Posted on 10/01/2008 10:24:51 PM PDT by bruinbirdman
The prospect of a second defeat for George Bush’s rescue package for the US economy is looming, as members of the lower House of Representatives expressed their discontent with the government’s revised plan.
The new version of the bill, including a 250 per cent increase in the amount the US government will insure in peoples’ savings accounts, is expected to pass the Senate in a vote on Wednesday night.
But with the world waiting anxiously for an agreement in Washington, considerable wrangling still lies ahead in the lower house, which rejected the first draft on Monday.
On a day of rising tension on Capitol Hill, supporters of the bailout faced delicate calculations of how many Democrats or Republicans would be won or lost by changes to the bill.
Left wing Democrats in the lower House of Representatives expressed their unhappiness with the addition of tax cuts for businesses and the lack of provision for home owners in danger of defaulting because of sub-prime mortgages.
Members of the Black Congressional Caucus and Hispanic Congressional Caucus, who represent poor communities blighted by foreclosed homes and who voted heavily No on Monday, insisted on more aid for their constituents before changing their votes.
“The poor – poor blacks, poor whites, Native Americans, Latinos – get little help from this administration. Then they come in here and ask us to bail out Wall Street. I’m not prepared to,” said John Lewis, from Georgia.
Right-wing Democrats on the other hand asked how the proposed tax cuts for businesses would be paid for. “I’m not particularly pleased with that addition myself, very frankly,” said Steny Hoyer, leader of the Democrats in the House. “There’s no doubt the tax package is very controversial.”
Architects of the revised bill will be hoping that rebellious Democrats are won over
(Excerpt) Read more at telegraph.co.uk ...
To: Hugin
This is definitely an unfortunately situation for small businesses. Small businesses need short-term loans to conduct their day-to-day activities. It is ashame that this situation is affecting one of the basic foundations of our economy. Although this Congress is attempting to provide a solution to restore confidence to the banks so they will continue to provide the liquidity to small business, it is should not be done using our tax dollars.
********************
What will they use Monopoly money?
I dont suppose either of you own a small business?
As I posted on that thread:
Some of the more obvious wing-dingers from the article:
The number of homeowners who could lose their homes to foreclosure by the end of 2009 is estimated by some to be around 2.8 million. Under the legislation, 400,000 having trouble with payments could avoid it by trading their loans for new, more affordable mortgages through the Federal Housing Administration.
. . .
Their banks would have to agree to allow the swap and to take a large loss in exchange for avoiding the lengthy and costly foreclosure process. To qualify, homeowners would have to be paying more than 31 percent of their incomes toward their mortgages and show they could afford to make the payments on a new, smaller loan.
. . .
“By expanding homeownership opportunities and protecting families against foreclosure, we are helping keep the American Dream alive,” said House Speaker Nancy Pelosi, D-Calif.
. . .
The bill permanently increases to $625,500 the size of home loans in high-cost areas that the government-sponsored mortgage companies Fannie Mae and Freddie Mac can buy and that the FHA can insure.It would otherwise have reverted to $417,000 for Fannie and Freddie and $362,790 for the FHA by the end of the year.
The White House sought to focus attention on parts of the legislation aimed at calming markets. Those include the offer of a temporary but unlimited government line of credit for troubled Fannie Mae and Freddie Mac. The Treasury Department gains power, until the end of 2009, to lend them emergency money or buy their stock.
***
THINK ABOUT IT!
It’s late here in the East but this one is going through. The House will pass it late today or mid-day Friday. Watch the Dollar and Gold tomorrow. The Pyramid scheme that ended up in Europe is getting a bail. Isn’t Government great. Who needs a numbers (lottery) ticket?
And make no mistake about it, I am VERY worried about what happens to my business. But I am more worried about doing what is right. And supporting this “crap sandwich” is not right.
Show me a bill that doesn't steal from taxpayers, and I'll gladly support it. All I've seen so far is the same crap repackaged twice and renamed at least three times. All the changes to the earmarks and pork don't change the reason why I'm calling all the congress critters to fight this. It's SEVEN HUNDRED BILLION OF OUR MONEY. I'm not going to stop fighting until the another plan is brought forward.
European banks have turned out to be deeper in debt than their US counterparts
yitbos
I think you have just identified the U.S. Dollar. Fiat currency is Monopoly money. We have so many resources in this country that we could tie our money to in order to give it real value.
You are on to something. Note that the main effect of the ‘bailout’ bill to free up credit for small busnesses is NOT DEALT with by the bail out bill at all. The bailout bill dedicates the money to LONG TERM debt in the mortgage industry..it cannot be available for short term credit. Here is a link from
http://www.nakedcapitalism.com/2008/10/more-discussion-of-why-bailout-bill.html
After a lot of detail, the piece ends with this important comment: “When Paulson dumps out his 700 billion in treasuries it’s going to be at the short end. That will drive up rates for short-term treasuries. This will obviously draw even *more* deposits into the treasury MMs. That means even less in the commercial MMs and thus less working credit, the eventual commercial MM product. Hence Paulson’s billions remove working capital by competing for the deposits that could get used to make working capital loans. That 700 billion is going to go to fairly long-term mortgage securities. So Paulson’s billions divert credit from working capital to long-term mortgages - from where it’s most needed to where it’s most wasted.
Even if the giveaway adequately props up the banks, which I doubt, they still can’t make working capital loans, because the raw material they used (commercial MM deposits) will be desperately short.
I think it’s very telling that in two days of hearings and two weeks of discussion we have yet to see *any* detailed mechanism for how Paulson’s plan will increase the supply of, say, inventory loans. It’s not that every economist in the world is an idiot, it’s just not going to help. I think people have fallen into the fallacy that if it costs a lot it must be valuable. Paulson’s plan falls into the category of very expensive way to hurt ourselves.”
The bailout will not do a darn thing for mainstream US if these comments are correct. Hope that the House Republicans and smarter Democrats will not pass a defective bill that will make the current situation even worse.
I missed that thread because I am East but I will say the sell of bad securities from Freddie and Fannie is no different than your Mom & Pop Pyramid tactics. The early ones win, the last ones lose. Europe was last. Now we all pay. I am ashamed of my Country for letting this happen FOR THE LAST THIRTY YEARS! Just Damn.
Working capital originates from investors who are willing to put up the funds that utilize low yield short-term rates. Because of the lack of confidence in these investors, there is little short-term capital to work with.
Hopefully, those particular investors are willing to work with the fallacy that this solution is enough for them to risk their capital.
The real solution is to identify what those short-term investors find important to regain their confidence. I believe that if the opinions of those investors are attained, and those solutions are applied that we would have a more viable solution to our current problem.
We do need a long-term solutions, but we need to revitalize our economy too instead of allowing it to stall.
Yea.. it's not a bill about stealing taxes... it' a bill about spending taxes! :)
I don't know about the credit worthiness of these purported "tens of thousands of small businesses" that will go "belly up" without this bailout plan, I do know that the local banks I deal with have plenty to loan credit worthy individuals and businesses. I have also heard bankers from other states say that this is much the same elsewhere. The Fed is still lending money to banks. Banks are still making loans. They have probably tightened up their lending practices as well they should. There might be marginal borrowers who could have gotten loans before this mess and can't now but that is not a bad thing, too many marginal borrowers is what got us into this mess. I cal BS on this whole "the sky is falling" scenario. They talk like all the banks are out of money to lend and this is just wrong and stupid. I have no fear of not being able to continue borrowing from banks. That's how they make their money and they are not going to stop just because some large reckless financial institutions gambled with the money entrusted to them and lost. If you can't borrow money it is not because there is no money to loan, it's because the lending institutions, with their tightened policies, don't consider you a good risk. It's people who don't like the tightened policies who are bitching and they want the taxpayers to flood the financial markets with money so they can go back to loose lending policies and lend the marginal borrowers some more. This, of course, is the perfect spiral that got us to where we are.
Bad financial businesses must fail. Good financial businesses will be strengthened with more business. Marginal borrowers will be out in the cold. Credit worthy borrowers will be sought out by lenders. This is all as it should be. It is not a problem it is just the reality of a rational market.
I could not agree more. I’m not look for small businesses to get a break at all. I believe that a free market should exist in this county. I’m sure that the majority of the small to medium sized banks in this country are fine. In a free market the government should not interfere at all. The sky is definitely not falling. We have sufficient time to analyze the problem and provide a viable solution. The problem is the government is getting too excited and trying to impose a solution that no one accepts. Of course investors want a government solution because they want to continue making the same money they used to in the past. The investors just need a dose of reality to realize that it is not that simple. Easy money does not exist in their world anymore. This is no unlike what happened in the 1920s. The chickens are just coming home to roost differently this time and with less confidence.
Right wing Democrats??
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Well, if you would stop using deductive reasoning and applying logic to this, I think you could see the other side more clearly.
What we will see is this piece of legislative compost recycled over and over until it passes. We will, however, not see what we should see; a bill that addresses this financial crisis in an intelligent and reasonable manner that works and does not burden future taxpayers.
The Republicans need to hang Bush out to dry and bring forth a new effective plan and shout the plan from the rooftops to as many as will listen. If McCain were a smart man (Keyword:If), he would ignore Bush and show some leadership bringing an alternate effective plan to the floor.
We are being told we can throw money at this and end the crisis. We are told that only this will work. We need a bill that cuts spending (like a moratorium on all foreign aid and all pork and other frivolous spending) until such time as this crisis is in our rear view mirror. If we are indeed in a crisis then our actions should be commensurate of those in crisis and not business as usual.
The capital gains rate could be cut by 75% for a period of one-year and either be continued for another year or allowed to expire, depending on financial climate.
A package could be put together that insures the debt rather than buying the debt. They worked themselves into this, let them work themselves out.
A package for lenders who have done things right and are not on the brink of collapse making money available to them to lend to qualifying small businesses only.
Get rid of mark to Market, if not for good, for at least one-year. These are just a few things the Republicans could put in a new bill that would address liquidity and capital problems without a bailout at taxpayers expense.
I agree with you, something needs to be done and Republicans need to take the wheel unless they want to be riding in the backseat for the next 8 years. I also agree with you that this bailout will not work. It will not do what it is intended to do and as you stated, “the money will be tied up in LTMS”. Then the Congress Critters will crank up the printing press and write a bill for another trillion.
That needs repeating. Populist rhetoric about how things should work in a perfect world will not help this world.
Dumb question: How does this bill address the root causes of the problem? (Answer: Nada)
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