Bush urges and the stock market surges
@ 5:30 pm So there it was, the 700 billion dollar bail-out plan on the table and there it stayed. The House of Representatives vote on the bill was split. Of the 205 votes for there were 65 Republicans and 140 Democrats and of the 228 votes against 133 Republicans and 95 Democrats. The analysts noted that representatives looking for re-election were most likely to vote no for the unpopular bill. Republican house leader John Boehner repotedly described the package as a “crap sandwich” in his floor speech before the vote.
President George W Bush renewed calls for Congress to back the bill stating the obvious: “”We are in an urgent situation and the consequences will grow worse each day if we do not act.” Congress will not meet again until Thursday - after a break for the Jewish New Year - with another vote unlikely before the weekend, by the time an amended version of the bail-out bill will be introduced.
The US stock market reacted to both the bill failing with Dow Jones dropping 770 points as well as Mr. Bush’s speech on Tuesday when the Dow Jones rose by some 200 points. The stock markets around the world followed the wave trend and in Russia the exchange was closed for a while. The subprime mortgage crisis has hit a number of European banks, but the credit crunch is biting hard.
The EU commission released a statement calling for the US to take its responsibility and try to stabilize the markets. The EU parliament is making a formal request to the Commission to propose new legislation to improve regulation of financial markets, in particular regarding hedge funds and private equity investors. They also want measures to deal with some of the causes of the credit crunch.
The governments of Netherlands, Belgium and Luxembourg agreed to use 11.2 billion euros to save Fortis, and only today the French, Belgian and Luxembourg governments declared another bank Dexia is on the same nationalisation path with 6.4 billion euros being poured in. Meanwhile in Iceland the Glitnir bank was taken over by the government and in the UK mortgage lender Bradford & Bingley was nationalised. No doubt this next week will bring forth other similar news from around the globe.
Meanwhile in the USA there is five weeks left for the presidential elections.
McCain bites the dusty and Palin makes it into the Oval office! She is REAL change. And has foreign policy experience too (=can see Russia from her window)! Go hockey mom, I’m rooting for you!!
Comment by muuli — Tue, Sep 30th, 2008 @ 6:12 pm
You think we are witnessing the end of the end of history (to continue Fukuyama’s claim)? Too many representatives tried to free ride and ended up voting against their voter’s best interest. And many of the voters seem to still still concentrate on not letting the executives off the hook with golden handshakes that they do not seem to mind that they will suffer severe damages in their moral righteousness. Maybe the “jeesusland inhabitants” need this shock to realize that they cannot just punish the “godless wall street” without suffering themselves. Anyway, we are definitely living interesting times.
Comment by mara — Tue, Sep 30th, 2008 @ 7:02 pm
Way more effective than nuclear weapons and terrorism. This is the real war.
Comment by Summer sucks — Tue, Sep 30th, 2008 @ 7:13 pm
I’ve been mainly lurking for quite some time, but feel the need to comment on this issue as much as I can. Palin is the Governor of my state and I’ll tell you one thing. Her and McCain have no clue! I’m a Conservative and I really can’t believe what I’m seeing. Common, Conservative America is spitting in the face of Wall Street without any regard for their own economic welfare. That is putting aside the fact that this is not just a Wall St. problem but one that was started by common, everyday Americans who didn’t pay their damn mortgages. I’m ashamed that the vast majority of my Nation would rather have vengeance and not take responsibility, than be able to avoid a long painful crisis. I just have to continue to shake my head! Maybe it’s time to move to Europe, how’s Finland this time of year?
Comment by RealTrue — Tue, Sep 30th, 2008 @ 7:54 pm
#4 Waiting for another school massacre. Welcome to Finland!
Comment by ass — Tue, Sep 30th, 2008 @ 7:57 pm
#4 occasionally wet this time of year…
http://www.lintukoto.net/lintukoto/webcam/
Comment by Hank W. — Tue, Sep 30th, 2008 @ 8:08 pm
#2: Didn’t take you for a communist!
Comment by Freeridin' Franklin — Tue, Sep 30th, 2008 @ 9:38 pm
#7: Right, I’m not.
Comment by mara — Tue, Sep 30th, 2008 @ 9:41 pm
#8: Why are you against market economy, then?
(Hint: Badly managed companies must die)
Comment by Freeridin' Franklin — Tue, Sep 30th, 2008 @ 9:45 pm
Yesterday’s vote was a victory for the American people in the fight against communism. Americans will always rather be dead than red. Don’t you ever learn?
Comment by Freeridin' Franklin — Tue, Sep 30th, 2008 @ 9:50 pm
Incidentally, I’d like to hear winnie’s portfolio report. How’s the Hummer project progressing?
Comment by Freeridin' Franklin — Tue, Sep 30th, 2008 @ 11:18 pm
Interesting that in Monday’s vote, the plan endorsed by Bush was defeated, primarily, by representatives of his own party. It looks like Republican Congresspersons up for election are REALLY making an effort to distance themselves from Dubya.
That is how much of a political liability he has become among his own people - or as it is now known: “folks”.
Comment by K. Wilska — Tue, Sep 30th, 2008 @ 11:21 pm
Oh, WHERE is Finnpundit in our hour of need? I understood he was in NYC. I do hope he hasn’t been wiped out and lost his broadband connection.
Comment by Spiritus Fortis, but the FTSE is weak — Wed, Oct 1st, 2008 @ 2:43 am
“Republican Congresspersons up for election are REALLY making an effort to distance themselves from Dubya.”
naw…just distance themselves from another gov run enterprise. Or can we all say socialized lending followed by socialized medicine?
No thanks to both. I learned in the nanny state a new word for care? its not approved if its “not cost effective”
So if you have cancer in the nanny state, gues what???? your expensive treatment is not cost effective……geeeeee
Comment by winter “Yea, Proton Power, now in remission” — Wed, Oct 1st, 2008 @ 3:15 am
#9: If it were just some greedy banks or just some defaulting lenders, I would have no problem with them suffering. But we live in an interlinked world, and it is more or less all banks, the whole sector, and not just US and British banks. Whole market institutions are at risk, through the unprecedented global risk spreading. The indirect effects are probably very large.
I’m not a communist. I like markets. I’d like to preserve the institution of markets, even I’d miss seeing some unethical execs suffer. (The lenders will suffer anyway.)
The median voter faces a risk of halting markets, halting credit, growing prices, shortages, unemployment. And the suffering may be long term, because it takes a long time to rebuild whole market institutions, not just some market actors.
Maybe the median voter realizes this, maybe he doesn’t quite get the extent of the damage. And it might be that he still would choose the punishment, but I doubt it. It’s nicer to punish people with other people’s money. It’s easier to think that the financial brat’s suffering is his private problem.
Comment by mara — Wed, Oct 1st, 2008 @ 3:16 am
Mara,
This ‘bailout’ will not work. It will just give more people a reason to not pay their mortgages. Really, what is the incentive to pay your mortgage once you find out that the Government is your lender and they are going to prioritize the reduction of foreclosures. Do you really think the Democrats are going to let the Treasury foreclose on ‘poor’ people?
Geez. Where do I sign up for a free house? Face it, many people are in trouble as a result of their own stupidity. It was their responsibility to make sure they could afford their mortgage, two car loans, credit card debt, vacations, and whatever other crap they bought when they used their houses as an ATM and pulled thousands of dollars out of it. If this really is a crisis, why aren’t they selling their stuff? F them. Loans are being denied now because they are bringing back the old rules people used to have to live by. Work harder and save money if you want to buy something expensive.
The one bill Congress should pass is a requirement that lending tank into consideration a borrowers ability to pay at the main reason for approving/denying a loan.
Comment by Fred Fry — Wed, Oct 1st, 2008 @ 5:17 am
No bailout! Isn’t it amazing thus far, that the voice of the people actually matters in this case?
If you cant pay your damn bills, dont make me pay it. No bail out to those. Bail out NO!
Prison time YES! Better yet, send them to iraq
Comment by born there — Wed, Oct 1st, 2008 @ 10:21 am
Boys boys, try to see the big picture! This bail out plan is just a way to insure the real creditors that everything will be taken care of. See, the real deal here is the US goverment debt, not these Wall st a-holes. This is not about one more goverment plan or this or that. That kind of thinking just shows how little you guys understand this crisis. The Real crisis is not mortages, banks fallin, but the US national debt. While you’ve been reading this, millions and millions of dollars have been added to that. If the biggest creditors of United States of America, the country, the nation, land, loose their trust to it, it will be one funny day. US goverment does not have any money. There is nothing in the coffers. It is living on a loan. If China and Japan loose their faith to US and pull out and/or stop loaning any more money to the US goverment, it will go bust. In few months it can not pay any salaries. Not for anybody. Not to the congress men or women, not to the CIA, FBI, the military. Get it? US goverment does have no money left. It’s revenues don’t cover the costs. It lives on loans. They are keeping it from sinkin. Understand? That is the real deal here. But americans, poiliticians or citizen, do not understand this. They can not believe that their country is in jeopardy to go bust. But it will unless somebody somewhere is financing it continously, that is loaning more money to it. This is the Big picture behind this bail out plan. It is just to show that US will take care of it’s financial troubles. Nothing more. And the sum of the bail out? I read from somewhere that it is roughly the same as fighting in Irak is costing to US tax payers every day, month or a year. Can’t remember which it was. What ever it is, it just shows you how incredible simple our beloved american friends can sometimes be. Some of them ofcourse understand, but some just don’t. They will vote McCain and that brilliant shining example of american idiotism (as rock band Green Day puts it) Sarah Palin. Hope that more will vote differently but we will see. Interesting times indeed.
Comment by sam the ham — Wed, Oct 1st, 2008 @ 12:02 pm
a sail out is pure socialism..period. The Dems love it, as they get the banks they can go Politically correct in lending again, and we get a second failure 10 years from now.
Gee just look at what the Gov does when it runs Helath Care. That should scare you enough.
Comment by winter “Yea, Proton Power, now in remission” — Wed, Oct 1st, 2008 @ 1:15 pm
“That kind of thinking just shows how little you guys understand this crisis. The Real crisis is not mortages, banks fallin, but the US national debt”
- Oh please. If that was the case then why not just write a $700 billion check against the debt…
“If China and Japan loose their faith to US and pull out and/or stop loaning any more money to the US goverment, it will go bust.”
- It is not China loaning the US money. It is China purchasing US Securities to keep their currency artificially low in order to fuel their exports which in turn create the many jobs that China needs for its booming population. China created this trap for themselves. anyway, without the US buying their crap they won’t have more money to buy more US securities…
“What ever it is, it just shows you how incredible simple our beloved american friends can sometimes be. Some of them ofcourse understand, but some just don’t. They will vote McCain and that brilliant shining example of american idiotism (as rock band Green Day puts it) Sarah Palin. Hope that more will vote differently but we will see. Interesting times indeed.”
- ‘Hope and change’ is not going to fix this problem. You might as well have written ‘If your not angry then you don’t understand’. Obama is an empty suit and people who plan on voting for him are fools, unless your unemployed or making very little money, sine he plans to give you all great big handouts. Don’t earn enough to collect your $3,000 tax credit? (A refund of the first $3,000 in taxes paid, after all the other deductions. The credit is available to the poor for the amount of tax they pay, up to 3k.) No problem, the IRS will send you a check for the difference!
Comment by Fred Fry — Wed, Oct 1st, 2008 @ 2:28 pm
1 And after these things I saw another angel come down from heaven, having great power; and the earth was lightened with his glory.
2 And he cried mightily with a strong voice, saying, Babylon the great is fallen, is fallen, and is become the habitation of devils, and the hold of every foul spirit, and a cage of every unclean and hateful bird.
3 For all nations have drunk of the wine of the wrath of her fornication, and the kings of the earth have committed fornication with her, and the merchants of the earth are waxed rich through the abundance of her delicacies.
Comment by King James — Wed, Oct 1st, 2008 @ 2:55 pm
Would that be “King James Phelps” on the line?
Mind you, you have to admit, Revelations is good meaty stuff. Truly GREAT literature: File under “Early Fiction”.
“The wine of the wrath of her fornication…” - plumb-crazy sentence, but absolutely killer prose.
Comment by Anonymous — Wed, Oct 1st, 2008 @ 3:18 pm
21, fiction will come to fact..at least i hope
Comment by born there — Wed, Oct 1st, 2008 @ 3:28 pm
The day countries stopped backing their currency with actual goods (gold or other precious materials, usually), they landed into monkey dollars that has completely arbitrary (and essentially nil) value. Then again, it’s all a mockery to make some people believe that they own it all and make other people believe that they owe it all.
I cannot help but think about the old joke on, what would Martians think if they saw that Humanity has the knowledge to end famine, hardship and poverty and yet Humanity chose to create an artificial barrier to acquisition of goods and to preserve the conditions that force the populace into neverending hardship and slavery? More to the point, what would they think of a Humanity that allowed this to happen and yet has the nerve to call itself an intelligent creature?
Comment by Martin-Éric — Wed, Oct 1st, 2008 @ 4:10 pm
Freddie. China is growing market for it’s own goods. What they do not need soon is any goods manyfactured any where else. China and India have a nice markets just among themselves, not counting the other asian states. They don’t need tiny US markets soon (only 250 million or so people). Or europeans either. Actually Deng Xiaoping said this 25yrs ago: in fifty years China will be at par with US and in one hundred it will be in it’s historical place, that is in the center of the world once again. That’s what China is after. I don’t know what Obama will do and I don’t care. I just said that the mess this goverment has created is something else. And this goverment is republican. Maybe you are too Freddie, but you can’t deny that this is the republican way: free markets and so on. If this whole mess is part of your ideology, then why not just let fall. Let’s see what happens. I’m game. I have no trouble with any depression, mental or economical. I just feel sorry for the american tax payers who will foot the bill one way or another. That sucks. And if you think Obama is an empty suit, then what about that air head Sarah Palin? That is one seriously sick puppy there. Even you can not explain her away. After all, she knows that men and dinosaurs walked the earth 6000 yrs ago and that she has an extensive forign policy knowledge because Alaskas neighbours are Canada and Russia. She also took part in a ritual which excorcised the witches away from her. She must be your kind of politician, eh? :-DDD
Comment by sam the ham — Wed, Oct 1st, 2008 @ 4:49 pm
#15: So, are we to conclude that the market works everywhere else except Wall Street? If the Invisible Hand (remember?) will not make it all better, who will?
Rep. Marcy Kaptur (D-Ohio) seems to have an answer:
http://uk.youtube.com/watch?v=mbD62gNi9WE
Comment by Freeridin' Franklin — Wed, Oct 1st, 2008 @ 6:52 pm
8/28/2006-Peter Schiff Predicts The US Economic Collapse With Unbelievable Accuracy
http://www.youtube.com/watch?v=LfascZSTU4o
Comment by Alppi-Joe — Wed, Oct 1st, 2008 @ 6:58 pm
#25: If you ask me, the watchman-state would be fine. We haven’t seen a watchman-state in US, but instead a corporatist state. Quite far from the Smith ideal.
You may be right about the Treasury having a hard time to make the lenders pay. But at least in Finland the state had no problem what so ever to make the small guy pay his debts in the economic downfall of early 90’s, even when the big guys were saved. I think the last ones who haven’t been able to pay everything back were pardoned only this year. At least the bailout in US was designed to include nationalizing the banks, i.e. transferring the shares into government portfolio. So if the banks survive with the bail-out and start to prosper later, the taxpayer owns the banks through the state ownership.
And I would have nothing against making the bank execs lose their golden handshakes and bonuses for the last year or two, if it somehow could be included in the bail-out agreement. The problem with such conditions is that the bank execs would be inclined to not accept the bail-out for their bank but instead would let their bank go bust. That way they could keep their old personal bonuses, but everybody else would be much worse off.
Comment by mara — Wed, Oct 1st, 2008 @ 9:42 pm
Crap sandwich — lifted from Stephen Colbert (”we’ve been eating a shitburger for the last eight years”) in EW’s interview with him and Stewart. WHat gall.
Comment by Kris — Wed, Oct 1st, 2008 @ 10:50 pm
“She must be your kind of politician, eh?”
- Yes.
“If this whole mess is part of your ideology, then why not just let fall.”
- Did you even read my reply? I stated that non-payers should be foreclosed on. Let the market work this all out. Free markets do not reward these people.
Comment by Fred Fry — Wed, Oct 1st, 2008 @ 11:57 pm
mara:
“The problem with such conditions is that the bank execs would be inclined to not accept the bail-out for their bank but instead would let their bank go bust.”
Quite a lot of power for CEOs considering that they are mere hired hands. Perhaps this whole debacle is a systematic failure in corporate governance?
Comment by Freeridin' Franklin — Thu, Oct 2nd, 2008 @ 12:38 am
Senate passes $700B rescue. Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25.
Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday’s 228-205 defeat. They were especially targeting the 133 Republicans who voted “no.”
Their opposition appeared to be easing after the Senate added $110 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.
Comment by Hank W. — Thu, Oct 2nd, 2008 @ 7:25 am
It never ceases to amaze me how quickly communism becomes kosher when those sacred Wall Street bonuses are at risk.
Comment by Freeridin' Franklin — Thu, Oct 2nd, 2008 @ 8:25 am
Weird stuff. You are right Franklin. It is really weird!
Comment by sam the ham — Thu, Oct 2nd, 2008 @ 9:40 am
Oh, just for the thought. I looked up the tax rates in the US in a long run and found some interesting figures: for those who were makin more than 200 000 a year the federal tax was 91% all the way up to the year 1963. Actually it was 92% in 1952-53. In 1964 the highest tax rate was 77%. It went below 70% in 1982 and under 50% in 1987. I’m sure some of you will be surprised to see these figures. They surely explain some of this recent mess in federal budjet. Source: Federal Individual Income Tax Rates History.
Comment by sam the ham — Thu, Oct 2nd, 2008 @ 10:01 am
Mr Sam the Ham: it would be a great service if you wrote your comments in easier to read paragraphs - when you write it all in one big one it looks like a maniac on speed wrote it (don’t even bother to read because it is so cluttered).
So, write as much as you like… Just use some punctuation and carriage returns.
PS: If Fred Fry disagrees with you, you must be saying something right!
Comment by Dave the Revelator — Thu, Oct 2nd, 2008 @ 6:30 pm
Yeah, this is a feature and not a bug. Capitalism - especially without social democracy - is only too good in concentrating incredibly huge amounts of capital to very few hands. It is also - especially when minimally regulated - a very unstable system. The result is that losses, if big enough, will always be socialized while profits are untouchable. But after a couple of years when things turn around again we’ll get a again the same smug CEO sermons about the stupidity of government and brilliance of the free market. And this really is a feature of the system, that’s why we need strict guidelines for markets and strict regulation. Otherwise the corruption will engulf the political process and the tax payers will end up subsidicing these “champions” of the free market.
Comment by mjr — Thu, Oct 2nd, 2008 @ 8:25 pm
Dave, how did you figured out what I’m on when I write?? Who revealed you I am a maniac?
Comment by sam the ham — Thu, Oct 2nd, 2008 @ 11:16 pm
#31: I agree with you there, there is a failure of corporate governance. But there is a regular government failure, too. The bail-out version that is passing now has a thick layer of pork, renamed “sweetener” in these anti-fat times.
Comment by mara — Sat, Oct 4th, 2008 @ 9:13 pm
#39: Do you think that the infallible market forces will learn a thing from this?
This was a rhetorical question.
Comment by Freeridin' Franklin — Sun, Oct 12th, 2008 @ 9:06 pm