Obama, Democrats, and GOP at odds over financial regs

http://content.usatoday.com/communities/theoval/post/2010/04/obama-the-democats-and-gop-at-odds-over-financial-regs/1

Looks like it’s time for the next round of “Whats actually in the bill?”

UPDATE:  We’ll get to what’s in the bill later.  One other news story that fits into this agenda (and it ain’t an accident) is the recent news of the prosecution of Goldman Sachs.

Wall Street’s preeminent investment bank, Goldman Sachs, was charged Friday by the government with fraud in marketing exotic mortgage-backed securities before the financial crisis.

The Securities and Exchange Commission brought the civil charges in federal court in Manhattan with a lawsuit against Goldman and one of the bank’s vice presidents.

The charges relate to so-called collateralized debt obligations — complex securities tied to the performance of subprime mortgages — that Goldman created in 2007 near the end of the housing boom.

The value of the securities plunged in the mortgage meltdown that began later that year, helping to set off the global financial crisis.

This was Sach’s own version of “too big to fail”.  Since they had their hands in so many pies, it only made sense to bet against themselves, in the twisted logic of the money-makers-movers-and-shakers.

They are probably totally hosed here.  This is going to shut them up, and some others, about the new regulations.  Personally I’m for them (in a general sense).  I like the idea of a Consumer Protection Agency.  Many whistles were blown in the Fed’s direction as far back as 2000 about the shady crap, but it didn’t make it far enough up the chain.  Hence the CPA.

I also like more light on the derivatives and more complex weird products being sold.  Just like Enron (and under the same guy), Wall Street was making loads of cash by hiding all the risk (and loss).  More light makes that harder, and in the global age, after a global meltdown, international havens for sums that large are going to be hard to come by (in the long run).  Our recent move to go after the “Swiss Bank Account” b.s. is a good example of this.

The (R)’s are in a tough place, again.  Having to argue that Obama is owned by the banks (bailout) and a socialists against them (new regulations) while trying to stymie legislation wanted by the majority of the country and the majority of the government.  My guess would be misdirection as their strategy.

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The Dark Bailout (and Joker vs. Joker)

Here’s a couple quick mash-ups made from “The Dark Knight” and Heath Ledger’s soon to be legendary performance.  When I rent a movie, I might watch it once before returning.  This one I’ve watched at least 3 times, and will probably *gasp* by a $.015 piece of plastic for $20 just to have a copy laying around.

Anyway, here’s the goods…

And the Joker v Joker one, “Whens Clowns Collide”.  This took some serious editing, but did a great job making something new out of something old.

The Seven Minutes of Death

On Monday afternoon, Wall Street basically stopped trading to watch TV — mainly CNBC — to see how the House of Representatives would vote on the $700 billion bailout package. When it first started looking like the bill would fail, the Dow plummeted 389 points, or 3.6%, in just seven minutes.

Without a Bailout Plan, What Will the Cost Be? – TIME.

Wow, just wow on that.  Let me see if I can find a good graph….

The Seven Minutes of Death

The Seven Minutes of Death

See that part where the line disappears?  That was where the whole concept of a “rational market” disappeared.

Most economists don’t model for such things, as it would be impossible to do so by definition.

Why the Failout Failed (at least on Blackish Monday)

Welcome to Fail Street

Welcome to Fail Street

FiveThirtyEight.com: Electoral Projections Done Right: Swing District Congressmen Doomed Bailout.

[via Nate Silver at fivethirtyeight.com]

This was predictable, I suppose, but it’s remarkable to see how strong a relationship there is between today’s failed vote on the bailout and the competitive nature of different House races.

Among 38 incumbent congressmen in races rated as “toss-up” or “lean” by Swing State Project, just 8 voted for the bailout as opposed to 30 against: a batting average of .211.

By comparison, the vote among congressmen who don’t have as much to worry about was essentially even: 197 for, 198 against.

They also added this tidbit from a reader comment.  This is the one that cinches it for me.

UPDATE: A helpful reader named Matt Glassman passed along the fact that, among 26 congressmen NOT running for re-election (almost all of whom are Republicans), 23 voted in favor of the bill, as opposed to 2 against and one abstaining.

And so we see how polling and an election year and a huge financial emergency all come together to crash against the rocks of reality.

What we are left with then, is an electorate fairly split about a bailout package…that most who know how the system works would like to see implemented…and those that have no idea about oppose on general principles.  The fact that it wasn’t passed today led to this….

The day started with silence — the iconic opening bell of the New York Stock Exchange failed to sound — and things just got worse from there, ending in the single biggest one-day point loss in history. The Dow Jones industrial average lost 777.68 to close at 10,365.45. The previous biggest point drop came on Sept. 17, 2001, the first day the market reopened after the 9/11 terrorist attacks. A jittery stock market spent all morning in negative territory as investors worried about the $700 [billion bailout].

[full story]

This is becauase most of these people know what’s going to happen when banks don’t have any money to lend.  We are now seeing the disease spread, and this kind of stuff *REALLY* affects people who hope to retire….soon.

It’s not that bad for people like me who are 30+ years from retirement.  Those, however, currently in the 2-5 year window (read: 40+ million Baby Boomers) don’t have that option.   They get to decide…soon…what to do.

My simple prediction?  They will sell out and the stock market will continue to stagnate.  It has been hugely propped up by this retirement money, and now that people are going to actually pull it out of the market, put it someplace *much* safer (like a bank…ha!) and use it to live, the amount of capital in the stock market is going to tumble….which adversely affects the price of everything else.

I’ve been predicting this general trend for a while now, based mainly on the demographic shift we are seeing as a country.   The whole “U.S. Economic Collapse” thing has been predicted by history, which dictates that large empires running expensive un-ending wars halfway around the world tend to collapse….every, single, time.

The fact that it is our democracy itself (in the form of election-year politics) which is freezing our government when it needs to act is the icing on the crap-cake we will all soon be swallowing.   The irony would be delicious…if it wasn’t for the fact that it smells, tastes, and nourishes….like shit.

UPDATE: In what can only be called par for the course…the McCain Campaign accepted credit for passage of the measure.

“Sen. McCain knew time was short and he came back, he listened and he helped put together the framework of getting everybody to the table, which was necessary to produce a package to avoid a financial catastrophe for this country.” 

On Monday morning, McCain campaign communications director Jill Hazelbaker said on Fox News that the deal would not have happened “without Sen. McCain.” 

“Sen. McCain interrupted his campaign, suspended his campaign activity to come back to Washington to get Republicans around a table,” Hazelbaker said. “Without Sen. McCain, House Republicans would not have appointed a negotiator, which would not have moved this bill forward. 

“It’s really Sen. McCain who got all parties around a table to hammer out a deal that hopefully is in the best interests of the American taxpayer.” 

[full b.s.]

BTW, in addition to the alternate breakdown that started this post (i.e. Politicians facing re-election or Not) one can alsobreak down the vote by party lines.  Democrats 140-95 (~60% Yea) and Republics 65-133 (~33% Yea).

So that claim of “suspend[ing] his campaign activity to come back to Washington to get Republicans around a table” was not only total b.s., it was a total failure of leadership.

UPDATE2: The next step…

Democratic and Republican leaders alike pledged to try again, though the Democrats said GOP lawmakers needed to provide more votes. Bush huddled with his economic advisers about a next step. The House was to reconvene on Thursday instead of adjourning for the year as planned.

[full article]

Umm, Thursday?!?  They do realize the DJIA is going to be at about 9,000 by then, right?  [hmmm…second thought…I’ll say 9,500.]

By then I think the Panic of the People will have set in and the Bailout will get about 90% support and everyone will claim credit…including your and/or your employer’s bank.  😉

RE: From the Office of His Royal Majesty King Paulson

Dear American:

I need to ask you to support an urgent secret business relationship with a
transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country has had
crisis that has caused the need for large transfer of funds of 800 billion
dollars US. If you would assist me in this transfer, it would be most
profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator, you may
know him as the leader of the American banking deregulation movement in the
1990s. This transaction is 100% safe.

This is a matter of great urgency. We need a blank check. We need the funds
as quickly as possible. We cannot directly transfer these funds in the names
of our close friends because we are constantly under surveillance. My family
lawyer advised me that I should look for a reliable and trustworthy person
who will act as a next of kin so the funds can be transferred.

Please reply with all of your bank account, IRA and college fund account
numbers and those of your children and grandchildren to
wallstreetbailout[nospam-﹫-backwards]yrusaert*gov so that we may transfer your commission for
this transaction. After I receive that information, I will respond with
detailed information about safeguards that will be used to protect the
funds.

Yours Faithfully

Minister of Treasury Paulson

This looks legit to me.  I think I’m going to send over the info.

As a pirate I have to say, this is pretty ballsy.