Bush remarks: Congress has to act

posted at 9:10 am on September 30, 2008 by Ed Morrissey

George Bush made a statement today about the failure of the House to pass the agreement that leaders of both parties hammered out over the weekend.  He acknowledged the difficulty of the vote, but underscored the difficulty of the situation and the need to address it quickly.  The drop in the stock market yesterday represented a less of $1 trillion dollars, and the cost to taxpayers would be much less — and perhaps nothing at all, if the assets can recover their value over time.

The consequences of delay will make this problem worse, and Bush said he will press Congress for action when they return.  “Our economy is depending on decisive action by the government,” Bush warned, and continued inaction will send a very bad message to global markets.

Interestingly, Bush didn’t announce any further actions today.  Some had expected Bush to announce a move by the FDIC to expand its protections for depositors as a means of injecting confidence into the banking industry.  That could still come today, and Darrell Issa mentioned that Republicans favor this approach over the Paulson plan as modified by Congress.

Meanwhile, the global collapse didn’t come immediately.  CNBC attributes this to continued breath-holding in the markets, but the Russian exchange had to halt trading after sliding more than 7 percent.  Global banks began hoarding dollars, which may help the currency but points to a fear of tighter credit.

Steve Forbes, who has served as a voice of free-market sanity over the decades, told CNBC that Congress should have passed the bill yesterday.  He blamed Nancy Pelosi and Henry Paulson for its failure, especially Paulson, who he accused of having diplomatic skills of a “drill sergeant to young recruits” with Republicans over the past week.  The Bush administration tried selling this as a bailout, when Forbes says that distorts what the bill rejected yesterday would actually do.

Options on the Dow look about 200 points higher this morning.  If the administration acts to expand FDIC funding as a means of assuring some liquidity, perhaps we may see some light at the end of the tunnel today.  And if Congress thinks this is an emergency, they would have been working on Rosh Hashana rather than taking a day off.


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If the market rises in spite of the failed bailout, maybe we can just forget about the bailout?

ballz2wallz on September 30, 2008 at 9:12 AM

Who keeps propagating this nonsense about taxpayers making a profit on these toxic bits of paper? We’ll never see a dime of that money ever again. This is the government, remember.

lodge on September 30, 2008 at 9:12 AM

Interestingly, Bush didn’t announce any further actions today. Some had expected Bush to announce a move by the FDIC to expand its protections for depositors as a means of injecting confidence into the banking industry. That could still come today, and Darrell Issa mentioned that Republicans favor this approach over the Paulson plan as modified by Congress.

This alone could avert a major catastrophe. To hell with the mortgage institutions, investment firms, student loan companies. Ensuring that bank runs do not collapse the monetary supply can ensure that we do not enter the apocalypse that Paulson has been threatening us with.

MadisonConservative on September 30, 2008 at 9:15 AM

True conservatives should be against this “crap sandwich”.

therightwinger on September 30, 2008 at 9:16 AM

MARK STEYN: “As a general proposition, when told by unanimous elites that a particular course of action is urgent and necessary to avoid disaster, there’s a lot to be said for going fishing.”

Keemo on September 30, 2008 at 9:16 AM

With the markets, it’s NOT how you open, it’s how you close.

Yesterday’s drop cost me $20,000 in our 401K’s. So a bailout-rescue would help those on Main Street.

For the Dems to try to call this a bail out of fat cats is, frankly, a LIE.

originalpechanga on September 30, 2008 at 9:17 AM

I thought I heard Bush say this bill would grow the economy and create jobs. Is there a stimulus in the bill that will do this?

huckleberryfriend on September 30, 2008 at 9:18 AM

Read this:

http://online.wsj.com/article/SB122273257698488295.html

Keemo on September 30, 2008 at 9:19 AM

Let it burn.

Fletch54 on September 30, 2008 at 9:20 AM

Yesterday’s drop cost me $20,000 in our 401K’s.

Didn’t cost you a dime if you didn’t sell. You didn’t sell off, did you? Time to go fishing for a few days.

james23 on September 30, 2008 at 9:20 AM

I thought I heard Bush say this bill would grow the economy and create jobs. Is there a stimulus in the bill that will do this?

huckleberryfriend on September 30, 2008 at 9:18 AM

The stimulus is that people and business can get lines of credit and/or won’t have their current lines of credit revoked. Businesses don’t run on cash under the mattress, if the an’t borrow they can’t expand.

McLovin on September 30, 2008 at 9:21 AM

maybe Cindy Sheehan can use this to defeat Pelosi.

OT/ heard another Obama ad in NC today, this time is carnival themed and creepy voice pointing out Iraq has a Surplus and are building a Ferris Wheel in baghdad with some of the funds while “Americans spend 80 billion….we need to ‘rebuild America’ and we don’t need more of the same”.

jp on September 30, 2008 at 9:21 AM

originalpechanga on September 30, 2008 at 9:17 AM

I moved all my retirement money into cash about a month ago. But over the last year, I lost about 20%. This bill won’t get our money back.

huckleberryfriend on September 30, 2008 at 9:21 AM

MARK STEYN: “As a general proposition, when told by unanimous elites that a particular course of action is urgent and necessary to avoid disaster, there’s a lot to be said for going fishing.”

Keemo on September 30, 2008 at 9:16 AM

Maybe that’s what members of Congress are doing with their vacation day today.

Note to Ed: First paragraph, fifth line down, I think you mean “loss” not “less.”

BigD on September 30, 2008 at 9:21 AM

My Dream

President Bush appears on national television to give a speech. Standing next to him are Dick Cheney, Mitt Romney, and Warren Buffett. Dick Cheney says, “I resign.” President Bush says, “I thank Vice President Cheneyfor his service. I appoint Mitt Romney to be Vice-President. He is a skilled financial manager. Just the guy we need right now.”

Romney is sworn in as Vice President. President Bush starts talking again.

“Right now America needs a leader. Due to my standing in the polls, regretfully, I have lost credibility with the American public. I hereby resign.”

Romney is sworn in as President.

Mitt Romney starts talking. “Secretary Paulson has done a good job, but people just aren’t listening to him. I hereby fire him. In his place, I appoint Warren Buffett as acting Secretary of the Treasury. I thank Mr. Buffett for serving his country in its hour of need.”

Romney and Buffett then get the Paulson plan passed and FDIC insurance limits increased. Romney appoints Ed Morrissey as Vice President.

America is saved.

indythinker on September 30, 2008 at 9:21 AM

I heard Bush on the radio on the way in to work today. it as all i could do to restrain myself from ripping out the radio in disgust. I kept screaming “NO NO NO, YOU ARE WRONG!” at the radio. (Other drivers must have thought I was nuts!)

Frankly, the GOP needs to stick to it’s guns. DEMAND the Conservative plan of less regulation, drasticly lower taxes on businesses and capital gains (push for cap gains tax ELIMINATION!) and the removal of Mark to Market and other stupid clintona dn carter era regulation.

those things ALONE will fix the problem! The sub-prime loan securities will OVERNIGHT be worth more than they are now, and the whole market will relax.

But to knuckle under to Bush, Paulson and the Democrats would be economic SUICIDE and the death of not ONLY conservatism, but the GOP as we know it.

There is FAR TOO MUCH AT STAKE TO DABBLE IN SOCIALISM!

TOSS THE CRAP SANDWICH, PASS THE GOP RESCUE PLAN!

wearyman on September 30, 2008 at 9:22 AM

The markets are acting like a child. It’s mine, It’s mine, It’s mine, whaa, whaa, whaa, you promised whaa, whaa, I want my money, whaa, whaa,whaa.

meci on September 30, 2008 at 9:22 AM

Who keeps propagating this nonsense about taxpayers making a profit on these toxic bits of paper? We’ll never see a dime of that money ever again. This is the government, remember.

Ditto. Just like Social Security….once these vermin have the money, they’ll use if for what they want.

Priscilla on September 30, 2008 at 9:22 AM

If the Credit Crisis is what they say, all out destruction is ahead of us if nothing is done. Forbes knows this, Coburn knows this, Newt was convinced.

at some point down the road(soon I guess), companies credit lines will dry up and they won’t be able to make payroll. Thats when chaos starts.

jp on September 30, 2008 at 9:23 AM

McLovin on September 30, 2008 at 9:21 AM

But all this bill will do, at best, is get money flow back to where it was a few weeks ago. There is no stimulus in the bill. Look for a major stimulus bill (pork laden)by the Democrats next session.

huckleberryfriend on September 30, 2008 at 9:24 AM

This is the final nail in the Bush coffin. As if we needed more proof the guy has more in common with Democrats than conservatives. Record debt. Thanks.

therightwinger on September 30, 2008 at 9:24 AM

My minimal understanding is that the big cause is that a lot of institutions are holding over-valued mortgage backed securities, and the the bailout would buy them up at face value.

Don’t fire sales usually go for pennies on the dollar?

How about the bailout offers to buy these dogs for two cents on the dollar. No takers? We’ll pay three cents. When every one jumps at the chance to unload their garbage at eight cents on the dollar, we have found the right price.

fluffy on September 30, 2008 at 9:24 AM

The only true solution is shining some sunlight into the activities of Congress, especially democrats over the past decades. What they’ve done is criminal and they should not be allowed to go unpunished.

Democrats in Congress needs to be cleaned out and the American people told exactly who they are and what their goal is.

Of course I’m dreaming … that would take a compliant media.

darwin on September 30, 2008 at 9:25 AM

It is not the time for selling… no no no, it is the time for buying like a madman. And I am!

spec_ops_mateo on September 30, 2008 at 9:25 AM

“Bush didn’t announce any further actions today.”

Surprise, surprise – he wants to keep America in a corner so that Americans are made to “give it up” for big business. Fear is the one card he has to play with, and so no “help” or relief will come from this President until we pay the piper. Give it up for W, folks. He wants to line the pockets of corporate America with taxpayer wealth – your $2300 at a time.

dtestard on September 30, 2008 at 9:25 AM

You know the Republican’s are playing Chess and the Democrats are playing rugby…… until the Republican party understands that this is a political war and starts pointing out the connections the Democrat Party and ALL of their “Fat Cat” buddies have to this mess they are going to go down the tubes in Nov. Politics is not bi-partisan…. it’s a win or lose proposition and currently we are losing bad…… No to the Bail Out until these people go to jail….period! Dodd/Frank/Raines to would be a good start!!!!

Randy1968 on September 30, 2008 at 9:26 AM

Who keeps propagating this nonsense about taxpayers making a profit on these toxic bits of paper? We’ll never see a dime of that money ever again. This is the government, remember.

lodge on September 30, 2008 at 9:12 AM

Even if the real estate securing the bad mortgage loans were to recover some value, the bail-out bill that failed yesterday also allowed the gov’t to purchase other types of bad debt — student loans, car loans, credit card debt, etc., — that has no chance of ever being worth anything. So even if the gov’t were able to generate some profit from eventually selling the bad mortgage loans, how do we know that that profit wouldn’t be swallowed up by all the losses we’d incur on all that other bad debt the gov’t would be purchasing?

AZCoyote on September 30, 2008 at 9:26 AM

I’ll just say again:

There’s an old saying that if you can’t spot the sucker at the poker table, it’s you.

Well, I am starting to feel like that sucker every time I hear another Wall Streeter or multi-Millionaire with a large portfolio tell me this bill is really to bail me out.

TheBigOldDog on September 30, 2008 at 9:27 AM

Be careful today. Bank stocks are already up in pre-trading a huge amount. Wachovia is up +26. Fannie +15. Look for a sell off sometime during the day when these early buyers get out.

huckleberryfriend on September 30, 2008 at 9:29 AM

As Mark Steyn said, if Barney Frank is all that stands between us and certain doom then it’s already too late.

Mike Honcho on September 30, 2008 at 9:30 AM

No bailout! . . . stop this socialist garbage.

Put on your flak jackets, steel yourselves and let it happen. Whatever pain there is will be better than this bailout dive into a Marxist/socialist abyss.

rplat on September 30, 2008 at 9:32 AM

Yesterday’s drop cost me $20,000 in our 401K’s. So a bailout-rescue would help those on Main Street.

For the Dems to try to call this a bail out of fat cats is, frankly, a LIE.

originalpechanga on September 30, 2008 at 9:17 AM

As long as you don’t panic and sell out now, you haven’t lost a penny. Wait a few years, the market will recover and you will regain all of that lost value and more.

MarkTheGreat on September 30, 2008 at 9:32 AM

I don’t mind Congress acting, as long as it’s the III Act of Henry VIII.

Tommy_G on September 30, 2008 at 9:34 AM

My minimal understanding is that the big cause is that a lot of institutions are holding over-valued mortgage backed securities, and the the bailout would buy them up at face value.

Don’t fire sales usually go for pennies on the dollar?

How about the bailout offers to buy these dogs for two cents on the dollar. No takers? We’ll pay three cents. When every one jumps at the chance to unload their garbage at eight cents on the dollar, we have found the right price.

fluffy on September 30, 2008 at 9:24 AM

No they don’t get purchased at face value. They get purchased at a price that Treasury determines and that will be likely 50% or less of face value. The governemnt holds them and sells them at profit or wash.

Those holding the paper are going to take a bath but they are willing to do it to have liquidilty.

McLovin on September 30, 2008 at 9:34 AM

As Mark Steyn said, if Barney Frank is all that stands between us and certain doom then it’s already too late.

Mike Honcho on September 30, 2008 at 9:30 AM

I am still waiting on that idiot to be frog marched from congress!

grapeknutz on September 30, 2008 at 9:34 AM

they would have been working on Rosh Hashana rather than taking a day off.

Ed, you know when I became convinced this was all BS? Starting Friday, I watched every single presser of panting politicians; I logged onto HA and never left; monitored everything that was being written over at NRO, here, the wires, etc.. I saw the House leadership on both sides in both chambers explain how desperately we needed this NOW, nearly every economists in the press said we needed this and need it NOW; everyone said we need this, not NOW, but YESTERDAY. I went to bed at about 11:40 Sunday knowing that the House would vote early afternoon on Monday. THEN I woke up and read that the Senate wouldn’t vote on the bill until WEDNESDAY…….got that?

Weight of Glory on September 30, 2008 at 9:34 AM

President Bush appears on national television to give a speech. Standing next to him are Dick Cheney, Mitt Romney, and Warren Buffett. Dick Cheney says, “I resign.” President Bush says, “I thank Vice President Cheneyfor his service. I appoint Mitt Romney to be Vice-President. He is a skilled financial manager. Just the guy we need right now.”

Romney is sworn in as Vice President. President Bush starts talking again.

“Right now America needs a leader. Due to my standing in the polls, regretfully, I have lost credibility with the American public. I hereby resign.”

By the time all of this could happen, it would be time to swear in the next president anyway.

MarkTheGreat on September 30, 2008 at 9:34 AM

the Russian exchange had to halt trading after sliding more than 7 percent

Russia’s market has been tanking already. I read one source that said their market had fallen 47 percent in four months with $40 billion in foreign investment pulling out.

CP on September 30, 2008 at 9:36 AM

If Bush would spend more time seriously talking tough against these bozo bankers who started this whole mess, and less time talking gloom and doom unless we do the “patriotic” thing and fork over our paychecks to bail these goofs out, I would have more respect for the man.

pilamaye on September 30, 2008 at 9:37 AM

Let me clarify: when I wrote “this was all BS” I was not referring to the underlying economic problem.

Weight of Glory on September 30, 2008 at 9:38 AM

Yeah, I’ve become convinced that while there is a serious problem, a lot of this hysteria has been manufactured for political gain by the Democrats and, unfortunately, for the short term at least, it looks like it’s going to work. Paulson, Pelosi, and co. have been encouraging a stampede reaction–not giving people enough time to stop and thing and not really pausing long enough to explain the problem adequately. But I also think that there’s something to what another commentator cautioned–the Democrats misjudged the situation in 2004 and 05, and might be misjudging the situation here. That they’ve underestimated the threat and so decided to make political hay based on their faulty calculations–in which case we could be on the verge of a real mess.

Historians 50 or 75 years from now are going to have a field day trying to untangle this mess.

Matt Helm on September 30, 2008 at 9:39 AM

maybe with Russia tanking, it will help Putin see the light

jp on September 30, 2008 at 9:41 AM

Victor Davis Hanson is the only pundit I have read who seems to truly understand how normal people see this situation. Here is a post of his from The Corner this morning (sorry for the lengthy post):

A Defining Moment [Victor Davis Hanson]

The stage is set for someone to play Washington, Lincoln, or Churchill. An entire generation of leadership is failing, as the world watches aghast.

Greedy Wall Street hot shots are worse than discredited.

Rep. Nancy Pelosi at the hour of national crisis proved why she may well be the worst House Speaker in the history of the Congress.

The more Sen. Dodd and Rep. Frank shout and demagogue in front of the cameras, the more desperate we know they are to talk their way out of their own past reckless and unprincipled conduct.

Lame duck President Bush is spent, tired and knows only that he will blamed for something he tried to prevent.

Sec. Paulson thought he could bark out orders at Treasury and expect underlings to snap to attention as they did once for him as Goldman Sachs. And when they didn’t, in vain he went to one knee — arrogance to fawning in a matter of hours.

The utterly corrupt Left-wing members of the House who green-lighted the thievery at Freddie Mac and Fannie Mae that started the panic will be lucky if they are not targets of a special prosecutor.

Free-market Republican House members gave high-minded speeches and then panicked in the face of populist outrage just when the country needed their calm, hand-in-glove with Democratic House ideologues — the one claiming we are getting socialism, the other robber-baron capitalism.They are as captive to public outrage over the bailout now as they soon will be to the next phase of outrage over shattered retirement accounts.

Barack Obama is again voting present, clueless while trying to act cool, waiting for calls, and issuing hourly contradictory statements adjusted to perceived CNN punditry and Drudge headlines.

Somewhere, somehow the American people need a steady voice of experience to rise above politics, stop the bickering, calm the country, get the proper guarantees passed, promise the needed reform — and so lead and inspire.

Can John McCain seize the moment and transcend the campaign?

BigD on September 30, 2008 at 9:43 AM

Have they plugged the leak yet? If the banks are still required to loan to people who have no ability to pay, as mandated by Congress, then no bail out is going to work.

I haven’t heard any news on whether Congress has overturned the laws that got us into this in the first place.

bonnie_ on September 30, 2008 at 9:43 AM

Again, Ed,

Do not listen to a word Bush (or Dems say) about fixing this. They are the problem. http://www.youtube.com/watch?v=vLUbb2DUYGk

bucktowndusty on September 30, 2008 at 9:44 AM

And if Congress thinks this is an emergency, they would have been working on Rosh Hashana rather than taking a day off.

My thoughts exactly. As an owner of a small business, if I have a large crisis, I work how ever many hours it takes to get past the crisis. Congress on the other hand, is in recess until Thursday.

Although it may be better that they recessed. Let the markets play out today and tomorrow and it may not look so grim by Thursday.

txsurveyor on September 30, 2008 at 9:44 AM

Here in NC, we are having a major gas shortage. Which was started by the Hurricane in Houston(refinaries).

Its made worse by idiot Dems, and they are trying to use this for their gain(to beat McCrory for Gov., help Obama, etc.). The Dems run the state right now, have “anti-Gouging laws’ and have been using them. So Gas stations are afraid to charge any more than around $4 bucks for Gas. As soon as a station gets gas(about 1 in 5 have gas), people are lining up and buying it all up, whether they need it or not. Which is making it next to impossible to get inventories back up to normal. THis would always happen if everyone was constantly buying as whether they needed it or not.

The Dem(startings with Gov. Easley) are blaming the OIl companies and telling people they are ‘witholding gas from them for profit’. When in reality its their anti-gouging laws that is the problem. If gas stations could charge $8/gallon right now, people would be forced to conserve until inventories get back to normal.

Idiot dems, this is a preview of the next 4 years or more.

jp on September 30, 2008 at 9:46 AM

He people Remember this. It was the fat cats that jumped in 29. The poor eaked through. Must just be house cleaning of the upper crust criminals this mess.

Me I don’t care. I will endure. I have my guns and amo to protect mine.
Maby thoes A$$holes in Hollywood will have to start driving UGOS.

Rick007 on September 30, 2008 at 9:46 AM

Can John McCain seize the moment and transcend the campaign?

BigD on September 30, 2008 at 9:43 AM

Thanks for sharing that, BigD. I thought yesterday, while walking in a beautiful Texas sunset, that for McCain to win, his presidency has to actually start today. He can no longer run for president, he must be president; a vacuum, large enough to allow for that reality, has just opened.

Weight of Glory on September 30, 2008 at 9:48 AM

Had I been in the House I would have voted with Pence and all others against the bailout bill. As constructed I don’t believe that bill would have solved the problem and it would have set a precedent we would come to regret. That said, the minute the bill was voted down I would have been jumping up and down in front of television cameras, trying to to get the word out that something must be done and it must be done now. There are free market ideas that would not put the American taxpayer on the hook for bad paper, nor would those ideas fundamentally change the role of government forever. If a free market bill can’t pass, then I would fight like hell to couple the free market ideas with some of the Paulson ideas, but place time limits on his authority and force the government to divest themselves of any purchased assets by a date certain. In other words, ensure government is only a temporary conduit to see us through an extraordinary problem, not a permanent player in the marketplace.

For those who say let it burn, I don’t believe you really understand what is coming. My wife is a CPA and the controller of a Fortune 500 company, a healthy, profitable company in a growing industry. Her company is positioned well for even a nasty recession, but tens of thousands of employees will be out of work within weeks if something doesn’t give in the instant crisis. And it won’t be my wife’s job, it will be the blue collar workers whose jobs go first. They use short term lines of credit to conduct every day business, and product orders are suddenly nonexistent or have been placed on hold. Their production workers won’t make it to Christmas if something doesn’t give. I know this is only anecdotal, but I suspect (I’m a JD and CPA, too) this is representative of what is happening all over the country in many industries. American commerce is grinding to a halt. If that happens, I don’t believe either McCain or Obambi will be able to unscramble the eggs.

flyfisher on September 30, 2008 at 9:54 AM

Hmmm….

…Dow up 207 points right now.

It’s becoming more and more difficult to believe there is a major problem.

Religious_Zealot on September 30, 2008 at 9:56 AM

If Bush would spend more time seriously talking tough against these bozo bankers the democrats in congress who rewrote the Community Reinvestment Act, and who COERCED banks into making loans to people with bad credit by threatening legal action against redlining who started this whole mess…

pilamaye on September 30, 2008 at 9:37 AM

Had to make a few modifications in order to reflect reality.

Vashta.Nerada on September 30, 2008 at 9:58 AM

All this high drama is just to push that moron Obama into the White House. That’s it, nothing else.

promachus on September 30, 2008 at 9:59 AM

MARK STEYN: “As a general proposition, when told by unanimous elites that a particular course of action is urgent and necessary to avoid disaster, there’s a lot to be said for going fishing.”

Keemo on September 30, 2008 at 9:16 AM

Hear, hear! Add my vote to all the others on this makes sense to me! Look, if Rush smells a rat and there are 400+ economic dudes out there saying, “NOOOOOOOOO!”, then I say let us put the brakes on this monster.

To all you kiddies from the KOS, Bush on this is a moron. Why in the name of Hallelujah will he not have Paulson release the money everyone is saying they could release? Over a trillion? What is up with that?

I do not get this raising the FDIC insurance to $250,000 either. To me that is like placing a bandaid on the Titanic. Now Obama and McCain are fighting over who suggested that first!

And has anyone seen this mess in OH with early voters? And like I have been asking where are our 527s- we are being outspent 4:1 in outside ads!

freeus on September 30, 2008 at 10:00 AM

Just an observation from someone who is economically illiterate but has been taking a crash course the last 3 weeks learning about this stuff. If this bailout is such a crushing bit of socialism, why isn’t Obama lifting a finger to get it passed? Does he look like he gives a frak whether this passes or not? Every day that this goes on he wins more and more votes, and he knows it. He’s willing to let this continue until 11/4 because he knows this benefits him.

Just something to think about.

Dudley Smith on September 30, 2008 at 10:02 AM

for McCain to win, his presidency has to actually start today. He can no longer run for president, he must be president; a vacuum, large enough to allow for that reality, has just opened.

Weight of Glory on September 30, 2008

GW certainly seems to be MIA on this one. His lips keep moving but nothing worthwhile is coming out.

SKYFOX on September 30, 2008 at 10:04 AM

Ed,

You are assuming (perhaps on advice) that the bill will actually do more good than harm. I haven’t seen many reasons explained to support that position. All I’ve heard is “meltdown is coming otherwise.” Yet, WaMu went belly up and the next day it was business as usual. Wachovia was cleanly taken over. The market is working.
To argue that the stock market lost more than the bailout would cost is to neglect that (a) individuals only lose money on stocks if they sell (or use their price to borrow funds), (b) for every seller their must be a buyer, so clearly the buyer thinks he will make money later when he sells and is therefore betting on the future (bailout or no), (c) many who don’t own stocks at all lost nothing, and didn’t have their money taken (or diluted) by the bailout.

The Feds have no money. They must either borrow it or create it out of thin air. Either hurts the economy and slows the recovery. Let the market deal with the problem. Congress can help by reversing the factors that created the problem. The Fed should stop printing money (they pumped another $650 billion out yesterday). Congress should repeal the CRA. Fannie and Freddie should be slowly reduced, not expanded. Etc., etc…. until all the things that caused the problem are undone.

Doing more of the same (govt intervention) will not solve the problem; it will only lengthen the pain and spread it more widely.

JDPerren on September 30, 2008 at 10:11 AM

The drop in the stock market yesterday represented a less of $1 trillion dollars, and the cost to taxpayers would be much less — and perhaps nothing at all, if the assets can recover their value over time.

How much of that 1 trillion dollars came from the taxpayers? That’s the point. Yes, the economy is in bad shape. . . I’VE BEEN SAYING THAT FOR A WHILE – trying to convince you. (I’d love you to comment on GDP again and the ‘mental recession’). But that’s what happens in a market economy. The weak fail and are bought by the strong. Market has bull runs and bear runs. The people who put money at risk are the people who lose the money. I’d rather the government not be the ‘decider’ of where to risk my money.

My parents’ generation never borrowed money. They earned the money they needed before they bought something. The baby boomers are the ones that are taught that everything is theirs for the taking. . . just borrow what money that you don’t have.

Now my generation is coming up and saying STOP SPENDING MONEY YOU DON’T HAVE! My generation may be known as slackers, but we know how not to shoot ourselves in the foot. I fell on hard times in my business and had to fire people. I borrowed money at first to make payroll – but that was the worst thing I could have done. If I had cut my losses early, it wouldn’t have taken me 3 years to pay off the debt I incurred funding my business.

This is capitalism. If you fail, you should fail. If you succeed, you should succeed. But none of it should depend on the government.

ThackerAgency on September 30, 2008 at 10:11 AM

Anyone else enjoy being blackmailed?

Let’s face it, the banks are flush with money. They have loads of people sitting in cash and the fed keeps pumping more in. All of that money, yet, they are not lending. Why? Because they want a bailout of their bad debt. They know that our sorry leaders will wipe all of their sins clean. It’s extortion.

Wallstreet is doing the same thing. They are addicted to loose money. They know if they put on a temper tantrum, then they will get their way. That’s what got us into this mess. Our sorry leaders juiced the markets after the dotcom bubble, then after they thought we might get a recession, then after 9-11, then the war, etc.

Why is it that greedy corporations get to make a fuss and get their way, but us taxpayers do the same and get punished for it? The free market will only come back once the government gets out of it, and wallstreet and the banks know they are on their own.

KentAllard on September 30, 2008 at 10:12 AM

Doing more of the same (govt intervention) will not solve the problem; it will only lengthen the pain and spread it more widely.

JDPerren on September 30, 2008 at 10:11 AM

good post. agree 100%

ThackerAgency on September 30, 2008 at 10:14 AM

As a voter, I don’t like being talked down to.

As a consumer, I don’t like being told I need to spend my money to help the economy.

As as taxpayer, I don’t like my money helping people on welfare who should never have been given home loans.

As an American, I don’t like the pols who don’t listen to the people.

madmonkphotog on September 30, 2008 at 10:16 AM

Can John McCain seize the moment and transcend the campaign?

BigD on September 30, 2008 at 9:43 AM

He has the opportunity. And its not a difficult leap to make either. It’s very simple. I don’t understand why he’s not doing it.

lorien1973 on September 30, 2008 at 10:16 AM

Let’s face it, the banks are flush with money. They have loads of people sitting in cash and the fed keeps pumping more in. All of that money, yet, they are not lending. Why? Because they want a bailout of their bad debt.

KentAllard on September 30, 2008 at 10:12 AM

While I agree that the bailout sounds like blackmail, I have to disagree on the banks being flush. The writedowns of subprime debt instruments to something like 30 cents on the dollar means that their balance sheets look terrible. They must maintain their ratios to remain solvent, and therefore are not lending in other areas, which is causing the market problems.

Vashta.Nerada on September 30, 2008 at 10:17 AM

It makes no difference if Forbes supported it or not, unless you want to fall prey to an appeal to authority. Fact: No data have been presented. No projections, no economic analyses, nothing but hysteria. Anybody who would vote for a bailout without first seeing the evidence is an idiot.

I’m neither pro- nor anti-bailout. But I want to see evidence. Analyses. Numbers. So far, the only numbers we’ve seen have been pulled out of thin air.

rightwingprof on September 30, 2008 at 10:18 AM

I called McCain’s office and they said he is going to work on the backchannels to get this thing passed; he’s not going to come out in front of it and be the leader.

So I guess that seals the deal for McCain. He’s done.

lorien1973 on September 30, 2008 at 10:21 AM

lorien1973 on September 30, 2008 at 10:21 AM

Go John McCain!

phronesis on September 30, 2008 at 10:24 AM

Russia’s market has been tanking already. I read one source that said their market had fallen 47 percent in four months with $40 billion in foreign investment pulling out.

CP on September 30, 2008 at 9:36 AM

Yes, an underappreciated silver lining. Putin/Chavez/Ahmadinejad/Saudis etc. have seen their income fall drastically.

There is really no Russian threat without high energy prices. The main determinant of its economy is energy, as is also the case with Iran and Venezuela.

JiangxiDad on September 30, 2008 at 10:24 AM

Hmm this is good for the little man.

Building material cost are sure to come down.
Gas prices dropping.
Houses are more affordable. Back to realistic prices.

Stop the Bail Out now.

Rick007 on September 30, 2008 at 10:24 AM

rightwingprof on September 30, 2008 at 10:18 AM

We’ve provided fact after fact for the last two weeks. That you choose to ignore them isn’t our fault.

phronesis on September 30, 2008 at 10:26 AM

indythinker on September 30, 2008 at 9:21 AM

i dont know if i have ever read a stupider post on the interwebs!! you think there are people out there w/ a magic solution?? and you think paulson is one of them? remember where he was just 2 years ago. he’s trying to keep his friends from losing money! and buffet will just try and get taxes raised! just because someone knows how to make money in the market doesnt mean they understand economics. they are totally different animals.

this “toxic paper” the govt wants to buy need to be sold on free market for whatever the owners can get. or they can hold it and lose all value. the govt should not buy. that would artificially inflate the value and keep home prices high. this is a much needed correction. it will be hard and it will hurt but only because the govt has been trying to keep it from happening for too long. economies are cyclical, they eventually HAVE to go down, no way to avoid it. the more interference the worse it is, either in going further down or lasting longer. the great depression is proof of govt interference prolonging recovery instead of helping it.

chasdal on September 30, 2008 at 10:26 AM

While I agree that the bailout sounds like blackmail, I have to disagree on the banks being flush. The writedowns of subprime debt instruments to something like 30 cents on the dollar means that their balance sheets look terrible. They must maintain their ratios to remain solvent, and therefore are not lending in other areas, which is causing the market problems.

Vashta.Nerada on September 30, 2008 at 10:17 AM

You are exactly right. With no floor under the real estate market or a change to FASB 157 mark to market rules, their balance sheets will get worse as time goes on. Hoarding cash is the one thing they can do to remain solvent until this mess is cleaned up.

flyfisher on September 30, 2008 at 10:26 AM

Bush and Congress have to the same they have done for the last two years. “NOTHING”

You are seeing the big money buying stocka at a verry good price since they scared the little man to death.

Rick007 on September 30, 2008 at 10:27 AM

The Me Generation is panicking it’s way into the We Generation. The next #1 download for your i-Pod will be “Sixteen Tons”. Hope you were smart enough to buy batteries.

Limerick on September 30, 2008 at 10:27 AM

Interestingly, Bush didn’t announce any further actions today. Some had expected Bush to announce a move by the FDIC to expand its protections for depositors as a means of injecting confidence into the banking industry. That could still come today, and Darrell Issa mentioned that Republicans favor this approach over the Paulson plan as modified by Congress.

I heard Dick Morris on Michael Medved’s show yesterday, and he said that Bush is basically a democrat president at this point, or something similar to that.

Steve Forbes, who has served as a voice of free-market sanity over the decades, told CNBC that Congress should have passed the bill yesterday. He blamed Nancy Pelosi and Henry Paulson for its failure, especially Paulson, who he accused of having diplomatic skills of a “drill sergeant to young recruits” with Republicans over the past week. The Bush administration tried selling this as a bailout, when Forbes says that distorts what the bill rejected yesterday would actually do.

Options on the Dow look about 200 points higher this morning. If the administration acts to expand FDIC funding as a means of assuring some liquidity, perhaps we may see some light at the end of the tunnel today.

Sorry to say this, but don’t hold your breath. Bush/Paulson don’t seem terribly interested in pursuing much besides their big government handout for investment banks and hedge funds.

funky chicken on September 30, 2008 at 10:28 AM

So I guess that seals the deal for McCain. He’s done.

lorien1973 on September 30, 2008 at 10:21 AM

Rats, I was hoping that he would come out, announce who his A.G. would be, and then pledge that his Justice Department would go after those in D.C. on day one of his administration. McCain MUST develop a, “get the thugs in D.C.” aspect to this. If he did this, I think many in the Country would get behind him. That’s what I mean, by the way, that he must be president now.

Weight of Glory on September 30, 2008 at 10:30 AM

flyfisher on September 30, 2008 at 9:54 AM</blockquote

Thanks for that. Can you explain the need for short term working capital, and why companies, especially large ones who have so many other sources of capital, still rely on it.

JiangxiDad on September 30, 2008 at 10:30 AM

Hope you were smart enough to buy batteries.

Limerick on September 30, 2008 at 10:27 AM

Heh. I guess I should thank Ike for my stock.

Weight of Glory on September 30, 2008 at 10:30 AM

phronesis on September 30, 2008 at 10:26 AM

provide a link. explain why these MBS should be bought by the govt instead of the private sector. what reasonable explanation do you have for supporting nationalization of the mortgage industry? the dems lust economic crisis to push more socialism, why are you supporting it? do you really trust frank and pelosi and dodd?? you are aware they caused the problem, you think they can fix it? you think they are willing to fix it? the more they prolong it the more people like you cry for help. this article points out japan trying similiar remedies and who they failed. do you want the euro nanny state economy here?

chasdal on September 30, 2008 at 10:31 AM

One of the most irritating things about GW Bush is he rarely if ever does something to gain a political advantage. Firing Rumsfeld the week AFTER the 2006 elections? Two weeks earlier, we’d have done better in the House races. Never whining when he’s criticized, even if it’s unfair criticism. And now, with the bully pulpit, saying nothing about the role the Dems played in this with the CRA and similar attitudes creating the sub-prime lending problem which is the root of the current crisis. Not a peep out of him, or McCain.

Paul-Cincy on September 30, 2008 at 10:31 AM

Too stupid to know better, I guess.

Weight of Glory on September 30, 2008 at 10:32 AM

the ‘do-nothing’ approach and ‘let the market handle it’, means massive chaos and destruction. Once the Credit dries up, companies won’t be making payroll. at that point, chaos, riots, you name it

jp on September 30, 2008 at 10:32 AM

There is really no Russian threat without high energy prices. The main determinant of its economy is energy, as is also the case with Iran and Venezuela.

JiangxiDad on September 30, 2008 at 10:24 AM

Let’s hope they don’t decide to generate an international crisis just to force oil prices back up. Are they evil enough to block the Straits of Hormuz or blow up a pipeline
just for cash? That’s the last thing we need amidst this financial crisis.

flyfisher on September 30, 2008 at 10:33 AM

The bailout is damn near equivalent to taking us towards Karl Marx’s own fifth measure of proletariat governmental control: The “centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly.”

I’m appalled at the President I voted for right now for trying to dog congress into passing this fiasco and I’m even more disappointed in McCain’s willingness to go along with it as well instead of standing with his congressional colleagues in fighting against this nonsense in tandem with what the majority of the American people want to happen.

If this disaster makes it through congress and the senate and the President’s pen, we can start to kiss capitalism goodbye.

Jockolantern on September 30, 2008 at 10:36 AM

Once the Credit dries up,

jp on September 30, 2008 at 10:32 AM

Or once McCain goes home to Arizona the market will suddenly smooth out, worth a bit less, and we will have a recession instead of this predicted end-of-America depression…..until Barry’s and Pelosi’s WPA grinds what is left of free markets into dust.

Limerick on September 30, 2008 at 10:38 AM

Let’s hope they don’t decide to generate an international crisis just to force oil prices back up. Are they evil enough to block the Straits of Hormuz or blow up a pipeline
just for cash? That’s the last thing we need amidst this financial crisis.

flyfisher on September 30, 2008 at 10:33 AM

They are already trying. Russia announced a day or so ago its nuclear cooperation with Venezuela. Iran goes chugging along quietly perfecting its nuclear weapons while the world’s attn is focused on other things. It a recipe for a perfect storm as you suggest. If I was an enemy of the US, I’d be salivating right now. Unstable economy and an unstable deeply divided gov’t in transition.

JiangxiDad on September 30, 2008 at 10:39 AM

The Depression of 2008? Don’t Count On It – from the Wall Street Journal

Mr_Magoo on September 30, 2008 at 10:42 AM

Hmmm….

…Dow up 207 points right now.

It’s becoming more and more difficult to believe there is a major problem

That’s what I’m wondering too! At 10:22 AM, Dow up 2.57%, Nasdaq up 2.88%, S&P500 up 3.24%. That’s about a third of what they lost yesterday.

If the failure of the bailout bill was such a catastrophe, markets would be tanking today while Congress fiddles and wishes everybody a happy Jewish New Year. Something else is going on behind the scenes that is reassuring the market. Maybe they woke up to the fact that taxpayers DON’T want to bail them out (the ones who were yelling at their Reps to vote against the bailout), and they’ve got a Plan B lined up.

As I commented yesterday, the Fed can inject money into the system at will, by offering low-interest loans to banks, which they can use to continue lending and make GOOD loans so they can gradually weed out the bad loans and write them off, while continuing to make money on loans to solvent borrowers.

The downside to this is inflation–more dollars in the system means that each dollar is worth less than it was before. But let’s say the Fed throws $700 billion into the banking system. In the second quarter of 2008, the GDP was $14.3 trillion, or about $57 trillion per year. An extra $700 billion in the money supply would add about 1.2% per year to the inflation rate, which is a small price to pay to avoid a financial collapse. Once the credit system is re-stabilized, the Fed could always tighten interest rates to squeeze out inflation.

If Congress passes a bailout of the banks using Treasury money, the burden falls on the taxpayers–about half the population. It could be that those Congressmen who voted against the bailout had a disproportionate share of taxpayers (and not those too poor to pay taxes) in their districts!

If the Fed bails out the banks by “creating money”, the burden of inflation falls on the entire population–possibly a fairer sharing of the burden! Also, in an inflationary economy, responsible borrowers who took out fixed-rate mortgages repay them in cheaper dollars–which rewards responsible borrowers relative to those who borrowed using ARMs beyond their means.

Steve Z on September 30, 2008 at 10:45 AM

Jeez, I don’t think I can stand this eeyore website today. I’ll come back after this “crisis” blows over.

Nattering nabobs of negativity, indeed.

fossten on September 30, 2008 at 10:46 AM

ThackerAgency on September 30, 2008 at 10:11 AM

Hear Hear!

Jezla on September 30, 2008 at 10:47 AM

Even the Canadians to the North of us in Quebec, know this is a Power Grab. I guess they are Pink and don’t want us to turn RED ;)

http://network.nationalpost.com/np/blogs/fpcomment/archive/2008/09/29/bailout-marks-karl-marx-s-comeback.aspx

Dr Evil on September 30, 2008 at 10:47 AM

flyfisher on September 30, 2008 at 9:54 AM</blockquote

Thanks for that. Can you explain the need for short term working capital, and why companies, especially large ones who have so many other sources of capital, still rely on it.
JiangxiDad on September 30, 2008 at 10:30 AM

I’m probably not the best person to answer that. I am sure someone else can give a more sophisticated answer than I can. But I think the general answer is that over time companies have found ways to maximize profits and cash flows. Often they use credit to simply smooth out unsteady cash flows. More importantly, however, in the era of cheap money, corporations have been incentivized to use leverage for everything. Over the past twenty years I can’t tell you how many times I’ve done calculations for a business owner comparing the use of his own capital versus tapping a credit line. More often than not they opt for borrowing because it is cheaper than the lost opportunity cost. In other words, they know how to employ their capital more efficiently for a greater overall return.

flyfisher on September 30, 2008 at 10:48 AM

This is what comes from electing millionaire lawyers to represent us in Washington.

The answer remains, is, and always will be TERM LIMITS.

Just take a look at the no votes and come to the realization that most of them are up for re-election this year. They are answering to the people, temporarily, so they can get re-elected and come back and screw all of us another two years.

They are not representatives, they are scoundrels who care only about themselves, their pocketbooks and their never-ending careers as worthless politicians.

fogw on September 30, 2008 at 10:50 AM

Hmmm….

…Dow up 207 points right now.

It’s becoming more and more difficult to believe there is a major problem.

Religious_Zealot on September 30, 2008 at 9:56 AM

Those buying stocks are working against the revolution and will be shot.
- High Comrade Paulson

MB4 on September 30, 2008 at 10:53 AM

How is this bailout any different then some gigantic department of motor vehicles, or social security administration, or IRS office? The Government is going to ride in on some super-efficient white paper and be smarter, faster, stronger then free enterprise?

Screw that. Everyone it talking about saving Wall Street and Main Street. The way to save them is to let Side Street roll up their sleeves and get to work ON THEIR OWN INITIATIVE. What Darwin breaks men will fix.

Limerick on September 30, 2008 at 10:54 AM

The Depression of 2008? Don’t Count On It – from the Wall Street Journal

Mr_Magoo on September 30, 2008 at 10:42 AM

True enough; depressions don’t last only one year.

phronesis on September 30, 2008 at 10:55 AM

http://article.nationalreview.com/?q=MTBjMWVlNjExZGI4ZDMwNzYzNzBkNDU3YmQ4MDU5ZTQ=

An interesting perspective on this from Rep. Marsha Blackburn (R-TN), who voted No yesterday (H/T National Review Online). She believes that a more free-market approach could be used, such as eliminating the mark-to-market rule (from Sarbanes-Oxley) and increasing FDIC insurance limits.

“Tennessee Republican Marsha Blackburn was among the conservative Republicans who bucked both parties’ leaders to kill the Emergency Economic Stabilization Act of 2008 on Monday. She explained her reasoning to National Review Online editor Kathryn Lopez.
Kathryn Jean Lopez: Monday morning on Bill Bennett’s radio show, you said you were leaning “no.” What solidified that no?

Marsha Blackburn: Hearing from my constituents in the district solidified the “no” vote. We had phone calls and e-mails by the thousands. They did not want a bill that would favor Wall Street over the taxpayer.

Lopez: Are you concerned by your vote you might have played a role in a pending market collapse?

Blackburn: The markets like certainty. We know that. We also know that the bill before us today did not solve the underlying problems. Some provisions that could have immediately addressed the liquidity issue, such as mark-to-market, uptick rule, increases in FDIC insurance could be done with immediate rule changes should be done.

Lopez: Are you worried you might have just helped hand the election to Obama?

Blackburn: I don’t think this is handing the election to Obama. A more solid solution, crafted this week, will restore confidence in the market and in Congress. I do think it is important to get this done right so that we preserve free markets for the future.

Lopez: Some on the Right are arguing “no” votes were irresponsible. Why do you think they’re wrong?

Blackburn: The responsible action is to pass the most effective legislation in as short a time frame as possible. The bill before us didn’t do that. It leveraged too many federal assets and too few Wall Street assets. It also ignored some market-oriented solutions that could be carried out immediately. Again, I’d look to options like mark-to-market reform, increases in FDIC insurance, etc.”

Food for thought.

Steve Z on September 30, 2008 at 11:00 AM

Ed, Andy McCarthy yesterday pointed out that this bill contained provisions enabling the Fed to buy bad local and state debt. In other words, rescuing irresponsible local and state governments from their own stupidity.

I’m beginning to think those No votes did the nation a service.

irishspy on September 30, 2008 at 11:01 AM

but the Russian exchange had to halt trading after sliding more than 7 percent.

That’s because the Russian economy moves in lock-step with the price of oil.

Sheesh.

progressoverpeace on September 30, 2008 at 11:08 AM

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