This bail out will not work now, if it ever was going to - the psychological impact has passed. It's now just a mess. It could have had an impact if it was bounced into play within 24 hours notice (not that it should have gone through without rigorous debate, of course) Today - $640 billion has been pumped into banks and finance across the world. It hasn't made any difference.
I suspect they'll come back and vote again with very modest changes. Even as the market is tumbling it means money is leaving the market. The big investors are moving it into T-Bills looking for security. T-Bill prices are soaring and rates of return are dropping. The big money is rolling into security. The "bailout" is and was mostly about not only maintaining the banks, but maintaining a system of private credit and access to liquidity around the world. All the banks own plenty of bad debt. They are all being forced to recognize losses to meet accounting rules. Their losses are wiping out the equity (stock prices/ownership) of the firms. None of them trust that the others are credit worthy enough to make loans to one another. Its a scary proposition. As this situation spirals downward, I do hope they return to vote again. The political comments are all blame stuff. Plus voter response to Congress was running dramatically against the bailout. If economic things turn ugly fast I suspect there will be a change in votes. I suppose we will see.
The earliest they will come back to vote is on Thursday The Dow Jones has just closed down 557 - its biggest ever one day points drop (correction: no its not)
This is where I think people advocating no-action are missing an important point. The amplifier effect of a "cash only" system is a disastrous prospect, in my opinion. It is speculative play on credit, and not the legitimate need for credit, that is at the heart of this thing.
This is where I think people advocating no-action are missing an important point. The amplifier effect of a "cash only" system is a disastrous prospect, in my opinion. This is false - a scare tactic. Banks will continue to lend money, when it is profitable. This means interest rates, down payments, and your reason for spending the money might need to go up, but it doesn't mean that all credit will be impossible to get. We have a crisis / collapse coming, I am sure of that. The only option left is to choose between contraction and hyper-inflation. IE: Do you want $100,000 homes or $10 gallons of milk? You have to pick one or the other at this point...
Korr: We are in a crisis now. A lot of institutions are facing paralysis. They are not lending among one another. That is the primary way they maintain healthy balances. Banks don't trust one another. Its a loss of trust in the financial markets. I have no idea where most American banking liquidity is located; focused on big riskier institutions or the aggregate of many small, more localized institutions. Regardless, bigger institutions are stuck and frozen for the time being. There is an enormous amt of corporate rolling debt. In healthier times it gets readjusted almost as a quick matter of course. That is going to dry up and die for the time being. That leads to a lot of contraction and loss of jobs. The only banks that will be lending are those that have been run on very tight conservative bases. I suspect they are in the minority with regard to total lending ability, and I also suspect they aren't big enough to handle large accounts. There are many problems in the economy right now. The biggest and most current one is this real estate debacle. I'd go in and try and tackle it. To repeat. I'd try and buy depreciating loans on real estate real low. The only caveat on that is that they can't be so low as to drive the selling institution (bank) into bankruptcy. Then I'd try and go back into the market, selling homes and loans. I'd try a bunch of things to see which seem to work best. I'd probably go into those real estate markets in parts of Florida and California where things are worse and see what it takes to get some stability .....just to prevent more foreclosures. I hope Congress revotes on this issue.
Korr, speaking for myself, it's not a "tactic" at all, much less a scare tactic. From my experience in business, there were times I needed the flexibility of liquidity, or die. Were that to have happened, not only my livelihood, but the livelihood of the many people who draw their pay from what I do, would have all go down the toilet; the dollars used to buy elsewhere no longer available, the spiral is a disaster. To give you an example from my former industry, say I had a profitable restaurant, doing well; paying its purveyor and loan bills timely and well. Now, absent some assurance they can tap liquidity as needs be, by some known criteria, they began to institute tougher credit terms - even though nothing has changed in the essential health of my business. They go to a 2 day credit cycle, as opposed to a 2 week cycle; or, worse, C.O.D., or higher interest on retained balances. Now, when once I was running a healthy business, if only an ice-thin profit margin (as all restaurants, particularly, full-service restaurants tend to be), the new credit regime begins to bite me in the cash-flow ass, and the spiral of doom begins to come down. I buy less wine and food, maintain lower inventories, and a perception begins to creep into my client base that we aren't doing well. I am now not able to see as much because I have less to sell at any one time, and the dreaded "86" of menu-markups starts to take place. I've seen it for decades, and watched it kill business after business; in my industry, this is death. Now, multiply this by any sector. A precipitous credit crunch throws a wrench in all activity, immediately. People can't afford to buy any longer, people can't therefore sell, jobs lost, no money to buy again, and the spiral heads south. Basically, what you call contraction, I call a helluva lot more. Don't know how old you are, but I'm old enough to know what my mom and dad went through in the last great collapse, and it wasn't epiphenomenal - if fortunes were lost on the NYSE, lives were lost in the debacle that followed. No solution is pretty, but I guess I'm not comfortable with the theoretical curative of a free-market solution applied to a titanic calamity, for what would obtain in the lives of millions now.
A bailout would not have solved anything - only prolonged the inevitable and likely cause a wholesale collapse in the value of the dollar. This is an umitigated victory for the long term. Now if Congress will only start addressing the real problems. Dr. Paul’s House floor remarks on the bailout
If defaulting mortgages is the problem, then how is the solution going to be created by inflating the cost of living through new public debt? Oil prices came DOWN $11 a barrel today on news that the bailout had failed. Wasn't it rising energy and food and general costs that drove so many mortgages into failure? We keep trying to "inflate" home values, but we are only inflating things with real value like oil and milk and beef. I live in Florida - I bought at the top of the bubble. We're doing fine. That 3,000 square foot luxury condo build 30 minutes out of town 20 miles from the nearest sign of civilization? Its NOT worth what those people paid for it and it doesn't matter how much you try to reflate the system, the smart money isn't going to chase stupid homes in a hope for profit.
The mortgage situation caused the problem. It started taking off a good while before commodity prices took off. Its the crux of the debt problem. (but its not the only one!) As to oil prices. ugh. good one day situation ....but for bad reasons. Speculators are betting on a serious serious slowdown in the US and other markets as they fear a melt down on business from this financial crisis.
the stock markets are crashing. its gonna get real bad http://www.timesonline.co.uk/tol/news/world/us_and_americas/article4848747.ece
Capitol Hill is in blame mode now. The proposal is so unpopular that the dems despite having a majority dont want to pass this without GOP fingerprints on it. Unfortunately the Speaker of the House, Pelosi, took her title too literrally and preceded the vote with a rabidly antagonistic partisan diatribe aimed toward the guys whose votes she needed (to spread the blame)... and they basically voted "screw you" in response. Good move Nancy, next time you might wanna spew the spin AFTER the vote. God, and they say Palin is dumb... this wench took firm aim at her toes and emtied the magazine. I watched the speech, she has the political instincts of a doberman. There may need to be a bill of some sort, but if the Dems in the majority want to get it passed they may be on their own. They are firmly aware of two crucial problems with doing that: Passing it over the GOP objections may hand the GOP a hammer that eliminates the chances of ever hearing "Hail to the Chief" played when Obama enters the room. Passing it over the objections of the public may end their own political careers too. If these guys really think we're gonna go to hell in a handbasket moreso than we already are without a $700 billion dollar bill hammered out in less time than these guys spend discussing a change in the price of a stamp... they better focus on push marketing... sell the voters on the wisdom of this move... not the guys on the Hill. I have yet to hear anyone on either side make a cogent argument/explanation of this bill to the public. We have a plethora of bullshit coming from both sides, but little on the way of info. As a banker might say to a borrower... " Funny that we got into this mess by giving away money without proper explanations and oversight and now they wanna tell us thats the best way to get out of it.
Repubs actually had the gall to say their no vote was cause by the speaker? Are you kidding? What are they, 5 years old??? If they believed the correct vote was YES then they should have voted YES regardless of what anyone says. Their vote is supposed to be used for the American people, not for personal vendettas. THIS my friends is what politics is really about. Personal profits and vendettas. The rest is marketing to the common man to get his vote, but they couldn't give a rats ass about them.
Ummm... The American people oppose the bailout overwhelmingly. Hence my suggestion at the bottom of post. Read, dont skim.
their feeling got hurt. fu--k the pugs. their feeling is not important at all. they should stop playing around. the pugs are children if they changed their vote because of pelosi.
While on principle I am glad they voted no, the reason I agree was sickening. Made them sound like little kids. Anyone blaming the speaker as to why the Republicans voted no is simply buying spin, hook line and sinker.
Thank you for again sharing the views of the party that considers themselves our intellectual superiors. Any thoughts that don't require involve simply spewing profanity at those that disagree with you? Naah. Didnt think so. ==== Hey grim - you're forgetting the dems have enough members to pass anything they want over GOP opposition in the house. The GOP voted the way the public wanted them to vote. If the Dems dont want to "play politics" maybe your heroes need to pass this thing without Pelosi's stated requirement that there be Republican fingerprints on the smoking gun.
'My Heroes' yet I back the Republicans for not passing the bill, I do not support them for using the childish reason they claimed. I am not a democrat, nor do I support Obama. You can yell it until you're blue in the fact, it does not make it true.