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Wall Street Banker Bonus Bailout Bill Defeated!


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2008 Sep 29, 2:58am   17,636 views  191 comments

by Patrick   ➕follow (55)   💰tip   ignore  

democracy

Wonderful news! The Wall Street Banker Bonus Bailout Bill did not pass the house!

http://www.nytimes.com/2008/09/30/business/30bailout.html

My faith in American representative democracy is being restored: 99% public opposition to Paulson's theft translates into 53% opposition in Congress. Nearly half of Congressmen sold out to the banks, but not all!

Not too bad, considering how much money Congress takes from lobbyists. All is not lost, yet.

Patrick

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1   sa   2008 Sep 29, 3:03am  

WOW!!! This is one vote most politicians would like to vote against and hope the others voted for it.

2   snmr   2008 Sep 29, 3:10am  

Even though i HATE bailout just like you patrick, i am still for it.
Every economist believes that we need a bailout.They just dissagree on the way its structured.The biggest casualty of this financial meltdown will be the common man and not the big guys.They have enough money in thier banks to enjoy the coming depression and buy cheap assets.
We should not try to punish wal street by denying a bailout.Instead, we should give them a bailout and then do a criminal investigation later and put all the bastards involved in jail.
Even though 95% people are against bailout, it does not mean they are right. Sometimes, congress needs to make decisions for the benefit of the country even though its not popular. Most people are financially illitrate.
these are the same folks who took homes at 20 times what they earn yearly.
BTW, I am ardent follower of your website.I didn't buy a house during the bubble and i am still renting.I am furious over this whole bailout thing but i am thinking rationally and not emotionally. i would prefer a bailout rather than a depression.
Even warren buffet thinks we need a bailout.

3   Paul189   2008 Sep 29, 3:13am  

Is a bit of democracy still alive?

4   Paul189   2008 Sep 29, 3:20am  

WOW - maybe.

5   Paul189   2008 Sep 29, 3:24am  

"...gave proof through the night that our flag was still there..."

6   thenuttyneutron   2008 Sep 29, 3:26am  

I am so glad my only debt is student loan debt! I would love to see them try and take my education away :) I have lots of cash just waiting to buy some assets at firesale prices!

7   Patrick   2008 Sep 29, 3:27am  

NO, snmr is very wrong when he says "Every economist believes that we need a bailout."

Here are 192 who are publicly against it:

http://faculty.chicagogsb.edu/john.cochrane/research/Papers/mortgage_protest.htm?ref=patrick.net

Warren Buffett thinks we need a bailout because that would be good for Warren Buffett's stocks. Warren is no saint, he's just looking out for his self interest. You need a finely honed sense of self-interest to become the world's richest man.

Patrick

8   justme   2008 Sep 29, 3:32am  

One way or the other, I think today will be remembered as a historic occasion.

9   justme   2008 Sep 29, 3:32am  

Patrick, I agree. Warren Buffett is just a self-serving vulture. A clever one, but the same nevertheless.

10   justme   2008 Sep 29, 3:34am  

I never thought I would say this, but I think right NOW would be a good time to enact a temporary ban on shorting ALL stock.

Otherwise GS, MS and all the other brokerages will take their anger out on the non-financial sector.

11   thenuttyneutron   2008 Sep 29, 3:38am  

John Boehner is on TV talking. He mentioned "Jewish holidays" and needing to rush this bill through before them. He is worried now because they are out of time and Paloci poisoned the bill with a partisan speech.

WTF! This shit should not be dictated by any group of people and their holidays!

12   thenuttyneutron   2008 Sep 29, 4:00am  

Where can I find a record of the votes? I want to see how my reps voted.

13   justme   2008 Sep 29, 4:00am  

The interesting part now is what is going on behind the scenes at this point.

14   justme   2008 Sep 29, 4:01am  

Neutron, on c-span.org front page.

15   justme   2008 Sep 29, 4:02am  

Does this means Hank Paulson will turn in his resignation? Or Bernanke? I don't think that would actually help anything. Better they stay until the next president decides who he wants to appoint.

16   StuckInBA   2008 Sep 29, 4:31am  

My stocks are down big time, and my short positions were too small to provide any cushion. My 401K - fully invested has lost huge money - big portion today.

Still, the fact that this particular bail out bill not passing makes it all worth it. I know we are screwed no matter what. But this bail out would have screwed us without any tangible hope of help.

Let the other alternatives now come to forefront.

17   StuckInBA   2008 Sep 29, 4:32am  

Paul,

Yes, this is a small victory for democracy.

18   Patrick   2008 Sep 29, 4:43am  

> Where can I find a record of the votes? I want to see how my reps voted.

Yes, if anyone can find a record of how our "Representatives" voted, please forward it to p@patrick.net

I will happily repost it on my site so that we all know whom to kick out of Congress at the first opportunity!

19   thenuttyneutron   2008 Sep 29, 4:54am  

The gubermint websites are not responding.

I do think it is funny how people say there is a huge fire and it needs to be put out. These people know nothing about firefighting.

My job requires that I fill the role of a Fire Birgade. The firebirgade are the first guys on the scene of a fire at my work and we are tasked with dealing with it.

One thing we are trained over and over to do is not risk our lives for a fire. If the fire is bad enough, let it burn and just protect the exposures. This means keep it from spreading to other structures by using water curtains or spraying it down with water streams. This means the thing on fire is going to be lost. Knowing when to let something go is very important! Why risk more to save something that is beyond salvage?

21   Peter P   2008 Sep 29, 5:13am  

Every economist believes that we need a bailout.

Huh? We certainly do not need a bailout. We need to prepare for a recession or a depression.

Many economists agree that recession is a necessary evil.

22   HeadSet   2008 Sep 29, 5:29am  

StuckInBA Says:

My stocks are down big time

Yes, but notice that each time recently that we have had a 300-500+ drop, the stocks recover rather quickly. Even the '87 crash fully recovered in one year. Lets see how low the stocks will be next week.

23   EBGuy   2008 Sep 29, 5:32am  

Once again I miss the new thread... holy crap, the Fed is expanding TAF by $300 Billion to $450 Billion total. We don’t need no stinkin’ Paulson Plan. As I have previously pointed out the Fed has a little less than $300Billion in Treasuries available (almost $200B are unavailable as they have been swapped out through TAF). Looks like the Treasury will continue to hold a bake sale for the Fed. Again I ask, do they need Congressional approval, or is this now the Ben and Hank show?

24   Patrick   2008 Sep 29, 5:35am  

Thanks justme! I copied it and added a few notes to make it clearer that we should kick out the Ayes as soon as possible:

http://patrick.net/housing/contrib/roll674.html

25   justme   2008 Sep 29, 5:44am  

Patrick,

Actually, I am not in favor of kicking out the AYEs. Many of them are solid and well-meaning representatives, and there should be no judgment on whether they were wrong or not until we see how this all plays out. This decision is not practically irreversible, unlike the similar and very ill-fated decision to go to war in Iraq.

We shall see how well we do without the bill.

It is quite possible, as Headset says, that the dip in the market will not last very long. Personally I think today looked promising in terms of market reaction. I think someone said that the market first did not like that the bill was going to pass, and then it didn't like that it did not,. All in all it was a 7% day. It could have been much worse.

And EBGuy just wrote about a new 300B addition to the Fed Term Auction facility. This might be enough to tide the worst over and let a more free market do its job.

26   KurtS   2008 Sep 29, 5:51am  

“…gave proof through the night that our flag was still there…”

...where the flag pole was anybody's guess, but Paulson was sure walking funny.

27   Patrick   2008 Sep 29, 5:58am  

I'm sorry, anyone who voted to spend $700 billion of taxpayer money to buy distressed mortgage-backed bonds at OVER market value, rewarding the exact behavior that got us into this, is definitely guilty of betraying the people.

Especially since the vast majority of people recognized this for the scam it is and were against it. Our representatives should represent us. They did, but just barely.

The ones who did not represent us should not be forgiven. They failed.

28   thenuttyneutron   2008 Sep 29, 6:00am  

I agree with Patrick! If they voted yes for the bailout, throw them out of office! Run their asses out of Washinton on a rail!

29   Duke   2008 Sep 29, 6:01am  

Oh ho.
This is but the first dip. We are seeing 401ks flight to security. Even more importantly tomorrow is "Redemention day" at the hedgies. The massive sell-off will pop them and drive the markets to heck. Also, after the hedgies pop, they will simply say 'bankrupt' and all that borrowed moeny they used will go bad. And wow, at up to 50:1 that is a ton of debt going bad.
Bond market will go bad. I am curious to see Mr. Gross' much hyped Plan B.
People's flight to cash will onlybe changed by inflation scare, and I simply cannot believe the Fed would do that on purpose.
Also, we FINALLY saw Europe get it. They are worse than us. I predict Germany will be the first bank that drops the EU central bank. More will follow. Italy and Spain will be hardest hit at first.
Like the US, the British Pound is backed by the taxing authority of Mother England. But as a country whose wealth and workforce are in the financial sector, they will be disproporitannly hit. Pound sterling may hit dollar parity by years end.

In the end, calling the bluff of the Financial gang was the right thing t do. So many resrouces are so misallocated now. I want to see all those quant mathmatecian PhDs working on real problems, like: 50% solar cell effeciency, algea biofuels, fusion, cheap de-salinization, etc

30   HeadSet   2008 Sep 29, 6:13am  

Pound sterling may hit dollar parity by years end.

If you prediction comes true. I will consider you an Oracle (as in Delphi, not database). Is anyone else predicting that?

Dollar-Quid parity would make it cheap for me to take my family to see all our bloke relatives.

31   englishman26   2008 Sep 29, 6:15am  

Oh yeah genius! Free market, democracy - more like idiocracy! People have no idea!! When they all lose their jobs they'll look back on this say that that was the day we could have done something and we failed ourselves.

US stock markets lost $1.1 trillion today. Most of that came out of people's retirement accounts.

So people voted to lose money - far more money in the future than this plan would have cost. Brilliant!!

32   Peter P   2008 Sep 29, 6:16am  

If you prediction comes true. I will consider you an Oracle (as in Delphi, not database). Is anyone else predicting that?

I am not so brave... but dollar-euro parity may be a reality.

Not investment advice

33   Peter P   2008 Sep 29, 6:16am  

When they all lose their jobs they’ll look back on this say that that was the day we could have done something and we failed ourselves.

Coulda, woulda, shoulda. Meaningless.

34   englishman26   2008 Sep 29, 6:22am  

Exactly! Today was it. It's done. Depression here we come!

35   Duke   2008 Sep 29, 6:26am  

The previous industrial might of the US was daunting. We could make machinary that was less expensive and with higher quality than the rest of the world. And we did very well as an export nation.
Now we have a massive trade imbalance and simply paying the interest on our debt is causing huge piles of cash to build up in foregn ledgers.
While we, likely, will not be an export nation for a while as all other economie are adversely affected, we do at least have a very well developed domestic market.
We are simply better positioned to weather this crises.

As for the pound. Timing is so hardto call. I thought we would be at DOW 10,500 months ago. So, 3 months to sterling parity? maybe not. I just do not see the way clear for England to dig out from their problems with their 1 trick economy.

36   thenuttyneutron   2008 Sep 29, 6:32am  

I have lots of money in Key Bank. I also know they have massive amounts of land in a RE trust where I live. I wonder what the chances are of them selling some of it to me to raise capital?

37   MST   2008 Sep 29, 6:33am  

When they all lose their jobs they’ll look back on this say that that was the day we could have done something and we failed ourselves.

Look, we can prop up this sytem until it looks like a Dr. Seuss tree house, but that is still not going to prevent it from falling, as far as I can see. Yeah, people are going to get hurt, me included. But keeping it up in the air just so it doesn't fall down tomorrow is not the best use of yet another $700B of borrowed money. And when it hits the ground the next day, we could then say, "Why didn't somebody stop that crazy bailout bill!?!"

The system's broken (and broke). Time to take our medicine and fix the damned thing.

38   Duke   2008 Sep 29, 6:35am  

No - today was the day we say to Greenspan, "That was not economic growth basedon productivity gains, those were fake gains based on shadow banking and leverage"

And that $1.1 that disappeared today, that money that was NEVER real.

Paper gains. Paper losses. C'est la'vie.

But I do feel bad for retirees. No idea what we can do for them other than give em a desk and say, "Working in your 70s in high tech is easier than hefting bricks" I really don't mean to sound callous, but the short term recovery to Dow 14,000 isn't in the cards and if reitrees were havy into the market - yeowch.

39   surfer-x   2008 Sep 29, 6:50am  

Shit I feel just terrible for all those people who lost money in their 401k's. But what truly puzzles me is how this could happen? I thought everyone in the bay area was rich beyond compare and everyone that lives there were not only baller programmers but financial geniuses? What gives? You Bay Area residents shouldn't worry, you can always use your house equity. Plus the vigorous manufacturing section will weather all storms.

Shit that is just never going to get old.

How does it feel mother fuckers?

40   ClubberLang   2008 Sep 29, 6:51am  

When Bear Stearns went under, the Fed put up $30 billion in taxpayer dollars in order to....prevent Lehman/Merrill and the entire financial system from collapsing.

Well, what happened? Six months later, Lehman & Merrill collapsed along with the entire financial system. So the taxpayer lost $30 billion to delay a collapse for six months.

Maybe $700 billion could buy us a year or two...but the financial collapse is coming. Let's just rip the band-aid off and get it over with...

NO BAILOUT!

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