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The Bailout Bill
Posted by: McQ on Wednesday, October 01, 2008

If you're interested, here is the bill being debated in the Senate. As Lance notes, it is a House bill which has already cleared the House, to which the Senate has attached the bailout as an amendment. By doing that they successfully sidestep the Constitutional requirement that all spending bills originate in the House. They also sidestep those pesky 228 "nihilists" in the House who won't cooperate and pass the bailout.

A much more compliant Senate will "save the day." That will give the 12 Democrats in the House necessary to pass this abysmal bill the cover they need to do so when it is sent back to the House.

Constitution?

Who needs it?
 
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Previous Comments to this Post 

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Huh???. So it’s a Senate amended House bill therefore it goes straight to the President????.
 
Written By: markm
URL: http://
My bad, markm - I had edited it to reflect the fact that with passage by the Senate, the Dems in the House necessary to pass it there would have the cover they needed to then pass it in the House.

Unfortunately, I never clicked the "publish" button.

I have since done so.
 
Written By: McQ
URL: http://www.QandO.net
We pledge to make this the most honest, ethical, and open Congress in history. By Nancy Pelosi

Just add a little "O"!
 
Written By: Commander Tom
URL: http://
The dynamics of this bailout legislation are still hooked to the November electoral dynamics for the House. I don’t think that the House has any confidence that the Senate acting first gets them off that hook.

I think they (the Republicans) would have been better off passing the thing (it’s going to pass) on Monday. The idea that the bill can be "improved" is very dicey. The longer Congress holds the thing, the greater chance it will be "improved" to the detriment of the economy.

Bush and Paulson are much criticized for submitting such a vague, basic "three-page" bill, but I suspect that the reason for that will unfold as the bill is continuously "improved."

Yes, the administration tried to get the "fast one" past the Congress. It was a nice try.

It was an effort to get liquidity into a system jammed up by the subprime catastrophe, and to do it before it had gone in and out of Barney Frank’s ass.

Well, now it’s going to happen, and you’ve seen how Barney is screaming with ecstasy over the deep penetration.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
"Constitution?

Who needs it?"
I could answer that. I could do it in all kinds of ways. I could tell you the truth — which I’ve been doing for as long as you’ve known me — or I could be only slightly facetious and point out that these creeps are erasing it anyway, which has always been their prerogative in the nature of things. They’ve been doing it to the Second Amendment, and the Fourth, every day. As a military professional, you know what the War Powers Act did to perhaps the most serious element of the constitution.

I’ve never needed it, Bruce, because I always knew what they could do to and with it.

~~~~~~

Martin: you’re wrong about this. Every bit of it. There is no mitigating this disaster, not even by contrasting it to life without it. This week is going to be a crucial turning point in American history, and if American children ever walk the earth again with brains in their heads, they will curse us roundly.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
Martin: you’re wrong about this. Every bit of it.
Well, about the basic part, the liquidity part, I don’t think so.

About what the Congress will do to the bill the longer it holds it, I don’t think I’m wrong either.

To go through my view on this one more time: The U.S. government made itself the central bank via the Federal Reserve in 1913. It did that precisely for the purpose of being able to quell systemic financial panics and liquidity crises. (We know that it failed in that job at the outset of the Great Depression by causing deflation. But it has muddled through it since.)

This "bailout," as it is being called, is a response to a financial panic and liquidity crisis caused by the Congress via Fannie/Freddie, CRA. The financial system needs liquidity and a lot of it, not to avert a recession, but to avert a systemic crash (we’re going to get a recession, probably, anyway).

Now, I appreciate the views of "theory hawks," but I’m listening to the "in-practice hawks" on this one. I don’t for instance like Warren Buffett very much, and don’t trust him, but I like Jack Welch and think that he keeps his eye on the level and on point.

I’ll go with them on this, and my own just restated belief that the role of the central bank cannot be redefined in the middle of a crisis.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
"I’ll go with them on this,..."
Off you go, then.

I’ll be here when they have nothing more to say to you. I’ll try to leave you alone with this:
"...and my own just restated belief that the role of the central bank cannot be redefined in the middle of a crisis."
That is a crucial misgrappling of the whole problem. "Redefinition" here is a ridiculous absurdity. The thing was never properly identified in the beginning, and that’s why we’re where we’re at.

The implication: there is no escape from reality, no matter how hard you try.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
There’s nothing there preventing us from being in this situation 1-2 years from now.

As long as that’s the case, I say no.
 
Written By: jpm100
URL: http://
That is a crucial misgrappling of the whole problem. "Redefinition" here is a ridiculous absurdity. The thing was never properly identified in the beginning, and that’s why we’re where we’re at.
Well, the reality is that market institutions are now holding unreal paper that the government essentially forced them to write (whatever the culpability of the market institutions, they had their rules rewritten—defined down—for them by the government). The assets behind the paper are real, however. The government takes the bad paper and the assets together from the market institutions in return for liquidity, allowing them to continue to function, and the government gets to occupy itself with disposing of the assets over time.

I think that puts the responsibility for this mess with the correct party, and makes that party, the government, less able to do it again in the short term.

This is not an avoidance of a recession; it is averting a systemic collapse so that the markets can live to fight another day.

My view on the enormity of this problem (holding that interest default swap thingy to the side) is that it is not so enormous, and that we have a real and enormous production and asset based market economy that will get trimmed quite brusquely in a recession, but should not and need not get left to a systemic financial collapse.

I’m further of the opinion that the shape of the bailout cannot be improved; it is what it is. It is going to happen. And the first guess on how it should go forward is probably going to be better than the last guess.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
"This is not an avoidance of a recession; it is averting a systemic collapse so that the markets can live to fight another day."
That’s been the running idea for coming-up on a century now, Martin. Look at
’em.

It’s absurd to call ’em "markets" anymore.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
It’s absurd to call ’em "markets" anymore.
I don’t agree. I think that the markets are real and are way bigger, and more effective, than the government, and that they can usually outrun the government, but that in this case the markets were more or less intentionally jammed up by the government defining real market practices down.

The results on that are in, and I say let the government have them.

Real market practices also result in crashes, and government has a role in that if it is central banker. But in this case the government, I believe, must fulfill both its established role as central banker and take the garbage that it caused onto its own books.

That may or may not work to the benefit of the commies. That is yet to be determined by future events. But I sure as hell don’t want there to be a systemic market collapse in the short term.
 
Written By: Martin McPhillips
URL: http://newpaltzjournal.com
I’m being asked to lend someone my wallet so he can stablize his life style with the money I have in it, and then agree to sell me back the contents at a future date after which he’ll ’return’ it to me.
 
Written By: looker
URL: http://
"But in this case the government, I believe, must fulfill both its established role as central banker and take the garbage that it caused onto its own books."
"Its own books..."

Excuse me, sir, but those are my brother’s "books". You know me and why I don’t have anything in this fight like a lot of people do, but a lot of them are very close to me. They include the example of one of my brothers who slaved his ass off, put a lot of money down on a house, kept a good fixed-rate when nearly everyone around him was blowing through ARM’s like they were mid-80’s party-favors, and generally and precisely lived as rationally as an American possibly could with his ass in the ransom-sling in which this government holds just about everyone but me. (I don’t let them touch the things I love: I don’t hold them, either.)

Do you understand? This "government" in your usage does not exist. It consists in the real lives of individual people whose interests you, my old friend, are not competent to assume.
"But I sure as hell don’t want there to be a systemic market collapse in the short term."
You can have it in the long term if you want it — which is what’s been going on during your whole life. In any case, why should what you "want" be more important than a dissenter’s "want" in the matter, especially when he’s the one who already owns what you want?
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
You can have it in the long term if you want it — which is what’s been going on during your whole life. In any case, why should what you "want" be more important than a dissenter’s "want" in the matter, especially when he’s the one who already owns what you want?
because we live in the type of society based specifically around the fallacy of argumentum ad populum. That’s Democracy, Billy, in all it’s glories and shortcomings. It’s a terrible system, but the best that exists, and you have to take the good with the bad, else you open the door to even worse forms of government.

Again: not that you’re point doesn’t have compelling merits. But if you’re counseling us to look at reality, reality dictates that in a democracy, popular opinion wins.
 
Written By: Joel C.
URL: http://
"But if you’re counseling us to look at reality, reality dictates that in a democracy, popular opinion wins."
The specific question that I asked and that you took up was directly concerned with a man’s private property. Do you understand?

I will not stand for your lectures about looking at reality when your answer tells me everything I need to know about how far you can see.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
So now we resort to Ad Hominum, do we? See why I compare your tactics to Erb and Mkultra? Having a silver tongue doesn’t make it any more dishonest.

You’re indignation is amusing considering it comes on the heels of condescending tones reserved by those you normally hold in contempt.

In short: get your head out of your a$$. Disagree, but stop being a pr!ck. Being an internet bully is usually reserved for 12 year olds.
 
Written By: Joel C.
URL: http://
I live in a small rual community in Iowa. And I belive that this bailout bill is not needed. We are having a hard time paying our bills, putting gas in the car (we do have to commute to work around here), and putting food on the table for our babies. I understand that these problems are everywhere. And I belive that others will agree. 700 billion dollars was not in my budget!!!!!!!
 
Written By: Rebecca Stonehocker
URL: http://

 
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