't you wait until it's gone down even ONE thousand points, before you start fearmongering about another 2 or 3 thousand?

    We had a bigger crash after 9/11, in the middle of a recession, and my memory is hazy but I don't recall the soup lines. To judge our economic health by the gyrations of the Dow is unwise. To react and pass hasty legislation based on it would have been moreso.

  • Larry (unverified)
    (Show?)

    Posted by: Fair and Balanced | Sep 29, 2008 12:12:09 PM

    The part of me that watches my retirement nest-egg shrink in value wants the bailout to succeed.

    The part that cares about long-term progress for America wants it to fail. The Wall Street Ponzi scheme needs to be smashed, and its perpetrators brought to justice.

    I agree.

    and also: Posted by: artsasinic | Sep 29, 2008 3:28:10 PM

    Good for Defazio and company. What we were being offered was the chance to bail out the loan sharks to save the casino. And putting the Mafia in charge of the whole thing.

    I also agree.

    To whoever asked (Kari?) about if this is a good time to buy stocks, somebody else answered: Buy low, sell high.

    Buy tomorrow and Wednesday, sell on Thursday when the House votes on something better.

    But only if you are a trader with the nerves of a trader.

    Otherwise, don't kid yourself.

    You will ending up selling at the bottom (following the herd) and buying back in after the run up (again following the herd).

    Or otherwise, do a Buffet and buy and hold. Rarely, if ever, does he sell.

  • RW (unverified)
    (Show?)

    ALERT: sickeningly personal.

    Single mother here, raising a magical young man. Just enough intelligence to experience continuously entertaining existential angst.

    Negligible retirement or assets, striving to correct that so I do not hang like a massive obelisk round the neck of my child and his family. After all, I'm not gonna be a peaceable old lady. Or healthy, my guess.

    Wall Street and assorted minions seem jealously bent upon asserting certain aspects of "nasty, brutish and short" as being the life for me.

    Either I'm feeling intensely stifled rage, or this is what it means to be sickened with helplessness. I won't tell you what happened to my piffling few dollars TODAY.

    Jesus.

  • (Show?)

    Fair or not, Republicans have a convenient scapegoat for the defeat of this measure in Nancy Pelosi. . . With just half an hour left in the debate, she took to the floor and delivered an amazingly partisan speech.

    That's nonsense. Republicans throw rhetorical bombs all the time. Pelosi's speech had no more to do with the bill's failure than John McCain's transparent posturing would have had to do with its passage.

    But just because a majority of House Republicans opposed the bill doesn't mean it was the right thing to do. I am not going to pretend to have suddenly learned to understand the cure for this crisis; but I generally trust DeFazio--if he voted against it then there were probably good reasons to block it.

    Even as Bush slouches toward irrelevance, he has provided another example of how a president should not behave in a crisis. By acting like chicken little and predicting disaster if Paulson's plan wasn't enacted, Bush virtually assured the Dow would crash if Congress didn't obey him. Similarly, McCain's impulsiveness is looking less presidential all the time. Look for the steadier hand.

  • (Show?)

    DeFazio speaks: http://www.loadedorygun.net/showDiary.do?diaryId=1376

    As was noted, if Peter smells a rat, I do too.

  • (Show?)

    As one of the few on this site who is near retirement, I resent those who blow off the markets. I have no pension so my future income is based upon the ability to earn a return on my 401k and personal investments. This is also the story for most of the non-government workers in retirement. Interest rates on secure investments have cratered. Stock prices are dropping. Even corporate bonds are at risk as companies go under.

    The public didn't like it when this was labeled a wall street bailout of billionaires. My guess is that the tide will turn rapidly as all of us in our sixties or older ask why can't Congress fix this mess. Panic and fear is a bigger motivator than ideology.

  • (Show?)

    Has anyone considered the possibiity that the bill died on the floor because it was a bad bill?

    I don't know much about the specifics of the bill, but what I do know of the administration's proposal was enough to give me pause for concern, and the fact that Peter DeFazio, Earl Blumenauer, and David Wu all voted no makes me wonder whether we aren't better off slowing things down a bit and making sure that appropriate corrections are built in for the American taxpayers and for our children who will be footing the cost of this bill.

    As to the rest, I agree with Jack. This wis an intensely stupid time to play partisan games, even if it is true that the Republican push for deregulation -- aided and abetted by all-too-many Democrats -- is what led to this mess.

  • (Show?)

    Just listened to DeFazio's speech. I agree with his approach and sentiments. $700 billion could pay for a great deal of infrastructure and be a great step towards rebuilding America's middle class.

    Why don't more Democrats act like Peter?

  • Bill Bodden (unverified)
    (Show?)

    There important reasons why this bailout bill failed and should have.

    There was a conspiracy between Paulson, Bernanke, Cox and the Senate and the House, Democratic and Republican committee members, to sell the store to Paulson and Co. Not surprising when you observe how much the many members of these committees (and Obama and McCain) received in legal bribes for their campaigns from the banking industries.

    Check the data on House and Senate committees at the Center for Responsive Politics web site.

    I listened to the House debate and heard at least two supporters of the bill concede it wasn't the best bill possible. If we are talking about 700 billion dollars then let's get this bill in much better shape than this con job Barney Frank, Chris Dodd, their committees and other bandits offered. Wall Street and the economy are in a mess, but there is no reason why Congress can't take another couple of weeks to get such a monumental bill right - except more people will have a chance to become better informed and less likely to go along with getting screwed.

  • (Show?)

    Sal

    The cost of construction bonds has gone up 2.5% in just the last two weeks. If Earl, Peter, and David think this is just about some fat cats on Wall Street, they are sadly mistaken. You want a new Sellwood Bridge? A new ballpark? New construction downtown?

    Forget it until this gets fixed.

    Is this a hard lift for politicians? Of course it is--there is no denying that the only way to make this work is to overpay, above the going market rate, for lower rated CDOs.

    If we follow that with reforms of the housing market, then prices will recover and the Treasury is likely to make money.

    The consequences, on the other hand, are dire. The longer we dither, the deeper we sink.

    What DeFazio smelled was not a rat, but his own political mortality.

    ==

    Rich I don't know the answer to your question. I attended a lecture by Austan Goolsbee, Obama's chief economic advisor, last Thursday. He argued that what is needed is some "oil" to get the market gears moving again, and that this plan should be sufficient. It is not necessary to unwind the credit default swaps.

    He's a hell of a smart economist.

  • Larry (unverified)
    (Show?)

    Posted by: John Calhoun | Sep 29, 2008 4:26:25 PM

    As one of the few on this site who is near retirement, I resent those who blow off the markets. I have no pension so my future income is based upon the ability to earn a return on my 401k and personal investments. This is also the story for most of the non-government workers in retirement.

    John, sorry you took it in the shorts today. You can just work an extra few years to make up for the losses you took today.

    Maybe you should have gotten a job like Torrid Joe, aka citizen Mark Bunster, who got paid all day long today, and was also busy updating his blog and commenting here, there and everywhere while getting his government pay. His boss doesn't seem to mind him doing that, since Bojack tattled on him a while ago, to no effect.

    Most of the folks here are also state workers with PERS (you remember, the retirement plan that goes up if the stock market goes up, and if the market goes down 8% today and 25% this year, their PERS will 'only' go up the guaranteed 8% gain the negotiated through their unions. They have no sympathy for saps like you who pay taxes; they prefer to benefit from other people's taxes.

    How do I know most people who comment here are state workers?
    Two reasons: 1) many have self identified as such, and 2) the volume of comments drops off completely after 5pm, when government workers hear that whistle blow, clock out and stop their internet activity.

    So John, no sympathy for you!

  • Fair and Balanced (unverified)
    (Show?)

    What should we be looking for to fix this mess?

    1. Pelosi said the message is "the party is over for Wall Street," but the failed bill didn't really do that. How about imposing some strict limits on:
    2. how large any financial firm can get
    3. how much they can pay their execs
    4. how much incentive they can add to the pay
    5. how long they have to hang on to any stock options before they can sell (I suggest 10 years!)
    6. how they can raise capital (leverage)

    7. Go after the schemers who made off with billions in salary and bonuses through their pyramids. Exact prison terms and restitution if they committed criminal acts, and if they didn't just tax the hell out of them -- yes, after the fact; sorry.

    8. Place a moratorium on all mortgage foreclosures, then develop some criteria to determine whether the borrower was really speculating or just following the lender's rules in buying an owner-occupied home. Then let the speculators be damned.

    9. Take over any failing institutions and structure them so they can be split up into medium-size businesses that would compete with each other on the basis of service, not behemoths that can act like monopolies.

    There's a program for you.

  • (Show?)

    The argument that Defazio and many others on the left have raised that we should just increase government spending on infrastructure or whatever is just as crazy as the Republican suggestion that we eliminate capital gains taxes. Both are non-sequitors.

    The problem we face is a credit crisis and a lack of bank capital. Handing out money to road pavers or home owners does not solve the problem. There are viable alternatives like using the government funds to buy equity in the banks or requiring broker transaction taxes to pay for the loans, but Congress can not take months to craft a bill that pleases everyone and there is no need to solve our entire regulatory system in the next 24 hours. Defazio and Blumenauer and others need to get real about what they want that can get passed or get on board with what can.

  • (Show?)

    Paul, reducing DeFazio's position to one that says "let's stick it to the fat cats so that I can get re-elected", is both disingenuous and narrow-minded.

    I understand that we are in a credit crunch, but handing out $700 billion of taxpayer money with very minimal protections is not the only way out of this mess.

    $700 billion is a hell of a lot of money, and I'd like to see a more reasoned approach than the one that the Bush administration and Democratic leadership have attempted to saddle us with.

  • Josh Reynolds (unverified)
    (Show?)

    Sal

    To answer you question on why more don't act like Peter? Peter can act like this because he doesn't have an opponent for reelection. I am sorry, if Mayor Leiken would have decided to run against him this election his diatribe would most likely had been different.

  • (Show?)

    The blame game is a diverting amusement, but it hardly sheds light on things. For what it's worth, the GOP are going to take this one on the chin, and it may well hasten what is the party's inevitable banishment to the political wasteland. Jack, carp all you want about Nancy Pelosi, but the GOP are taking credit for this one. Clinton was too pro-market in the 90s, and I hated his policies. But the GOP have run the most nakedly pro-business, anti-regulation coalition since the late 1800s, and hiding behind the fig leaf of a single president amid a Republican land grab will not save your party from the consequences it deserves. I encourage you to do some deep soul searching and think how your party has abandoned responsibility and used vicious partisanism before you get too hysterical about a fairly sedate speech.

    That said, laying blame isn't particularly useful. There are reasons beyond blind populism to reject this plan. I would hazard a guess that fewer than ten people in Congress actually understand the problem or the solutions, never mind the consequences that might result. They're being asked to diagnoses a terminal condition, and they didn't got to med school.

    DeFazio has one suggestion, and there are others out there. Krugman suggests this. But here's the point I'd emphasize. Paul's right--this is a crisis. Congress knows it's a crisis. They even know what they don't know and have lined up people who they trust (like Krugman) to tell them what to do. Now what we need to see is the political courage to do what will be unpopular but necessary. Of COURSE it's unpopular. We've been living past our means on the fake profits generated in "exotic" schemes by companies that are now collapsing. Now the credit line is gone. The banks (in China) want their money back. We are going to have to tighten our belts and act like adults. Even if it means pissing off the electorate, someone's got to act like an adult.

    With any luck, this market nosedive will act as smelling salts for the members of Congress momentarily caught in reveries of electioneering.

  • (Show?)

    Paul, I do think you have this wrong:

    What DeFazio smelled was not a rat, but his own political mortality.

    DeFazio's mortal? Who exactly is his slayer? I think you're right that politics played a role here, but it seems like you have the logic backward on DeFazio. Here's wunderkind Nate Silver:

    Among 38 incumbent congressmen in races rated as "toss-up" or "lean" by Swing State Project, just 8 voted for the bailout as opposed to 30 against: a batting average of .211.

    By comparison, the vote among congressmen who don't have as much to worry about was essentially even: 197 for, 198 against.

    I'm with you--this is real and Congress has to act. But voting for this bill isn't the only choice. Whether there's time to recalibrate now without sending the market tumbling by serious percents (23% in 1987, at the tail end of the last free-market administration) is critical. If not, I'll expect the Oregon Congressmen to come around.

  • Bill R. (unverified)
    (Show?)

    Ponder this, if you are one of those who wants to "stick it to Wall St."

    From ABC economic consultant today: "I don't care if you're a big corporation, a small business, an individual trying to send your kid to college, or buy a car or buy a house, it is virtually impossible to get a loan in this country.

  • joel dan walls (unverified)
    (Show?)

    Larry, something tells me that you don't know much about public employees and their retirement plans. Let me tell you about federal employees. The old system that amounted to a pension plan--retirement income as a specified fraction of one's salary at retirement--was abolished during the Reagan Administration, although people who were covered under it are "grandfathered" in. Federal employees hired after 1986 pay into Social Security like everyone else, and have the option to contribute to the Federal Employee Retirement System, which amounts to a 401(k) plan, with Uncle Sam matching in small part. There are NO guaranteed returns under FERS.

  • joel dan walls (unverified)
    (Show?)

    Larry, something tells me that you don't know much about public employees and their retirement plans. Let me tell you about federal employees. The old system that amounted to a pension plan--retirement income as a specified fraction of one's salary at retirement--was abolished during the Reagan Administration, although people who were covered under it are "grandfathered" in. Federal employees hired after 1986 pay into Social Security like everyone else, and have the option to contribute to the Federal Employee Retirement System, which amounts to a 401(k) plan, with Uncle Sam matching in small part. There are NO guaranteed returns under FERS.

  • joel dan walls (unverified)
    (Show?)

    On the business of credit, I hear from college instructors that students depending on loans are in a bad way because of the credit crunch. It ain't just Wall Street.

  • joel dan walls (unverified)
    (Show?)

    Oh LARRY, one more thing, the Oregon PERS no longer has that guaranteed return stipulation. This went away in the reforms that were passed early in Kulongoski's first term.

    On the other hand, your rampant speculation about these matters, and your raging resentment based on vapor, seem fully intact.

  • (Show?)

    "I don't care if you're a big corporation, a small business, an individual trying to send your kid to college, or buy a car or buy a house, it is virtually impossible to get a loan in this country.

    That's fear-mongering. We purchased a new home, received a loan at a favorable rate, and closed on it in the middle of the worst of this crisis to date.

    I agree that it's a crisis, but there remains no reason to allow politicians, bureaucrats, and a hysterical media to use panic to stampede the American people towards a bailout that will cost taxpayers $700 billion that accomplishes nothing other than alleviating a short-term credit crunch by buying a mountain of bad debt.

    At a minimum, we need assurances that policies will be put into place to prevent this from happening again, and to protect loan consumers.

    The last time the Bush administration used fear to drive policy, we invaded Iraq. It may be the case that congress needs to act expeditiously, but they also need to be judicious with our money and prudent with the policy so that we don't have a repeat in another 3-10 years.

    As someone who believes in our representative democracy, I can say unequivically that when Peter DeFazio, David Wu, and Earl Blumenauer are satisfied with the bill (but especially DeFazio), I will be satisfied with the bill.

  • Larry (unverified)
    (Show?)

    Larry writes: "Most of the folks here are also state workers with PERS"

    joel dan retorts: "There are NO guaranteed returns under FERS."

    PERS and FERS... hmmm, the "P" key on my keyboard is pretty far from the "F" key. No typo there!

    Confused, joel dan?

    PERS is state, FERS is federal.

    Still confused?

    Ask your boss. He/she is very familiar explaining basic government things to his/her low level government employees.

  • Bill Bodden (unverified)
    (Show?)

    Ponder this, if you are one of those who wants to "stick it to Wall St."

    From ABC economic consultant today: "I don't care if you're a big corporation, a small business, an individual trying to send your kid to college, or buy a car or buy a house, it is virtually impossible to get a loan in this country.

    That may be applicable today, but if the Congress can get a temporary injection of integrity and come up with an honest plan - admittedly that will be a formidable challenge - then ten days or two weeks from now the country will be in better shape under such a plan than it would have been if today's scam had gone through.

    One of the biggest problems is that too many people are too easily scared. In 2002 it was mushroom clouds if we didn't get Saddam Hussein's (non-existent) WMDs. In 2003 Congress was stampeded into voting for the Patriot Act even if they never read it and had little idea what was in it. Now we are heading into another Great Depression. We do have one justification for depression. Observing this nation of sheep. (Sorry, Chris, but I still believe this analogy fits.)

  • joel dan walls (unverified)
    (Show?)

    Larry, I described two things:

    FERS: Federal employee retirement system. As I explained, it's like Social Security (which you have) plus an optional 401(k), which I'll bet you also have.

    PERS: Oregon public employee retirement system. Since the Kulongoski-sponsored reforms passed in his first term, there are NO guaranteed returns.

    But go ahead, don't let facts get in the way of your resentment about the nonexistent cushy deals that public employees get.

  • joel dan walls (unverified)
    (Show?)

    Larry, I described two things:

    FERS: Federal employee retirement system. As I explained, it's like Social Security (which you have) plus an optional 401(k), which I'll bet you also have.

    PERS: Oregon public employee retirement system. Since the Kulongoski-sponsored reforms passed in his first term, there are NO guaranteed returns.

    But go ahead, don't let facts get in the way of your resentment about the nonexistent cushy deals that public employees get.

  • Brian C. (unverified)
    (Show?)

    I LOVE IT!!! I can count on DeFazio to vote correctly at least 66% of the time (how I wish he was currently running against Gordo), but I'm pleasantly surprised that Wu & Blumenauer didn't tow the line. Ultimately it was Republican congressman who flipped the bird to W, Pelosi & the Barney Franks of the world, but they couldn't have pulled it off without some bipartisan support. Hooley & Walden remain on my enemies list.

  • calmnsense (unverified)
    (Show?)

    Brian: blame Hooley for her vote for the repeal of Glass-Steagall or the anti-consumer bankruptcy bill of 2004 but not this one. Without a final election vote to face, we can now trust that Rep. Hooley was voting her conscience and not trying to squeak thru once more in her swing district. Maybe she was trying to make up now for the aforementioned past sins, or others such as her reversal of opinion on the Estate Tax a couple of years ago.

    The fallout from today's vote might be felt for years (not weeks or months) to come. As Barnhart said: shame on DeFazio, who should know better. Shame too on Blumenauer, who is smart enough to know better and is really misrepresenting his constituents in Portland, Oregon's financial/banking center. And shame on Wu, but who probably didn't know better and is clueless as ever.

    Yes, DeFazio has some good ideas. Nothing precludes a Democratically-controlled DC (come Jan. 2009) from instituting the "transfer tax" or increasing the oversight (but after today, query what that means???) from Congress etc. The original proposal from Paulson was a joke but this compromise should have been an appropriate stop-gap measure until the lame ducks had quacked out of town for good.

    Instead, we are in for a roller coaster ride that will make us old-timers remember Jantzen Beach. The only silver lining will be Obama's landslide win come November, but this is now a terribly poisoned chalice and the Dems who have just added more cyanide to the mix ought to be full of remorse by week's end.

  • 1929 all over again (unverified)
    (Show?)

    It would be interesting to see how Defazio and Blumenauer would have voted if it were $700 billion for global warming mitigation, union jobs (light rail), and public housing.

  • Bill Bodden (unverified)
    (Show?)

    Nothing precludes a Democratically-controlled DC (come Jan. 2009) from instituting the "transfer tax" or increasing the oversight...

    Except campaign donations to appropriate committee members from the finance, insurance and real estate corporations. In the 2008 election cycle they gave the House Financial Services Committee (Rep. Barney Frank (D-Mass), Chairman; Rep. Spencer Bachus (R-Ala), Ranking Republican) $12,803.208. These corporations gave the Senate Banking, Housing, and Urban Affairs Committee (Sen. Christopher J. Dodd (D), Chairman; Sen. Richard C. Shelby (R-Ala), Ranking Member $26,729,637. That is almost 40 million to Congress, a sum that is more than adequate to buy a nice bi-partisan care package for Wall Street - and a team of skilled wordsmiths to concoct a plausible lie for the American people.

  • (Show?)

    Paul,

    A friend who worked the credit derivatives desk at an investment bank (and married a MBS trader) says the gears need "grease" instead of "oil", which I'd say qualifies as the same as far as metaphors go. However, he argues that the government trying to price and acquire these things is a recipe for disaster, and argues instead that the feds acting as a lender in the commercial paper market would provide the grease. If the people at Lehman and Bear Stearns couldn't figure out how to handle these without getting burned, why would the staff at Treasury do any better?

  • (Show?)

    Also, I should add, he says let some more banks fail, and only lend to non-financial firms. He figures the CDS exposure is minimal for non-financial firms. Anyway, a perspective from someone who's worked in the business.

  • rw (unverified)
    (Show?)

    Rich R - where is your friend putting his investment bucks right now, and how?

  • r. james (unverified)
    (Show?)

    How conflicted you good liberals must feel! You're in bed with GWB, entangled in a massive, writhing orgy of political hedonism, and ohhhhh how good it feels! But you know how embarrassed (and violated) you'll feel in the morning, which is why you're trying so hard to justify your coziness with W before the endorphins fade. Enjoy it while it lasts! When it's over you'll be wondering, "What is that bad taste in my mouth and who put it there?"

  • (Show?)

    Larry's so cute with his envy, and the way he lashes out at public employees to cover his anger. Larry, one of the MANY perks you get for working on the government dime are these things called BREAKS. They give you two of them each and every day! You also get an even longer one--that you have to pay for yourself--that many people call LUNCH.

    Today I had something called a MEETING. I got there 10 minutes before it started, and people were late arriving.

    And I also took a very satisfying crap today.

    In each of these cases, I happened to have a personal instrument handy that allowed me access to the internet. I availed myself of those opportunities.

    And I'd like to specifically warn you that tomorrow morning, when you might THINK I'm at work, I'm actually likely to be at home with a sick daughter. So if you see me posting or commenting then, don't blow a gasket; like the other times, it's not costing you anything.

    So take your lame-ass "tattling" and walk, eh? My taking the time to explain why you don't have the first freaking clue what you're talking about, was more than you deserved.

  • LT (unverified)
    (Show?)

    Jack Roberts, I voted for Gerald Ford and John B. Anderson for president precisely because they cared about issues and problem solving, not blame game.

    Of all the times that Republicans basically called every Democrat the focus of evil in the modern world while Republicans were infallible, it is juvenile for them to say some of them changed their votes because of a speech by the Speaker.

    Heard EJ Dionne speak tonite and he said that comparing what happened recently to Herbert Hoover was an insult to Hoover because he was more of an activist than the Bush folks until very recently. I know there were Democrats who voted for various kinds of deregulation, but Peter DeFazio wasn't one of them. So I have no problem with him voting his conscience--wasn't he the one who said the premise was wrong, there should have been a vote on the original Paulson plan, and then after it went down they could have written a better plan?

    Time to get away from the name calling. No one was ever allowed to be offended by the remarks of Speaker Gingrich or question Speaker Hastert's comments of being the Speaker of the majority of the majority, but Speaker Pelosi has no right to freedom of speech because some Republicans might have their feelings hurt?

    I recall a story that prior to the S & L problems some small town S & L owners had come to DC to ask for some common sense regulations to protect their operations and been told "We're the Reagan Administration, we don't do regulation." That turned out real well, didn't it---how much did the S & L bailout cost?

    If there hadn't been derivatives, stated mortgages (where income didn't have to be proved) and other fancy financial dealings which George Bailey of Its a Wonderful Life fame wouldn't have understood, we wouldn't be in such a mess.

    Did that statement insult the tender feelings of Republican politicians?

    Let's get back to common sense, folks!

  • Greg D. (unverified)
    (Show?)

    Looks like the morons have come out to play on this thread. My only comment is a factual one. PERS Tier I folks - like my beautiful wife who was on the OHSU faculty for many years before she went into private business - are guaranteed 8% annual returns on their accounts (except for last year's legal costs which reduced the return to something like 7.89%). My earlier post was intended to suggest that Oregon taxpayers may not be able to stomach the difference between 30% losses in the stock market and the 8% guaranteed returns to Tier I folks. Maybe most of the Tier I folks have already retired so this is not a big deal. The contrast between Tier I and my private 401k is amazing, as I am being slaughtered by the market whereas my wife keeps on getting her 8%. I was hoping for some help today from my Dem representatives, but no luck. God Bless the Oregon taxpayer!

  • (Show?)
    I attended a lecture by Austan Goolsbee, Obama's chief economic advisor, last Thursday. ... He's a hell of a smart economist.

    Maybe not so smart. I wanted to go to the Goolsbee lecture to ask him which of Obama's economic advisers (including himself) saw this disaster coming, but wasn't able to get away. I sure didn't hear anything coming out of the Obama camp about an imminent financial disaster.

    Then there's this.

    Even more surprising, given his research, Goolsbee believes that most of the income inequality results from "radically increased returns to skill" which is the standard movement conservatism excuse for widening income inequality. This completely ignores the unbelievable distribution you find when you focus on just the top ten percent of income earners, which is almost as badly skewed as the national picture - most of the gains have gone to the top one tenth of one percent. In one of his papers, "What Happens When You Tax the Rich? Evidence from Executive Compensation,"in Journal of Political Economy, April 2000, Goolsbee is worried about "the amount of deadweight loss created by a progressive tax code." He even explicitly points out that a "few thousand executives may account for as much as 21%" of the change in wage and salary income of almost the top one million taxpayers from 1992 to 1993. ... So, the evidence that an extremely small number of extremely rich people have been -- let's be honest and call it what it is -- looting the United States, is slapping him in the face, but Goolsbee is sticking with the "neo-liberal" radical free market economic theory that higher skills are simply getting paid much more. That misses the whole point of "lifting all boats." If it turns out, as all the evidence now shows, that your pet economic theories are not lifting all boats, well, shouldn't you begin suspecting that there's something wrong with the theories? Unless, of course, you really don't mind -- or are told not to mind, and you obey -- the filthy rich getting ever filthier and ever richer.
  • (Show?)
    I was hoping for some help today from my Dem representatives, but no luck. God Bless the Oregon taxpayer!

    Greg, there's no guarantee that a passage of the bailout today would do anything more than stave off the continuing collapse of the markets for a week or a month. This problem has been years in the making. It's not going to be fixed overnight by filling the holes temporarily with money.

  • (Show?)

    It's worth remembering that Japan took 7 years to bail their own banks out to free up credit.

    Taking that much time led to a deep recession, but another lesson we can take away is that neither Congress nor the American people should not allow ourselves to be stampeded into an ill-conceived bailout package.

    The time frame we should concern ourselves with is weeks or months, not days and minutes. If failing to pass a bill today or tomorrow leads to a global depression, then what reason do we have to believe that the $700 billion was going to do anything more than delay the inevitable, particularly since American taxpayers have already spent more than $600 million to date.

  • joel dan walls (unverified)
    (Show?)

    There's a good argument for the Democrats to now turn this affair into good, progressive policy making. Read here.

  • Bill Bodden (unverified)
    (Show?)

    There's a good argument for the Democrats to now turn this affair into good, progressive policy making. Read here.

    Unfortunately, much as I respect the American Prospect darrelplant's post of Sep 30, 2008 12:00:47 AM (above) seems more based on reality than wishful thinking.

  • (Show?)

    Sal

    Wow. Double Wow.

    Citing Japan's foot dragging, which led to the "lost decade," destabilized their political system, and displaced its economy from its perch as the most vibrant and innovative economy in the world is your argument as to why we should take "weeks or months"--well, thanks.

    That's a great argument for doing just the opposite.

    ==

    Rich R., those distinctions are outside my pay grade. I think your friend would agree something needs to happen now, in days, not in months, regardless of how the Fed adds the grease.

  • Tom Civiletti (unverified)
    (Show?)

    At some point this country will need to face the severity of our economic problems. This is not just another low spot in the business cycle. The Keynesian approach to infinite growth has hit the wall. We went from the burst hi-tech bubble directly into the real estate bubble, an unprecedented event. Fossil fuel use, which correlates very closely with the total economic growth in the past two centuries, cannot grow much more because of constraints on supply. And even if the supply were available, using it would hasten the climate crisis.

    Globalism has led to 6+ billion people who expect to live the unsustainable lifestyle of Americans. That only makes the unsustainability more acute.

    The party is just about over.

  • Tom Civiletti (unverified)
    (Show?)

    paul g.,

    Breath, meditate, take your meds, whatever; but chill out.

  • (Show?)

    Jeff, you're smart enough to know that the reason many members are in safe seats is precisely because they make politically wise decisions.

    Sadly, I think DeFazio and Blumenauer cast a tremendously bad vote, and did so because, instead of helping their constituents understand why this bill had to pass, they reacted to the howls of outrage from the public.

    Any bill that will pass and will be effective is going to have to attract significant numbers of Democratic and Republican votes. This is not the time to think about a new Progressive agenda. This is not the time to think about sticking it to the Republicans. This is not the time to cut capital gains (the GOP poster child) or guarantee individual mortgages

    Earl stood on the steps of the Capitol stating that a "bit of market uncertainty" is all right as long as he gets a different bill. He wants to impose new taxes on financial companies. Good luck with that one!

    David Wu says nothing of substance. His statement says "we need to act to protect Americans’ jobs, retirement, and financial security". He's protecting his political hide.

    But I will give DeFazio credit. He claims to have found loopholes by which executives could still receive golden parachutes. That seems to me a reasonable--and compromisable--position.

    I'd focus my ammunition on DeFazio. I think a bill can be crafted that he can support.

  • The Agave King (unverified)
    (Show?)

    I don't see the bill itself as the problem so much as managing the cash outlay. Given all the liquidity that has already been pumped into the economy, Congress was going to do the right thing by releasing just the first $250B. Spending that money wisely (say, actually buying up distressed mortgages instead of deadbeat securities) could well prove to provide enough short-term relief such that (a) home foreclosures can be abated and (b) lenders feel less threatened by new credit committments.

    Don't get me wrong: this was not a great bill. But it was better than the other gimmick-laden proposals it was competing against. Of course, it didn't help that (a) Pelosi had no idea how to lead this effort in the House, (b) House members up for re-election didn't have the confidence to speak about the plan in basic terms which their constituents would understand, and (c) there was all this stupid talk about how the bill would usher in the age of socialism.

  • (Show?)

    Paul, I'm surprised to see someone of your academic background and experience promoting the false choice that the choice we are presented with is doing something IMMEDIATELYRIGHTNOW, regardless of how well-conceived it is, and taking 7 years as the Japanese did.

    Only a colossal misinterpretation of my comment could lead one to believe that I was suggesting that the feds wait 7 years to relieve the credit crunch.

    Also, I think you are missing the point DeFazio was making and the protections that consumer advocates are looking for. Taking a hard stand on executive compensation is more about demagoguery than policy. Yeah, they should go ahead and do it, but to focus on that kind of gotcha politics misses the real point.

    We need congress to improve consumer bankruptcy protections and provide us with assurances that sufficient regulation is put into place that will keep the kinds of irresponsible speculation that got us into this crisis from hitting us again in the near future.

    If Peter DeFazio can also get significant government investment in infrastructure then I'd favor that as well.

    If it takes weeks or even a months to craft such a bill, Americans will be better off than if Congress allows the Bush administration to use this panic to stampede them into spending another $700 billion, on top of the $600+ that we have already spent.

  • (Show?)

    Paul, FWIW, on the contrary, no, my friend doesn't seem to share your sense of urgency. In fact, he is against bailing out the banks, and only supports intervention in the form of commercial loans to non-financial companies.

    If you listen to Earl's comments on the bill, it doesn't sound like it would take much to get a majority. Giving home owners the same bankruptcy protections as businesses and rich people. Making the financial sector pay us back for the costs. These are hardly bold or radical proposals. Too soft for my tastes, actually.

  • Peter Ferris (unverified)
    (Show?)

    Excuse me if this has been stated before, but here's my question: Why can't we see the actual language in the legislation, posted on the CSPAN website? Otherwise we are buying a "pig in a poke"!

    We should demand that this be posted everytime it's changed. There is no open process here at all and we are left to turst the two parties...and as a good Democrat, I'm not going to allow my party the benefit of the doubt...

    If these legislators are claiming to be "taking care of all Americans," let's have the transparency to make believers out of us!

  • inbf (unverified)
    (Show?)

    I don't think Pelosi is stupid. I think her speech was political - giving dems cover in order to give a boost to the dems in the election. She probably knew the votes were not there - from either party and so she would take a political advantage out of it. Short term thinking.

  • Bill Bodden (unverified)
    (Show?)

    Why can't we see the actual language in the legislation, posted on the CSPAN website? Otherwise we are buying a "pig in a poke"!

    If any new legislation is created in the same way the bailout bill was concocted - that is, in closed session with Wall Streeters and politicians on their payroll - you don't need to read the bill to conclude it is a safe bet it is at least a pig in a poke - more likely, a rattlesnake in a sack.

  • Tom Civiletti (unverified)
    (Show?)

    inbf wrote:

    Short term thinking.

    I believe the opposite is true. Short term thinking would be that such a floor speech would give House Republicans an excuse for not producing the votes they promised. Long term thinking is that those Republicans might not be around in January.

  • inbf (unverified)
    (Show?)

    Tom, given the fact that the speaker could not get dems like DeFazio on board with a bill I think she knew it was a bad bill and would not pass. Instead of working towards a bill that could pass she just makes inflammatory grandstanding accusations. You think that is smart? Since when did the dem party behave just like the repubs? Win at all costs. It was not constructive, helped no one. This kind of politics is not healthy. Its all about the blame game, but actually both parties are looking pretty much the same these days!

  • Tom Civiletti (unverified)
    (Show?)

    inbf,

    You need to follow the chronology, at least that which was made public. Congressional leaders and Paulson negotiated a bill. House Rs promised to supply 100 votes for that bill. They could not deliver, but at that point, the vote was set. Pelosi already had a deal with her caucus to supply the majority of votes as long as the Rs delivered their votes.

    She could have begged, prayed, or done a striptease at that point without affecting the outcome. She decided to come out of the ruins with as much political capital as she could.

    I am no Pelosi fan, but she did nothing to fault, beyond agreeing to the quasi-Paulson plan in the first place.

  • inbf (unverified)
    (Show?)

    No, she did not work to get dems on board with the bill. It was a bad bill, and she allowed 94 or 95 dems to take political cover and vote no. (can't access the congressional website yet to check all the votes). It was a sham all the time. Many of those dems owed her and if she wanted the bill it would have happened, unless you think she is completely incompetent (which I don't). IF she had wanted this bill passed she would have handled the entire process much differently. It was just political cover and games. With our $. How are the two parties different?

  • RW (unverified)
    (Show?)

    Look, call me naive. But I actually believe those Repubs being interviewed. Listen to the fatigue and weight in their voices. Not much pretense there to my ear. It just was not, ultimately, something folks could sign their names to. And they had the guts to stop the train despite all protestations to disaster on the part of Paulson and company. No matter what is done me and mine will suffer; some, much or really a lot. I am convinced Pelosi had nothing to do with that outcome. Possibly some folks are starting to realize that this shit sticks to your name, folks. So do what you really want on you later.

  • Tom Civiletti (unverified)
    (Show?)

    inbf,

    The deal was what the deal was. Pelosi had the votes she promised. Boenher did not. That is how the parties were different.

    We both agree, along with most Americans, that it was a bad bill.

  • Tom Civiletti (unverified)
    (Show?)

    I just received this from Dennis Kucinich:

    Yesterday marked a day that will go down in history, when Congressional Democrats and Republicans alike took on full responsibility to protect the interests of taxpaying Americans, and defeated the deceptive bail out bill, defying the dictates of the Administration, the House Majority Leadership, the House Minority Leadership and the special interests on Wall Street.

    Obviously Congress must consider quickly another course. There are immediate issues which demand attention and responsible action by the Congress so that the taxpayers, their assets, and their futures are protected.

    We MUST do something to protect millions of Americans whose homes, bank deposits, investments, and pensions are at risk in a financial system that has become seriously corrupted. We are told that we must stabilize markets in order for the people to be protected. I think we need to protect peoples' homes, bank deposits, investments, and pensions, to order to stabilize the market.

    We cannot delay taking action. But the action must benefit all Americans, not just a privileged few. Otherwise, more plans will fail, and the financial security of everyone will be at risk.

    The $700 billion bailout would have added to our existing unbearable load of national debt, trade deficits, and the cost of paying for the war. It would have been a disaster for the American public and the government for decades and maybe even centuries to come.

    To be sure, there are many different reasons why people voted against the bailout. The legislation did not regard in any meaningful way the plight of millions of Americans who are about to lose their homes. It did nothing to strengthen existing regulatory structures or impose new ones at the Securities and Exchange Commission and the Federal Reserve in order to protect investors. There were no direct protections for bank depositors. There was nothing to stop further speculation, which is what brought us into this mess in the first place.

    This was a bailout for some firms (and investors) on Wall Street, with the idea that in doing so there would be certain, unspecified, general benefits to the economy.

    This is a perfect time to open a broader discussion about our financial system, especially our monetary system. Such a discussion is like searching for a needle in a haystack, and then, upon finding it, discussing its qualities at great length. Let me briefly describe the haystack instead.

    Here is a very quick explanation of the $700 billion bailout within the context of the mechanics of our monetary and banking system:

    The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them.

    Confused?

    This is the system. This is the standard mechanism used to expand the money supply on a daily basis not a special one designed only for the "$700 billion" transaction. People will explain this to you in many different ways, but this is what it comes down to.

    The banks needed Congress' approval. Of course in this topsy turvy world, it is the banks which set the terms of the money they are borrowing from the taxpayers. And what do we get for this transaction? Long term debt enslavement of our country. We get to pay back to the banks trillions of dollars ($700 billion with compounded interest) and the banks give us their bad debt which they cull from everywhere in the world.

    Who could turn down a deal like this? I did.

    The globalization of the debt puts the United States in the position that in order to repay the money that we borrow from the banks (for the banks) we could be forced to accept International Monetary Fund dictates which involve cutting health, social security benefits and all other social spending in addition to reducing wages and exploiting our natural resources. This inevitably leads to a loss of economic, social and political freedom.

    Under the failed $700 billion bailout plan, Wall Street's profits are Wall Street's profits and Wall Street's losses are the taxpayers' losses. Profits are capitalized. Losses are socialized.

    We are at a teachable moment on matters of money and finance. In the coming days and weeks, I will share with you thoughts about what can be done to take us not just in a new direction, but in a new direction which is just.

    Thank you,

    Dennis www.Kucinich.us 216-252-9000 877-933-6647

    PS: Watch the 47 minute 'Money as Debt' animated documentary in http://video.google.com/videoplay?docid=-9050474362583451279. This is a useful, though by no means definitive, introduction to the topic of debt and the monetary system. Let me know what you think.

  • Bill Bodden (unverified)
    (Show?)

    (can't access the congressional website yet to check all the votes).

    This was the vote even though the title seems irrelevant.

  • RW (unverified)
    (Show?)

    ... and just for one more moment I am positively grief-stricken that this is not our candidate for President or at least Vice Presidence: Dennis K.

  • meg (unverified)
    (Show?)

    We both agree, along with most Americans, that it was a bad bill. What about the golden boy?

    RENO, Nev. -- In a sweeping speech in battleground state Nevada, Obama made a direct appeal to the American people and to members of Congress to support the $700 billion rescue plan that failed to pass in the House of Representatives yesterday.

  • (Show?)
    RENO, Nev. -- In a sweeping speech in battleground state Nevada, Obama made a direct appeal to the American people and to members of Congress to support the $700 billion rescue plan that failed to pass in the House of Representatives yesterday.

    Ugh. Thought so.

  • Bill Bodden (unverified)
    (Show?)

    We both agree, along with most Americans, that it was a bad bill. What about the golden boy? (Obama)

    He has been bought just like the rest of them

    Go to the Center for Responsive Politics web site and check for Obama, McCain, Dodd, Shelby, Frank, Bachus, Pelosi and Boehner to see how much Wall Street gave to them and find out why they were so willing to sign Hank Paulson's blank check.

    Then contrast their donations with Dennis Kucinich's.

  • Tom Civiletti (unverified)
    (Show?)

    This is not the only issue on whch I disagree with Obama. I have not been able to find any on which I agree with McCain, however.

  • andy (unverified)
    (Show?)

    Bill Clinton has some good points in the latest edition of Business Week on the liquidity bill. Hillary has also weighed in with strong support passing a bill to provide liquidity support into the markets.

    On the other hand, I was a little shocked to see how stupid both Defazio and Blumenauer sounded in the statements I read today. Those guys are either morons or else someone did a hatchet job on the interview. DeFazio was making some stupid comparison to the Iraq war and Blumenauer made some silly comment about rich people with four houses getting a bailout but poor people won't. Those two guys evidently didn't even understand what they were voting on. Or maybe they found a stash of mushrooms that Earl had been saving for a special occasion and they were both high during the interview.

  • (Show?)

    Jeff, you're smart enough to know....

    <h2>Paul, you impugn my carefully-tended reputation of boneheadedness.</h2>
in the news

connect with blueoregon