House Rejects Wall St Mortgage Bailout

I was hoping the bailout would NOT go through. Why should I pay for someone else's bad decisions?

If my business fails I don't go running to the WF and ask for a handout - strings attached, or otherwise.

~Michael

Dow is down 622 now.

Looks like McCain wasn't very persuasive in getting his own party to vote for something he supported.

The Republicans are worried about socialism, but if things get as bad as people like Warren Buffet and Paulson say it can, then that seems shortsighted. Seems this wasn't simply a bailout of Wall St. and will quickly effect Main St, but if the Republicans want to gamble and see what happens, I guess we'll find out what happens.

Yes, this will only help Obama.

This is why the country is in the shape it is.
Why are you worried about blame and not worried about fixing the situation?
Michael,
I don't like paying for someone elses mistakes either, but sometimes we have to do things we dont like,

Espacecadet- Thats the most redicuous statement I think I have ever seen on this forum. I didn't quote it because you probably should edit it out .

Barry,
it is not the democrats responsibility to vote it thru by themselves,
a REPUBLICAN president came to the nation and asked that this be done.
Why is it the democreats responsibility to vote it thru by themselves?

As bad shape as the country is currently in, it's about time to stop thinking about republican and democreat.

And I'm an American.
I want what's best for the country in the long term.
I'm not concerned about making a political statement for one party or the other.

Well, that's why we differ I guess, because I DO think this country is in the worst economic crisis since the great depression. It;s funny you said that as I was about to write a post asking if your parents are alive and if they lived thru the depression? It's one thing to read about it from history books and another to hear about it through the lips of people that lived through it.
But the issue is not if we are in a recession right now, or headed for another depression, the issue is if we as a country need to bail out others to save our economy from a disaster. Personally I am appalled that the situation was allowed to even get to this stage. It is not anything that happened overnight.

It wasn't just $700 billion - that was only outstanding at any one time. They would have took you for trillions and it wouldn't have helped in the long term, according to most economists. At least now, if you end up going down the greedy crooks will be going down with you.

I'd say that's a result!

You can read the draft of the plan here. CNNMoney.com

chuck

A reminder from Ron Paul:

Dear Friends,

The financial meltdown the economists of the Austrian School predicted has arrived.

We are in this crisis because of an excess of artificially created credit at the hands of the Federal Reserve System. The solution being proposed? More artificial credit by the Federal Reserve. No liquidation of bad debt and malinvestment is to be allowed. By doing more of the same, we will only continue and intensify the distortions in our economy - all the capital misallocation, all the malinvestment - and prevent the market's attempt to re-establish rational pricing of houses and other assets.

Last night the president addressed the nation about the financial crisis. There is no point in going through his remarks line by line, since I'd only be repeating what I've been saying over and over - not just for the past several days, but for years and even decades.

Still, at least a few observations are necessary.

The president assures us that his administration "is working with Congress to address the root cause behind much of the instability in our markets." Care to take a guess at whether the Federal Reserve and its money creation spree were even mentioned?

We are told that "low interest rates" led to excessive borrowing, but we are not told how these low interest rates came about. They were a deliberate policy of the Federal Reserve. As always, artificially low interest rates distort the market. Entrepreneurs engage in malinvestments - investments that do not make sense in light of current resource availability, that occur in more temporally remote stages of the capital structure than the pattern of consumer demand can support, and that would not have been made at all if the interest rate had been permitted to tell the truth instead of being toyed with by the Fed.

Not a word about any of that, of course, because Americans might then discover how the great wise men in Washington caused this great debacle. Better to keep scapegoating the mortgage industry or "wildcat capitalism" (as if we actually have a pure free market!).

Speaking about Fannie Mae and Freddie Mac, the president said: "Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk."

Doesn't that prove the foolishness of chartering Fannie and Freddie in the first place? Doesn't that suggest that maybe, just maybe, government may have contributed to this mess? And of course, by bailing out Fannie and Freddie, hasn't the federal government shown that the "many" who "believed they were guaranteed by the federal government" were in fact correct?

Then come the scare tactics. If we don't give dictatorial powers to the Treasury Secretary "the stock market would drop even more, which would reduce the value of your retirement account. The value of your home could plummet." Left unsaid, naturally, is that with the bailout and all the money and credit that must be produced out of thin air to fund it, the value of your retirement account will drop anyway, because the value of the dollar will suffer a precipitous decline. As for home prices, they are obviously much too high, and supply and demand cannot equilibrate if government insists on propping them up.

It's the same destructive strategy that government tried during the Great Depression: prop up prices at all costs. The Depression went on for over a decade. On the other hand, when liquidation was allowed to occur in the equally devastating downturn of 1921, the economy recovered within less than a year.

The president also tells us that Senators McCain and Obama will join him at the White House today in order to figure out how to get the bipartisan bailout passed. The two senators would do their country much more good if they stayed on the campaign trail debating who the bigger celebrity is, or whatever it is that occupies their attention these days.

F.A. Hayek won the Nobel Prize for showing how central banks' manipulation of interest rates creates the boom-bust cycle with which we are sadly familiar. In 1932, in the depths of the Great Depression, he described the foolish policies being pursued in his day - and which are being proposed, just as destructively, in our own:

Instead of furthering the inevitable liquidation of the maladjustments brought about by the boom during the last three years, all conceivable means have been used to prevent that readjustment from taking place; and one of these means, which has been repeatedly tried though without success, from the earliest to the most recent stages of depression, has been this deliberate policy of credit expansion.

To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about; because we are suffering from a misdirection of production, we want to create further misdirection - a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end... It is probably to this experiment, together with the attempts to prevent liquidation once the crisis had come, that we owe the exceptional severity and duration of the depression.

The only thing we learn from history, I am afraid, is that we do not learn from history.

The very people who have spent the past several years assuring us that the economy is fundamentally sound, and who themselves foolishly cheered the extension of all these novel kinds of mortgages, are the ones who now claim to be the experts who will restore prosperity! Just how spectacularly wrong, how utterly without a clue, does someone have to be before his expert status is called into question?

Oh, and did you notice that the bailout is now being called a "rescue plan"? I guess "bailout" wasn't sitting too well with the American people.

The very people who with somber faces tell us of their deep concern for the spread of democracy around the world are the ones most insistent on forcing a bill through Congress that the American people overwhelmingly oppose. The very fact that some of you seem to think you're supposed to have a voice in all this actually seems to annoy them.

I continue to urge you to contact your representatives and give them a piece of your mind. I myself am doing everything I can to promote the correct point of view on the crisis. Be sure also to educate yourselves on these subjects - the Campaign for Liberty blog is an excellent place to start. Read the posts, ask questions in the comment section, and learn.

H.G. Wells once said that civilization was in a race between education and catastrophe. Let us learn the truth and spread it as far and wide as our circumstances allow. For the truth is the greatest weapon we have.

In liberty,


Ron Paul

http://www.campaignforliberty.com/blog/?p=554

I didn't think the bill would go through today.

For those who think the bailout should have gone ahead, you might be interested to know that many top economists did not. That ought to tell you something.

Prestigious Group of 192 Economists - Including Nobel Prize Winners - Slams Bailout

George Washington's Blog
Friday, Sept 26, 2008


(This letter was sent to Congress on Wed Sept 24 2008 regarding the Treasury plan as outlined on that date. It does not reflect all signatories views on subesquent plans or modifications of the bill)

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers' expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.


Signed (updated at 9/27/2008 6:00PM CT)..."

Huge long list of names follow. See here: http://faculty.chicagogsb.edu/john.c...ge_protest.htm

Here is the vote tally. Ayes Noe PRES NV

Democratic 140 95

Republican 65 133 1

Independent

TOTALS 205 228 1

Want to see how YOUR representative voted? Take a Look Ron Paul's Campaign For Liberty Blog Archive Vote tally

I agree 100% with you Kay.

no, it would not be fascism.

This is the definition of fascism:a governmental system led by a dictator having complete power, forcibly suppressing opposition and criticism, regimenting all industry, commerce, etc., and emphasizing an aggressive nationalism and often racism.

I don't see how passing that bill would constitute the above.
I have many problems with our current government,and I believe our current administration has done many illegal actions, but I cannot say that passing that bill would be fascism.

It's disgusting to see how politicians still only care about their own seats when the whole economy is in jeopardy.

They can blame each other whatever they want. They better know that they are the one to be blamed!

Here's some protests outside Wall Street. Heheh they sound pissed off.

Kay, Oil and other commodities fell today for three reasons.
1. Anticipation of a slowdown in GLOBAL demand due to GLOBAL
recession. (check out U.S. Steel, Alcoa, et al).

2. Anyone who had both cash and a brain ran to bonds today,
(and will continue to do that tomorrow). U.S. Gov't bonds may
have a negative yield tomorrow BUT it won't mean a whole lot.

3. Hedge funds facing hugh demands for cash due to withdrawels.

The silver lining in this whole mess is that Barack Obama won the
election today. (Remember where you heard it first).

"The silver lining in this whole mess is that Barack Obama won the
election today. (Remember where you heard it first)."

How is that a silver lining?

Paul, will you loan me 10 grand? I'll petition congress to pay you back.

Don't forget you've already given them billions to save Fannie and Freddie etc and it didn't help things. Unlikely to do it this time either. These gits are screwing around with hedge funds, and they have to sign a form to say they are rich enough to lose big before they can even play. They speculate - ie GAMBLE - and it went pear shaped for them. Instead of taking their losses - and Paulson apparently goes around the world lecturing countries to allow failing banks to fail as the market will stabilize on it's own - all of a sudden when it's their asses on the line (did ya know Paulson has millions in Goldman Sachs stock?) well, they can't lose their assets can they? They are special.

While they are turfing you lot out of your homes and devaluing your pensions and savings, they expected you to give them your money so they wouldn't face the same. And some of you guys are ready to tug your forelock and do it. Geez.

Where do you think the next administration would get it's funds from to pay for health, education and any kind of social program? You'd have sold out your childrens future for something that would not have worked long term, but would have allowed the greedy super rich to keep their assets.

There is FRAUD going on here people. Hello??

"The FBI has begun an investigation into four major US financial institutions caught up in the current financial crisis, US media say.

Investigators are reportedly examining possible fraud by mortgage giants Fannie Mae and Freddie Mac, the failed bank Lehman Brothers and insurer AIG.

Top managers at those firms are also being investigated, the reports say........."

http://news.bbc.co.uk/1/hi/business/7632790.stm

Still wanna give them more of your money? If all those top economists above think the bailout won't truly solve things, then you were being set up for what was essentially a financial coup d'etat. They'd have had complete control over your hard earned money, had no intention of reigning in all the obscene bonuses and would have carried on gambling with virtually unlimited credit, until it all collapsed in on itself. They'd have been sitting pretty at the end, probably converted all that useless cash to gold. Oh and they'd have no doubt bought up all those foreclosures for a pittance.

If the economy collapses because of them , then fer gawds sake at least make sure most of them get to suffer too.

This is working out very well for the "elite" bankers at the very top. They are 'consolidating', and even the Europeans are talking about a controlling 'centralised' banking authority.

Quote:
"What we are dealing with is a clash between a handful of major financial institutions, which have developed through mergers and acquisitions into Worldwide financial giants.

The financial meltdown on Wall Street largely benefits Bank of America and JP Morgan Chase, which is part of the Rockefeller empire, at the expense of Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley. Lehman Brothers filed for Chapter 11 bankruptcy on Bloody Monday, September 15. Lehman's assets are of the order of $639 billion....

....In 2000, J.P. Morgan merged with Chase Manhattan, leading to the integration of J.P. Morgan, Chase, Chemical and Manufacturers Hanover into a single financial entity. Bear Stearns was acquired in 2008 by JP Morgan Chase following its collapse. This banking empire controlled by the Rockefeller family has assets of more than 1.6 trillion dollars....."

Have a read of this by Professor of Economics, Michel Chossudovsky: Global Financial Meltdown

ETA: There is one way out of it all, which has always been used historically. WAR.

We didn't loose Jack Squat today. The market went down. In
October of '87 the market "crashed" on black monday by 500
points. The next day it was up 340 points. We will survive this.
The sky won't fall, birds won't quit chirpin', etc. The "bailout"
was not, is not, the only solution. Our eight year nightmare
with this monkey runnin' loose in the Whitehouse will end. A
change in administrations will buoy the spirits of Americans and
investors. I wish there was a way to hold our elected officials to
a higher standard than they obviously hold themselves. Perhaps
that is the next great goal.

T.W.

It's great to see some Ron Paul supporters on this board! I for one am glad the bailout did not pass. I would rather be poor and free than rich and in bondage.

Congresswoman Marcy Kaptur is one who recognises the fascist power grab going on here.

Geddit? You were being conned by crooks. Sal already posted the Kaptur vid; for those who missed it here it is again.

http://www.youtube.com/watch?v=oAADyc6t4nY

I took the definition straight out of the dictionary(dot com that is)
And the bailout would not qualify under that definition.
And let me clue you in...ppssst.....George Washington died a few hundred years ago, that isn't really his blog! Shocking I know!
So no, it wouldn't be fascism.
I just like to call a spade a spade.

Alex Jones? is that his site, or was he just quoting him from some place else? He's just a shock jock like Howard Stern, except once every blue moon Stern can actually be funny.
I have to say Alex Jones is a nut job.

Yeah, and the only person who is jumping up and down with joy right now is Osama Bin Ladin.

With the stockmarket, the only prices that matter is what you bought the stock at and what you sell the stock for. Nothing that happens in between matters, unless you use the stock for other pursposes e.g. as security for a loan. So basically unless you sell out it is all paper gains or paper loses.

But the US government is proposing to use "real" money to bail out Wall street, so it is a different matter.

Although many bailouts are known to work, forerign money is involved quite often. If you look at the Japanese situation, the record of the domestic bailouts is rather poor. After each bailout, the Nikkei index would then get a short spurt and then tanks again even further. This illustrates the point fully

December 29, 1989 Nikkei Index 38915.87
September 30, 2008 Nikkei Index 11259.86

The US stock market was already falling before the bailout was rejected. The bottom line is that there is no absolute certainty that the bailout will really help the stockmarket in the long run.

A lot of people are definitely making their fortunes right now by shorting stocks and placing other bets agains the stockmarket, and perhaps the US dollar.

-Derek

Ron, small investors have no business in selling shares yesterday. Perhaps they should not have been in the market in the first place. As Buffet pointed out, you should be prepared to keep a stock for at least 10 years or not at all.

I am well aware of the wealth effect as I have lost tens of thousands in paper value as well. Also I am feeling sick in the stomach as my mother rejected a $0.5M offer on an appartment I co-own with her a month ago. Now the appartment has been rented to a new employee of Morgan Stanley whose job probably is not secure. All this coming on top of the fact that my business is faltering at the moment, mainly because of technical problems. Right now, I am drawing up a list of items to cut personal spending on, including my children's education if things get out of hand. Still it is better than a few years back when my wife and I had mortgages worth 0.75M on properties that were worth less than that. However, I am working full-time in IM now and so I am feeling rather threatened at the moment.

My point is that the falls in the US stock and property have been miniscule so far compared to the Asian markets. Here, falls in property prices of 50% or more is normal. If American investors cannot stomach the possibility of huge losses, then they should not be in the market in the first place. If you mess around with margin trades, short selling, options, warrants, futures and derivatives, you should not expect any sympathies if you lose everything. The same goes for forex traders who seem to be the in-thing at the moment.

-Derek

I don't see fascism in it, because it is not there. No need to be surprised.

"Yeah well, you know what they say "sarcasm is the lowest form of wit".
Sorry, I was following your lead.

But anyways,I'm glad you take such an interest in our countrys well being.

Besides the #1 reason this bill was dangerous (giving them unbridled power and vague wording that could be exploited), even the revised version made me laugh.

#2 Regarding CEO compensation - we were supposed to be mollified that if a company performs badly - in FIVE YEARS the CEO would have to pay back the money he earned. HAHAHAHAHa. How about yesterday, stupid dweebs?

Due to over a decade working in corporate banking, my entire retirement savings is heavily loaded with bank stocks, in particular BofA. (BAC) It is worth about half of what it was 4 years ago, and that was BEFORE yesterday's news.

They are considered strong, but they bought CountryWide and then Merrill Lynch recently, and nobody is impressed by them 'bailing out' anybody because now they have all the debt that buried those two entities.

Bank of America itself was bought out for pennies on the dollar by Nations Bank due to just one bad loan about 10 years ago.

The CEO that was responsible really got slapped visciously with only a $5 million stock package (that's an estimate) when he was asked to resign for his bad judgement. I wish I could be punished for my stupidity like that.

None the less, I say don't cover Wall St and the Governement's butts now that they have been caught with their pants down. Don't put off the inevitable - just let it fall where it may.

For someone to lose all that money and then ask for more to fix what they did and didn't do, is just plain insanity. 'throwing good money after bad'.

It is so not a consolation that they will eventually pass some form of this same nonsense.

The stock market rebounded big time at least for today so I am sure people are feeling a little better than yesterday.

Well the Dow is up 485 pts, back to what it was before the vote got rejected. Perhaps this is a signal that the market won't be affected in the long run whether the bill is affected.

Weird I read earlier today that US was more in dept as percentage of GDP in 80's and 90's.

I have friends on different forums that are bemoaning the fact that they lost such and such the other day.
But the fact is, if you leave the stuff alone, it will rebound eventually.

The bailout is needed, there is no denying that we need to do something very drastic to help avert this situation. Does the bailout that was proposed make sense? To a degree yes, but giving Paulson carte blanche control over the funds was the deal breaker for me, as no one should have that much unregulated control over our wealth.

The US stockmarket is falling again before the vote. Even if it passes, I think it may still fall on the "good news".

Of course I'm keeping in mind who the clientel would be...if things go according to consensus, it would be everybody! You'd corner the market!

You're missing my attempt at humour, but it's all good. That happens too many times of forums,that the intent is misunderstood.

It seems that the bill has gone through. The Dow is up right now but I would not be surprised if people sell on the good news later on.

I hope that oil prices doesn't recover suddenly as well as that will certainly cost billions as well.

don't know whether to laugh or cry right now.

hmmmm laugh now, pay later.

It's politics. What has to happen next is all the politicians start a motion to repeal it because thats what their constituents want.

As I suspected, the Dow is down right now after the bill has passed.

I agree Kim - Don't give up EVER.

Maybe it's not the right time, yet. But i do believe if wallstreet hit below the-10000-psychological-level something BIG will happen

ohhh america....what have you done.....and the sad fact of the matter is we are behind you....Pushing you....

get behind me devil......and Push....

devil...(bush/brown/blair) the 3 B's....no think it dont say it.....

Once the religious, the hunted and weary
Chasing the promise of freedom and hope
Came to this country to build a new vision
Far from the reaches of kingdom and pope
Like good Christians, some would burn the witches
Later some got slaves to gather riches

But still from near and far to seek America
They came by thousands to court the wild
And she just patiently smiled and bore a child
To be their spirit and guiding light

And once the ties with the crown had been broken
Westward in saddle and wagon it went
And 'til the railroad linked ocean to ocean
Many the lives which had come to an end
While we bullied, stole and bought our a homeland
We began the slaughter of the red man

But still from near and far to seek America
They came by thousands to court the wild
And she just patiently smiled and bore a child
To be their spirit and guiding light

The blue and grey they stomped it
They kicked it just like a dog
And when the war over
They stuffed it just like a hog

And though the past has it's share of injustice
Kind was the spirit in many a way
But it's protectors and friends have been sleeping
Now it's a monster and will not obey

(Suicide)
The spirit was freedom and justice
And it's keepers seem generous and kind
It's leaders were supposed to serve the country
But now they won't pay it no mind
'Cause the people grew fat and got lazy
And now their vote is a meaningless joke
They babble about law and order
But it's all just an echo of what they've been told
Yeah, there's a monster on the loose
It's got our heads into a noose
And it just sits there watchin'

Our cities have turned into jungles
And corruption is stranglin' the land
The police force is watching the people
And the people just can't understand
We don't know how to mind our own business
'Cause the whole worlds got to be just like us
Now we are fighting a war over there
No matter who's the winner
We can't pay the cost
'Cause there's a monster on the loose
It's got our heads into a noose
And it just sits there watching

<A name=AMICA>(America)
America where are you now?
Don't you care about your sons and daughters?
Don't you know we need you now
We can't fight alone against the monster

and just where is the ignore button in here? I've never
had occasion to look for it before.

Good post Kim

Sal,
Maybe it was a subconscious slap,and if so I apologize to anyone I may have offended. My real point was any country that is dependent on the US economy needs to be trying to clean their own house not ours.
While our country is sinking in decline( In the past I might have prefaced that statement with the word slowly) There are many trying to correct that situation. But if I lived in another country and realized what happened in the US would have direct negative consequences one my home country, I would be focusing my energy to fixing my countries dependecy on the US. It's basically that because of our dependency on foreign oil we have to put up with dealing with the countries in the middle east .Instead we should be developing our own energy resources,which contrary to our governmets statements ,is VERY possible in a decade or so.ANd it has been possible for decades. If we had seriously started in the 70s, we would not need middle east oil today.
In contrast, If I lived in (name any country that might be dependent on the US ) I would be focusing on making my countries leaders deal with WHY we are dependent on the US and fix that aspect of our nation.
I don't know if that better explains what I meant or not, or if it makes me sound worse.