Sep 29 2008
Bottom Line: Bipartisan Rejection Of Obama-Pelosi-Reid-Bush Bailout
There is nothing much to say about today’s failure in the Democrat Congress to get a bailout package passed It was a bipartisan rejection of the Obama-Pelosi-Reid-Bush bill – bottom line.
And I doubt the hyper-partisan pre-vote speech by the bitter liberal Democrat Speaker of The House was a rallying cry for support:
A reminder to Pelosi: Bush called for reform at least 17 times while in office, Democrats blocked it. McCain co-sponsored a bill to head this off in 2005, Democratds blocked it. Democrats were going to go home for the election until Bush called on them to act. Pelosi is the biggest disaster to America since Benedict Arnold.
Addendum: Remind me again were Obama’s vaunted ability to cross the aisles and bring both parties together played out here again??? Â If not now, in a moment of national crisis – when?
I can think of some things to say.
We lost over 1 Trillion dollars in market cap today. In just one day. We will lose several more trillion in the next few days.
Goodbye, economy.
Goodbye, jobs.
Goodbye, GOP. Forever.
Hello, President Obama.
AJ, what do you think this will do to the election?
…
Kitty,
Not a clue!
AJ
Try this on for size.
We saw a war between the Socialist Congressional Progressive Caucus and the liberal classic Dems a continuation of the primary fight.
Pelosi was playing her usual over the top political theater in the House waiting for the more sane Senate bill to actually deal with the issue.
She saw a slim chance of the bill passing on a do something even if it’s wrong basis and threw her tantrum to kill the bill so she wouldn’t have to own it and then have to conference it with the Senate version.
Look for the Republican press conference replay on CSPAN.
Eric Cantor nailed her to the wall big time.
Fear, uncertainty and financial ruin favor the Dems in a big way. They will control the white house and both branches of congress with large majorities.
The Republicans just shook people’s faith in free market capitalism to the core, and they did it taking a “principled” stand in defense of free markets.
Morons.
And the funny thing is it was over a paltry $700 billion most of which would have been eventually recouped. Compare that to the cost of the new National Health Service over it’s lifetime.
Compare that to the cost of a precipitous withdrawal from the war.
I’m glad the bill failed.
The govt is bankrupt.. the previous “bailouts” didn’t work, and neither will this one.
vince – consider this observation from Larry Kudlow today:
http://corner.nationalreview.com/post/?q=ZmU5YTUwYWZiMzUzNmM1MDcxNDQ1MmQ4ZWE2MWVlNWM=
Monday, September 29, 2008
The End of the U.S. Financial System as We Know It? [Larry Kudlow]
A number of Republican House members and staff, along with others who are plugged in, are telling me that Nancy Pelosi and the Democrats will come back with a new bill that includes all the left-wing stuff that was scrubbed from the bill that was defeated today in the House.
As this scenario goes, the House Democrats need 218 votes, and they have to pick up a number of black and Hispanic House members who jumped ship because the Wall Street provisions, in their view, were too benign. So things like the bankruptcy judges setting mortgage terms and rates, the ACORN slush-fund spending, the union proxy for corporate boards, stricter limits on executive compensation, and much larger equity ownership of selling banks through warrants will all find itself back in the new bill. Of course, this scenario will lose more Republican votes. But insiders tell me President Bush will take Secretary Paulson’s advice and sign that kind of legislation.
Personally, if this scenario plays out, I would probably withdraw my support for the rescue mission and switch to plan B, which would center on the FDIC and its bank-recapitalization powers. The bank-ownership issue, in particular, could lead to heavy nationalization of America’s financial system with a three-house Democratic sweep in November.
I’m not forecasting, because I don’t know the next bill’s content. And while McCain’s polls are heading south, he could still win. But a three-house Dem sweep to implement some of the very onerous provisions being talked about could set up the end of the U.S. financial system as we know it.
I’m gonna wait and see. Obviously, the financial markets are in total collapse today. And the economic outlook is suffering.
Tough day. One of the worst I can remember.
Nancy Pelosi was absolutely right when she said Bernanke was the “foremost authority on the Great Depression”. At a Nov. 8, 2002, conference to honor Friedman’s 90th birthday, Bernanke said he agreed with Friedman that the Federal Reserve caused Great Depression. They are also the cause of this fiasco and until we dissolve this unconstitutional entity, history will keep repeating itself.
WND Exclusive MONEYNETDAILY
Bernanke: Federal Reserve caused Great Depression
Fed chief says, ‘We did it. …very sorry, won’t do it again’
Posted: March 19, 2008
9:02 pm Eastern
By David Kupelian
At a Nov. 8, 2002, conference to honor Friedman’s 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman’s old home base, the University of Chicago. Here’s a bit of what Bernanke, the man who now runs the Fed – and thus, one of the most powerful people in the world – had to say that day:
QUOTE:
I can think of no greater honor than being invited to speak on the occasion of Milton Friedman’s ninetieth birthday. Among economic scholars, Friedman has no peer. …
Today I’d like to honor Milton Friedman by talking about one of his greatest contributions to economics, made in close collaboration with his distinguished coauthor, Anna J. Schwartz. This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression – or, as Friedman and Schwartz dubbed it, the Great Contraction of 1929-33.
… As everyone here knows, in their “Monetary History” Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation’s monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that “the contraction is in fact a tragic testimonial to the importance of monetary forces.”
After citing how Friedman and Schwartz documented the Fed’s continual contraction of the money supply during the Depression and its aftermath – and the subsequent abandonment of the gold standard by many nations in order to stop the devastating monetary contraction – Bernanke adds:
QUOTE:
… Before the creation of the Federal Reserve, Friedman and Schwartz noted, bank panics were typically handled by banks themselves – for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution – the suspension of payments for several weeks was a significant hardship for the public – the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal: Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon’s infamous ‘liquidationist’ thesis, that weeding out “weak” banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks – which would have intervened before the founding of the Fed – felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.
In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
Best wishes for your next ninety years.
At the same time The Federal Reserve Bank and Wall Street were shoving this “Bailout” down our throats, Jeffrey Garten, Former Kissinger Policy Planner, CFR Member, Nixon And Clinton Administration Figure, Lehman Brothers Director, is Calling For New Global Monetary Authority!!
We need a new Global Monetary Authority
By Jeffrey Garten
Published: September 25 2008 20:02
“Even if the US’s massive financial rescue operation succeeds, it should be followed by something even more far-reaching – the establishment of a Global Monetary Authority to oversee markets that have become borderless.”
“That vacuum at the centre is dangerous for everyone. The US’s dependence on massive inflows of foreign capital, roughly $3bn (€2bn, £1.6bn) a day, will surely increase now as Uncle Sam acquires $1,000bn in new obligations from current bail-outs. For years to come, Wall Street and Washington will be unable to manage without strong co-operation from other markets.”
“It would act as “bankruptcy court†for financial reorganisations of global companies above a certain size. The biggest global financial companies would have to register with the GMA and be subject to its monitoring, or be blacklisted. That includes commercial companies and banks, but also sovereign wealth funds, gigantic hedge funds and private equity firms.”
“The GMA’s board would have to include central bankers not just from the US, UK, the eurozone and Japan, but also China, Saudi Arabia and Brazil. It would be financed by mandatory contributions from every capable country and from insurance-type premiums from global financial companies – publicly listed, government owned, and privately held alike.”
“In terms of US and international politics, a Global Monetary Authority is probably an idea whose time has not yet come. That may change as today’s crisis evolves.”
SBD
Bush had better not sign such a bill.
Vince:
If people start losing their jobs and their savings because of this public opinion will change. I think it was a mistake for the GOP to reject this. I know why it all happened, but right now we are looking at a disaster and we need to act.
The market lost 1.1 trillion by the end of the day. That is 400 billion more than the rescue plan.
Paul Ryan the Republican from Wisconsin said this is a Hoover moment. He voted for the bill. If it is a Hoover moment, the Gop just helped make Obama president with majorities in the House and Senate.
Socialism will win out with that scenario, far more than it would with this bill.
I am disgusted with the whole bunch of them, Republicans included. At least Bush tried.
I live in Indiana, I sent Congressman an email and told him that if the rest of us started losing paychecks over this that he should give up his own. But he won’t. The US Treasury signs his checks, he isn’t concerned. No sweat of his whatever.
The economic is going to fail no matter what. Even this “bailout” isn’t going to stop it
[…] requiring broad bi-partisan support and let lose with typical DC hyper-partisan finger pointing (you can see the video here). Why did she tank a bipartisan bailout with partisan sniping? Is she really that dumb or that […]
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