Pelosi and the leadership felt this needed to be a bipartisan bill. They made compromises so that the government appeared united. The House Republican leadership didn't hold up their end of the deal. This now strengthens Pelosi's hand. Hopefully she will now move the bill to the left and provided the votes from her own caucus. She can tell Paulson, the President, and the Senate if he wants something fast, then it has to move to the left...keep your fingers crossed!!! If this ends up a Democratic populist bill it will help down ticket and Obama.
Posted by allansfca at September 30, 2008 10:04 AMWell, it's worth a shot, but I think the Dems have calculated correctly that it wouldn't pass.
The bill rejected yesterday was really bad, but also the best we could do, and under the circumstances absolutely essential. It is not an accident that it was sunk mostly by right wing rhetoric and Republicans.
On the economy, it only gets worse from here. Actually, that's an electoral boon for Obama, but I'm happy to see his reaction mirrors mine, even if Jerome Armstrong, whom I've been agreeing with lately, mocks it.
Posted by andgarden at September 30, 2008 10:04 AMand that's why this is the moment for the dems to step up. the republicans have proved they are not serious about solving this. the dems now can prove their ability to govern without any repug input.
Posted by Turkana at September 30, 2008 10:08 AMIndeed. Obama needs to do successfully what McCain fumbled at last week.
Posted by andgarden at September 30, 2008 10:14 AMAs Atrios often notes, there is no pony plan. There is no Democratic plan, there is no progressive plan, there is only Bush's plan. And it's not even a Republican plan.
Obama and the Democratic congressional leadership ought to come up with one right now. They could sell Obama and themselves as the people working to solve the problems, while Bush, McCain and the Republican are the people who caused the problems.
The hard part is coming up with a plan. Is there something that can be done? I do not have the economic understanding to know. But I will be that Krugman does. There are certainly others who have good, Democratic, ideas.
I do know that Democrats have not done enough to fix the idea in the minds of Americans that this crisis is the product of Republican policies. They have not defined the problem in a manner that can be understood by the great mass of American dullards. That should be the first priority because it will create the political energy to enact whatever the Democrats come up with.
Posted by James E. Powell at September 30, 2008 10:19 AMif obama stepped up, now, a solid lead could turn into a rout.
Posted by Turkana at September 30, 2008 10:30 AM"Nobody will pay attention to him."
"Nobody likes the idea of a Wall Street bailout."
You libel me Steve! I'm not that dumb!
Seriously, the problem with the bailout is that markets really work doing their thing of matching price discovery with supply and demand regardless of what any government program does.
The reality is that these companies have balance sheets that the market says are insolvent because they hold overvalued junk and if the junk is disposed of, it will not get the price currently reflected on the balance sheet. The only way that the companies can be made solvent is to receive a GIFT from the government to the owners to put equity in the shareholders's account.
It is wrong for the government to take my money to give the shareholders a gift. If the government takes equity, it is not so much of a gift, but it makes the whole market dodgey because now you have governmental entities competing against private entities and that seriously distorts the price/supply/demand function of the market because the government entity will always get a preference.
Or, we as a society, could decide that we no longer like private enterprise and like government enterprise better. That is a fair choice if that is what we really decide, but not one that should be made by fiat.
The markets work even if the enterprise is a government enterprise, but the outcome might not be what we want. The history of nations with a government enterprise economy is not pretty.
My vote is not to bail out and pick up the pieces with public works from the bottom as needed.
There really isn't time to craft a real piece of serious legislation, nor is Bush the person to do it with. So the answer is some mere time-buying temporizing, while unfortunately there is an entire third of a year to "temporize" (Bush isn't gone for almost 4 months).
That unfortunately means simply throwing some money at the criminal banks or doing nothing.
The fall of Lehman Bros caused the current short term disequilibrium, apparently. Every commercial bank that has "failed" has been gobbled up by bigger competitors, and every investment bank but one has been gobbled as well. So there's a "market" for these things as they fail. The market may "handle" the "bodies" as they pile up.
So maybe the worthless Congress, with its utterly worthless Prez-failure, should just throw a smaller amount of money at the problem, get on the hook for another $100 billion of shit securities from the shakiest banks, clear out of town and call an end to this shit Bush Era.
Give the smallest amount we can to the crooks--what's another $100 billion into the shitter at this point, seriously? The credit market has the country by the balls and is blackmailing us for something.
Thinking that anything worthwhile, substantive, successful or sensible long term can come out of this revolting mix of DC clownshow and freakshow is frankly insanity at this point.
Our government has been reduced to a joke by conservatism and Bushco and the weak-ass Dems holding the Congressional fort can't change that no matter what they do. Throw the robber barons some small change, clear the hell out and hope for a win in Nov. It's the absolute best that can possibly be accomplished.
Posted by euzoius at September 30, 2008 11:37 AMI have been saying infrastructure is important. Instead of bailing out Wallstreet from the top, lets help Birmingham, AL from the bottom. I think this would be better than giving some banker a vacaation I cannot afford by bailing his company out. Also, if Birmingham does not default, neither will the banker because his loan will still be good!
Posted by Nobody at September 30, 2008 11:46 AMI'm not an economist, and I'm sure there are smarter people than me...
Stop this condescending crap. You are very intelligent. You don't have to be an economist to understand that creating debt to purchase nothing is a recipe for disaster, and this is especially so when it on such a grand scale. It's easy to be impressed with economists and the stuff they do. But you should realize it took some of the highest paid economists, mathematicians, MBAs and lawyers to come up with the debacle we see on Wall Street. It may take an economist to explain in detail the crap they did and its resulting effect. That's nice. We all live in the crap they did and its resulting effect. Everyone, except republi-cons, seems to understand this.
And, just so you'll know. To be hired as an economist by the federal government the qualifications are: 3 courses in econometrics at the graduate level. Period. Anyone else see a problem here?
Posted by phidipides at September 30, 2008 12:38 PMFirst, I don't think Obama is in line with any of your views stated at the beginning of your story. Don't know why you would think he thinks the surge success is a lie, Russia isn't responsible, or that Iran isn't a danger to us. Can you share what basis you have for thinking he holds these views?
Second, I don't think a bailout for people who bought more house than they could afford would be popular with the public.
Third, I don't see how a bailout for people who bought more house than they could afford would be different from the proposed solution and be of any benefit to the economy at the same time. What does a homeowner bailout look like?
What stock purchases are you talking about?
tex,
it's not complicated- instead of just throwing money at failing companies, you buy them. and i think plenty of people would be happy with a bailout that targets people. a lot of people were suckered into bad loans. helping them also helps the economy, because it keeps them from becoming dependent on social services.
Posted by Turkana at September 30, 2008 03:17 PMTurkana, have you considered the possibility that the Bush players and the Pelosi players belong to the same team? Why do you think there is not one piece of legislation from the Democrats to fix the problem since they took over the House and the Senate in 2006? We knew the problem was there. In 2006 McCain, the person that doesn't like regulation introduced a bill to fix the Fannie Mae and Freddie Mac problem, but for their own partisan reasons, the Republicans didn't have the will to pass it.
The Democrats cannot point the finger to the Republicans any more than the Republicans can point the finger at the Democrats. Let's face it, both parties respond to the corporate raiders as a slave to a master. Obama can point the finger at McCain, but Obama has done absolutely nothing to bring accountability to the crisis, though we've known for at least three years that the situation was bad. I don't believe anything he says. Americans will never see health care or any of the other policies that Obama mimicked from Hillary.
Posted by Dhyana at September 30, 2008 04:33 PMThe problem is not people buying more house than they can afford. It's the god almighty market leveraging mortgages 39 times over. It's the absense of oversight over our wonderful corporations and the market players.
Now I have a huge news flash for everybody.
Wall Street is not our economy. Wall Street is not a cipher for our economy, an index for our economy; no, WS is an economic tool. It is a means to an end, not an end in and of itself.
But don't tell WS, they don't want to hear that. They've spent decades overinflating their own importance, to make themselves relevent and rich. And they've done a good job of that. Of course, it probably doesn't hurt to have Madison Ave just down the street, eh?
WS needs to be put back in it's place. Regulatory rules need to be re-installed, and enforced. Criminal behavior, and there has been lots of it in the past 8 years at least, must be punished. Nothing like a couple of heads on pikes to clarify priorities, I would imagine.
Raise the FDIC limits to $250K now, rfn. Simple, and it's pretty much cost free at this point, since bank deposits aren't the problem, mortgages and our horrible economy after 8 miserable years of free market rampage are the problem.
Inact the executive pay provisions, as symbolic as it is. Then provide capital to Community Banks, banks that actually know the people they're lending to, to start breaking up the credit logjam.
And there are more stimulative things that need to be done, and those are all Democratic platform type of things. So, Speaker Pelosi, do a Democratic Rescue Plan, and fuck the Republicans.
Posted by Duckman GR at September 30, 2008 07:39 PMKrugman, on his blog, made a couple interesting points today.
First, in the Paulsen-Dodd-Frank plan, unlike the Paulsen plan, the taxpayers should get back most of the money spent resulting in a net cost of close to zero.
Second, the Paulsen-Dodd-Frank plan is a short-term solution, one that calms the waters for a while but doesn't address the root causes.
So, Krugman favors the Paulsen-Dodd-Frank plan because the net cost is close to zero and it buys time until an Obama administration and a Congress with a larger Democratic majority to address the real problem. Basically he doesn't trust the keystone kops running the economic branch of the Bush adminstration to do a good job anyway, so buying time is the right thing to do.
Posted by Anonny at October 1, 2008 08:56 AM