quote:Growing expectations that Lehman will become Wall Street's most high profile bankruptcy since junk bond specialist Drexel Burnham Lambert collapsed in 1990 sparked a sell-off in U.S. asset prices.
Tomorrow is going to be an interesting day.
--j_k
[ September 16, 2008, 08:09 PM: Message edited by: James Tiberius Kirk ]
Posted by Mucus (Member # 9735) on :
Cheery.
May fortune favour the bold.
Posted by TomDavidson (Member # 124) on :
I would prefer fortune to favor the responsible.
Posted by Mucus (Member # 9735) on :
The two are not mutually exclusive.
Posted by Elmer's Glue (Member # 9313) on :
Fortune favors your mom!
Posted by Lyrhawn (Member # 7039) on :
Yipes. I guess Greenspan was right when he said it was only going to get worse.
What next? And what's the expected long term impact of so many major banks and investment houses either going bankrupt or being taken over by other companies?
Posted by BlackBlade (Member # 8376) on :
Wow, although the stock market is always fluctuating, that news is going to do something.
Posted by Jhai (Member # 5633) on :
I'm glad the government decided to not bail out Lehman, and kudos to BoA for buying in a shaky market. If they're lucky (and did the financial scenarios right), they'll do very well with Merrill Lynch.
Right now, the only ones I'm worried about are my friends from undergrad who are low on the investment banking totem pole. Now is not a good time to be graduating with an eye towards a job on Wall Street.
Posted by Samprimary (Member # 8561) on :
Well, all this talk about market problems. The important question is, how do we blame it on our political opponents?
Posted by Mucus (Member # 9735) on :
Actually, there is this interesting essay about why there will not be too much blame, at least aimed at one favourite scapegoat:
quote: ... there have been surprisingly few people, even on the left, as far as I can see, and even in Asia, who have pointed out another seeming contradiction.
When other countries find themselves in a debt crisis, as happened across Asia a decade ago, America and world institutions like the International Monetary Fund argued strongly for free market, monetarist solutions: take the pain, cut subsidies, stop bail-outs.
When America (and the West more generally) finds itself unable to pay its debts, on the other hand, the pain must be alleviated by government action - even up to the point of nationalisation of giants like Freddie Mac and Fannie Mae and the giantly ambitious Northern Rock.
Why is the anti-globalisation left not up in arms about this double standard? ... And there is little doubt that Chinese government intervention played a part in this: it kept the yuan low against the dollar, rather than allowing it to float - thus keeping those imports cheap. It dealt with the huge consequent trade surpluses by buying US currency, using its dollars to invest in bonds. Buying bonds is another way of saying lending money, which is to say that the Chinese irresponsibly injected huge quantities of unnaturally cheap credit into the whole bloated system.
So in this case why is the anti-China, pro-free market right not up in arms about that? (I add in "pro-free market" because there is also the anti-China left, but they are not so pro-free market). Well, here are some answers.
The anti-China, pro-free market right is largely an American phenomenon, and naturally enough will in this year's presidential election vote largely Republican. And the curious fact is that it is a Republican administration that has overseen the extraordinary interlinking of American free market capitalism with Chinese communism - or state capitalism, as some prefer to call it.
Among the biggest buyers of bonds in Freddie Mac and Fannie Mae is the Chinese government, via the People's Bank of China. In other words, the American financial establishment arranged for millions of ordinary Americans unknowingly to take out their mortgages with the Chicoms, as the neoconservative bloggers love to call the folks in Beijing.
And that is just the symbolic icing of the cake of the close relationship between the two economies.
Does the anti-China right want too much stress to be laid on the fact that Mr Paulson, a standard-bearer now for both the administration and Wall Street, was helping his friends in the Chinese government just as much as he was American home-owners when he nationalised FM and FM? No, I thought not.
What about the anti-globalisation left? Unfortunately, the unwinding of first the Asian credit crisis and then the Western credit crunch has revealed much that does not quite fit their picture of social justice as applied to developing and developed industrial states.
...
I do not want to suggest myself, by the way, that along with lip-synching schoolgirls, Tibet crackdowns etc we have to start rounding on the Chinese as being "to blame" for the credit crunch. In these great interlocking patterns of globalisation, policy-makers all over the world get into ruts where collisions are impossible to avoid and in the absence of marked roads it is hard to say one driver is more responsible than the other. ...
Edit: To shorten essay, not an easy thing to do given how its structured
Posted by The Rabbit (Member # 671) on :
That article makes too critically false assumptions. First, that the politicians involved actually care about the facts and second that most Americans understand enough about international finance to understand. I predict he is wrong on both counts and that both political sides will indeed be pointing fingers at the opposition.
Posted by Mucus (Member # 9735) on :
I don't think you quite get his point. He's not saying that Americans won't point fingers, by all means they will point fingers around, but at each other for once.
He's just predicting (and attempting to explain) why there won't be (and hasn't been) much finger pointing at China, even though China (and foreign targets in general) is normally a quite popular scapegoat.
Posted by ClaudiaTherese (Member # 923) on :
Greenspan anticipates more banks also falling.
If Social Security had been privatized, would this sort of market downturn have been likely to have had substantial specific and individually-felt effects on Social Security payments?
Posted by BlackBlade (Member # 8376) on :
It seems all too apparent why my father breathed a huge sigh of relief when he watched markets tank for the past year having sold all his Merryl Lynch shares in the spring of 07.
Still Shinsei Bank took huge chunks out of all their executive's employment packages this fall. It stands to reason many banks are taking similar steps.
edit: Just talked to my father and Shinsei Bank has several hundred million dollars tied up in Lehman Brothers. Lehman going bankrupt could potentially mean my dad will lose his job. He is going in to work today to see what the damage is.
[ September 15, 2008, 06:14 PM: Message edited by: BlackBlade ]
Posted by Lyrhawn (Member # 7039) on :
My mom said she had to stop doing quotes (which is a sort of offer estimate for annuities) with AIG today, after spending half the day redoing them, because they are in some sort of trouble.
Posted by rivka (Member # 4859) on :
Anybody know what the story is with WAMU? Someone warned me about them, and they're my primary bank . . .
Posted by TomDavidson (Member # 124) on :
Bank holdings will be safe, unless you're over the FDIC limit -- unless the economy actually collapses. In that case, I'd imagine that anyone who's not in cash will have problems.
Posted by Kwea (Member # 2199) on :
WAMU is a huge back, and have a HUGE debt in mortgages, so they are far more at risk than most banks are, and you should be vary careful with them, investment-wise.
Posted by Mucus (Member # 9735) on :
TSX, Hang Seng, DOW, NASDAQ, why must you all hold back? Please tell us how you really feel.
Posted by rivka (Member # 4859) on :
Would that I had over the FDIC limit with anyone!
I guess I shouldn't call them my primary bank -- my IRAs and savings and such are all elsewhere. Just my checking accounts are with WAMU. Which is what I deal with day-to-day.
Am I at risk of having said accounts frozen if the FDIC is forced to take over? If so, probably for how long?
Posted by James Tiberius Kirk (Member # 2832) on :
quote:Originally posted by Lyrhawn: My mom said she had to stop doing quotes (which is a sort of offer estimate for annuities) with AIG today, after spending half the day redoing them, because they are in some sort of trouble.
Man, I hope this doesn't mess with my car insurance rates...
Posted by Lyrhawn (Member # 7039) on :
quote:Originally posted by rivka: Am I at risk of having said accounts frozen if the FDIC is forced to take over? If so, probably for how long?
I'm not sure how it would work with a bank as large as WAMU, but presumably it would be a process similar to what happened with smaller banks. In that case, the FDIC would take over, but you'd still have access to your money via checks, debit cards and ATMs, and then all funds would be transferred to a different bank where you'd have complete access to it. Unless they use a different process, you wouldn't be without access to your money.
Posted by rivka (Member # 4859) on :
Ok, thanks, Lyr. Posted by James Tiberius Kirk (Member # 2832) on :
quote: At 1515 GMT, AIG was down 22 percent at 3.71 dollars, taking its worth down to 10 billion dollars.
quote: News reports said AIG was is crisis talks at the New York Federal Reserve, seeking a short-term loan of as much as 75 billion dollars to avert a cash crunch and bankruptcy.
I strongly suspect I'm going to need new car insurance.
Posted by James Tiberius Kirk (Member # 2832) on :
You and millions of others. I hadn't realized how big AIG is. The Fed is reconsidering a loan.
I keep thinking about that kid from those commercials.
"Don't worry son, we're with AIG."
--j_k
Posted by BannaOj (Member # 3206) on :
Avid reader. found this link on CNN. As far as actual insurance day-to-day you are probably fine.
I don't have AIG, but the driver who rear-ended my daughter a couple of weeks ago does. I just spoke with the claims agent yesterday, and she indicated I'd be getting a check within a week. Hearing the dire news on NPR this morning has me a bit worried, but I'm reassured by the faq above.
Scary times.
Posted by fugu13 (Member # 2859) on :
CT: it really depends on what is meant by 'privatized', but probably not. Assuming we mean individual retirement accounts, those accounts would have been shifted into low-risk investments for anyone approaching retirement, and for anyone not approaching retirement they wouldn't have had access to their money until things recovered, anyways.
There could theoretically be some effects if someone is at the cusp of switching to more conservative investments, though they wouldn't be felt for years, and could be almost entirely circumvented by rearranging the reallocation plan.
Posted by MrSquicky (Member # 1802) on :
quote:and for anyone not approaching retirement they wouldn't have had access to their money until things recovered, anyways.
Unless they were disabled.
Posted by ClaudiaTherese (Member # 923) on :
quote:Originally posted by fugu13: ... those accounts would have been shifted into low-risk investments for anyone approaching retirement...
Honest question (and you have to use short words with me ): before last week, wouldn't Merrill Lynch, AIG, et al, all have been considered low risk investments?
---
Edited to add: I think I don't understand the timing context of your answer; i.e., is it "would [already] have been shifted into low-risk investments" or "would have been shifted into low-risk investments [in response to recent changes]?"
Thanks so much.
Posted by James Tiberius Kirk (Member # 2832) on :
Oh, wow. That's a huge mistake.
Posted by King of Men (Member # 6684) on :
Am I mistaken, or is 85 billion fairly serious money even for the government?
Posted by TomDavidson (Member # 124) on :
Yeah. It's like a whole week in Iraq.
Posted by King of Men (Member # 6684) on :
Well, Iraq is a notoriously expensive war, no? But in that case, why is it such a mistake? It seems to me that 80% of a company known to have assets in the trillions if only they could be untangled is a bit of a bargain at 85 billion.
Posted by Lyrhawn (Member # 7039) on :
That's pretty serious money, even for the government. The Federal budget is around 3 trillion dollars, so 85 billion is, off the top of my head, almost 3% of the budget?
I don't know economics as well as some of you, but I agree with Tom, that's a huge mistake. The government is handing out money like candy.
For someone more well versed than I, what is the upside/downside of bailing out or not bailing out a company like AIG? In other words, what does the government hope to gain from such a massive infusion of money, or what is it trying to prevent losing?
To think the Fed was balking just a few days ago at any further bailouts and Congress was rolling their eyes at the Big Three asking for a secured loan that was either half or a fourth as big as what AIG is getting (depending on which story you read).
Posted by BlackBlade (Member # 8376) on :
The government could afford to let Lehman crumble but many market analysts are saying that AIG collapsing would represent the first disaster on par with the Great Depression.
Posted by AvidReader (Member # 6007) on :
quote: He thought the near brush with catastrophe would bring about an acceleration of efforts within the Treasury and the Fed to put safety controls on the use of credit default swaps.
“They’re going to tighten the screws and say, ‘We want some safeguards on this market,’ ” he said of the Fed and the Treasury.
The swaps are not securities and are not regulated by the Securities and Exchange Commission. And while they perform the same function as an insurance policy, they are not insurance in the conventional sense, so insurance regulators do not monitor them either.
I agree with this 100%. Promoting a free market shouldn't mean there are no rules. And I'm all for keeping a close eye on the guys who stand to make large swaths of cash off a company regardless of how it performs.
The things we let CEOs and boards get away with today is disgusting and harmful to businesses and their employees. Both parties should be ashamed of themselves for letting them get away with all the outrageous post-WorldCom/Enron/etc scandals, including the bad credit glut.
Posted by fugu13 (Member # 2859) on :
CT: would have been shifted into low risk investments simply because retirement was approaching.
Any individual stock is a very high-risk investment, as is any managed fund. Any index fund is a high risk investment in the short term (say, under five years, perhaps longer).
Someone approaching retirement should have little to no money (at least, that they'll need within the next five or ten years) in index funds, much less anything higher risk. The money needed for the near future in retirement should be rolled into much safer investments such as CDs, money-market accounts, and short term bonds. All of these are doing just fine.
Posted by fugu13 (Member # 2859) on :
Regarding AIG, without voicing an opinion, the reason the gov't bailed out AIG is that they were on the insuring side of large amounts of credit insurance for large numbers of banks (and other financial institutions).
That is, right now banks have (or are at least allowed to pretend they have) insurance against certain large moves in the credit of things they are invested in, because they have agreed to make payments to AIG in exchange for AIG taking on that risk (basically).
If AIG goes away, that shield disappears, and there's suddenly a lot more unchecked risk being held. As the current situation has amply demonstrated that even with such insurance in place there is a lot of risk going around, the extra risk would probably lead to more failures. How many and who is probably unknown, except for some notions by those who are very familiar with AIG's customers.
Posted by King of Men (Member # 6684) on :
Let me see if I can understand the basics of what's going on, with Hatrackers in the starring roles. I, Bank of Men, have lent $1000 to kq so she can buy a house. There is some nonzero risk that she will have an attack of hives and be unable to repay her loan, so I buy insurance from Papa Janitor against that risk, at say one dollar, which reduces my profit and my risk from the loan. PJ then turns around and lends that dollar, minus ten cents of capital requirement, to someone else.
Now, when I lent that money, kq looked like a reasonable risk. But now I've heard through malicious Hatrack gossip that ketchup is going out of fashion and the mustard heresy is gaining ground. So I take out my insurance policy from PJ and check that it covers this instance, which it does, but hang on. The people PJ lent money to are also not such great risks anymore. If kq defaults, it's not clear that he will have the cash on hand to pay me the balance of her loan. He has the assets, more or less - lots of people owe him money - but it's not necessarily stuff he can lay hands on quickly. And now Lisa, who I owe money to, is knocking on the door, saying "KoM, can you make the next payment?" And the thing is, I'm damned if I know! On paper I've got everything I need - kq owes me money, PJ will pay if she can't - but it's not clear whether they can actually pay me or not. Usually I would put such a thing on my credit card and eat some interest payments, but now my bank has lowered my limit because, b'God, they're not sure about whether I can pay. And I've got a loan payment due tomorrow...
So now the Fed can be played by OSC, who is pretty well off by Hatrack standards. He agrees to lend PJ enough money that I can be sure I'll get my insurance, if not the original loan - the ketchups are still in trouble, no bailout for them - but only in exchange for 80 percent of the profits. In other words, 80 cents of that dollar I paid PJ for my insurance. Which is probably a fairly good deal, because after all it's not certain that kq won't be able to pay; we only have vicious Hatrack gossip to go on for that. So it could well be that PJ won't have to pay me anything.
Is this a reasonable picture of what's going on?
Posted by Blayne Bradley (Member # 8565) on :
I lost you at "Let.."
Seriously, yeah that sounds a bit right.
Posted by ClaudiaTherese (Member # 923) on :
Thanks, fugu13. I'll go chew on that for awhile.
That was a glimmer of light, King of Men -- thanks.
Posted by fugu13 (Member # 2859) on :
One thing worth noting about some of the instruments (such as credit swaps) people are railing against as alleged causes for this downturn is that some companies that are doing pretty well (given the economic environment), such as JP Morgan, divested most of their positions in areas suffering problems in advance because they used changes in the prices of credit swaps related to those sectors as indicators of the riskiness of those sectors.
KoM's description is a decent approximation. Credit insurance, and in particular credit swaps, are a lot more complicated thing (especially when neither party in the swap is the one whose credit is in question), but they're pretty hard to explain thoroughly.
And yes, AIG's balance sheet is in decent shape (for the current situation), it is its cash balance that is in trouble.
Posted by rivka (Member # 4859) on :
quote:Originally posted by fugu13: KoM's description is a decent approximation.
Also very funny. Posted by Chris Bridges (Member # 1138) on :
[goes off to buy mustard futures]
Posted by BannaOj (Member # 3206) on :
Skimming an article I came across this:
quote:Rabbit said stocks were also under seasonal pressures, with September typically the worst month of the year for the major gauges.
quote:Originally posted by Chris Bridges: [goes off to buy mustard futures]
How do you have any capital for that?!
Word on Wall Street is that the entire condiments industry is tanking. Without ketchup, burger and hotdog institutions are finding demand scarce. People just don't want mustard without ketchup.
Relish, Mayo, and Miracle Whip are all effected, yet strangely BBQ sauce hasn't felt the pinch at all.
Posted by Mucus (Member # 9735) on :
One must diversify globally, oyster sauce and soy sauce may decouple from ketchup, relish, and mayo.
__________
In other news, TSX, Hang Seng, Dow, Nasdaq .... oh the humanity! Its a massacre!
Posted by maui babe (Member # 1894) on :
I took a very very basic economics class many years ago, and the only example I can remember is that when people can't afford to buy shoes, that the market for shoelaces decreases also.
That didn't make much sense to me, since it seems to me that if one can't afford to buy new shoes, he'd be more likely to need shoelaces to make his old shoes last longer.
I decided to stay with my strengths (which is most decidedly NOT economics) and let those who have a head for such things worry about shoes and shoe laces.
And as for condiments, as long as I can get mustard and Franks sauce, I really don't care if ketchup becomes scarce.
Posted by pooka (Member # 5003) on :
Try chili sauce. It's like ketchup with a kick.
Posted by ketchupqueen (Member # 6877) on :
Man, I walk out of a thread for one day and all of a sudden I've got hives from mustard and am losing my house. Posted by Stray (Member # 4056) on :
Morgan Stanley and the FDIC are both in trouble now. This is getting very scary.
Posted by King of Men (Member # 6684) on :
quote:Originally posted by ketchupqueen: Man, I walk out of a thread for one day and all of a sudden I've got hives from mustard and am losing my house.
And you owe me a thousand bucks. Pay up!
Posted by ketchupqueen (Member # 6877) on :
Will a thousand bottles of ketchup suffice?
Posted by Sterling (Member # 8096) on :
I must confess, I'm worried.
It would be one thing if, in an otherwise stable financial time, a reasoned plan was devised to take a greater hand in control of markets where it was decided that a major downturn would be catastrophic to the private sector.
This feels more like smoke rising from our shoes as we drag our heels, desperately trying to stop a train before it goes off a cliff. The government is acting quickly and saying, "It will be all right, we can handle it"- mostly because, well, someone has to take care of it, and hope that things turn out for the best.
But our money is already losing value, we're already running under a massive deficit, and the average citizen has already been primed to believe he or she is getting shafted- any responsible actions to start digging out of this mess are going to fall on their shoulders, and they're probably going to scream bloody murder.
And... I have a bad feeling we haven't seen the last big warning sign, yet.
Jokes aside, I feel like we're being told "don't panic!" not because panic is an illegitimate reaction, but because those in the know recognize that panic will accelerate a freefall.
Posted by fugu13 (Member # 2859) on :
The dollar losing value is a positive movement that helps deal with the situation, not a negative one (on the whole).
This is a pretty weird situation, economically. Many sectors of the economy are doing just fine (which is unusual when there are such large financial issues). Expect more problems, but overall this won't cause great problems in standard of living.
Posted by Darth_Mauve (Member # 4709) on :
According to NPR the reason AIG got into trouble, and the reason they are being bailed out, is that they got heavily into insuring Bonds--govt Bonds to be exact. But unlike regular insurance, that AIG is expert at, Bonds are all related in value. If they insure a house, and it burns down--the money from 20 houses in the same town cover the cost of the burned one. Rarely does a fire cover an entire city of houses, and in that rare case houses in cities across the country will cover that burned city.
Bonds, however, are linked in the minds of investors. If one bond does not pay out, it is likely that others won't, so people stop buying all of them. The payouts go out and nothing much comes in.
Since this is all kept hidden, nobody knows how much AIG has in Bond defaults. Suddenly the safe Bond market is dangerous, and the risk in lending money, even to other banks, is greater.
Once the banks stop loaning to banks, the system crashes.
Posted by King of Men (Member # 6684) on :
It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers. Oh sure, Detroit is in trouble, but then again that's been true for going on forty years now. It's even possible that the government might make quite a bit of money on the AIG buyout, since the loan terms are apparently not very generous and the problem seems to be liquidity rather than solvency. Who knows, this might be the place where the deficit turns around! Anyway, if credit gets tighter than it has been, I'm not convinced that's a bad thing. Just how many consumer loans and credit cards does the economy really need? Sure, it'll get harder to buy a house, or more accurately, to borrow money to do so. But no houses have been burned. They'll still be around in five years, maybe rented out for a while. A year or two of retrenchment is not a disaster.
Posted by fugu13 (Member # 2859) on :
Retail expansion has basically vanished, and commercial and residential construction are both in trouble, but yes, there hasn't been significant spillover beyond the financial and construction areas.
Posted by TomDavidson (Member # 124) on :
quote:It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
This doesn't appear true in my anecdotal experience. I know a lot of people who're doing a lot of belt-tightening.
Posted by Nick (Member # 4311) on :
I agree with fugu, they were building a mall in my hometown, but due to lack of volume, the big names backed out(GAP, Abercrombie, etc). The whole project is half-built and on hold. That alone is pretty indicative that retail expansion is just not there right now. Elk Grove, CA was once one of the fastest growing cities in the United States. There now are loads of empty neighborhoods waiting to be built, foreclosures with dead lawns, and empty stores. Example Even at my job(mechanic), less cars come in for service every time things like this happen. When Lehman Bros. announced their bankruptcy, the whole week was crazy slow.
Getting kinda scary at this point. . . Posted by King of Men (Member # 6684) on :
Hum. In an economy consisting of a large number of sectors, one or two of them will always be contracting, no? I think you would want to demonstrate that there is more contraction either overall or in number of sectors than usual. And the GDP numbers do not appear to support this - true, they are not growing very fast, but I'd say they are within a sigma or two of the usual.
As for belt-tightening, how loose were the belts to start with? Anyone who was, say, running a largish credit-card balance would do well to tighten their belts quite independent of what the economy was doing; a crisis could simply be the signal that wakes them up to do so.
Posted by TomDavidson (Member # 124) on :
quote:Anyone who was, say, running a largish credit-card balance would do well to tighten their belts quite independent of what the economy was doing; a crisis could simply be the signal that wakes them up to do so.
A huge percentage of the population is running a largish credit-card balance. Their belt-tightening will inevitably constrict the economy, even if it's a good idea for them personally.
Posted by dabbler (Member # 6443) on :
From anecdotes, it seems some small businesses could attribute their economic failures to less consumer spending.
Posted by King of Men (Member # 6684) on :
Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth. Credit can work to smooth out consumption, but you cannot - in the long run - consume what you do not produce. So to whatever extent this happens, that's the extent to which we've been living in a fool's paradise, and we'll be better off when we come down off that high.
Posted by Sterling (Member # 8096) on :
quote:Originally posted by fugu13: The dollar losing value is a positive movement that helps deal with the situation, not a negative one (on the whole).
This is a pretty weird situation, economically. Many sectors of the economy are doing just fine (which is unusual when there are such large financial issues). Expect more problems, but overall this won't cause great problems in standard of living.
Frankly, I disagree. The dollar is losing value, and consumer prices aren't rising at a similar level; as a New Yorker article mentioned, prices of identical consumer goods in Europe are often costing a good 30% more in Europe. Many companies are accepting lesser profits from the American marketplace in order to keep up volume and brand loyalty because American consumers have been such a rich source of capital in the past, but that's not an infinitely sustainable situation. Our current standard is also maintained to a significant degree by foreign debt, and while lowering the value of our own money may help us pay some immediate bills, it decreases the apparent value of the U.S. as an investment, imperilling our ability to continue on credit as we have in the future.
Honestly, I don't think the full brunt of the increased costs of shipping has even hit American consumers yet.
I agree that it's a weird situation, but it's a weird situation largely because it's an artificially suspended situation.
Or to put it another way: devaluing the dollar as a tactic can only be seen as a good thing if one believes it is a tactic, i.e. something the U.S. can reverse if it chooses when it chooses. That is increasingly not what the evidence suggests.
Posted by King of Men (Member # 6684) on :
quote:Originally posted by dabbler: From anecdotes, it seems some small businesses could attribute their economic failures to less consumer spending.
Again, you would want to get some actual numbers. Any number of small businesses fail every year; when the economy is bad, they blame it on that, when the economy is good, they blame it on phases of the Moon. The question is, are more businesses failing than usual?
Posted by Christine (Member # 8594) on :
quote:Originally posted by TomDavidson:
quote:It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
This doesn't appear true in my anecdotal experience. I know a lot of people who're doing a lot of belt-tightening.
That's not true for me either. My grocery bill has gone up by about 20% over the last year, our gas bill nearly doubled, our utilities are higher, clothes are higher, services are higher, and my husband's raise was a joke. We are having to seriously reprioratize soon. We're very fiscally responsible -- we have monthly budget meetings and an end of year where we reevaluate everything.
Last year, we tried to account for the rising costs of things but we were thinking way too small. Next year we're almost certainly going to have to cut our home improvement budget, our eating out budget (only $100 a month as it is so that would pretty much go away), and our entertainment budget.
Now, for us personally, that's annoying. We won't get to do some of the things we'd like to do although we can still afford everything we need and are not in debt. Trouble is, we're not the only ones who are cutting back on things like dining out, entertainment, and home improvement. Which means that our favorite local restaurants may suffer, home improvement businesses will suffer, etc.
Which in turn, makes the overall economy even worse and puts jobs at risk -- maybe my husband's. (We hope not but maybe.)
I have to admit, I'm nervous about the economic future of this entire country.
Posted by Jhai (Member # 5633) on :
To add in my anecdote, my family and friend group is doing pretty awesome. In fact, GJP (Gross Jhai Product) has shot up dramatically in recent months, and there's good housing boom going on in my personal/familial economy.
Concluding from that the nation's economy as a whole is doing awesome is just as silly as concluding from negative personal anecdotes that the economy is doing poorly. Economics needs good data in order for conclusions to be drawn. No one here has listed any, and most of the data I'm seeing suggests that, as a whole, the economic future of this entire country is doing just fine.
Posted by dabbler (Member # 6443) on :
I didn't say in my brief comment that I thought it was something to extrapolate. Mainly it comes from hearing from one fellow poster on sake and feeling quite sad that he probably had the deck stacked against him more this year than another.
Posted by Jhai (Member # 5633) on :
dabbler, just so it's clear, I'm not trying to imply that you did at all. I just get nervous when people start using anecdotes to talk about any sort of national-level phenomenon - especially economics, since it seems to get that treatment more than most. Edit: I offer up this article (with data!) to put the thread back on track.
Posted by Christine (Member # 8594) on :
Some stories we've seen on the news lately that go along with the crunch I'm feeling:
People losing their homes.
Middle class families shopping at food pantries.
New construction down.
Consumer confidence down.
...
Posted by fugu13 (Member # 2859) on :
For many of the people losing homes nowadays, that's probably better than them being saddled with the amount their mortgage was really for. Extremely painful and wrenching in the short term, but probably improving their long term economic situation.
I suspect the middle class families shopping at food pantries article is a sensationalist piece not reflecting any serious trend.
New construction is down, a lot. There's also a lot of new construction out there unoccupied. This will be painful for the construction industry, but probably won't have many ripple effects.
Consumer confidence is down in a vague sort of way, but it isn't having much significant impact. While retail expansion has vanished, retailers themselves are overall coping pretty well; the expansions were often predicated on ideas about the growth of residences in the area.
As Jhai said, overall the economy is looking in reasonable shape. My personal prediction is that there will be several more major financial company failures, but that these will ultimately be opportunities for the financial companies that are not as vulnerable, and that the economy will gradually regain momentum, perhaps after a short recession.
Posted by Noemon (Member # 1115) on :
quote:Originally posted by fugu13: New construction is down, a lot. There's also a lot of new construction out there unoccupied. This will be painful for the construction industry, but probably won't have many ripple effects.
Why?
[Edit--Why won't it have many ripple effects, I mean.]
Posted by King of Men (Member # 6684) on :
quote:Originally posted by Christine: Some stories we've seen on the news lately that go along with the crunch I'm feeling:
People losing their homes.
Middle class families shopping at food pantries.
New construction down.
Consumer confidence down.
...
News stories are more or less the definition of 'anecdote'. First, the journalist writes about what gets past his selection bias; and then you remember the stories that get past yours. By the time what's going on has been filtered through that many layers, there's not enough actual data in it to colour an opinion. Numbers! We want numbers! And what's more, we want numbers that haven't been cherry-picked to support whatever the story du jour is.
Posted by Shigosei (Member # 3831) on :
quote:Originally posted by BlackBlade: yet strangely BBQ sauce hasn't felt the pinch at all.
That's because people are saving it up to roast the CEOs of the companies that have been failing.
Posted by Jhai (Member # 5633) on :
Christine, if you look at the article I linked above, it addresses exactly the issue we've been talking about: how there isn't a recession, and yet people still feel unhappy about the economy and worry about their economic future.
Noeman, I'm not sure what answer fugu will give you, but my guess is that because the industry has already been in a decline for a year or so, there aren't going to be any sharp jerks in the industry - we're just going to continue to see a slow decline. Volatility (like what's happening in the financial sector) is normally a much more problematic issue than just decline. Combine that with the fact that construction is one of the more fluid job markets out there, and I don't think we'll be hearing about too many problems. That's not to say that it isn't a issue we should be concerned about: slowing growth in the construction industry will mean slower general economic growth, but it shouldn't create a cascading effect like we've seen in the various subsections of the financial markets.
Posted by rivka (Member # 4859) on :
It is currently harder for students to get student loans than it has been for probably a decade. Even after Congress raised the annual maximums for Stafford loans, many students are finding it difficult or impossible to get enough funding to continue in school. Still anecdotes, but I personally know quite a few students who are putting off starting or continuing their degree (or shifting from full-time to part-time), and I hear similar stories from many of my colleagues.
Posted by Christine (Member # 8594) on :
I don't know....economists seem to be in disagreement over the state of the economy and I'm not sure how you can sum up an entire country's financial situation with a single number. It's not an anecdote that inflation is staggering. It's not an anecdote that loans are harder to acquire. It's not an anecdote that the housing industry is in serious trouble.
As for the parts of what is being said that are anecdotes -- why can't we talk about them, exactly? Personally, the fact that my family is having to seriously rethink our budget due to inflation is a lot more relevant to me than the gross domestic product. I'm not an economist. I'm just a person trying to live my life.
Posted by ketchupqueen (Member # 6877) on :
Hmm.
Personally, my family is doing well. We've paid off our CC debt, we've almost paid off our car loan (though we'll probably have to buy a new car next year, we're hoping to get the minimum loan and pay the rest up front), we're paying down my husband's student debt (he thankfully finished school last year, at least for the forseeable future; now he's going for professional accreditations-- is that a word? I'm tired-- instead of another degree, at least for now...), we're even starting to pay off some personal debt to family and friends we accumulated when we made our big life path change... It's a good time for us. We're hoping in a few years we'll be able to benefit from these lower house prices and start looking for a starter home. (If not, it won't bother us; as long as we can find a big enough place to rent, we're happy...) Our grocery bill is not significantly up, gas is up but we don't often do too much driving, and so, we're not doing that badly.
On the other hand, my sister-in-law and her husband both lost their jobs last year, within 6 weeks of each other, and have been unable to find work in that industry (they both worked for a big mortgage house-- you guessed it, their jobs don't exist any more, pretty much anywhere.) They got into a house loan that took all of one of their incomes and a little more to pay. Now, they're barely hanging on. I really don't know what would happen if they defaulted on their mortgage (they already did on their second car); she currently runs a home daycare and needs the space, not to mention if they had to get an apt. they would have to move to an area too far away for her current clients to want to make the trip for childcare, and her husband's income really isn't enough even now. Their kids are on Medicaid and they are using food stamps to get by-- and barely making it. Do I think they were irresponsible to get into their mortgage? Sure do, and we very hesitantly expressed that opinion at the time, but not wanting to be rude, did not push it. Do I think they made other irresponsible financial decisions? Yes, I do; they did not seem to read the writing on the wall and spent months looking for work in their prior field that could have been spent with at least something coming in, even if it's physical, boring labor like my brother-in-law is doing now. But they were deluded, like so many others, into thinking that it was a GREAT time to buy a house, that things were going to turn right around in the mortgage industry, etc., etc. (And to their credit, they knew enough not to get into one of the really bad types of loans-- just more house than they could reasonably afford if one of them lost their jobs, much less both.) Do we still help them out when we can? Yes we do, even when it causes us to do some juggling of things we'd rather pay off right away (they always pay us back ASAP; we're basically no-interest payday advance loans for them when they need it.) And when they need big things for their kids, like their eldest outgrowing her carseat and needing a new one, we are happy to tighten our belts a little in order to give them as birthday or holiday gifts. But, I can really see, through them, what the results are like for people who had a combination of bad choices and bad luck come crashing down on their heads.
So, I see both sides. In some sectors, things aren't that bad. (Some would add, "yet.") In others, the world is ending, at least as it had been known.
I'm of the opinion that that world ending isn't necessarily a bad thing, except as it unfortunately impacts individuals. Sadly, in a "correction" this massive, yes, there's going to be some human suffering as part of the cost. Personally I'll do what I can to alleviate that suffering in my own circle where I can, as has been done for me previously. But in the end, I guess we just have to slog through. Because it couldn't go on forever.
Posted by fugu13 (Member # 2859) on :
It probably won't have many ripple effects because, while it will hurt for the construction industry, the problems in the construction industry are due to people not wanting more construction. And if they do want more construction, there's lots of empty stuff available.
And no one is asking for a single number (the GDP is more of a media number, it isn't for nuanced comparisons), but lots of numbers (measures of the various things we're talking about -- and I can point at most of those if people are interested, though I'll mostly just be linking to bloggers that have already done the finding; I mostly haven't done it yet because I'm in Brazil at a conference). As for inflation, it isn't staggering in the least. It is slightly higher than we're used to, but we went through some incredibly low inflation, especially in low-end consumer goods (which are still doing pretty well, price-wise). Many countries with strong economies have inflation as high or higher than we're at currently, and ours will probably go down a little when the economy strengthens. In fact, growth in gas and food prices is relenting already, and that will probably lead to readjustments in prices over the next few montsh.
Loans are harder to acquire, but there are still plenty of loans available for people who are in sound financial situations. Housing is in trouble in some ways, but it is also much, much more affordable, now, to people with incomes that can support a reasonable home loan.
I don't think anyone here is saying there isn't short term pain in the economy for many. Remember, the argument is not that nobody will have problems, but that the economic situation overall will recover. No one is invalidating your experience, just arguing against projecting your experience as a harbinger of disaster for the whole economy.
Posted by Samprimary (Member # 8561) on :
quote: It seems to me - not that I'm an expert - that outside of the financial industry, the economy is humming along pretty much in business as usual. People are buying groceries and cars and whatnot, and aren't getting laid off in huge numbers.
Over half of my friends have had their personal income drastically reduced, food prices and transportation prices have increased and now are more of a financial burden for everybody, I got a lotta buddies reduced to temp labor jobs.
And I live in a cushy, economically insulated portion of the united states. No place that has been sinking due to manufacturing flight or whatever.
The economy is not humming along as usual; it's just that what has hit the fan was not evenly distributed and seeing the effects in an anecdotal sense largely depends on where you live and who you know.
I'm fortunate. The most I have to bitch about is the emergency ban on short-selling.
Posted by Tresopax (Member # 1063) on :
quote:Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth.
That is not exactly true. Borrowing is essentially a way of redistributing future wealth into the present. If by doing so, you can increase your future wealth, it is possible to increase overall (future and present) wealth just by borrowing.
For instance: If you borrow $1 from the future, and invest it in a way that pays off $5 in the future, that means that you now have $1 more in the present and $4 more in the future. So it is possible, in theory, to borrow your way to wealth. (And it is also possible in practice, since banks do exactly that.)
Posted by Belle (Member # 2314) on :
We have felt a crunch with the construction income that is no longer there, but instead my hubby is taking a different part-time job. His full-time job is secure - and as soon as I graduate in May and find something mine will be too. We still have a pretty major teacher shortage in secondary education, so I don't foresee any issues with finding and keeping a job for me.
There is something to be said for a dependable government job. Yes, his part-time income is struggling, but if all goes well he'll soon have a different part-time job - he's applied and is awaiting the final say-so from the employer and we think it looks good.
So we're going to be all right. I know a lot of people suffering a lot right now but that's because a high percentage of our friends were also employed by the construction industry.
Then again, I know people doing well - my brother just got a new job that doubled his previous salary and went out and bought a new car for his wife to celebrate. So, some people are doing okay.
Construction and mortgage industries are really hurting, and I feel for the people who've lost their jobs, I really do.
Posted by King of Men (Member # 6684) on :
quote:Originally posted by Tresopax:
quote:Any part of the economy that was running on demand from credit didn't actually exist. In the long run you can't borrow your way to wealth.
That is not exactly true. Borrowing is essentially a way of redistributing future wealth into the present. If by doing so, you can increase your future wealth, it is possible to increase overall (future and present) wealth just by borrowing.
For instance: If you borrow $1 from the future, and invest it in a way that pays off $5 in the future, that means that you now have $1 more in the present and $4 more in the future. So it is possible, in theory, to borrow your way to wealth. (And it is also possible in practice, since banks do exactly that.)
You cannot borrow a dollar from the future. You can only borrow a dollar from someone living in the present. What you probably mean is that when someone lends you a dollar, he is foregoing the use of that dollar today, in exchange for 105 cents next year. This does not move wealth from future to today; it moves consumption from today to future. If done correctly, it will indeed increase future consumption above what was foregone. But it is not the borrowing that accomplishes this; it is the foregone consumption. This is clearer if you consider 'borrowing' from yourself by, say, going for a cheaper cut of meat and thus saving a dollar, or taking an extra job instead of relaxing in the evenings, or whatever. By not consuming today, you plant the seeds (perhaps literally!) of additional wealth tomorrow.
It is saving, not borrowing, that increases wealth. Sometimes borrowing is a necessary intermediate step, but borrowing for purposes of consumption builds nobody's wealth.
Posted by King of Men (Member # 6684) on :
quote: I'm not sure how you can sum up an entire country's financial situation with a single number.
And then you propose single anecdotes in an attempt at the same summing-up!
quote:It's not an anecdote that inflation is staggering.
Granted. Then again, it's also not true.
quote: It's not an anecdote that loans are harder to acquire.
No. But considering the sorts of loans that were handed out like candy and got us into this in the first place, I'm utterly unconvinced that this is a bad thing.
While we're on the subject of anecdotes, my bank recently increased my credit limit from 2000 to 10000. I thought I detected a rather plaintive note in their letter reminding me that I had one.
quote:It's not an anecdote that the housing industry is in serious trouble.
Yes it is, actually. As already mentioned, in an economy this size, one or another sector is always going to be in trouble. The car industry has been in trouble for forty years without anyone outside of Michigan much caring. What you want to determine is whether more sectors are in trouble than is usual. Until you've got some number to compare, it is indeed an anecdote. It's like saying "Of course I'm following my diet, today I ate three bowls of ice-cream!" Unless you happen to know that the usual consumption is five, this is meaningless.
Posted by fugu13 (Member # 2859) on :
I agree with almost everything you've said in that post (edit: about savings), but the last paragraph. I only agree that savings increases wealth insofar as a more expansive definition of savings is taken; most wealth is created by spending, not saving, in order to facilitate the provision of goods and services.
Posted by fugu13 (Member # 2859) on :
The housing industry (by which I mean the home loan industry and the residential construction industry) is in rather a bit more trouble than troubled industries usually are. Institutions are taking losses in a day that are larger than Detroit has in years. The economy is only doing "okay" for the short term, and quite possibly will be in recession for a time. However, there isn't evidence of long term problems or any extreme short term problems.
Posted by kmbboots (Member # 8576) on :
Whenever I read this thread, this speech comes to mind:
quote: He did help a few people get out of your slums, Mr. Potter, and what's wrong with that? Why - here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers? You - you said - what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him.
Posted by fugu13 (Member # 2859) on :
Movie speeches are always so stirring.
Posted by Jhai (Member # 5633) on :
Especially because this problem comes from people wanting to live in "a couple of decent rooms and a bath" and not being able to.
... uh-huh. *rolls eyes*
Posted by King of Men (Member # 6684) on :
quote:Originally posted by fugu13: I agree with almost everything you've said in that post (edit: about savings), but the last paragraph. I only agree that savings increases wealth insofar as a more expansive definition of savings is taken; most wealth is created by spending, not saving, in order to facilitate the provision of goods and services.
Um. I think perhaps what you are trying to say is that most wealth is created by exchange, which is usually a spending of money by one side in our economy. But in the long run, exchange has to be backed up by production. Perhaps a formulation we can all agree on is that no wealth is created without work.
Posted by Mucus (Member # 9735) on :
Card is such an interventionist.
Posted by Lyrhawn (Member # 7039) on :
I read an article I think in USA Today the other day about how the government bailout of AIG was actually foreign governments using their leverage because so much of their money was invested in AIG, or actually, I think it was that their money was in government bonds, but that relates to AIG somehow. I can't remember the specifics, but the article suggested that this was the first time that the government's massive debt was used against it by foreign banks/nations to compel a specific action.
I'm curious as to what our more financially knowledged people think about that. I'll try to find the article I read and I'll link to it, cause I feel like I'm leaving out some details.
Posted by ketchupqueen (Member # 6877) on :
I heard AIG backed bonds and sold them with other securities packages. Not sure of the veracity, though, but that's what I've heard along those lines.
I also heard the CEO (who was previously majority stockholder in AIG) didn't think this was necessary and it came as a surprise to him (and was done largely without his consent.) Not sure of the veracity of that, either. But as long as we're spreading rumors... Posted by fugu13 (Member # 2859) on :
KoM: every exchange involves at least one purchase (not all purchases are with money), and every purchase involves at least one exchange (at least in non-command economies). I was using the language of purchase to contrast with the language of savings, but there's no big reason to use exchange over purchase, given even a moderately free economy. No exchange necessarily involves saving.
Creating wealth does require work, but I'm not sure we're using that the same.
Imagine two people, one with a lot of cereal but no milk, and one with a lot of milk but no cereal. Assuming both like to eat cereal with milk, an exchange between them creates value. Note that if they do not exchange, this value is not created, even if the exact same amounts of cereal and milk are in play. Of course, some work goes into this exchange, and the production of some goods of interest is a necessary condition for the exchange, but it is not the production itself that created the value in the exchange.
There can easily be two economies with similar quantities of all things, but one having much more wealth (and presumably huge barriers to exchange in the other). We've actually see phenomena like that in some areas in Africa, I think.
Posted by fugu13 (Member # 2859) on :
Re: the foreign investors rumor, the same rumor was going around about the FMs. I doubt either is true, though I have no doubt there were worried calls about the situation from foreign gov'ts to the US gov't. I do not think any specific action was compelled, though, at least by foreign gov'ts. There were more than enough very worried people in the US to go around.
As for the CEO of AIG not thinking it necessary, AIG proposed a federal deal in the first place, which was initially rejected. He definitely thought it was necessary, and almost certainly helped craft it.
kq: I'm not sure what you mean by this:
quote:I heard AIG backed bonds and sold them with other securities packages. Not sure of the veracity, though, but that's what I've heard along those lines.
Of course they backed bonds and sold them with other securities packages, that's one of the many things financial institutions do.
Posted by Stray (Member # 4056) on :
So I guess all of us in the U.S. are now part owners of $700 billion worth of "toxic assets", i.e. debt that's never going to be repaid? Wonderful.
Posted by ketchupqueen (Member # 6877) on :
fugu, I think what I meant was that the bonds were packaged TOGETHER, meaning instead of the risk being spread around they were all lumped together and other countries bought them.
Posted by fugu13 (Member # 2859) on :
Bonds are commonly sold in groups of the same general type; there were no doubt practices at AIG that have turned out not to be wise, but I haven't heard of anything unusual, and that one doesn't seem unwise, either, excepting possibly some additional information.
Posted by Samprimary (Member # 8561) on :
quote:Originally posted by Stray: So I guess all of us in the U.S. are now part owners of $700 billion worth of "toxic assets", i.e. debt that's never going to be repaid? Wonderful.
Whether or not it's actually it's as bad as you say, at least now the US has so much debt accrued that they got a donald trump effect going on.
Posted by jh (Member # 7727) on :
This $700 billion bailout is a terrible idea, and all I keep reading in the news is that Bush wants it immediately pushed through Congress, basically saying that the taxpayers taking on a $700 billion mountain of debt is not worthy of second thoughts or further consideration on whether this is the best plan of action. I agree that the financial market is in upheaval right now, but seriously, that is the fault of all those companies who were making idiotic moves since all they cared about was maximizing the amount of money going to executives and shareholders, and years and years of deregulation (backed by McCain, as a side note). Of course, now McCain says that the financial market should be regulated. What hasn't he flip-flopped on? Bush's idea right now is to toss a bunch of money at the financial companies holding the bad debt which is at the expense of the taxpayers - so does that mean we get a say in how the banks are spending that money? What assurance do we have that the banks aren't going to make the same or other dumb decisions, dig themselves a bigger hole, and the taxpayers having to bail them out again in a few years? Or, in a couple of years? Are additional regulatory rules going to be put in place to prevent this kind of disaster? The financial companies who have survived are those who saw where the wind was blowing and got rid of their businesses which were the most risky. Exactly how does giving a lot of money to banks who will be controlled by the top executives help the common people? Not that the ones who did this to themselves deserve it - it is ridiculous how much a consumer society we have become where it's all about who has the bigger house, the nicer car, the newest Apple gadget and people begin making purchases who are way outside their means. If you can only afford Target, don't buy at Gucci.
It's the same with the Big Three - I say no government bailout for them either. They were the ones who spent years building clunk SUVs and pick-ups, and didn't see that building fuel-efficient cars was the way to go. They deserve to go out of business for making dumb business decisions - in business, those who make stupid decisions don't deserve bailouts at the taxpayers expense.
Sometimes I think this country is run by a bunch of idiots.
Posted by Lyrhawn (Member # 7039) on :
Only sometimes? I'm starting to think that's the rule and not the exception.
I think a better statement would be "sometimes I think this country is run by a bunch of competent people," except I rarely have that thought.
Posted by Mucus (Member # 9735) on :
On the other hand, I greatly appreciate it.
Its a little unexpected and refreshing having Americans stepping up to the plate and doing making wrongs right without being asked. Also a little indiscriminately targeted in taking the responsibility across your entire population rather than trying to focus it on the bank executives and investment bankers that caused the problem, but its a start.
On behalf of at least Canadian banks (and I guess banks from Europe and Asia), here's my thanks for stepping up to the plate and buying back the mis-rated and mislabeled sub-prime mortgages that your banks sold us.
Maybe there is room for a bit of collective responsibility and socialism in your economy after all
But seriously, it is appreciated.
Posted by steven (Member # 8099) on :
I'd like to know why the children of all those CEOs who allowed all this still get to have their trust funds. Why can't they work in a call center, or flip burgers, or work at Barnes and Noble, or some other crappy-and/or/low-paying position? What value are they adding? Seriously, we're talking about trust funds in the tens of millions in some cases. I really doubt that such is all that helpful to society. I went to college with kids like that, really rich ones. Some are dumb, ignorant, and mean, and will probably stay so. Why are we footing the bill so they can play Nintendo, get high, and screw all night? Into their 30s, for heaven's sake, and dumbly, too. sheesh.
Posted by kmbboots (Member # 8576) on :
Section 8
quote: Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
It is being reported that the above language is included in the bailout plan. Is this true? Am I understanding correctly? If so, what could possibly justify it?
quote:On behalf of at least Canadian banks (and I guess banks from Europe and Asia), here's my thanks for stepping up to the plate and buying back the mis-rated and mislabeled sub-prime mortgages that your banks sold us.
Do you think your banks didn't know how bad the debts were?
Posted by Dagonee (Member # 5818) on :
quote:Is this true? Am I understanding correctly? If so, what could possibly justify it?
I don't know - what is your understanding of it?
Section 701 of the Administrative Procedure Act which dates back to at least 1966) allows judicial review of agency decisions
quote:except to the extent that--
(1) statutes preclude judicial review; or
(2) agency action is committed to agency discretion by law.
The scope of judicial review under the APA is governed by section 706:
quote:To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall--
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be--
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
There are numerous statutes that commit specific agency decisions to agency discretion by law. Such decisions are not reviewable under the substantial evidence/ arbitrary and capricious standards of the APA. Courts still have jurisdiction for reviewing decisions for constitutional error and possibly error under other statutes.
So, if your understanding was "the law prevents courts from ever examining Secretary decisions made pursuant to this law," then it was incorrect. If your understanding was "the law prevents courts from reviewing the decision under the APA," then it is correct.
As to "what could possibly justify it," there are many possible reasons. I don't know which ones actually apply here. But the concept of committing decisions to agency discretion is a very old one and is not novel.
Posted by Mucus (Member # 9735) on :
That was my understanding: e.g.
quote:A large proportion of these mortgages were packaged into dubious investment vehicles and sold to foreigners, including Canadians, backed by triple A ratings from U.S. rating agencies. This meant, says Stephen King, chief economist of HSBC, that "the rest of the world has funded the expansion of the U.S. housing market through increased purchase of assets that are, in many cases, now seen to be not much more than toxic waste."
I guess its all forgiven, after all it seems like you'll be buying them back anyways.
Edit to add: IIRC, there was only one bank, TD Bank, that didn't get hit by the subprime debacle and that was because they literally didn't understand what they were asked to buy.
quote:Toronto-Dominion Bank Chief Executive Officer Edmund Clark's decision three years ago to dump subprime debt ''that didn't make common sense'' may pay dividends again this week. ... ''I'm an old-school banker,'' Clark told reporters last month in Calgary after the annual shareholder meeting. ''I don't think you should do something you don't understand, hoping there's somebody at the bottom of the organization who does.'' ...
I think TD Bank is now bidding for the good bits of WaMu now.
[ September 23, 2008, 11:23 AM: Message edited by: Mucus ]
Posted by fugu13 (Member # 2859) on :
I assume you mean only one large bank. Most banks in the US weren't holding any subprime securities, so I assume most banks in Canada weren't, either. Smaller banks generally don't traffic in that sort of thing.
And the banks buying such things almost certainly did have some whiff of the problems involved. That it would get this bad? No, but it was common knowledge in the mortgage and banking industries that the situation wasn't sustainable. Either bankers in Canada were somewhat aware of potential problems, or they were ignorant and incompetent. They believed the fall would come after they had harvested more profits (and wouldn't be so bad), and are conveniently forgetting any discussions they had about how the situation wasn't going to keep going forever.
The rating agency system does need reform, though. Right now ratings are funded by the institution offering the securities, and that's a very bad thing.
Posted by Mucus (Member # 9735) on :
Sorry, its a Canadian thing. I was actually surprised when I looked at a recent chart of America's banks by capitalizations. You have a few major players and a huge number of medium and small sized banks. We're pretty different, we have five big banks (you can literally google Big Five(or Six) banks) and then only a handful of tiny banks. It is often called an oligopoly here and when most people say "banks" here, they mean one of them, not say Canadian Tire financial services or something.
As for the rest, maybe they suspected, but thats different from knowing. If the rating is wrong and if the equivalent of a prospectus that they were given was fraudulently incomplete (and currently under investigation), then thats pretty messed up.
And its not just a Canadian thing, here's an American professor on the subject:
quote: Charles Geisst, professor of finance at Manhattan College, said in an interview yesterday that he thinks foreign governments have good reason to resist stepping up to the plate.
"It's an American problem," he said of the financial crisis. U.S. subprime mortgages wound up in a number of complicated financial instruments that banks around the globe were holding. "The U.K. was the closest to it, simply because of the interbank connection," Mr. Geisst said. But "the German banks who bought these mortgage-backed securities just as investments have got to be wondering what the hell they were sold, as would the Chinese and folks in Singapore. And I think they're right."
But hey, I'm not saying that they're *entitled* to compensation. It is not quite the same as say a warranty repair.
Thats why I think you're (as in Americans) definitely stepping up to the plate and being generous, and I think thats worth a thanks.
Posted by aspectre (Member # 2222) on :
The only real problem has always been an insufficient amount of bludgeoning.
Posted by James Tiberius Kirk (Member # 2832) on :
quote:In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
"It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."
--j_k
Posted by Lyrhawn (Member # 7039) on :
You should have seen the hearings from the last couple days. From the looks of things, Bernanke and Paulson don't really have much of an idea as to what they're doing. They just want a really big blank check and no restrictions so they can run off and figure it out.
Listening to Bush tonight made it all sound pretty simple. Listening to the hearings was a little scary.
Posted by Kwea (Member # 2199) on :
quote:Originally posted by rivka: It is currently harder for students to get student loans than it has been for probably a decade. Even after Congress raised the annual maximums for Stafford loans, many students are finding it difficult or impossible to get enough funding to continue in school. Still anecdotes, but I personally know quite a few students who are putting off starting or continuing their degree (or shifting from full-time to part-time), and I hear similar stories from many of my colleagues.
Great. What a great time I picked to start school again, huh?
Posted by rivka (Member # 4859) on :
Yeah. But I think you'll be ok, since you're starting a relatively cheap program. Plus you have good credit, which is not something your average college student has. It makes a big difference when trying to secure a private loan.
Posted by AvidReader (Member # 6007) on :
I thought Bush made a really interesting point last night in his address. If the government buys up these mortgage backed securities really cheap and keeps them for thirty years while most people pay them off, they're going to make a stupid-huge profit on them.
What's going to happen to that money? Would it be part of the general budget and could go to things like infastructure, social security, and the debt? Or would it be held in some seperate Treaury account where it wouldn't necessarily help the tax payers that made the purchase possible?
Congress might want to specify now in the bill before there's giant piles of cash at stake.
Posted by Speed (Member # 5162) on :
quote:Originally posted by AvidReader: I thought Bush made a really interesting point last night in his address. If the government buys up these mortgage backed securities really cheap and keeps them for thirty years while most people pay them off, they're going to make a stupid-huge profit on them.
Isn't that the kind of logic that got us in this mess in the first place?
Posted by TomDavidson (Member # 124) on :
Yes. It's actually exactly the logic. There is of course a point at which a given bundle of securities is cheap enough that, even with the risk, it will still be profitable. I'm uncomfortable with letting the current administration decide with my money where that point is.
Posted by Mucus (Member # 9735) on :
Kinda seems better than the logic that came before. Individual houseowners can default much easier than the US government can default. The securities seem a lot more secure this way.
Posted by Speed (Member # 5162) on :
quote:Originally posted by Mucus: Kinda seems better than the logic that came before. Individual houseowners can default much easier than the US government can default. The securities seem a lot more secure this way.
And if I were the CEO of a bank trying to unload these bad securities, that kind of logic would make this deal seem very attractive to me.
As a taxpayer whose money is the only resource the US government can draw on to make these deals, it doesn't look so good.
Posted by fugu13 (Member # 2859) on :
Yep, and if the plan passes homeowners get to default on the US gov't, which can't foreclose on numerous people without seeming like a villain, and pass their debts on to the taxpayer.
Also, the logic previously was not that people were going to default, but that they weren't, and that if they did the risk was in someone else's hands in the form of securities. Coincidentally, that's what the plan perpetuates.
Posted by MrSquicky (Member # 1802) on :
quote:If the government buys up these mortgage backed securities really cheap and keeps them for thirty years while most people pay them off, they're going to make a stupid-huge profit on them.
There are two really huge ifs there. Right now, the plan doesn't seem to be buying them really cheap and, without changing the terms drastically, many, many people are going to be defaulting on these loans.
Think about it, if these were a really amazing investment, the government wouldn't need to step in at all. There are plenty of people with a lot of money who would be clamoring to be making stupid huge profits.
Posted by MrSquicky (Member # 1802) on :
I've been trying to keep up on the hearings, but really I've only gotten snippets. From them, I've gotten the impression that the people doing this don't really know what they are doing and haven't adequately considered other options. You know, the Bush doctrine.
Someone who has been following more closely, please tell me that this isn't the case. Please?
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Speed: And if I were the CEO of a bank trying to unload these bad securities, that kind of logic would make this deal seem very attractive to me.
Not just a bank trying to unload bad securities, all banks. For example, Warren Buffet cited it as part of his reason for heavily investing in Goldman Sachs. Mitsubishi probably had it in mind when it purchased 20% of Morgan Stanley. Manulife of Canada and Munich Re of Germany probably have it in mind when bidding on parts of AIG. Same with Britain's Barclays bidding on parts of Lehman Brothers.
When the US government demonstrates that it is willing to protect investment, its good for all investors, not just the ones trying to unload securities. This kind of thing encourages foreign investment which is a very good thing when attempting to avoid having more banks collapse.
quote:Originally posted by MrSquicky: ... There are plenty of people with a lot of money who would be clamoring to be making stupid huge profits.
In this interview with Buffet, he does mention that if he could borrow the amount of money that the US government can, he would buy them up. The problem is that even he can't borrow that kind of money with the current crisis.
Posted by TomDavidson (Member # 124) on :
quote:Yep, and if the plan passes homeowners get to default on the US gov't, which can't foreclose on numerous people without seeming like a villain, and pass their debts on to the taxpayer.
Five bucks says the Feds will pass some kind of wage-garnishing law to preclude foreclosures/bankruptcies on the debts they own.
Posted by Speed (Member # 5162) on :
quote:Originally posted by Mucus: In this interview with Buffet, he does mention that if he could borrow the amount of money that the US government can, he would buy them up. The problem is that even he can't borrow that kind of money with the current crisis.
And if Warren Buffet were sitting accross the table from these banks, negotiating with his own money, I'm sure he'd be able to get an excellent deal.
As Tom implied, when the people sitting accross the table from the banks probably owe more favors to their lobbyists than the taxpayers, are negotiating with my money, and go out of their way to make sure it's done very quickly and with as little oversight as possible on the process, I think the deal that ends up getting made will be (from the investor's point of view)... less excellent.
Posted by TomDavidson (Member # 124) on :
quote:a very good thing when attempting to avoid having more banks collapse
Here's the thing: I'm okay with having these banks collapse. Seriously. No skin off my nose. The adjustment would be brutal, but it would be worth it. I'm tired of propping up rich people.
Posted by MrSquicky (Member # 1802) on :
Is he buying any?
Of course no one is going to be able to raise 700 billion, but smaller chunks are definitely doable and, depending on how much information they could get, would be an even better investment (assuming that most of the debt was going to get taken over).
Maybe there just aren't enough people with enough resources out there to cover this much. I don't think that this is the case. If these are really great investments, there is money out there outside the U.S. government to buy it and we should be using a much smaller amount of money to help bring that about.
If they don't contain the amount of toxic debt that I've been led to believe, loans that just aren't going to get paid back ever, then the government's plan seems to be pointing the wrong way.
Posted by MrSquicky (Member # 1802) on :
quote:Here's the thing: I'm okay with having these banks collapse. Seriously. No skin off my nose. The adjustment would be brutal, but it would be worth it. I'm tired of propping up rich people.
I'd be even more okay with the government helping new banks and financial institutions get started to take advantage of the emerging situation that would result in these banks collapsing. The short term situation would be worse, but I think the long term outlook (except for the rich people who are in large part to blame for this) would be significantly better.
Posted by Stray (Member # 4056) on :
quote:Originally posted by TomDavidson: Here's the thing: I'm okay with having these banks collapse. Seriously. No skin off my nose. The adjustment would be brutal, but it would be worth it. I'm tired of propping up rich people.
That is a good solution in terms of spite. But in terms of the economy, the problem is that the financial industry still employs a heck of a lot more non-rich people than rich people.
quote:Originally posted by MrSquicky: Is he buying any?
No, but like I said he can't raise that kind of money. More importantly, he can't raise it at the same kind of rate since the US still has a very good credit rating even when trying to borrow that kind of money.
For example, if he needs to borrow money at 6% then he needs to make at least 7% on an investment to make it worthwhile. However, if the treasury can borrow at 3% then even making 5% is a good deal. The numbers are fictitious but the idea is his from that link.
quote: Maybe there just aren't enough people with enough resources out there to cover this much. I don't think that this is the case.
Apparently, that is the case. It is related to the commons idea. If any individual person buys it now and the bailout doesn't happen, then the economy tanks and the investment goes really bad before it gets better. The bailout is large enough to help the economy and help get a good return on the investment much earlier than any one individual can do.
As I mentioned before, we already did a similar kind of bailout last year when Canada had a problem with ABCP and it worked pretty well.
Posted by TomDavidson (Member # 124) on :
quote:But in terms of the economy, the problem is that the financial industry still employs a heck of a lot more non-rich people than rich people.
Sure. But you know what? When the Internet bubble burst, no one rushed to bail out the janitors at the various office complexes. Let these people find other jobs, just like we expect our ex-steelworkers to do.
Posted by Jhai (Member # 5633) on :
Yeah - but the adjustment would be brutal for people not just in the financial industry. It would be brutal for everyone if we let our whole financing sector collapse. Since, you know, they finance everything else that goes on in the economy.
Posted by Mucus (Member # 9735) on :
Except that there is a difference between the financial industry and steelworkers.
Steelworkers jobs have been moved to China and other developing countries and the world is a better place for it.
Its actually in America's best interest to revive its financial industry because a collapse would cause problems throughout the economy. There was a thread on student lending having major problems, venture capital to start new businesses would suffer, the housing industry would suffer even faster. Its in the world's best interest for America because it is not as easy to move those jobs. Students in America cannot easily go abroad to get a loan.
When this bailout is in both America's best interest and the world's best interest, I consider that a win-win scenario.
Posted by lem (Member # 6914) on :
It seems to me, when I reduce all arguments I have heard for and against the bailouts down to a simplistic statement of where I stand, that you cannot address a crisis caused by artificial wealth with artificial wealth.
At least cut the budget by 700 Billion.
Does anyone think by the time this is over it will only be $700,000,000,000?
EDIT:
quote:Its actually in America's best interest to revive its financial industry because a collapse would cause problems throughout the economy.
There is a pretty big assumption that this bailout will revive the financial industry. It is also possible it would only delay it and replace it with an even bigger financial crisis.
[ September 25, 2008, 12:49 PM: Message edited by: lem ]
Posted by MrSquicky (Member # 1802) on :
quote: But in terms of the economy, the problem is that the financial industry still employs a heck of a lot more non-rich people than rich people.
Most of those people will be able to find other employment, many of them in the financial industry.
The banks and investment houses failed. Let them fail. Others will take their place and they'll have learned that if they make stupid, greedy decisions, the government won't pull the out of the fire.
quote:No, but like I said he can't raise that kind of money. More importantly, he can't raise it at the same kind of rate since the US still has a very good credit rating even when trying to borrow that kind of money.
For example, if he needs to borrow money at 6% then he needs to make at least 7% on an investment to make it worthwhile. However, if the treasury can borrow at 3% then even making 5% is a good deal. The numbers are fictitious but the idea is his from that link.
But they're not looking to pay the lowest they can get for these loans. If they were hard bargaining and seemed to really know what they were doing, many of my objections would be met. That's not what they are doing. Even the size of the bailout is a number they pulled out of the air and then freely announced to the people they are bargaining with.
And Buffet is talking about a 10-15% return for the whole thing, including the toxic mortgages. Someone with his acumen could stretch that percentage quite a bit. He doesn't seem to be putting any money into this, nor is anyone else.
This leads me to believe that it is not an amazing investment opportunity, although I should say that I haven't been able to keep up with this anywhere near as much as I'd like.
quote:Apparently, that is the case. It is related to the commons idea. If any individual person buys it now and the bailout doesn't happen, then the economy tanks and the investment goes really bad before it gets better. The bailout is large enough to help the economy and help get a good return on the investment much earlier than any one individual can do
And that's something the government can do, act as a broker/sweetener for many, many groups of people to come forward to invest in this.
If this really isn't a case of the government spending far above what this debt, a large amount of which will never be repaid, would go for on the market (especially with U.S. government coordination, I don't see why the way they are going is preferrable.
Posted by MrSquicky (Member # 1802) on :
quote:It would be brutal for everyone if we let our whole financing sector collapse.
I'm certainly not suggesting this. As I've said, I would expect the finanical sector to continue on, with most of the big players being replaced by new ones or others that didn't make the same stupid decisions. There would be a difficult period of readjustment, but I'm not sure that this wouldn't be better in the long run.
The industry that allowed this mess should have a major shake up, not just morally, but as a way to get it to work better.
Posted by Mucus (Member # 9735) on :
I'll have to go through those points later when I have more time, but briefly:
quote: Both US parties in Congress have reached agreement on the outline of a $700bn (£380bn) bail-out plan to revive the financial sector.
Leading Democrat Senator Christopher Dodd said they had reached "fundamental agreement" on the package though he did not reveal details.
He said Congress could act in the next few days to pass a bill on the subject.
...
Details of the package were not immediately available but it is expected to include limits on executives' pay as well as oversight requirements.
Edited to add: looks like as the day has gone on, he may be moderating that. (?)
quote:House Minority Leader John A. Boehner , R-Ohio, bristled early in the day at suggestions a deal was at hand. “As I told our Conference this morning, there is no bipartisan deal at this time,” he said. “There may be a deal among some Democrats, but House Republicans are not a part of it.”
By midday, however, Boehner’s tone had moderated. “The Speaker and I have worked together to try and craft a bipartisan plan that will pass the House,” Boehner said
quote:Students in America cannot easily go abroad to get a loan.
Good! Then fewer students go to college, and college prices fall, and we go through an extended recession.
Which is probably better for us in the long run.
The collapse of our financial sector may well be better for us than the violent revolution that's ultimately our other option.
Posted by Lyrhawn (Member # 7039) on :
The story on this seems to be changing by the hour. Richard Shelby (R-AL) is still saying that this deal is fundamentally flawed and that it should be solved with private sector money (like what Buffett did) and not a huge government plan. Shelby is the ranking Republican member of I think the Senate Banking committee, which is chaired by Chris Dodd (D-CT).
I guess we'll have to watch tomorrow to see where this thing lands. It may end up being that having McCain on hand to whip Republican votes isn't the worst idea ever, but that depends on where things stand tomorrow when/if we actually see a bill and not just more jockeying. If House Republicans give in on the measure, there could be a vote by the weekend, but it looks like a lot of the wrangling might be done.
What's the real neat thing that came out of this? Congress as a whole told Bush "NO!" about a dozen times, stood up to him, when he sent his surrogates to the Hill to tell Congress he wasn't giving in and that they had to pass the measure NOW, they said no again! And at the end of the day? They got a ton of major concessions from the White House that Bush swore he'd veto before. Huzzah for Congress! You regrew part of your backbone. I'm so proud.
Now let's see how you muck it all up!
Posted by Mucus (Member # 9735) on :
Richard Shelby may wish to read that link to the interview with Buffet. Buffet explicitly says this in regards to his investment in Goldman Sachs:
quote: Well, I would say this. If I didn't think the government was going to act, I would not be doing anything this week. I might be trying to undo things this week. I am, to some extent, betting on the fact that the government will do the rational thing here and act promptly. It would be a mistake to be buying anything now if the government was going to walk away from the Paulson proposal.
But his comments do reflect the latest news I've seen which indicates that the sticking point is Republicans who think that the plan is too socialist/big government, not Democrats.
I do like seeing the concessions the Democrats are putting in for oversight and executive's pay which is why I highlighted it in my previous quote.
TomDavidson:
I'm a little surprised by that. I kinda quoted Dodd's support for the plan because I recall that you previously billed one of his speeches as "This may be the best speech delivered this decade..." Granted, this is a different issue.
Anyways, could you elaborate on how you think violent revolution fits into all this? I'm not sure where you're heading with that.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by MrSquicky: But they're not looking to pay the lowest they can get for these loans. If they were hard bargaining and seemed to really know what they were doing, many of my objections would be met.
Thats a good point, but that seems to be an issue with the implementation of the plan rather than whether to have a plan in the first place.
i.e. the plan should be successful in reviving the financial sector whether they overpay or not, thats a primary objective. Whether the plan makes money (or loses less money) is gravy, a secondary objective
quote: He doesn't seem to be putting any money into this, nor is anyone else.
I've explained his two reasons in my last two posts. Maybe I'll just quote him directly
quote: BECKY: Are you buying instruments like these in the market?
BUFFETT: Well, I don't want to leverage up. No one wants to leverage up in this thing. So, if I could buy a hundred billion of these kinds of instruments at today's prices, and borrow non-recourse 90 billion, which I can't, but if I could do that, I would do that with the expectation of significant profit.
JOE: But the government can do that. You can't. And that's why the private sector can't, even you, can't save the system.
BUFFETT: I can't come close to it. But they have the ability to borrow. They can borrow much cheaper than I can borrow. They can borrow unlimited. They don't have covenants. They don't have -- I mean, they are in the ideal position. ...
quote: This leads me to believe that it is not an amazing investment opportunity, although I should say that I haven't been able to keep up with this anywhere near as much as I'd like.
This isn't an amazing investment opportunity. (Buffet compares it to declaring war after Pearl Harbour, something you have to do, not something that you should be happy about doing)
Buffet's investment into Goldman Sachs with 10% dividends on preferred shares and additional warrants, thats an amazing deal. But as he notes, he still wouldn't be doing it without an expectation of a bailout.
Posted by fugu13 (Member # 2859) on :
Yes. The net effect of the deal is an interest payment of effectively 20%, plus a 10% bonus if the loan is paid off early. He's getting a steal, probably even without the bailout.
Also, note that he made a loan. The gov't proposal doesn't look much like a loan.
Posted by Kwea (Member # 2199) on :
Read Empire.
Half way though shoot yourself. It will be less painful.
Posted by Mucus (Member # 9735) on :
From what I gathered on the other side of the forum, Empire involves a left wing coup of the US government and then a right wing coup of the US government via election. Oh, and the person elected is Palpatine who was orchestrating the whole thing. Oh, and there are Mechwarriors, Mad Cats by the look of it.
Needless to say, it didn't really seem like my cup of tea. I also don't quite see how it fits so I guess I'll just wait for an elaboration.
Largest U.S. bank failure; assets sold to JP Morgan
[ September 26, 2008, 01:22 AM: Message edited by: Mucus ]
Posted by Blayne Bradley (Member # 8565) on :
Actually if you look up the covers its the Scorpion tank from Haloverse.
Posted by TomDavidson (Member # 124) on :
quote:Anyways, could you elaborate on how you think violent revolution fits into all this?
There is a growing perception that the rich are benefiting from special rules and exceptions laid down and enforced by the law that are intended to protect them from the consequences of their own mistakes, even as rules are changed to remove these protections from the poor. This is of course cyclical. But we're moving into a new dynastic period, I think, and I think the rich should be very careful about being too open about their oligarchy.
Posted by rivka (Member # 4859) on :
Reassuring. Mostly, anyway.
Posted by Mucus (Member # 9735) on :
Oh, well then I'd probably agree with you that the bailout will enhance that perception except for two caveats. First, I think that by the time all is said and done the Democrats will probably be able to get in some of their pet ideas such as subsidizing mortgage payments and avoiding foreclosures on mortgages held by the government. This will somewhat shift the lines of bitterness from rich vs. (middle class + poor) to irresponsible vs. responsible. For example, fingers will be pointed at those that jumped onto subprime loans by those that did not and have to pay higher taxes to compensate. Second, violent revolution is not the only probable way to move through this cycle. Canada has gotten a more equitable system without violence and I suspect that it is possible for America to move through the extremes in a cycle favouring the rich and then the poor without going through violent revolution.
We shall see, I suppose.
Posted by TomDavidson (Member # 124) on :
quote:Canada has gotten a more equitable system without violence and I suspect that it is possible for America to move through the extremes in a cycle favouring the rich and then the poor without going through violent revolution.
Canada also broke away from Britain without having to kill a bunch of people.
Posted by Darth_Mauve (Member # 4709) on :
Justice and Accountability are always such fun.
Why are conservatives against any move that might help people in bad mortgages?
Because it was those who got the mortgages who made the mistakes, not the rest of the tax payers. They agreed to technical financial advice from someone claiming superior knowledge who showed them an easy way to get what they want, but they did not understand, nor even read the details of the complicated and binding financial commitments they were making. Some were in it for greed. Others were in it because they thought, and were told, that "everyone" was doing it.
Why are we having to bail out the Financial Sector?
Because it was those who got those mortgage bundles who made the mistakes, not the rest of the tax payers. They agreed to technical financial advice from someone claiming superior knowledge who showed them an easy way to get what they want, but they did not understand, nor even read the details of the complicated and binding financial commitments they were making. Some were in it for greed. Others were in it because they thought, and were told, that "everyone" was doing it.
So what does our President suggest? He suggests that Congress create and approve this super-Bailout NOW. There is no time to wait or debate.
It is in the hands of those congressmen, not the rest of the tax payers. They are being asked to agree to technical financial advice from someone claiming superior knowledge who shows them an easy way to get what they want, but they do not all understand, nor even read the details of this complicated and binding financial commitment they are making. Some are in it for greed. Others are in it because they think, and are told, that "everyone" is doing it.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by TomDavidson: Canada also broke away from Britain without having to kill a bunch of people.
I have confidence that the Americans of the future can catch up to the Canadians of over a hundred years ago. It will be tough, but be strong, you guys can do it.
Posted by Blayne Bradley (Member # 8565) on :
quote:Originally posted by TomDavidson:
quote:Canada has gotten a more equitable system without violence and I suspect that it is possible for America to move through the extremes in a cycle favouring the rich and then the poor without going through violent revolution.
Canada also broke away from Britain without having to kill a bunch of people.
incorrect, we killed a bunch of germans.
Posted by Lyrhawn (Member # 7039) on :
I don't think that's what he meant.
And I think you know that.
Posted by Blayne Bradley (Member # 8565) on :
And I think you what I know about what you presume to be knowing about.
Or ruining a perfectly funny joke.
Posted by Lyrhawn (Member # 7039) on :
I think you'd have to use a generous definition of "funny" for the word to apply in this case.
Posted by dabbler (Member # 6443) on :
I wonder what the answer is to this question: What is the cumulative amount of the principle of all the houses with bad mortgage plans, and how many homes is that?
I imagine this would be a bad plan for any number of reasons, but could a single entity purchase all the at-risk homes for the remaining principle and hold a "refinanced" fixed mortgage for those people?
My opinion so far on this whole mess is that while a Bailout might prevent worse catastrophe, I think it is very unlikely that those involved in making decisions will do a good job at it. Money is going to flow into the wrong hands. I also recall hearing on NPR that someone (Paulson? Someone who works for him?) said that they had just picked the 700 billion dollar number because it 'sounded large.' Considering the war in Iraq was supposed to cost something like 100 billion dollars and now is closing in on a trillion... I bet this is going to cost far greater than what anyone is estimating.
Posted by King of Men (Member # 6684) on :
There's something I don't quite understand here. Suppose the financial firms collapse. Obviously this is bad for their stockholders and employees and whatnot, but that's not the reason for the bailout. The bailout is because the resulting tightening of credit will make life very difficult for every other firm. Ok, fine, so how's this? Let the government make loans directly to those other firms, cutting out the middleman of the financial firms. The Treasury is the lender of last resort anyway, there's no reason (I know of) that it can't lend directly to commercial firms. Now, admittedly the government is maybe not set up to evaluate the credit-worthiness of small businesses and such, but then again, we have all these people just fired from collapsed banks.
Posted by Danlo the Wild (Member # 5378) on :
EX CEO of AIG yesterday sold SOME of his AIG stock for 108 million yesterday. Poor Fellow. If he'd a sold a year ago, it would have been a billion.
Well, i guess there is always hope for the other 30 million shares he has of AIG, or the Investment firm he runs that has 35 million shares.
Really? Was his 34 million dollar salary enough? It takes a special kind of Christian man to fly the hindenberg into the statue of liberty. I say give him a billion of the bailout.
Posted by ClaudiaTherese (Member # 923) on :
quote:Millions of us did nothing wrong, according to the accepted wisdom of the age. We saved. We put a large part of our money into the stock market, as we were urged to do. Because the market wasn’t at ridiculously high levels, it seemed prudent to invest in broad indexes, foreign indexes and small- and large-cap indexes. ... The “earnings” part of those price-to-earnings ratios turns out to have been fiction for some financial companies, which normally account for a big part of total corporate earnings. In fact, earnings of giant finance players were often wildly negative...
His proposition to annul credit-default swap contracts makes sense to me, but I am no economics maven. What am I missing? (fugu13, any thoughts? But dumb it down, please. )
quote:[section edited out -- see Dagonee's post below before jumping to the article directly] ... why not simply annul these credit-default swap contracts? With that done, the incomprehensibly large liability of the banks would cease, and we wouldn’t need this staggering bailout. Shouldn’t we consider making the speculators pay some of the price? ... One final little thought bubbles into my mind: Maybe the bailout should not be of the banks at all, but of homeowners themselves. Maybe if we make the government the buyer of last resort of homes, we will stabilize the markets, stabilize the debt associated with the markets and take the gain out of the credit-default swaps for the speculators. Yes, price would be a huge issue, but so it is for Mr. Paulson’s plan for buying debt from banks.
[ September 28, 2008, 02:01 PM: Message edited by: ClaudiaTherese ]
Posted by Dagonee (Member # 5818) on :
*sigh*
I am so tired of this myth going around:
quote:Mr. Paulson demanded that Congress forbid judicial review of his decisions on use of the money in the mortgage bailout. This would amount to an abrogation of the Constitution.
It's simply not true, and it's being repeated everywhere with no one even attempting to do an analysis of it.
There are lots of reasons to oppose or support the review language in the original draft. There's no need to stoop to repeating lies about it.
Posted by ClaudiaTherese (Member # 923) on :
Dagonee, I recall your raising concern about this previously. I'll edit the reference in my post so as not to be repeating it, and I'll add a request for people to note your post before reading.
---
On a tangentially related note, is this where you think the FBI investigation is headed? Not towards the "Constitutional" issue, but towards [investigating for] fraudulent representation in PE ratios and credit-default swap contracts?
Posted by dabbler (Member # 6443) on :
hey Stein agreed with me on the govt starting with the housing market instead of with the financial institutions...
Posted by ClaudiaTherese (Member # 923) on :
Yes, I recalled someone here mentioned that, but I didn't remember who it was. Thanks, dabbler!
Posted by ClaudiaTherese (Member # 923) on :
(Dagonee, I corrected this reference where I made it elsewhere on the site here, and I linked back to you. Even though that was in jest, I understand that this is a rankling thing.)
Posted by Dagonee (Member # 5818) on :
quote:Dagonee, I recall your raising concern about this previously. I'll edit the reference in my post so as not to be repeating it, and I'll add a request for people to note your post before reading.
My post wasn't directed at you, CT, but Stein. There was nothing at all wrong with your post or quoting Stein.
Sorry I didn't make that clear.
quote:On a tangentially related note, is this where you think the FBI investigation is headed? Not towards the "Constitutional" issue, but towards [investigating for] fraudulent representation in PE ratios and credit-default swap contracts?
No idea, but I suspect it's more than that. The SEC would be the one to investigate simple misstatement of earnings.
Posted by ClaudiaTherese (Member # 923) on :
Whoa. More?
Sounds like we might possibly be in for a really interesting few months.
Posted by Dagonee (Member # 5818) on :
Theoretically, a fraudulent scheme for pecuniary gain that results in communication via mail or interstate wire is mail fraud.
Mail fraud - or plain old securities fraud - is a RICO predicate. And a corporation can count as an enterprise under RICO.
There could be much, much more than simple misstatement of earnings.
There's quite a lot that's less than a full-blown RICO case that would be more than misstatement.
Posted by ClaudiaTherese (Member # 923) on :
A last question, then I'm off for a bit -- does interstate email correspondence count as "communication via interstate wire," or something of the like? Or webpages for a financial institution accessed from another state? (my thanks in advance, BTW)
Posted by fugu13 (Member # 2859) on :
He's playing a bit fast and loose with the issues surrounding credit default swaps.
First, the size of the market is not measured by the total value of all credit swaps; many (most, I think; statistics are hard to find) banks holding swaps hold positions on both sides, which means that the net payments in the event of a default are small.
Second, credit swaps play an important role in reducing risk in many situations. For instance, when a bank owns bonds for a company, purchasing a credit swap for that company means that the bank will receive some return on its investment even if the company defaults.
Mostly, there doesn't seem to be a very good argument that removing credit swaps would solve the problems. Credit swaps are not what are making it hard for, for instance, money market funds to remain in existence (meaning, have assets with value at least equal to the amount investors have invested in the fund, since that is how a money market fund works).
Basically, mortgages are not as nice an investment as supposed in valuation models, but this was hidden by the general increase of the market at the same time as they were made available with less leverage. Even annulling all credit swaps (and assuming this removes a large amount of overextension), the remaining overextension would probably be somewhere from 500 to 1,500 billion dollars (using very rough estimates based on overvaluations estimated in the link above).
Posted by Dagonee (Member # 5818) on :
quote:A last question, then I'm off for a bit -- does interstate email correspondence count as "communication via interstate wire," or something of the like? Or webpages for a financial institution accessed from another state? (my thanks in advance, BTW)
Oh, yes. Absolutely.
Your second example raises a good point: the defendant in such a case could be guilty even if he had nothing to do with the communication, as long as it is shown that he knew the communication would occur. More importantly, the communication does not itself have to be fraudulent. It just has to be part of an overall fraudulent scheme.
Posted by ClaudiaTherese (Member # 923) on :
Wow, again. And thanks, Dagonee.
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fugu13, I think I'm going to buy you a tinkertoy set and label one disk "money," one "debt," one stick "a bank," etc., and have you over for dinner. Give me a bit -- I'll need some time before I can chew on it. But to you as well, thanks.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Dagonee: It's simply not true, and it's being repeated everywhere with no one even attempting to do an analysis of it.
Out of curiosity, was that quote a mischaracterization of the section 8 in the original three page bailout proposal? If so, how do the two relate? (Or if not, what are you referring to?)
Posted by Dagonee (Member # 5818) on :
quote:Out of curiosity, was that quote a mischaracterization of the section 8 in the original three page bailout proposal? If so, how do the two relate?
Yes, it was a mischaracterization of Section 8. I addressed it a bit on the previous page.
Posted by Mucus (Member # 9735) on :
Ah, to be honest that post was a kinda opaque to me. My reading of it now is that section 8 tries to exempt the bailout proposal from the APA but not (and it cannot?) the actual constitution. Is that correct?
Posted by Dagonee (Member # 5818) on :
I think the easiest way to view it is that it reduces the amount of judicial review to the constitutionally allowed minimum - a minimum which is not well defined at this point in time.
Posted by kmbboots (Member # 8576) on :
Personally, the current administration in general and Sec. Paulson and Chairman Bernanke have inspired so little confidence and trust that, should we give them what they ask for, I think that everybody and their Aunt Fanny should be reviewing what they do with it. We should watch them like hawks.
Posted by Dagonee (Member # 5818) on :
I think that's generally true - we should watch the government like hawks.
Posted by Mucus (Member # 9735) on :
Dagonee: Hmmm, alright.
Posted by Mucus (Member # 9735) on :
I told my mom (who is much more financially savvy than I am) about a month ago that Wachovia was in line for trouble. She shrugged. I'm glad that her finances are safe according to the article.
Posted by Darth_Mauve (Member # 4709) on :
The debate in Congress made me realize that there was a big difference between Business Conservatives and Fiscal Conservatives.
The Business Conservatives are promoting the Bail Out. They believe that "What's good for the Corporation is good for the Country." Fiscal Conservatives argue that "What's good for keeping federal expenditures down is good for the country."
Usually these two groups walk hand in hand, promoting lower corporate taxes and less regulation.
Now the Biz-Cons want more money and are playing the Doom card for all its worth
The Fis-Cons are talking the language of Social Conservatives, with words like "hand-out", "responsibility", and "paying for their mistakes".
Moral Hazard is another great term.
Posted by King of Men (Member # 6684) on :
Well, the bailout bill seems to have failed. Perhaps we are in for interesting times.
I have a possibly stupid question. Suppose the American financial system fails badly, and credit dries up. Is there anything preventing European/Russian/Chinese banks from taking over and lending to the American businesses that need credit? It seems to me that globalisation may come to our rescue in a way that it couldn't in the 1930s.
Posted by MrSquicky (Member # 1802) on :
I'd like to see some exploration of the government making it easy for new players in the financial sector to come in and buy parts of the old firms at fire sale prices, maybe with some sort of stock switching options. I think this might be a better solution than propping up the old firms that screwed us into this mess.
Posted by MrSquicky (Member # 1802) on :
Somewhat in the vein, I'm not sure I understand the sale of WaMu and Wachovia. I've got a very sketching understanding of what went on here. From what I can tell, the government forced them to sell.
The reason for this sale is that they had a lot of bad debt, but it seems to me that this is exactly what the bailout bills were supposed to be addressing. It seems like, in my limited understanding, that the government made it easy for an old firm to buy these companies at fire sale prices and basically forced them to sell at this price.
That'd be what I was talking about, but instead of reducing the number of banks out there and giving fire sale deals to the big, old firms, I'd like to see them helping out smaller banks get started or expand by gobbling up parts of the firms that are being taken over.
Posted by fugu13 (Member # 2859) on :
WaMu was a takeover by the FDIC, who then sold it. It outright failed.
Wachovia did not fail, but was purchased by Citi in a deal brokered by the gov't. It was in trouble, but not as badly as WaMu.
So, it seems they're managing to keep accounts covered. But the issue isn't accounts being covered, it is the ability to keep making loans (in the case of non-investment banks), and there's no particular reason why one bank's failure and acquisition by another will make the other any more able to issue loans. Quite the opposite, in fact.
Posted by MrSquicky (Member # 1802) on :
I'm not sure if I was clear there. I'm going throw out some semi-connected thoughts to maybe make it clearer.
I'm not expecting large take overs to free up money for loans.
My point with bringing up the bail out is that, if the $700 billion bail out went through before these take overs, would either of them been necessary?
I was under the impression that Wachovia didn't really have a choice in their sale. Is that incorrect?
I'm envisioning, with the government's support, new and/or smaller banks buying up the branches and such at fire sale prices and carrying out bank operations, most especially loaning out money. Definitely a rough idea, but it seems to me it might be a much better use of our money than what is going on and proposed now.
Posted by dabbler (Member # 6443) on :
The whining about how Pelosi's speech undermined the vote is annoying. Vote for or against the bill because of its merits. Her speech didn't suddenly add amendments to the bill. Now they're back to bickering about how "partisan politics" caused the failure of the bill. People who let her speech change their vote are more to blame than her. It shows yet again how many of them care less about the actual nuances of the bailout plan and more about posturing.
Posted by AvidReader (Member # 6007) on :
quote: I'm envisioning, with the government's support, new and/or smaller banks buying up the branches and such at fire sale prices and carrying out bank operations, most especially loaning out money.
I'm not sure how this would work. Right now, if your utility company, for example, wants to make some renovations, they can't charge you for it up front. They go get a short term loan from the bank for many millions of dollars and then pay it back. Big banks have ten or twenty million sitting in the account that they can just loan out. Smaller banks very well might not have that on hand.
And there's several thousand utilities in the US. Plus another 8,000 or so publically traded companies. Plus all the little mom and pop places that might need a loan. Oh, and then there's private citizens who want a new car or a mortgage.
The US engages in a truly rediculous amount of lending. Small banks could handle the personal lending, but I don't know that they'd have the resources to take over business lending.
Posted by fugu13 (Member # 2859) on :
I'm not sure how much choice Wachovia had, but if they had been in a position as bad as WaMu, they almost certainly would have been seized.
As for intentionally creating a host of small banks, I'm really not seeing what results from this, other than the phenomenal administrative overhead of creating a large number of semi-major banks. Small banks in the US essentially don't engage in the sorts of operations the larger ones do, and trying to create all that institutional capacity would be an astounding effort. Plus, I don't see what makes the current banks particularly incapable of carrying out operations reasonably well if the necessary liquidity is forthcoming that would make us suddenly want to make numerous smaller banks. If the idea is some sort of punishment, all the people working at the smaller banks would pretty much have to be the ones who had worked at the larger ones, so the only ones I see being punished are the shareholders and debtholders of the larger banks, which mostly means anyone with money in the stock market.
Posted by MrSquicky (Member # 1802) on :
I think I used the wrong term there. I didn't really mean small banks. I meant smaller ones.
A significant part of this crisis is the hugeness of the financial firms, as well as how easily they can develop credit lines. We seem to be moving towards a government assisted bank consolidation where we are going to end up with fewer, even larger banks, whihc, it should be noted, participated fully in the screwing of America.
We also seem to be inevitibly moving towards a situation where we're reinforcing the idea that when they again screw us up royally, the government will bail them out and the people in charge will suffer at best minor inconvenience.
I don't see the need to prop up these banks now when we could restore the ability to lend by focusing on encouraging and ensuring the growth of new banks. Is there a good reason why we need to keep them around other than the short term pain that will come with letting them fail?
This does leave the problem of people's investment tied up in the firms that are being let fail as they deserve. I'm not really sure what should/could be done about that.
Posted by BlackBlade (Member # 8376) on :
And now the Senate is attaching the whole bailout plan with amendments to an already passed alternate energy subsidies bill Wednesday evening. It then goes back to the House where I see no reason for why the House Republicans will suddenly change their minds on the issue. I guess the sudden drop in the Dow might rattle some nerves but is that really enough?
Posted by fugu13 (Member # 2859) on :
Especially as the Dow then went back up over half the drop, in one of the largest single day gains ever.
Posted by Mucus (Member # 9735) on :
BB: Which could be an interestingly circular. Some of the reporting today claims the the rise today is at least in part due to the feeling that the sell-off over the failure of the bailout bill was over the top (that while this bill may have failed, a bill of some form will eventually pass).
This gives us an interesting feedback loop where Congress is more likely to approve a bill as the markets tank but the markets are more likely rise as a bailout approaches, making it seem that a bailout is less necessary, and so forth.
Amusing thought anyways.
Posted by Lyrhawn (Member # 7039) on :
Wait, they are adding it to the energy bill and then revoting on it?
That's probably a great way to sink both the energy bill and the bailout measures in the House.
Posted by BlackBlade (Member # 8376) on :
Mucus: Don't try to explode my brain, it's not nice.
Lyrhawn: Yep, we've always known greedy corporate fat cats stifle progress, who knew they could do it in such an elaborate way? Posted by Godric 2.0 (Member # 11443) on :
quote:Originally posted by Lyrhawn: Wait, they are adding it to the energy bill and then revoting on it?
That's probably a great way to sink both the energy bill and the bailout measures in the House.
I'm not as familiar as I should be with congressional operating procedure, so forgive me if this is a stupid question...
Does adding it to the energy bill link the two in some way? Is this alternate energy subsidies bill one that expires/needs to be renewed every few years? If yes to both, how does that effect the bailout bill if it passes?
Although, in any case, yeah... it certainly just sounds like a sure fire way to kill a good bill (in my opinion) by linking it to a turd (as I mentioned in another thread, I'm not opposed to some sort of bailout, I'm just not sold on the idea that this is really the way we should go - I'm not satisfied that other options haven't been exhausted).
Posted by Enigmatic (Member # 7785) on :
I don't like that the Senate decided to try to pack the bill with more "goodies" to help it pass, as opposed to trying to tackle the underlying problems with it or simply coming up with a different plan that people would like better.
--Enigmatic
Posted by Mucus (Member # 9735) on :
quote: Buffett is buying $3 billion of General Electric Co. preferred shares. The perpetual preferred stock carries a dividend of 10 percent, similar to the terms Buffett struck with Goldman Sachs. ... Shares of GE, which fell by as much as 8 percent earlier Wednesday, pared their losses on the news. They traded down about 65 cents, or 2.6 percent, at $24.85, in afternoon trade.
Berkshire also expects to receive warrants to buy $3 billion worth of GE common shares for $22.25 each, exercisable at any time for a five-year term.
In unrelated news, if you go to the prediction market known as inTrade, it seems that futures predicting that a bailout bill will be approved by the end of October seem to be trading at almost 90%.
If you believe that the bailout is doomed, then you could certainly make a hefty amount of money betting against it. Just a thought.
[ October 01, 2008, 07:53 PM: Message edited by: Mucus ]
Posted by MrSquicky (Member # 1802) on :
Didn't realize this until I watched the Daily Show rerun last night, but, in the midst of this grave crisis where we need to pass this bill right away without even time to read it or explain to people what we are doing, the members of the House went on vacation for two days for Rosh Hashanah.
Posted by Mucus (Member # 9735) on :
And apparently it sucks compared to the Chinese New Year, or rather as Colbert put it, it blows Posted by MrSquicky (Member # 1802) on :
One of my angry, never going to happen thoughts. This bailout should include a measure that bans a member of Congress from working for any of the companies receiving bailouts for say five years from their retirement. It should probably do something about political contributions as well.
Posted by rivka (Member # 4859) on :
quote:Originally posted by MrSquicky: the members of the House went on vacation for two days for Rosh Hashanah.
As they do every year. The Senate does not, but they get Arbor Day off instead.
Posted by Lyrhawn (Member # 7039) on :
quote:Originally posted by Godric 2.0:
quote:Originally posted by Lyrhawn: Wait, they are adding it to the energy bill and then revoting on it?
That's probably a great way to sink both the energy bill and the bailout measures in the House.
I'm not as familiar as I should be with congressional operating procedure, so forgive me if this is a stupid question...
Does adding it to the energy bill link the two in some way? Is this alternate energy subsidies bill one that expires/needs to be renewed every few years? If yes to both, how does that effect the bailout bill if it passes?
Although, in any case, yeah... it certainly just sounds like a sure fire way to kill a good bill (in my opinion) by linking it to a turd (as I mentioned in another thread, I'm not opposed to some sort of bailout, I'm just not sold on the idea that this is really the way we should go - I'm not satisfied that other options haven't been exhausted).
If one passes, they both pass, if one fails, they both fail. They're the same bill now.
Posted by MrSquicky (Member # 1802) on :
quote:As they do every year. The Senate does not, but they get Arbor Day off instead.
I get off on weekends, but if we have a major crisis, I can find myself working on it on a Saturdsay until it is resolved.
I can deal with the 28 members who are Jewish taking off (not terribly happy about it, think that there are other arrangements that could be made). But the whole body? For two days? In the middle of this immense crisis the needed to be resolved last Friday or it would destroy our economy?
Either this is something that needs immediate action and a huge crisis that needs our full attention or it isn't. Don't tell me that it is and then act like it isn't.
Posted by Paul Goldner (Member # 1910) on :
"I can deal with the 28 members who are Jewish taking off (not terribly happy about it, think that there are other arrangements that could be made"
Not for jews serious about their religion. Rosh Hashanah is one of the holier days on the jewish calendar, and observant jews spend most of it in synagogue.
Posted by rivka (Member # 4859) on :
It actually seems to be 29. And given how much has been done in the past day, it's clear not taking those two days off would have really made a difference.
Just because they're using hyperbole doesn't mean we have to buy into it.
Posted by MrSquicky (Member # 1802) on :
The House doesn't have off for Yom Kippur (edit: actually they do. See rivka's correction below), which is the holiest day of the Jewish calendar. I'm not sure what the arrangements are for that, but I'd be willing to bet that they could work here.
I'm fine with them going to a synagogue in D.C. for as long as they feel necessary. I don't see how they should be allowed to have vacation to go home.
But honestly, I'm willing to give that a pass. The other 407 having two days off for a holiday they don't celebrate, not so much.
Posted by MrSquicky (Member # 1802) on :
quote:Just because they're using hyperbole doesn't mean we have to buy into it.
I don't buy into it. But if they are going to talk the talk, they darn sure better walk the walk.
If they try to say "We need to do this NOW!!!!", they should have to answer why it was completely fine for them to take two days off right in the middle of what they are claiming is an enormous crisis that demands immediate action.
Posted by rivka (Member # 4859) on :
quote:Originally posted by MrSquicky: The House doesn't have off for Yom Kippur
Yes, they do. At least according to the AP.
Posted by MrSquicky (Member # 1802) on :
Ahh...my bad. I misread it. The House does take off for Yom Kippur. The Senate does not.
Posted by rivka (Member # 4859) on :
Of course, the Senate currently has a higher percentage of Jews than the House does, and they get neither holiday off (although I imagine any practicing Jews among that number take the days off).
This is not about religion. It's about Congress taking their officially mandated days off, gosh darn it!
Posted by MrSquicky (Member # 1802) on :
For me it's about them not feeling the need to maintain the pretense that they are doing anything but fear mongering.
I just can't get over the American public's willingness to accept blatant dishonesty from people in our government.
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This is getting very scary.
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