This is an American revolution?

Change at any cost.  Change of the guard.  Bush and Congress thought they could scare the people into the bailout bill, just like with the Patriot act and the war in Iraq.  Not this time.  Maybe the American people do not care if they lose money, but rather want the government and markets to work properly.  Maybe Americans are looking past the short term hurt and toward the healthy functioning of democracy and capitalism for many future generations to come.  The government and the investment institutions all failed us, and maybe now we want them to fail so that better, more effective entities will take their place.  Maybe we want to clean house and have new politicians and bankers.  Maybe we are sick of all the ineffectiveness we have been seeing for the past decade.

Or . . .

Maybe we are just too stupid to see the bailout as anything but a life preserver for Wall Street.  If so, no one really sold it as much more than that.  The government was too scared to tell us the actual consequences of not passing the bailout bill, for fear that markets would respond poorly.  But maybe they should have tried to educate the American people, so we would respond properly.  Maybe they played the fear card one time too many.

Either way, America needs change!

End of the World! I feel . . . okay, I guess. And you?

Holy shit, Sarah Palin is inept and incoherent!  She got torn a new asshole by Katie Couric.  Ouch!!  Imagine what Biden will do to her in a debate?  Palin said the word “guest” when she meant “guessed” and “maritime” when she meant “marine”.  If she says “axed” when she means “asked” I am jumping off the Bayonne Bridge in protest.  She’s done, failed like WaMu.  No more white trash in the White House.

And if Putin, based in Moscow, decides to fly to the US, he is probably going to head west and fly over Europe and the Atlantic rather than fly east over Alaska and the Pacific.

McCain is done to.  He charges into “Wharrrshingtun” to fix the financial crisis, and at best he did nothing (looking like a fool in the process) and at worst he derailed the talks and fucked everything up (looking like a first class failure).  If he misses the debate in Mississippi, he might as well get into the grandfather business.  Merely suggesting the debate be postponed, and that he may not show up at the debate has to be one of the stupidest things a politician has ever done.  It does not exactly say high-performing, multi-tasking, leader of the free world.  It kinda says: whoa, I need a break, can I get some water?  Missing Letterman was political suicide.

Hey, WaMu has failed.  Let’s see if that affects anyone other than the shareholders of WaMu.  Let’s hope (pray) the FDIC manages this failure properly.  Kind of a interesting idea: let WaMu go bankrupt, let the shareholders take the hit on the liabilities, and sell the assets to a competitor.  We may need to employ this strategy again.  Let’s see if the world ends as another bank does.  Probably not.

One thing is for sure: we are at economic war and the war profiteering has begun.  GET SOME!

Prediction: there will be no bailout, because no one wants another American civil war.

Let them eat cake!!!

Choking Obama Off?

Is it possible that this bailout “plan” for Wall Street is really just a way to leave Obama with no money to spend on any of the programs he’s proposed if he’s elected president?  Paulson & Bernanke are Bush appointees, and you have to think they feel some loyalty to him and his party.  I wonder if the 700 billion dollars won’t actually be spent or needed on Wall Street if McCain becomes president?  One cannot discount that bipartisan politics are not at play here.

Bailout?

Ok, the bailout.  So we buy up the bank’s and brokerage’s non-liquid (worthless paper) assets.  We do this with the hope that these institutions will start lending out money again and the economy will grow again.  But isn’t that what got us here in the first place, loose credit?  I am not convinced that the institutions will make credit available after they sell off their worthless assets.  What’s to prevent them from selling these liabilities to the Fed, then still keep their credit belts tight, and the economy still stalls?  And shouldn’t the lesson of the past 58 weeks be that credit was given too freely for too long for too many people?  Credit should now be hard to get, not easy to get.

This bailout is starting to look like a raid on the national coffers (which are empty) to shore up an industry that needs to severely revise its business model, not be thrown a life preserver.  And then we are supposed to accept the bailout with no means of accountability, transparency, or oversight.  The proposal seeks immunity from prosecution if the plan is poorly or unsuccessfully administered.

All Paulson & Bernanke keep offering as upside to the bailout is that certain institutions probably will not fail, and credit will probably be available again, and unemployment will probably not grow, and the market will probably stabilize.  700 billion dollars doesn’t come with any guarantees these days.  Bernanke has not seemed to considered how this plan would affect inflation, inflation being one of two prime concerns of the Federal Reserve.

Why not let the vacuum that these failed companies will create be filled by other companies, perhaps even new companies, that will strive to perform better and don’t have the these liabilities holding them down.  Not every single financial company has these liabilities on their books.  Most do, sure, but not every single one across the globe.

There are plenty of small, local, solvent financial institutions willing to write loans to businesses.  Okay, Bank of America will not lend to a MacDonald’s franchisee anymore, but there are many other institutions that would be happy to offer them credit.

So much for Schumpeter’s theory of creative destruction.

Kudos to Dodd for standing up to Paulson & Bernanke

Posts 1 and 10 are worth reading.