What the President Didn't Say

Keaton: McManus. What the fuck is going on?
McManus: The strangest thing...

    -- The Usual Suspects (1995)

Here is a quick tag cloud of President's Bush speech to the nation earlier tonight on the credit crisis. You'll notice, as I did, that the word "taxpayers" didn't pop up often.

Overall, it was an overdue if somewhat surreal affair, with the Administration playing catch-up on something monstrous that clearly has caught it almost entirely by surprise. Granted, it shouldn't have been a surprise, because this complex plot has been playing out for some time, but welcome to the movie, boys and girls. We're all hoping for a twist ending.

[Wordle via NYT]

Comments

[RatWatcher]

As I posted on another article...not a word about bankruptcy protections for Main St.

2008 Sep 24 11:36 PM

[User 105132]

Good point. He mentioned something about buying the distressed assets at a very low point - and how he expects to return that money to us in the future when the market has turned around. I just had to shake my head and laugh.

Return the money to us? That's assuming 2 things: We don't go LOWER from here and that the market will turn around sometime in the future.

With credit markets continuing to seize and companies just starting to lay off workers now I think we've got a lot longer to go before we see the market (especially the housing market) turn.

Unfortunately I think 20 years from now we'll look back on this time and realize how lost we all were - how good we all thought we had it. The $700B if they do actually get this passed through will look like a sad attempt at saving our way of life - like the gambler trying to win everything they had previously lost on one last large desperation bet.

35% tax rate for the middle class and 20% unemployment rate here we come! Glad I didn't save for it - my money market funds would've been worthless anyway.

2008 Sep 24 11:41 PM

[flamorte]

It may be that the President is telling us that the over-riding concern of all, as a nation, is not that of "just the taxpayer", rather that it is problem for all of us, that is, the poor, the weak, the elderly, the children, those that pay a lot of taxes, and those that pay none.

Understand that he may have intentionally left out the term "taxpayer" for good reason. A good start may be to pick up a book about the Great Depression and read about actually happened, how people spent every minute seeking not only jobs, but just food and basic needs for their families. The government took possession of personal assets...the order of things, i.e. communism vs. democracy, was taken to the brink. "Seeking Alpha" then meant enough food to eat, and a place to call home. Please take a look at what "bad times" really means, when the system really has a breakdown, then come back and post an article on what "Seeking Alpha" may mean in the face of the challenges confronting us this hour.

2008 Sep 24 11:42 PM

[MarvinMBA]

This bailout and Iraq war are budget busters. The pain that the average guy on the street is going to feel will be worst than excreciating. The bailout will create more misery on the street than not having the bailout is my considered opinion. The budget and bailout at this level of economic growth and unemployment and Recession is just going to blow up the economy into DEPRESSION...believe it or not its going to happen...MarvinMBA

2008 Sep 25 12:05 AM

[Alan von Altendorf]

"More bad news from President Bush. Remember those rebate checks from a few months ago? He wants them back. We need to give that money to rich people on Wall Street. They need it more than you do." — Jay Leno (HT pastpeak.com)

2008 Sep 25 12:31 AM

[sickofthehype]

Marvin you need some education. The bailout will save YOUR ass, plain and simple, like it or not, so come to grips with it. The bailout will only produce liquidity needed to get banks lending to businesses, so those businesses can operate, and hire people, and pay people, and produce products, and on and on. No bailout, no business growth, no loans, no consumer, and THEN the economy nosedives like never seen before. Then and only then you will be the one wishing the bailout went through.

Get a clue.

2008 Sep 25 12:46 AM

[markg]

You really think so Johndough? Do you remember last summer when Bernanke said the problem would be contained? When Paulson said it was a suubprime issue, and would not have wider repercussions?

Do you remember when Bernanke was in confirmation hearings he said housing was not in a bubble?

These two have consistently been wrong. And negligent. Do we really want these yahoos with $700 billion in their hands?

We do need liquidity, that is not the same as buying up distressed assets.

2008 Sep 25 12:58 AM

[markg]

The purchase of MBS's is a very long term proposition. In OC California distressed properties are going up at an increasing rate. In August there were approx. 1400 foreclosures, but over 2400 default notices served. And the high end of the market, previously believed to be rock solid, is leading the charge.

Apparently people with larger incomes make poor decisions too. As part of the bailout let's make sure they can live in their houses for free for several months and forestall foreclosure

That should certainly stimulate the economy because they can spend the money they would normally use for a house payment. This sounds just as rational as the rest of the dynamic duo's bailout plan. Or maybe this is part of the plan

2008 Sep 25 01:20 AM

[1 of 4]

Markg, imagine you were in Bernanke's position speaking before Congress and the public. Do you a) portray yourself as in control and the situation as manageable, or b) tell everyone were F'd and you better get into cash and stuff it into a mattress? His job is to manage and steer the financial markets, not set off a panic. I bet privately he knew full well what was potentially coming down the pike. They started with measured moves, but the market continued to erode. Now they've pulled out the final solution and armchair QBs like yourself only throw blame around.

2008 Sep 25 01:48 AM

[sr9web]

You guys are crazy - Bush was spot on tonight. This toxic mortgage soup has the potential to croak the entire economy. This is NOT a drill. All hands on deck for emergency action.

America spent the last 15 years building ever bigger, ever grander McMansions and vacation condos - all paid for with less and less down payment on the back of over-stated incomes and "wink-wink" loan underwriting. The wolf was kept from the door with ultra low interest rates and exotic mortgages (2/28's, negative amortization, interest only, etc.).

So now, who is to blame? The idiots who bought more house then they could afford and then pulled out the equity to buy vacations and SUV's and the criminals in the mortgage food chain who enabled them.

But... just like the fool neighbor who smokes in bed and sets his house on fire - we still have to send the fire department or else the entire neighborhood will burn down.

2008 Sep 25 01:56 AM

[Pete Mitchell]

Noticed that you inserted "American" in the singular and right before the word "Banks". Wasn't the word "Americans" in the plural used many times by the President . . . and of course used by the President to be equivalent to "taxpayers" . . .?

Me thinks you're playing deceitful games (like most so-called "financial journalists" today) with your politics . . .

2008 Sep 25 02:11 AM

[HARM]

Greetings, taxpayers!

Sure, we completely blew the call on the housing bubble a few years back. Yes, it really existed, and yes, we sort of encouraged (and subsidized) loaning all that money to liars, crooks and deadbeats who had no intention of ever paying it back. Oh, and yeah, we also sort of encouraged reckless risk-taking and turned a blind eye to Wall Street/banking "regulation" (what a quaint term!) when it might have made a difference. And in hindsight, having all those IBs leveraging those funny-money loans 30:1 wasn't the great economic panacea we thought it was.

But... this time it's "different". We really need you to TRUST us to "fix" things this time. And the last thing we want you to do is *think* about it first. I mean, it's a no-brainer. Bailing out reckless IBs and rich gamblers is the AMERICAN WAY. It's "Free Market Capitalism" (tm) at its finest. Remember: four legs good, two legs better.

Well... gotta go now. All these "trash for cash" swaps are really creating awesome opportunities in commodities and other currencies that us insiders need so we can skim all the cream before the rest of you suck--, er, fine citizens catch on.

Anyway, thanks for listening and being so easily manipulated. And don't forget to pick up our tab on our way out!

Sincerely,

Pres. Bush
Dick
Hank
Bernie
Greenie
Congress

2008 Sep 25 02:29 AM

[henarl]

HARM: Best post yet by far!

2008 Sep 25 12:28 PM

[mediapro]

TO SR9web:

You probably also couldn't wait to finish the job in Iraq to the tune of $3 Trillion by the time we get out of what we never should have gotten into. When Bush EVER gets it right, I'll frame that day on the wall so that my children and theirs, who will be paying the bills generated by these neo-con ilk, can see that he wasn't such a bad guy after all.

Your reasoning is to blame it on the guy who saw only the low interest rates and appreciating housing prices, putting those poor schmucks on equal footing as the banker, real estate broker, and home builder who were all playing the same ponzi game.

This, sadly, is Bush's parting Italian salute to the country he so easily destoryed...ours!

2008 Sep 25 02:08 PM

[regeya]

'America spent the last 15 years building ever bigger, ever grander McMansions and vacation condos - all paid for with less and less down payment on the back of over-stated incomes and "wink-wink" loan underwriting. The wolf was kept from the door with ultra low interest rates and exotic mortgages (2/28's, negative amortization, interest only, etc.).'

The blame goes to people buying far too expensive homes, the Federal reserve, the Federal government...almost no one blames bankers and other businessmen who were all-too-willing participants in this mess.

If it weren't for the loan officer forging documents, 30k-income folks would never have gotten loans for million dollar homes. If it hadn't been for willing banks, contractors would never have gotten loans for half-million-plus "spec" homes. If it hadn't been...bah.

I guess what I'm getting at is that everywhere I look, people want to put the blame on everyone EXCEPT the people who could have prevented this in the first place. We want to claim the banks couldn't make money any other way, but that's not true, now is it? Certainly there were other money-making opportunities, surer things, but they went for the riskier options, driven by greed.

Plenty of blame to go around, and I'm not sure why most people want to leave the entities who gave out loans out of this.

2008 Sep 25 10:07 PM

[JCC]

It is obvious to most that when you arteries are clogged, the blood doesn't flow. When you have blocked arteries it is an emergency, and to avoid a heart attack it is critical to get the blood flowing, which implies the use of a stent or open heart surgery. A complete blockage will result in a heart attack or worse. Time is critical, and the required correction is an emergency.

Analogous to your vascular system, the financial markets are the arteries of the economy. Analogous to your arteries, when the financial markets are frozen, the monetary supply does not flow. This creates an emergency situation where it is imperative that we restore the monetary flow.

In today's environment it is critical that we on an emergency basis thaw the financial markets thereby enabling the required monetary flow. There is not a lot of time to react. Waiting too long will create a severe recession or a depression.

2008 Sep 25 11:47 PM