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And one more thing ...
Posted by: McQ on Monday, September 22, 2008

To the blockheads who run Congress:
Dean Baker, a liberal economist with the Center for Economic and Policy Research, said he has told congressional Democrats that Bush is the one who is in the delicate situation and would therefore be unlikely to veto whatever package Democrats send to him, as long as it gives Paulson some of what he needs.

“I can’t imagine Bush would veto something Democrats send him,” he said. “I just can’t believe he’s prepared to say, ‘If you don’t give me exactly what I want, the financial markets collapse.’ I can’t believe he’d do that.”
Don't even think about larding this bill up with pork or "stimulus" packages or any other misbegotten idea your twisted little political minds can come up with which hasn't a chance of passage at any other time.

On the other hand, this wording is unacceptable:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
For once, do your job, do it competently, do it quickly and leave the politics at the curb.
 
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Better yet, do nothing.
 
Written By: Arcs
URL: http://
Will someone please take control of lending policies out of Barney Frank’s hands. He continues to try make the same policies that led us to this morass.
 
Written By: capt joe
URL: http://
Will someone please take control of lending policies out of Barney Frank’s hands.
Unfortunately, barring a huge election day miracle in the MA 4th, his hold on his seat is as solid as Gibraltar. Ergo, so is his seniority and his committee chairmanship.
 
Written By: CR
URL: http://
Hey, I haven’t been around awhile.

How’s the Free Market Community doing these days ?

 
Written By: Juan Man
URL: http://
I see the Free Marketeers have been reduced to bashing Barney Frank.

WOW!

Really ??

Barney Frank was THE problem ?


 
Written By: Juan Man
URL: http://
Hey Juan Man, so what are you doing these days, now that Frank’s escort service is no longer employing?
 
Written By: capt joe
URL: http://
I’ve been doing some free lance consulting to the Republican McCain Champagne, er, I mean Campaign.

I’m the one who advised them to burn all their bridges, especially the ones to Nowhere.
 
Written By: Juan Man
URL: http://
If Barney Frank’s meddling in Wall Street ever makes Republican John McCain homeless, Republican McCain can live in his car. He would be the first homeless vet to ever live in a car with ten rooms.

 
Written By: Juan Man
URL: http://
How’s the Free Market Community doing these days ?
Looks like you’ve answered your own question, bubba.
Barney Frank’s meddling in Wall Street
 
Written By: CR
URL: http://
Better yet, do nothing.
Of course that’s not going to happen - they’re like cats trying to cover up their own crap.
 
Written By: McQ
URL: http://www.QandO.net
especially the ones to Nowhere
Obama and Biden really liked that one so much that they voted for it twice.
 
Written By: capt joe
URL: http://
For once, do your job, do it competently, do it quickly and leave the politics at the curb.


And that will happen just as soon as they ride their unicorns up to Capitol Hill.
 
Written By: Billy Hollis
URL: http://
By the way, I’ve been warning about the weak economic structure for some time, only to be derided by those who accused folk like me of ’talking down’ a ’fundamentally strong’ economy. Also, note that the European financial markets (continental) are generally not as seriously affected, in large part because of greater regulations.

Markets need rational regulation. They aren’t magic. What we had was irrational partial regulation that helped only the elites. Now we have a situation where, as The Economist magazine notes, the US is nationalizing the economy as fast as you can say "Hugo Chavez."

There is no ideological answer to this:
http://scotterb.wordpress.com/2008/09/20/ideology-and-economics/
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
"Markets need rational regulation."

By whom? You, you little goosestepper? Are you smarter than millions? BETTER?
 
Written By: T
URL: http://
"do it competently, do it quickly"

Even assuming they can do anything competently (an assumption I do not make), asking them to do it competently and quickly is asking a bit too much.


"By the way, I’ve been warning about the weak economic structure for some time,"

You have been warning about the weak everything for some time. By the way, have you warned your students yet about the inferior education they are getting at Cowflop U., and urged them to go to a real school lest they end up like the Gov. of Alaska?
 
Written By: timactual
URL: http://
Paulson = Fuhrer of the National Economy

This is the 1930s all over.

Liberal Fascists and the Communists who want to supplant them.
 
Written By: T
URL: http://
From the WSJ:

Once upon a time, in the land that FDR built, there was the rule of “regulation” and all was right on Wall and Main Streets. Wise 27-year-old bank examiners looked down upon the banks and saw that they were sound. America’s Hobbits lived happily in homes financed by 30-year-mortgages that never left their local banker’s balance sheet, and nary a crisis did we have.

Then, lo, came the evil Reagan marching from Mordor with his horde of Orcs, short for “market fundamentalists.” Reagan’s apprentice, Gramm of Texas and later of McCain, unleashed the scourge of “deregulation,” and thus were “greed,” short-selling, securitization, McMansions, liar loans and other horrors loosed upon the world of men.

Now, however, comes Obama of Illinois, Schumer of New York and others in the fellowship of the Beltway to slay the Orcs and restore the rule of the regulator. So once more will the Hobbits be able to sleep peacefully in the shire.


With apologies to Tolkien, or at least Peter Jackson, something like this tale is now being sold to the American people to explain the financial panic of the past year. It is truly a fable from start to finish. Yet we are likely to hear some version of it often in the coming months as the barons of Congress try to absolve themselves of any responsibility for the housing and mortgage meltdowns.

Yes, greed is ever with us, at least until Washington transforms human nature. The wizards of Wall Street and London became ever more inventive in finding ways to sell mortgages and finance housing. Some of those peddling subprime loans were crooks, as were some of the borrowers who lied about their incomes. This is what happens in a credit bubble that becomes a societal mania.
 
Written By: T
URL: http://
Hey Scott - did you see this line in the WSJ article?
Meanwhile, the least regulated firms — hedge funds and private-equity companies — have had the fewest problems, or have folded up their mistakes with the least amount of trauma. All of this reaffirms the historical truth that regulators almost always discover financial excesses only after the fact.
 
Written By: meagain
URL: http://
By the way, I’ve been warning about the weak economic structure for some time, only to be derided by those who accused folk like me of ’talking down’ a ’fundamentally strong’ economy. And the fact that libertarians have been warning about problems like this since I was in diapers is beside the point. I’m a wise leftist, so I can see these things happening well in advance.

Also, note that the European financial markets (continental) are generally not as seriously affected, in large part because of greater regulations. And also because nobody tries to invest very much there because growth is so low. See, it’s much better to have low growth, European-style soc!alism, because then your problems are drawn out over decades without any solution instead of having to face them all at once. And just forget about that Mark Steyn stuff and the fact that they’re aging and facing an even bigger crisis in their social welfare systems. It’s not going to happen because the Europeans are so much smarter than we are. I decree it.

Markets need rational regulation. And that means regulation by wise leftists. Those wicked capitalists need to be clamped down, and our beneficent politicians and bureaucrats need to be given more power. And don’t start with that stuff about how stupid regulations by ignorant politicians led to this problem in the first place. Just don’t start! Because that interferes with the wise leftist narrative about how we and only we can really run society, for the benefit of all of course. Well, yes, we benefit more than most, and it would certainly help keep my supply of brie and champagne stocked if we wise leftists were given the opportunity to make more money telling stupid industrialists how they ought to act.

Markets aren’t magic. I don’t understand them, but I’m sure they’re not a thing like what I read in Harry Potter. What we had was irrational partial regulation that helped only the elites. And the same guys that did that irrational regulation will all of a sudden get rational and produce stupendous regulation that will solve everything if we just give them a lot more power. Stop laughing!

Now we have a situation where, as The Economist magazine notes, the US is nationalizing the economy as fast as you can say "Hugo Chavez." We wise leftists chuckle over that, of course, because it will certainly make things easier when we eventually take over. A lot of spade work will already be done for us, with you dense righties fully supporting it! Keep it up, dense righties!

So some over and read an extended, and I do mean extended, treatment of how there is no ideological answer to this, because of course wise leftism is just fact and not ideology. You should come over there right now and read it all and be exposed to my brilliance on a regular basis by coming back all the time. Especially since I took the time out to come here and post after I said I wouldn’t, but it’s not because I’m desperate to pimp my blog here! Stop saying that! And stop laughing!
 
Written By: Ott Scerb
URL: http://cluelessprof.maine.edu
Markets need rational regulation. They aren’t magic.
That is a straw man, as McQ certainly believes in regulation of financial markets, and one assumes he wants it to be rational. The question is, what regulations are rational? This was not a failure due to lack of regulation for the most part, but a failure to enforce existing regulations, contraindicated regulations, and a constant attempt by the government to backstop risk taking and the consequences of leverage, leading to an explosion of both and with skinny to non-existent risk premiums.
By the way, I’ve been warning about the weak economic structure for some time, only to be derided
Not by me, though I have issues with some of your claims about what to do about it, though your assertions about what to do have been vague, as they are here today and at your blog.
 
Written By: Lance
URL: http://asecondhandconjecture.com
i think you’re wrong on this one erb.
By the way, I’ve been warning about the weak economic structure for some time, only to be derided by those who accused folk like me of ’talking down’ a ’fundamentally strong’ economy. Also, note that the European financial markets (continental) are generally not as seriously affected, in large part because of greater regulations.
AIG’s impact on European bank’s regulatory capital

But the AIG case shows the importance of another link across financial markets, namely massive circumvention of regulatory requirements. The K-10 annex of AIG’s last annual report reveals that AIG had written coverage for over US$ 300 billion of credit insurance for European banks. The comment by AIG itself on these positions is:

“…. for the purpose of providing them {European Banks} with regulatory capital relief rather than risk mitigation in exchange for a minimum guaranteed fee”.

Thus, a formal default of AIG would have exposed European banks’ large gap of regulatory capital, with possibly devastating effects on their ratings and market confidence. Which explains why AIG’s problems had sent shock waves through the share prices of European banks. Thus, the US Treasury has saved, inter alia, the European banking system. However, as AIG is to be liquidated, European banks will have to quickly shore up their regulatory capital.

The extent of regulatory arbitrage can also be seen in the very large gap between overall leverage ratios and the official, regulatory ratios. The dozen largest European banks have now on average an overall leverage ratio (shareholder equity to total assets) of 35, compared to less than 20 for the largest US banks. But at the same time most large European banks also report regulatory leverage ratios of close to 10. Part of the difference is explained by the fact that the massive in-house investment banking operations of European banks are not subject to any regulatory capital requirement. Another part of the explanation must the regulatory arbitrage, for example though the credit insurance offered for example by AIG.
you can read the rest here.
 
Written By: mac
URL: http://
Lance, man, I don’t know WHAT to do about it! I’m just glad people are finally waking up to the reality of the situation. I’m not sure there is much that can be done. I’m skeptical of a bail out too. I mean $700 billion!!? And that’s just the first figure? The cure may be worse than the disease. Political Scientist Susan Strange, who died in 1999, predicted three crises for globalization. One was the inability of credit markets to be rationally regulated in a globalized economy — and that this could lead to a massive credit crisis down the line (her article was called "The Westfailure System," noting that the system of sovereign states was buckling under the pressures of globalization). I still fear we’re at the tip of the iceberg. My blog point was only that ideology doesn’t give us an answer — ideological thinking has led to too many problems, whether on the left or the right or wherever.

At least now we have to come face to face with our vulnerability as a nation, the fundamental weakness in our economy, and the very real possibility that our days as "the" dominant superpower are ending. Luckily, I think we can craft some kind of way out, but not alone, and perhaps requiring a "new Bretton Woods." Last I checked our current accounts deficit was still 5% of GDP — and given the current climate, that’s unsustainable.
http://scotterb.wordpress.com
(I can’t seem to change the ’url’ on the link for my name here)

BTW, interesting posts...I’ll continue to lurk though...
 
Written By: Scott Erb
URL: http://faculty.umf.maine.edu/~erb/blog.htm
ahah i would like to see the next admin pay off the national debt after borrowing more money from china. so is inflation going to jump 5% this year?
 
Written By: slntax
URL: http://
Do I understand the situation correctly?
These companies are in trouble because they spent hundreds of billions of dollars on bad mortgages without adequate oversight, and the Bush administration’s solution is to spend hundreds of billions of dollars on bad mortgages with no oversight.



"though your assertions about what to do have been vague, as they are here today and at your blog"

Being vague means never having to say you’re sorry.
 
Written By: timactual
URL: http://
Obama and Biden really liked that one so much that they voted for it twice.

Obama and Biden have been in the forefront of getting massive pork millions up to Alaska. Everybody knows that.

And we all know Palin said, "Thanks, but no thanks to the bridge to Nowhere. Republicans are the party of small governmnet and fiscal responsibility."

Ever notice how Liberals all behave like they are members of some radical religious cult, and never let the facts get in their collective way?

Everybody knows that.



 
Written By: Juan Man
URL: http://
Obama and Biden have been in the forefront of getting massive pork
yeah, you are right there. good comment
Liberals all behave like they are members of some radical religious cult
right again, you are on fire today.
 
Written By: capt joe
URL: http://
The sad thing is that we’ll never really know what happened to cause the meltdown, and hence we can’t possibly know how to avoid a similar instance in the future. Both sides have their narratives; both sides have their "facts"; both sides have their whipping boys. The truth is lost somewhere in all the muddle.

What I DO know is that we’re screwed.

McQ - ... do your job, do it competently, do it quickly and leave the politics at the curb.

Billy Hollis - And that will happen just as soon as they ride their unicorns up to Capitol Hill.
 
Written By: docjim505
URL: http://
ERB says:
By the way, I’ve been warning about the weak economic structure for some time, only to be derided by those who accused folk like me of ’talking down’ a ’fundamentally strong’ economy. Also, note that the European financial markets (continental) are generally not as seriously affected, in large part because of greater regulations.

Markets need rational regulation. They aren’t magic. What we had was irrational partial regulation that helped only the elites. Now we have a situation where, as The Economist magazine notes, the US is nationalizing the economy as fast as you can say "Hugo Chavez."
How can you continue to exist in such abysmal ignorance? To blame the current problems on deregulation is astounding! Although I know that is the Democrat meme.

We had Sarbanne-Oxley, we had the regulations that told lenders to make sub prime loans to minorities and other weak borrowers, we had the accounting rule changes that made lenders mark their assets in current value instead of the way it had been done for decades, causing their balance sheets to become weaker overnight.

No, just like in the Great Depression, it isn’t a failure to deregulate that is the big problem, it is the failure of government.

Try to learn something instead of sprouting off liberal talking points.
 
Written By: kyleN
URL: http://impudent.blognation.us/blog
McQ, the reason they included that phrase is so that various interest groups (ACORN comes to mind) can’t tie the whole thing in court when if anything is going to be done it needs to be done quickly.

Remember, one of the reasons the levees around N.O. were inadequate is because the Sierra Club got a court injunction that stopped some critical ones from being built.

"Cheney in 08. Because shooting one lawyer is an accident. Shooting them all is sound policy."
 
Written By: SDN
URL: http://
Scott,
As to your predictions...what is it the Russians say?
even a blind pig finds an acorn once in a while?
 
Written By: looker
URL: http://
Prof. Erb says that greater regulation in Europe has kept those banks from being much affected. Let’s look into that a little more deeply. From the WSJ:

September 22, 2008, 8:21 am
European Banks: Too Big to Rescue?

European banks face greater capital shortages than their U.S. counterparts, but have become too big for any one European country to save, according to an article published Saturday by European economists Daniel Gros and Stefano Micossi on the Centre for European Policy Studies’ Web site.

That means a rescue of the European financial sector like the $700 billion plan proposed by the Bush administration over the weekend would be difficult, requiring coordination by the European Central Bank with the participation of all European countries.

The “overall leverage ratio” - a measure of total assets to shareholder equity - of the average European bank is 35, compared with less than 20 for the largest U.S. banks, the economists say, and relatively small writedowns on their assets could have a devastating impact on a bank’s capital.

If ever they were forced into a firesale, they could go very quickly into insolvency,” said Gros, who is director of the Centre for European Policy Studies.

The problem for European regulators is that European banks rival or in some cases exceed the economic size of their native European economies, making a rescue package in Europe difficult, according to Gros and Micossi. For example, Deutsche Bank, with an overall leverage ratio of 50, has liabilities of €2 trillion, over 80% of the entire German economy.

The liabilities of Barclays PLC, at £1.3 trillion - with a leverage ratio of 60 - exceed the entire U.K. economy, they say. – Matthew Dalton

Prof. Erb is yet again short on facts.
 
Written By: Tom
URL: http://
From this:
The director of the Federal Housing Finance Agency, which controls Fannie and Freddie, suggested Tuesday they could loosen lending standards to help more homebuyers qualify for a loan and stabilize the market.
 
Written By: huh
URL: http://
"which controls Fannie and Freddie"

I think you may misunderstand, my dear Huh. ’Control’, in this context, is a technical term, or term of art if you will, meaning "We will have conferences several times a year at various resorts, where I will congratulate you on the fine job you are doing and recommend increased salaries and bonuses all around".


With leadership like this, what have we to fear but fear itself? I think we should increase the bailout to a round one trillion dollars since it will be in such capable hands.
 
Written By: timactual
URL: http://

 
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