UPDATED: Bail out bill agreement reached – Yipee! My tax money is going to work!

28Sep08

Important update: The comments in this post reflect my reaction to the content of the Washington post article released in the wee hours of Sunday morning. HotAir has a good fact check and should be referred to for detail of the bill as it stands. Some of the points discussed here, are irrelevant since they did not make it into the final draft – namely the fee on the financial services industry, which may or may not eventuate, the salary cap is modified (Ed Morrisey did not mention this, but I believe it is not quite as draconian as the WaPo article discussed). REGARDLESS, my rant still stands in my opinion of what the cronies on the Hill had wanted. Thankfully it appears they were cut back, due to the good work of the republican negotiators. It is amazing what a minority can do to the majorities policies, when the public is not on their side. We must remember this, and remind our conservative representatives of this, whenever they feel like caving.

Original Post –

Well the Washington Post just broke news that the bailout will happen. Why do I feel such joy in my heart and pride for my legislators? I mean, they took less than a week to craft a bill, that even now we as members of the public have precious detail about, and has been promised to become the law of the land by as early as Monday. They really have outdone themselves.

I also love how the Democrats have one tool in their toolkit: taxes.

Yesterday’s talks, conducted mainly in Speaker Nancy Pelosi’s suite of offices on the second floor of the Capitol, were focused heavily on how to cover the cost of the program so taxpayers don’t get stuck with the bill.

Democrats pressed hard for further taxpayer protections, including a fee that would be imposed on the financial services industry if after five years the government had not fully recouped its money. The proposal, which did not surface in negotiations until yesterday, would help win the support of a fiscally conservative group of House Democrats known as the Blue Dogs, an important bloc of 47 votes.

Sounds benign… kinda, except when you consider that a ‘fee’ is merely a euphemism for taxes. In this case the financial services industry. Any guess who ends up ACTUALLY paying for those fees? Yep, us. You think we pay high fees now, wait until five years time.

“Oh, but that is ONLY if they do not fetch a profit.”

This is just the cynical side of me, but think this through with me. Government takes on these mortgages, administration costs eat the profits up of the sales (“oh but they wouldn’t compute it like that” – Oh really!? Have you seen the Bill? I haven’t, so how would we know? and at this point they could do whatever they wanted), then Government sees an opportunity to “stick it to the suits” in cooking the books to pose a loss on the sales, Government charges taxes “fees”, we get shafted by our financiers.

That might be a wee bit cynical: Government is wonderful, and is looking out for me. They are fully transparent. Just ask David Obey.

Also, why am I so happy and filled with confidence about the fact that congressmen called Warren Buffet for advice.

At one point, a senator sought advice from investor Warren Buffett, one of the world’s richest men, according to Sen. Kent Conrad (D-N.D.)

After all he is so impartial to the outcome of these negotiations.

Oh, and isn’t it wonderful that we are now going to see these financial companies being lead by sub par executives. What do I mean? Companies who participate in this bail out will have salary caps imposed (or have tax deduction eligibilities removed). What is the cap? A mere $400,000. To most average Joes like me, $400k looks just fine, and we would understandably say so what? Well $400k doesn’t buy an executive who can run a portfolio that runs into billions, to save themselves. Remember, these financial companies run our retirement fund accounts, stock investments, insurance and everything that has a “$” attached to it. The brightest talent does not operate on altruist motives. They go where the money is. Sorry liberals, but your socialist “look out for my comrade” ideals exist only in your head, and in Marx’s writing. The best CEO’s pack up there desk and move down the street, or even worse, they hop on a plane to work in London, Tokyo, Germany, or some other place where they can get paid justly for their extraordinary abilities. I guess this is the companies punishment for dealing bad deals, or alternatively for having shareholders who perceive weakness and would short the stocks into the ground. The Dem’s want these companies to suffer under fourth tier leadership for their sins.

A prediction I have is that we will see a “super class” of business consultant arise, who will be sub-contracted to these corporations to effectively run the company, with a figure head CEO taking orders. The company will pay millions in “consultation fees”, and the CEO gets his or her happy $400k, (actually with this plan they could have the janitor take the corner office, and bugger the $400K). Then again, maybe that too will be banned by Pelosi’s bill.

The Washington Post article has this to wrap up the report.

Pelosi said she hoped to publish the legislation on the Internet for almost an entire day before voting, meaning a vote could come tonight or tomorrow morning.

Oh happy day! On Sunday, on THE day when people go to the beach, play with the kids in the park, go to church, have friends over for dinner, and take their eyes off business and politics. I COULD choose to sit and read this bill, but will you? Oh, and I am sure by the end of the staffers meddling with it, it will end up being a nice size doorstop.

After this week, with the arrogance of this, and being yelled at to do this, and researching this, and nearly (?) being screwed by this, and this by Obey. I am a little jaded, and irate. An odd combination of temperaments, but I am at the verge of screaming at someone. Maybe I shouldn’t drive a car today. It might be safer for all of you.

A Politico report outlines in greater detail the events, and the current status. Article: Negotiators reach tentative rescue plan deal

With that, I have to go and find some crap around the house, and see if Paulson will buy it from me… don’t worry my salary is not over $400k so I will be okay afterwards.

Read more…

THIS ARTICLE FREAKED ME OUT! – Barack Obama and the Strategy of Manufactured Crisis

Bailout Package Almost Finished? – Kevin Drum seems pleased that it has Dem fingerprints all over it

The Daily Kos would want all executives to be salary capped (yeah! let’s drive all executive talent overseas) – Tentative Agreement Reached On Bailout

Breakthrough Reached in Negotiations on Bailout – Great photo of Harry Reid looking giddy , while Paulson’s face says, “Oh yay, yipee! I get to go and buy stuff, lot’s of stuff, enormous acres of stuff… fun! Fun! FUN!… Oh crap! Did that $400k exec ‘salary cap thingamy’ mean me too?” Pelosi’s face says, “We screwed the suits!”

Hey, Get Warren on the Line…

The Bailout: Three words

Huffington Post – Congress, White House reach financial bailout deal

Americas News Daily (blog) has some of the background angst that the poli’s are (hopefully) feeling – US bailout fuels protests in streets, online

We must get the bailout right.

Bailout 2.0 is Upon Us

Bailout: Democrats trying to commandeer negotiations to push their own program (Updated)

TELL CONGRESS: “STOP THE BAILOUT NOW!”

Voters Remain Overwhelmingly Against Bailout Plan

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7 Responses to “UPDATED: Bail out bill agreement reached – Yipee! My tax money is going to work!”

  1. 1 rjjrdq

    Now we see who’s really running the world. Wall Street says jump, and this government says “how high?” It makes sense: those buffoons in Washington couldn’t run a liquor store, much less a country.

    http://rjjrdq.wordpress.com/

  2. 2 Eric

    This bailout was proposed and orchestrated by Republican George Bush and Republican Paulson whom George Bush appointed. I don’t think its a positive thing that the bailout was approved at all, it gives the American taxpayers cash to the super wealthy so they can loan it back to American taxpayers for interest and profit. Giving money to super wealthy is a republican agenda, not a democrat agenda.

    Regardless of whether the bailout is necessary or not, its clear that it was proposed by Republicans, and that if it was necessary, the cause is 8 years of Republican Bush in the white house, and 8 years of Republicans supporting his incompetent policies, and 8 years of republican fiscal irresponsibility.

  3. 3 sadimtouch

    Eric –
    No, you are dead wrong. The money is going to publicly held corporations whose shareholdership is made up ultimately by ordinary people who have there life’s work saved up in retirement funds. It is these ordinary people who are at the verge of seeing their savings disappearing into vapor. Moreover these corporations lend the money that makes payroll possible for thousands of small businesses. Be thankful for the money you got in your paycheck last week (that is if you work in the private sector, and are not sitting on your rear end, or in a government job) and also for this bill, because if it were NOT for this bill, the likelihood of another paycheck for you could have been slim. That much seems to be clear by experts who actually know.

    You also play the blame game of, “George Bush sucks, George Bush sucks”, and have no idea what you are talking about. While George Bush does shoulder blame for being a democrat (yes his policy belonged squarely in the socialist democrat platform) in his wishes to make housing “affordable” in encouraging high risk loans to lower income people. Aside form that, virtually all the blame apart from this rides on the back of democrats when they pushed for greater and greater leniency in loaning requirements. Fannie and Freddie were both democrat constructs designed with government as a backstop, this should NEVER have been passed. Banks have been so desperate to give away money so that they could then sell the paper to Fannie and Freddie, that they loaned it to illegal aliens for goodness sakes. The government backstop is what drove F & F to buy up these risky deals. Democrats have been at the helm in virtually every push to give deadbeats money. This is tattooed into the very fabric of democrat identity, with the incestuous relationships, politicians have with groups like ACORN (yes it is group”s” as they are actually about 150 organizations under the ACORN banner, purposefully designed to muddle the identity of relationships).

    You are blindly drinking Kool-aid laced with poisonous democratic policies designed to tear America to pieces. You might think I sound like a lunatic when I accuse the Dem’s for having malicious intent, but then you wouldn’t have read this article at American Thinker.

  4. 4 jonathan payer

    Sunday, September 28, 2008

    cds credit default swaps wall street bailout

    *from: http://www.financialsense.com/editorials/engdahl/2008/0606.html

    * Warren Buffett once described derivatives bought speculatively as “financial weapons of mass destruction.” In his Berkshire Hathaway annual report to shareholders he said “Unless derivatives contracts are collateralized or guaranteed, their ultimate value depends on the creditworthiness of the counterparties. In the meantime, though, before a contract is settled, the counterparties record profits and losses -often huge in amount- in their current earnings statements without so much as a penny changing hands. The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen).” A typical CDO is for five years term.

    Now the other shoe is about to drop in the $62 trillion CDS market due to rising junk bond defaults by US corporations as the recession deepens. That market has long been a disaster in the making. An estimated $1,2 trillion could be at risk of the nominal $62 trillion in CDOs outstanding, making it far larger than the sub-prime market.

    The idea for the banks is to make a profit on each trade and avoid taking on the swap’s risk. As one CDO dealer puts it, “Dealers are just like bookies. Bookies don’t want to bet on games. Bookies just want to balance their books. That’s why they’re called bookies.”

    > No regulation – there must be regulation The executives at the top must pay for this poncy scheme. The public is being hoodwinked by spin. These people engaged in this activity are thieves stealing umbrellas; thwarting public trust and recklessly endangering everyone – for nothing more than greed.

    * Experts inside the CDS market believe now that the crisis will likely start with hedge funds that will be unable to pay banks for contracts tied to at least $150 billion in defaults. Banks will try to pre-empt this default disaster by demanding hedge funds put up more collateral for potential losses. That will not work as many of the funds won’t have the cash to meet the banks’ demands for more collateral.

    Sellers of protection aren’t required by law to set aside reserves in the CDS market. While banks ask protection sellers to put up some money when making the trade, there are no industry standards. It would be the equivalent of a licensed insurance company selling insurance protection against hurricane damage with no reserves against potential claims.

    *from: http://www.cfo.com/article.cfm/3262282?f=search

    * Nowhere else in finance are conflicting interests as fundamental as when banks buy or sell credit default swaps, derivative instruments that serve as insurance against a borrower’s default. When the borrower involved fails to make timely payments of interest and principal, the buyer of the protection can exchange the debt it holds for cash from the seller of the swap. But when commercial banks are involved in the deals, the party on the other side has to worry that the lenders can profit from the use of information they have privately gleaned from borrowers in the course of assessing their creditworthiness.

    Federal Reserve Board chairman Alan Greenspan has had nothing but praise for the proliferation of credit default swaps and other derivatives. That worries observers such as Chris Dialynas, a managing director of PIMCO, the nation’s largest bond-investment firm. “There’s no surveillance mechanism,” Dialynas warns. “It’s very, very difficult to know who’s doing what.”

    The rampant abuse of free market economies cannot be ultamitely insurred by the public trust.

    cds should be made null and void – like the outlaw weapons of mass destructiion that they are. Everyone should rebalance there books. And the people that profited should return their assests private and public. Then what left is not the abstract catastrophe but the main infrastructure of basic financial structures that can be maintained and were infected by this harmful practice.

    People should be fired and go to jail – and lose their ill got gains.

    we need tro procede cautiously and for all the right reasons

    do not rush this.

  5. 5 sadimtouch

    jonathan payer –

    not sure exactly what YOUR point was apart from the last three lines. I think we are all coming to some level of agreement that the whole CDS system is a fiasco.

    Whether I agree with you on YOUR first point of firing individuals depends on who YOU think is to blame. If I could I would fire Barney, Chris and Chuck, then move on to Harry and Nancy. The presidents who signed Fre-nnie into law are long gone.

  6. Hey sadimtouch, nice de-construction of the Dems. Why I don’t hear this coming from McCain is a mystery…


  1. 1 Scroll for updates: Bailout Deal Reached With ACORN, And Other Pork Removed | Right Voices

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