Moving the Deck Chairs on the Economic Titanic 22 comments
September 29, 2008
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I keep getting emails saying, "See, the House voted down the TARP bill, and the world didn't end, so we must be right in saying it was unnecessary."
Three points:
- The markets aren't convinced TARP is dead -- the U.S. system has more legislative rabbit holes than your average farmer's field -- so at least wait for that before celebrating.
- The carnage, without some support or assistance (and it doesn't have to be TARP, but nothing is going to easier), will now turn into a rolling boulder, regardless of what the Dow does in the next ten minutes. More banks will fail as overnight credit markets stay closed, small businesses will lose lending lines, consumers will retrench, etc.
- If you're so convinced that the House has cleverly figured this all out, ask yourself this: Where were these same newly smart people when the credit crisis was building?
We are just moving around the deck chairs on the Titanic. Hope you're all enjoying the views.
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This article has 22 comments:
Among other things, they were holding Congressional hearings on fraud at fannie and freddie, and were being poo-pooed, shouted down, or accused of various kinds of political meanspiritedness.
Many, including Ron Paul, have been sounding the alarm about fractional reserve banking for decades. Bernanke recently suspended the restriction against banks using deposits to fund the investment bank activities. Had we not levered up in the first place, we would not be in this situation.
Some are saying that "this is not the time for ideology". They are the ones who don't want their corporate socialist ideology resisted. Their solution already screams of ideology; it is only natural to oppose it on ideological grounds.
That is absolutely right.
It's filthy that columnists such as Kedrosky fail to see that when the enemy is "confidence" one has to START by eliminating politics.
Next remove Paulson, he's front and center "Wall Street's mouthpiece" to most Americans.
At the same time, transparency and valuation. We need to define the worth of troubled assets.
Shame on those that approach Democracy in a flaccid, "all or nothing" mentality.
This is a process, and what all you wimps that wanted the bailout have learned is that good policy comes from patience and understanding the problem.
That's next and watch for the bill to arise again (in some form) later this week.
BRAVO TO THE FREE MARKET FOR BEING BIGGER THAN POLITICS.
Its important to save main street instead of wall street brokerage houses...the supply and demand for the toxic paper will eventually reach a equilibrium without a bailout....what the country needs now is to get M1 on the move upward and that requires a return to fundamentals...reduce taxes, lower energy prices, adequate jobs for whoever wants to work. This is the Main Street Bailout that will answer all questions going forward.
It's a sign!!!! Time to pick up all of those stocks heavy in Las Vegas real estate!!
LOL!
What will the morons in Washington do when they find out the market works better WITHOUT THEM?
'Fix' it, of course, so it doesn't. They will start by taking equity and bank and insurance companies, buying paper neither they nor anyone else understand, and making a central economic czar in DC. We know how well that works too.
Despite all the blather by the talking heads on tv, the primary reason the House failed to pass the bailout bill is because the elections are five weeks away.
Most of them were buried under phone calls/letters/emails from irate voters telling them to oppose the bailout. Since they are politicians and value their seat in Congress more than anything else, they voted 'nay'.
Once the incumbents have retained their seats in November they will suddenly switch to the 'aye' side of the issue and pass a bailout.
You can bet the House leadership on both sides knows this is the case too. They are just making up fluff to justify what happened today in order to hide their true stripes.
WHY does everyone act like a Wall Street bank is needed for small town businesses to survive? You think the local greasy spoon fills out a loan app at JP Morgan or Goldman Sachs?
NO. They go to Podunk City bank and get a loan from the hometown banker. This will continue whether the Wall Street banks fail or not.
Besides, any business that can't STAY in business for more than a month without borrowing from a bank doesn't deserve to remain open. They are wasting valuable capital.
Claims to the contrary, like that made by Mr. Kedrosy amount to nothing more than scare-mongering whether they mean to or not.
Don't trash Paul K. He obviously is affiliated with the Democrats, but he writes nice articles. Even if you disagree with him, it is a good and intelligent opposing point of view.
I am not fan of Dems, but we need civility in discussion, and Paul has it.
Cheers
Please point out any glaring errors or omissions, I might learn something. :-)
"If you're so convinced that the House has cleverly figured this all out, ask yourself this: Where were these same newly smart people when the credit crisis was building?"
A very good question, to which I would counter, why did Ben and Hank not figure out until 2 weeks ago that we needed their magic touch and $700B to avert catastophy. One of the main obstacles is that no one believes them about the severity of the problem. We keep hearing their is a liquidity crisis, and maybe so, maybe not. But the solution is not preceived by the majority to place more money in the hands of those who p!$$ed it away the first time.
These "smart people" - the fscal conservatives have been there all along. Scuttled at every turn by their own boss - BUSH. He never met a spending bill he didn't like.
And - the icing on the cake - the lead on this was Barney Frank. What a slap in the face. The very man who stopped every effort made to rein in Frannie Mae and Freddie Mac. What a joke
Of course they voted no.
We're screwed. Thanks republicans. For nothing.
If the market tanks, the Democrats will be elected. If it holds steady or rises (if TARP passes?) the Republicans.
Maybe the entire financial crisis was planned by Karl Rove as a Republican election strategy because he thinks the Republican Party controls Wall Street.
"Beware the Ides of November."