Harry Reid: McCain’s voting for the bailout
posted at 9:00 pm on September 23, 2008 by Allahpundit
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True? Or just a crude lie aimed at staking McCain to a position publicly so that if he comes out against the bailout tomorrow he’ll look indecisive?
Bear in mind that Paulson’s also claiming he has reason to believe Maverick’s on board.
Republican presidential nominee John McCain will support a proposed $700 billion bailout of the financial markets, Senate Majority Leader Harry Reid (D-Nev.) announced Tuesday evening.
Sen. McCain’s (Ariz.) support of the package had been uncertain as a growing number of Republicans criticized it harshly.
Reid specifically challenged McCain on Tuesday to take a position on the bailout package.
“I got some good news in the last hour or so … it appears that Sen. McCain is going to come out for this,” Reid announced.
The McCain campaign did not immediately respond to a request for comment.
McCain conspicuously didn’t rule out the possibility of voting yes in his statement this afternoon. The politically safe thing, particularly for a guy who admits that economic matters aren’t his forte, is to simply vote with the Democrats, no? The One’s not going to oppose his own party leadership: He almost never does, and he certainly isn’t going to start now by risking the backlash that would come if he helped torpedo the bailout and the markets promptly melted down. All McCain has to do is vote yes with Obama, lament the fact that it’s necessary, point to his own foresight in warning about the crisis two years ago (which he’s already doing), and then use his vote as further evidence of his bipartisan maverickiness. The base will grumble but they’ve already sold their soul to him on immigration to win the election. And besides, he rewarded them by picking Palin. In fact, if he’s really worried about dissension in the ranks, he could have her express a little public skepticism about whether the bailout’s really necessary just to hedge his bets. What am I missing?
Update: Actually, Obama has a little more room to play here than McCain does. The Democrats hinted earlier this afternoon that they’re not voting for the bill unless Maverick specifically joins them, an obvious way of making sure that they and Obama aren’t left holding the bag if they pass it and McCain votes no and the price tag then becomes an election issue. If McCain does vote with them, though, then Obama can hedge his own bets by breaking with the leadership and voting no. If the bailout succeeds, he can claim he voted against it merely because he was worried about the cost to taxpayers, which shouldn’t lose him any votes. If it fails, he gets to say “I told you so.”
In fact, McCain could theoretically achieve the same thing by leaning on congressional Republicans to support the bill so that it passes while deciding to vote no himself. The question is, will Reid be satisfied with that or will he insist on McCain going down with this ship?
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Here’s one, but too late to do anything politically to him:
Vashta.Nerada on September 23, 2008 at 10:08 PM
If McCain votes yes and lets Obama vote no; he’s more retarded than I thought.
lorien1973 on September 23, 2008 at 10:09 PM
phronesis on September 23, 2008 at 10:09 PM
I’m here to help them through that… ;-)
Some of the fear-based ignorance reminds me of the loon left – or anyone from France* – but I digress.
* I clicked your “link”. Nice dogs.
Shivas Irons on September 23, 2008 at 10:10 PM
Fannie and Freddie had $5.4 trillion in mortgages, and at least $1.5 trillion was subprime, so they better be buying at under .50, or they aren’t asking for enough of our money. I don’t think anyone has any idea of what this paper is worth, and just to tie it back to real property will be a multi-year chore.
Vashta.Nerada on September 23, 2008 at 10:13 PM
They mentioned that it’s possible to make a profit. Buy low, and then in a few years, the govt could sell high. But then again, some also said that the Iraq war could pay for itself. So. I don’t know.
wise_man on September 23, 2008 at 10:14 PM
Agree with RBMN. It isn’t a bailout, we’re giving the gov’t a $700 billion credit line to buy (short term) MBS and CDOs, scrub them, re-rate them, and sell them back to the market.
The term is super misleading, and shows the ignorance of the mainstream media. Just as the “Surge” wasn’t entirely about troop numbers, the “Bailout”…isn’t.
k2aggie07 on September 23, 2008 at 10:14 PM
Vashta you don’t necessarily have to link them to the physical property, only de-tranche the tranches and find the original security each belongs to. We have shells inside shells resulting in an AAA rating being worth precisely squat.
These knots can be unwound…and the securities *should* be worth something in the end. The problem now isn’t that they’re actually worthless, it’s that marked-to-market pricing forces everyone to participate in the firesale.
Ah, the paradox of deleveraging…multiplied by corruption, federal interference, and massive media ignorance. Whee!
k2aggie07 on September 23, 2008 at 10:16 PM
Buying the mortgages and holding/selling is one thing. You have a house at the end of the chain with some sort of value. Backing all the money tied up in credit default swaps is a black hole and is PURE WELFARE for ultra fat cats. Do not do this.
CC
CapedConservative on September 23, 2008 at 10:17 PM
He might not have much of an option. If he votes yes, then Obama decides to vote no, and then McCain changes his vote, he’ll be slammed till November 4th for being indecisive and only following Obama’s “lead”.
amerpundit on September 23, 2008 at 10:17 PM
The end will start in Hong Kong on Thursday night. By the next Thursday we’ll all be apple salesmen.
Got a backup plan? It is a pretty sure bet not half a dozen of you do. Better make nice to all those relatives you have been avoiding for years. You are gonna need each other.
How’s that for panic marketing?
Please, everyone get a beer out of the fridge and quit gnashing teeth. Uncle Sugar knows what he is doing…..honest.
Limerick on September 23, 2008 at 10:18 PM
Exactly, the Surge and the Bailout/Rescue is about showing in real terms the ongoing confidence necesarry to allow the players to go forward knowing that the US is behind the project.
And “we” are the players if we have money in the market, a job, a mortgage or the desire to one day have one.
I hope this helps.
Shivas Irons on September 23, 2008 at 10:18 PM
While it is theoretically possible to make a profit on this, I feel compelled to point out that it is the government doing it, and they will be picking up the bottom of the pile of this paper (the most likely to default). Additionally, by effectively doubling the defecit for next year and at least the year after, they will be adding inflationary pressure, which could easily make currently timely ARMS adjust up, and quite possibly drive more homeowners out as their rates adjust upward. Fix one level of the problem, and create another.
Vashta.Nerada on September 23, 2008 at 10:21 PM
I find it amazing that so many people have so much faith that the government will handle this appropriately. It’s guaranteed they will screw it up like they do everything else.
poljunkie on September 23, 2008 at 10:22 PM
If Reid says that without McCain, no bill. Then, McCain needs to put his recommendations in there so that he can say his plan of action is already in place. McCain has huge leverage here and he needs to use it. If he doesn’t, well, he loses and we all lose.
Couldn’t be summed up better.
lorien1973 on September 23, 2008 at 10:24 PM
Yes, you are correct, and I am hoping that I can purchase some of these. I believe that the current default rate is 3-5%, and the mark-to-market is treating it like 25%. Good buy for those who have some extra cash. Of course, I don’t like to be putting up the cash as a taxpayer, would rather do it as an investor.
Vashta.Nerada on September 23, 2008 at 10:24 PM
Yes, I know. Maybe two.
wise_man on September 23, 2008 at 10:24 PM
Empircal evidence discounts the idea that deficits cause inflationary/ interest rate pressure. It just doesn’t happen, despite what Riccardo & Rubin say. Kudlow & Laffer are right on about this.
phronesis on September 23, 2008 at 10:24 PM
Always working in your single issue angle, huh?
wise_man on September 23, 2008 at 10:25 PM
There’s got to be a floor somewhere. We are so leveraged already, that at some point, the dollar becomes a penny stock on the world currency exchange. It will help exports, but we will have to raise interest rates at some point.
Vashta.Nerada on September 23, 2008 at 10:26 PM
Damn politicians and their machinations, straight to hell.
Bad enough in any given situation, but during serious issues like this?
Damn them. All of them. These bastards are the ones that got us into this situation – they can’t be trusted to reconcile their own checkbooks, much less fix this debacle they have caused.
Midas on September 23, 2008 at 10:27 PM
I spent a few months looking into mortgage fraud in my area of south Florida in late ‘06 based on a neighbors house selling for $600K then $1M 2 months later. There was a web selling in a circle to each other marking them up $200K to $500K a pop. A lawyer involved doing the closing. A mortgage broker. A realty company. An appraiser. At $30 million worth, I called EVERY law enforcment agency in Florida and the FBI. NO ONE WOULD DO ANYTHING. I called the local news paper. They did a story a year ago in April. Still nothing done. The county appraiser wanted all I could give him of this obvious fraud. I STOPPED at $100 million. These people and a large part of this money is already long gone. The state of Florida (counties that live off property taxes) is going to suffer HUGE the next few years. Now, as for the federal government… DON’T DO IT!.
CC
CapedConservative on September 23, 2008 at 10:29 PM
It’s a legitimate question, wise_man.
cheeflo on September 23, 2008 at 10:30 PM
THIS IS COMING FROM AN IDIOT SENATOR WHO SAID “THE WAR IS LOST”. THE SHRILLNESS OF THESE UGLY LIBS. BURNS MY EYES SEEING THE BODY REID AND STRETCH PELOSI’S UGLY FACES.
jaboba on September 23, 2008 at 10:31 PM
It’s an important issue, Wise man.
Money going to people that should not be here is a problem. We have enough problems now, we don’t need to import more.
HornetSting on September 23, 2008 at 10:31 PM
MM is over her head on this macro economic issue. First let’s assume the Fed directors aren’t a bunch of dunces and they knew how far to let it go before intervening. Does Michelle understand all our money transactions are based on trust. If we allow people who aren’t forced sellers to join the parade and redeem their retirement plans, we have acted in a morally hazardous way. Totally unnecessary to let that happen and usher in a new economic depression.
Do you know why AIG is being saved? So business doesn’t come to a screeching halt. Small case in point. AIG covers 70% at least of the business liability insurance market. Without a functioning liability policy the guys who go into Refineries as subs are going to be locked out. Guys who deliver groceries, same same.
Let the econ ministers handle this and don’t contribute to this turning from a crisis into a calamity.
pc on September 23, 2008 at 10:33 PM
Enough of trying to save the world, can anyone tell me what Biden meant in highlighted phrase, below?
“John McCain is my friend,” said the loquacious Blue Hen. “I admire John McCain. I know of no man or woman I have ever met that has more personal courage than John McCain. We have been friends for over 33 years. We have traveled together. When John was Navy liaison he staffed me for three or four years everywhere I traveled in the world.
Just askin’
Later.
Shivas Irons on September 23, 2008 at 10:34 PM
saw a story about that at Lou Dobbs, I think.
Something like 30 or 40 percent are illegal alien subprime loans…
My question, what’s the difference. We already pay for anchor babies, food stamps, subsidized housing, healthcare, for illegal aliens. Why not pay for their houses too!
Obama wants amnesty, McCain wants amnesty..no difference, even if McCain says “secure the border”. He also said that he “Got It” when we crashed the phone banks and said no to amnesty. Now, he is selling his pathway to citizenship for God’s children. We think we are in trouble now, wait until the leaches can apply for benefits as American citizens
HornetSting on September 23, 2008 at 10:35 PM
It won’t be money going to the wrong people. Well okay it sort of will and this is why. We all know where the bail money is coming from, the Treasury. That is marginally us, but still, it’s the public. Now what is going to happen next? It’s just like the Savings and Loan debacle of the 80’s. Regulators will set up shop and sell off assets. The question is where is the revenue from the sell off going? That’s so far down the line and disconnected from the buyout it gets lost. It’s just assumed taxpayers pay because we aren’t smart enough to see what happens to the proceeds regulators are about to start collecting on foreclosure sales.
pc on September 23, 2008 at 10:36 PM
Yup. I would think that a good portion of them might fall into the ‘they shouldn’t have been given a mortgage in the first place’ category.
Like when an illegal drives drunk and kills someone – they shouldn’t have been here in the first place. But what percentage of the illegals are driving drunk? Less than one percent?
Some illegals make good money. And some don’t. They shouldn’t be here. And if they weren’t, they couldn’t get a mortgage.
It’s a legitimate issue that is important.
wise_man on September 23, 2008 at 10:37 PM
Simple. When McCain got back from vietnam, a few years later he was the navy liaison to the government. That’s what it means. He was on his staff.
wise_man on September 23, 2008 at 10:38 PM
Yeah, wiseman, tell that to the family members who have to bury that loved one killed by the illegal alien drunk driver.
Money is money and when it is going to people that are not entitled to it, it is an issue.
I know that you are a McCain apologist and McCain is the second worst candidate on this issue, so it pains you to talk about illegal immigration.
HornetSting on September 23, 2008 at 10:40 PM
Did I leave the impression that I like this? Or i think that it’s okay?
wise_man on September 23, 2008 at 10:41 PM
Uh, yeah.
HornetSting on September 23, 2008 at 10:41 PM
.. LOL. McCain apologist … hey, F*k you, man.
wise_man on September 23, 2008 at 10:41 PM
Nothing at my 10:37 PM comment said I liked this, or was apologizing for it. You need glasses.
wise_man on September 23, 2008 at 10:43 PM
Here is the problem. the longer this stays on the front page the worse for McCain. People that say let it fail have NO idea what they are saying. It is not Wall Street that will fail. It is Wall Street and Main street. It is every large company that uses short term debt to meet payroll, it is the local diner, the Wal Marts, the gas stations that can no longer except credit cards. It is every Ameircan citizen that is using credit card debt to get by. It is every American citizen whose paycheck barely makes it to the next paycheck. It is china, it is russia, it is the middle east and yes it is Europe and South America and the Asia. that is what we are talking about here where we say “it”. People think only Wall Street and some big banks will go down in flames. that is untrue it will be the entire world that goes down.
Now is this plan the best no. It needs more oversight. The players that allowed this to happen on their watch like Cox, Paulson, and Bernake need to go. the CEO’s should not make out on this bailout. But in some way this bailout needs to happen and this toxic waste in the sytem needs to be expunged.
unseen on September 23, 2008 at 10:44 PM
Woman, and no thanks, Wiseman.
HornetSting on September 23, 2008 at 10:46 PM
You people who are hollering about the government must understand that this problem has transcended simple knee-jerk reactions of “hands off — this is the private sector!!”
Check out my blog. Look at this graph from it. Commercial paper almost tanked. Our economy almost stopped last week. Money market accounts (part of commercial paper) almost went poof. This is not a time to be partisan.
This is not an indictment of capitalism. Rather, it shows that unregulated meddling and corruption of social engineers (Johnson, Carter, Clinton, Dodd, Obama, etc etc etc) ultimately leads to collapse. Unfortunately, at this point only the government can fix the problem it created. Pray that this plan works because otherwise we’re in for this one!
k2aggie07 on September 23, 2008 at 10:46 PM
unseen, this was coming for 30 years. The Bush administration has talked about this 17 times this year alone. Jim Cramer was hollering about this in August of 07.
This is not this administration’s baby. It is the Left’s. Period.
And they’re STILL the ones standing in the way!
k2aggie07 on September 23, 2008 at 10:48 PM
wise_man on September 23, 2008 at 10:38 PM
They say a lack of humor a sign of low intelligence.
I simply believe it indicates a very boring person.
[If this confuses you, mush on]
Shivas Irons on September 23, 2008 at 10:49 PM
Texas Aggie?
Vashta.Nerada on September 23, 2008 at 10:52 PM
And asking questions for which you already know the answer is a sign of a Shivas Irons. Much on Shivas Irons, Mush. On.
wise_man on September 23, 2008 at 10:52 PM
Need a drink, Wise man?
HornetSting on September 23, 2008 at 10:54 PM
Texas Aggie. By the way, Vashta, a recent newsletter I was poring over said this:
Seems to me the financial market is broken, not the housing market — leaving the Fed open to buy and resell RMBSs at 70 cents on the dollar or less.
k2aggie07 on September 23, 2008 at 10:55 PM
Me too – class of ‘84. I hope there is a hedge fund I can get into to get some paper. I would just rather put in money as an investor than as a taxpayer.
Vashta.Nerada on September 23, 2008 at 10:58 PM
You might be right at some point. The theory makes sense, but again, we haven’t seen the evidence to date. And indeed the data would seem to argue for the oppositve conclusion, however counterintuitive it is. I’d wager the “bailout” wont lift treasury yields, or at least the tips spread, much, and there is a lot of evidence to support my deflationary market breakdown thesis (falling commodities in recent months, general deflation outside of commdodities for a far longer period, and the massive market failures last week) so I’d say we err on that side. Indeed the bailout should lower interest rates on risky debt by narrowing risk premiums. Bernanke and Paulson, who see more data and are more knowledgable than we are, agree with me. I’ll trust their opinion and my observations of the capital markets over the “wisdom” of Chris Dodd and even Michelle Malkin.
Anyway, when Lou Dobbs is being hailed as economic genius, I think it is time to call it a night.
phronesis on September 23, 2008 at 10:58 PM
No, HornetSting. I’m fine. Thanks for asking!
wise_man on September 23, 2008 at 11:00 PM
phronesis, I’m with you! Just glad that there are some people who can temper conservatism with…knowledge.
Don’t get me wrong, I’m pretty much as hard right as they come, but sometimes you gotta put partisan opinions aside. I’d rather have the government step in here than lose my job and live the stories I’ve heard about the depression.
k2aggie07 on September 23, 2008 at 11:01 PM
No, just the only one that will report on the scourge of lawlessness.
HornetSting on September 23, 2008 at 11:01 PM
The answer is simple. John McCain needs to go to the floor of the Senate and demand a clean bill. He MUST demand that the bill be free of earmarks, and bloated spending to further damage the debt of the United States. Then he leaves. What is Obama going to say, “no I want my earmarks?”
Shift it back to them.
Jdripper on September 23, 2008 at 11:01 PM
And how much news coverage do you think that will get?
CSPAN at nine…McCain demands clean bill. And in other news, Obama sneezed.
HornetSting on September 23, 2008 at 11:06 PM
I had an idea about an effective bail out for all.
Most mortgages held (upward of 70%) are not in or near default, the ones that are precariously held by true owners, could best be served by “mortgage Credits”. Maybe 6 this year and 3 next year, use them any time and they get tacked to the end of your existing note. This seems to be a simple way of encouraging growth, legitimizing the investments and helping the people who need it most, without re-casting the loans….It’s a big Sh*t sandwich, we all take a little bite…
KZnextzone on September 23, 2008 at 11:13 PM
McCain’s got little choice other than to support the bill.
But chalk me up as one who thinks he should demand a “clean” bill. That way, he can demonstrate that he’s casting a vote to protect the American people, not bloat the government even more with pork.
Vyce on September 23, 2008 at 11:18 PM
perhaps I should have said “six in the first year and three the following”
hitting my head in month 9……
KZnextzone on September 23, 2008 at 11:22 PM
Especially since it’s reported that student loans and car debt is being added on to this, Vyce.
wise_man on September 23, 2008 at 11:22 PM
Excuse me, but you keep making this assertion, which DIRECTLY contradicts what was said at the hearings today.
They specificly talked about fire sale prices, and “mature” prices (ie what it would be worth if held), and stated they would be bought at the MATURE price.
Stated reason was that no one knew how to price these assets for full worth, so the FED would have to buy at the mature price to drive the price to somthing reasonable, for accounting reasons.
Romeo13 on September 23, 2008 at 11:26 PM
This is most likely what will happen. I wouldn’t be surprised if he or Obama voted present.
All in all, my head hurts from reading AP’s analysis. . . but I think it’s probably spot on and one of the better posts I’ve seen here in analysis. Well done and thank you.
ThackerAgency on September 23, 2008 at 11:50 PM
Ergo, the problem. No valuation, no buyer, can’t sell.
Multiple classes of paper, from good to total junk with no way to sort it out quickly. In the end, the buyers will be getting a “pig in a poke” package of securities of varying terms, varying ratings, and varying classes. Buy the big bag of marbles and begin to sort the valuable cateyes from the muddies.
The amazing thing here so for is the lack of anyone indicating any lending laws were broken. Granted, there were some shitty laws, but the mom and pop regional banks loaned to meet the Community Reinvestment Act provisions and get a good score, – NINJA loans all the way to good solid citizen loans with 800 scores. All legit, per congress.
Sell the loans to Fannie and Freddie, (also legit with congress), to pass the risk along and get rich in the process. Now, return home laughing that Frannie and Freddie actually bought Ninja loans from Mom and Pop Bank and begin again.
Look really good in Good Morning America profile, as you are doing everything you can to promote “affordable housing”.
ALARMS GO OFF
No commercial paper to fund today’s loans. Noone buying Mom and Pop crappy paper either. Citizens alarmed. Redemption demands on money markets substantial.
WTF?
BIG PROBLEM – OPERATIONS NEED CASH
BUSTED and Broke.
Chapter 7
To think – most of this happened as a result of the nobel goal of providing housing funds to low income borrowers. Which morphed into providing funds for anyone with a pulse to meet Reinvestment Act targets.
All under the protection of Congress.
Think Katie or Wolf will have time to look into this?
BacaDog on September 23, 2008 at 11:51 PM
See, this is why you just should not run sitting senators or congress reps for POTUS…
SuperCool on September 23, 2008 at 11:51 PM
Former governors (most) always make better presidents than senators, SuperCool.
wise_man on September 23, 2008 at 11:59 PM
Just read this.
BacaDog on September 24, 2008 at 12:07 AM
From BacaDog’s link:
Well. THere you are.
wise_man on September 24, 2008 at 12:15 AM
Reid is interfering with public perception of a political issue by his statements concerning McCain and he knows it. The Republican Senate Minority leader ought to be vehemently publicly condemning Reid harshly for this obvious political move.
gwallensky on September 24, 2008 at 12:27 AM
Telling people to drink alcohol(a depressant) is not the answer(I don’t drink alcohol at ALL, and wouldn’t advise anyone to drink alcohol for any reason, especially to relieve aggravation or frustration. )
Come on.
Chakra Hammer on September 24, 2008 at 12:29 AM
I said I was going away, but given the accusatory and ill-informed nature of your post, I feel compelled to reply. The bailout plan doesn’t pay fire sale prices, as this would force companies to take more write downs and thereby risk insolvency in order to unload their unmarketable assets. Instead the TARP (the bailout entity) will pay its estimation of the held-to-maturity value of security at this point in time. If this were the value that the seller has recorded on its books already (which has already been written down from a previous higher value due to the current mark-to-market regulation), the seller of the asset to the TARP would record neither a profit nor a loss on its books as a result of the sale of the asset. If this TARP-deemed held to maturity value were below the current book value of the seller but still a premium to the fire sale price, the seller would record a loss upon the sale but presumably a loss small enough to avoid insolvency. In either case the held to maturity value will flucutate with time and change according to economic conditions. Right now the held to maturity value will still be low though higher than fire-sale prices as the underlying fundmentals of the assets in question are poor. If underlying credit and economic conditions improve as a result of the “bailout”, a situation which its authors may anticipate, the held-to-maturity will appreciate from these depressed levels. Thus when the asset is sold in an orderly fashion, the TARP (or government) will realize a profit on the sale. The profit will be less than it would have had the securitiy been purchased at fire-sale prices, but this reduction in profit will have enabled more seller companies to remain solvent.
phronesis on September 24, 2008 at 12:36 AM
SuperCool on September 23, 2008 at 11:51 PM
Seconded. McCain had better not drop the ball on this for the sake of “bipartisanship.” Give ‘em Hell!
thecountofincognito on September 24, 2008 at 1:20 AM
Ummmm, they were regulated not unregulated. It was poor government control and decisions that caused this problem to fester and then implode.
And now you want the men who were the “regulators” the ones in charge of the various commissions and committees, to now correct it.
So if you gave someone all of your savings, and that person lost it all in bad investments (but paid himself a large salary), gave you no reason, never gave you any warnings, then came back and asked for more you would give him the money?
I doubt you would, so why would you do it now?
right2bright on September 24, 2008 at 1:52 AM
But most “conservatives”/Republicans will still vote for McCain either way, mainly out of fear. Pathetic.
Send_Me on September 24, 2008 at 1:59 AM
IF?
You funny fellah!
Mark Jaquith on September 24, 2008 at 2:14 AM
Holy shite, do none of our politicians have any balls???
Vote with your conviction, not what’s best for you politically. Jesus Farking Christ.
Seixon on September 24, 2008 at 3:13 AM
Think of this like the Iraq war. We have the wherewithal to win, in any number of ways. Even if the surge hadn’t worked, we could try something else. Think WWII–plenty of trial and error. It is the political will and leadership drought that saps our abilities.
The same applies to this. The right leader can make it work, by hook or by crook, by trial and error, stumble after stumble. It’s not a question of this being entirely and completely right or wrong.
Make no mistake about it. We will have hell to pay in our economy as a consequence of these mortgage social engineering crimes and their financial manipulation through derivates. But we can succeed in reforming the economy with the right leadership and political will.
We’re not really faced with a financial question here, we’re faced with a political one. It’s all politics. And McCain either is, or isn’t the person who is both desirous and capable of leading us through this wilderness.
JiangxiDad on September 24, 2008 at 6:46 AM
Correct. I still don’t get why the present holders are required to use mark to market, but the future holder (us) won’t. That’s the basis upon which the argument is made that the taxpayer may come out alright in the end–that the mortgages have a held to maturity value quite different than their present no-value.
This part appears gimmicky to me. And why should the taxpayer absorb 100% of these holdings? Why not spread that risk back to the “saved” entities by eliminating mark to market, making them hold say 50% of these loans, or find a private party to sell them to.
At the same time, the door is open for new financial entites to be created–ones not yet in existence who have none of these mortgages on their books. Why not some new winners? Isn’t that exactly what Buffett and Goldman are up to?
JiangxiDad on September 24, 2008 at 6:53 AM
This is not just about McCain working with the Democratic leadership. Bush and Paulson are not Democrats. It would be nice if just for once people could rise above partisan politics and do what is best for the people as a whole. That is too much to ask for in the middle of an election I know, but if this thing is half as big as they say it is, and Congress does nothing..the Democrats will not get the blame, the Republicans will. Gallup says party ID is back in a double digit lead for the Democrats after steady declines in recent months. Let the financial sector crash and burn and it will only get worse.
I just hope it is not as bad as some analysts say. I really do, because it seems to me that way too many people are to cavalier about this. I can only hope that they are right. But I have my doubts. We can talk about the base all we want, but how would the base feel about collapse? Is that what they want? I don’t think so. I just think they believe this is all a ruse to get money.
Terrye on September 24, 2008 at 6:59 AM
Why do I think that this SUB-PRIME collapse mess has a lot more to do with illegal aliens obtaining mortgages than we’ll ever know?
stenwin77 on September 24, 2008 at 7:02 AM
Jiang:
Yes, we are faced with a financial question here. This is not some philosophical discussion. I heard on Fox last night that there is over 6 trillion in money market accounts overseas right now that can not be moved, the system is seizing up. If that is true, philosophy and will are not the question.
If you make the argument capitalism=economic collapse and the end to government intervention in the market because intervention is bad…you will lose, capitalism will lose.
People are not going to care one way or the other who started this 10 or 15 years ago if they lose their jobs, their homes, their life savings etc. All they are going to care about is that things went to hell in a handbasket and conservatives were talking about the political will to go broke vs doing something to stem the tide. If McCain chooses the former he will lose and the Republican party will lose. It will be Hoover all over again..only worse.
The only thing that will save us will not be any kind of political will, it will only be the hope that it is not as bad as some people are saying. That will be our only hope.
Terrye on September 24, 2008 at 7:07 AM
stenwin:
No, it is not. This is about regular people, American people. I was a realtor and I never sold a house to an illegal. Not one.
Terrye on September 24, 2008 at 7:10 AM
Eh, not really. Those involved in creating the problem were in the Carter and Clinton administrations. You can’t just broadstroke the government as “they” — there’s at least fifteen people up there. ;)
What caused this problem was unsound economic theory being forced on the market, shoved down it’s throat, as it it were, by the Gov’t. They lapped it up, all the way to the bank (har) but at the end of the day, they’re hurting. Normally I wouldn’t care, but in this case it can and will directly effect me. If commercial paper fails, my employer will be out of business because we deal with fairly large projects…we charge our customers several million dollars for 2-3 month jobs. All those payment terms are Net 30 days. That’s commercial paper. It makes it tick.
Don’t just scream “can’t trust the government, they screwed it up, taxpayer’s money, blahblahblah” because then you just sound like a real partisan…like Newt…and as a biproduct you sound relatively ignorant.
Those who know are worried. This is not a time to stand on some vague unfounded capitalist principles when other people have taken that option away from you due to socialist government intervention over the last 30 years.
k2aggie07 on September 24, 2008 at 7:13 AM
Actually, I believe Paulson is a liberal democrat. MM has quite a take on him.
Wrong. Completely backwards. People will follow the right leader to the gates of hell and back–as the saying goes. It’s the oldest story in the book.
JiangxiDad on September 24, 2008 at 7:17 AM
This is a much better to way to so what I’ve been trying to say.
Standing around hollering about the private sector does you no good when the other guy has been mucking about behind the scenes screwing stuff up for decades. Don’t let the democrats use this as an indictment of capitalism — because believe me, they’re trying! Nothing would please them more to frame this as an endemic problem, one bound to happen over and over again as a result of the free market.
Nice post Terrye!
k2aggie07 on September 24, 2008 at 7:17 AM
k2:
I am worried. I am worried at all these people like Newt seem to think this is just some political game. That there is no real crisis here. They seem to be completely oblivious to the ramifications of doing nothing. It is as if they think they are above it all, that is has nothing to do with them or their jobs or their mortgages or their states..that it is all some kind of game.
But the people who live with this stuff and deal wi
Time to go to work, while I still have a job.
Terrye on September 24, 2008 at 7:20 AM
I have no idea what happened to one my sentences up there. I meant to say that the people who live with this stuff and deal with it are worried.
Terrye on September 24, 2008 at 7:24 AM
Jiang:
Not to be rude, but exactly what does MM know about all this? That is what I am talking about. There are all kinds of people who do not have any expertise in all this making it a partisan political issue. And it should not be one.
Paulson will be gone in a few months, he is not going to be around to rule over anything.
And no, they will not follow a strong leader through hell and back if it means economic collapse that could have been avoided. That is just ridiculous. I know I will not. If this things goes to hell and I lose my job I will not be blaming the Wall Street fat cats or even the Democrats. I will be blaming the people who demaded that we do nothing and let it all go to hell for the sake of some poltical purity. That is who I will blame.
Terrye on September 24, 2008 at 7:28 AM
The One’s campaign commercial writes itself: “We told you McCain voted with George Bush 90% of the time… Now you can make it 91% of the time…”
I think McCain needs to get his ass back to D.C. and work on this. Time to show some leadership, maverick!
Outlander on September 24, 2008 at 7:30 AM
BTW, MM also was sure that Bush was going to sell our ports to terrorists from Dubai so that they could kill us all. See that is my point. Political pundits are not experts on leasing port terminals and most of them are not experts on the global credit system either. I am more worried about what someone like Bernacke says.
Terrye on September 24, 2008 at 7:31 AM
I wasn’t pointing out MM’s opinion for the mortgage mess. I was simply challenging your comment that Paulson isn’t a Democrat.
JiangxiDad on September 24, 2008 at 7:37 AM
The Democrats in Congress are an obstacle from anything positive happening. They are largely responsible for the problem in the first place, and many should be in jail. The notion that we should get along with them to lesson the problem is wrong. They are incapable of fixing it. They don’t want to fix it. They want to social engineer our society, and use the economy and any other levers they can find to do it. That’s their goal. If it enhanced their power and control, they’d take bread lines.
JiangxiDad on September 24, 2008 at 7:42 AM
The political gamesmanship doesn’t matter to me, especially if the consequences are as dire as it is assumed they are. The Maverick should vote his conscience–that’s why he’s the Maverick, right?–and deal with the political fallout.
My vote doesn’t hinge on whether he votes for or against the bailout.
pugwriter on September 24, 2008 at 7:45 AM
Since when does Reid speak for McCain? Seems rather slimy to me for any senator to “announce” another senator’s position like this. Especially for someone in Reid’s position to be making public announcements on behalf of a senator from another party.
Maybe the McCain camp should first just come out and say that Reid does not speak for Senator McCain.
taznar on September 24, 2008 at 8:37 AM
Can McCain vote “present?”
Keith_Indy on September 24, 2008 at 8:49 AM
Unfortunately, this financial crisis is going to be the undoing of McCain’s campaign.
Particularly his campaign manager and his connection to Freddie and Fannie.
albill on September 24, 2008 at 9:03 AM
What reason do we have to think McCain isn’t on board? His initial response to the crisis was the assertion that he would make government bigger to keep this from happening again.
Like that’s ever worked.
He is too moderate to represent the GOP properly.
angelat0763 on September 24, 2008 at 9:19 AM
Reid is kind of my hero lately.
chiefeditor on September 26, 2008 at 3:26 PM
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