Bits Bucket For September 29, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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More city apartments facing foreclosure…
Housing advocates say rental income can’t support inflated prices, and several apartment complexes in the city are facing an increasing risk of foreclosure.
http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20080928/FREE/809289997/-1/rss01&rssfeed=rss01
The New York City market is the least capitalistic rental market on the planet. Between rent control and rent stabilization, and all of the fraud that goes along with those programs, this market is a complete mess. I love subsidizing my rent control neighbors and then hearing them pi$$ and moan about 2% increases. Their advocates can blow me, too. Some people pay less than 20% of the market price for rentals in this city. But that seems fair. The whole thing is a massive shell game. A pox upon all of their houses, or apartments.
You can argue the pros and cons of rent control, but the article clearly states that these buildings were bought with a rent growth plan that exceeded what was possible under NY rent laws.
In other words it was more buyers and lenders ignoring reality. These buildings are not in trouble due to rent control, they are in trouble because they disregarded financial common sense.
I am sure the TARP, Bailout Bill, and suspension of “mark to market” will fix all these problems!
Hail to Supreme Commander Paulson! Hahahaha!
least capitalistic except for the Dutch housing market I guess (the heritage shows …).
fraud in the controlled rent market is a favorite subject here too lately, although it has been going on for at least ten years. Our subsidized housing is 3-5 times cheaper than the (small) free rental market. Rent increases have been capped at 1% a year for some years now. Waiting lists are 4-12 years, but if you pay say 5000 euros under the table it is easy to get on top of the list (also easy if you are a ‘disadvantaged person’ like an illegal immigrant or a non-working single mom, they all get free housing within a month or so of filing an application)
And of course, most people who play this game are not going to live there themselves, they rent out the house to Polish workers (by room or by timeshared bed sometimes) to make loads of money with it.
Rent Control and Stabilization has its own downfall. My lucky friends used to gloat about how cheap their controlled apts were. But in the early 90’s, (and later) when the market began to offer real buying opportunities; they could not give up their ‘perk’ and they missed out on the chance to own.
In ‘89 I bought a NYC coop studio for $29K (89th and Third / 4th floor walk-up). Last year I sold that $29k unit for $260K. I made a nice profit on the deal, and my ‘lucky’ friends are still ’stuck’ , not being able to let go of their deals.
It reminds me of the parable of the monkey that can’t get his hand out of the narrow opening of the cookie jar unless he lets go of his cookies. Their deal is actually a prison of sorts.
There wasn’t as much of a rent bubble in commercial, or a construction bubble (except retail in Texas, where else). But there was a price bubble, relative to rents as they are.
They expected to be able to replace all the tenants in middle and working class housing with hedge fund guys, and paid accordingly. Bwaaahaaahhaa!
investments in high quality commercial real estate over the past few years have been no better than a good CD and that with high rents and zero vacancy rate…Now that the the economy has turned the rents are being renegotiated…The vacancy rates are now going up because marginal tenants like Barbara’s hatir & nail are toast and more credit tenants like Starbucks are contracting…This then puts more pressure on the anchor tenants that depend on the synergies generated by the high occupancy rates…Bottom line is; highly leveraged retail centers are in big trouble and all centers have likely lost significant value over the past year…
My experiences at Lowes and Home Depot makes me think that both chains are hurting from the lack of construction trade and have severely over built for the DFW metroplex.
Or they just assumed that getting +100bp financing at high leverage, and low treasuries could go on forever, and they would never be faced with significant vacancy.
Just like housing, commercial had too much debt, and not enough equity. Unlike housing though, generally speaking, current income COULD pay the then current mortgage.
“Housing advocates say rental income can’t support inflated prices, and several apartment complexes in the city are facing an increasing risk of foreclosure.”
HAHAHAHAHAHAHAHAHAHAHAHA
See what happens when you don’t price in the risk. Financial Innovation my azz. As someone on the board is found of saying, Hire someone that knows how to do “long division”.
Call your congress persons this morning and tell them to vote no on the bail out or they are out.
Find them here.
http://www.house.gov/
Government decides to buy assets and changes the accounting rules on those assets all at the same time.
What the heck?
Moral hazards have been stripped away in favor of moral haphazard, and soon the public will be even more confused about the difference between right and wrong, than our politicians are, in D.C.
“”than our politicians are, in D.C.”"
Is that even possible? Nevermind…
Which way did they go? - Bugs Bunny
V=Moral hazards have been stripped away in favor of moral haphazard
I am stealing that, btw.
I think the public is fully aware right/wrong and what this bailout is all about.
They are just have a hard time accepting that fact that their Congressman are not really “their” Congressman any more.
They have been bought and paid for by someone else.
And yet 90% of the crooks will “win” at the “elections” this fall, so does it really matter?
RE: Call your congress persons this morning and tell them to vote no on the bail out or they are out.
The bail-out bill is a complete travesty.
It has more holes in it than the Bismark
Vote NO on any bailout — say NO to greed.
Bailout fails. Dow falls 700.
I am glad to be an American today — something I haven’t felt for many years.
Now, let’s continue to move forward, beyond the darkness and the pain and toward that tiny shimmering light in the distance.
Maybe the US is not dead after. I am impressed that CONgress actually listened to people this time.
“We are all afraid of losing our jobs” - Member of the House
We all want this to pass, but we want the other guy to vote for it, not me. (paraphrased) another House member.
Whether you are for or against this particular bill, this is great political theatre. I just wish my TV was back working from the hurricane so I could enjoy it in real time
If your representative voted no, call/email and say thank you. I’m still trying to see which way mine voted, but can’t get on to the house site for some reason.
Gave my rep an earful in an email last week. Was surprised by the loooong response that I got. It almost seemed like it was an actual repsonse to my email and not just a form letter, but I know better.
You can also use http://thomas.loc.gov if house.gov is too busy.
How each voted:
http://clerk.house.gov/evs/2008/roll674.xml
Hmm, I’d like to see it cross referenced against the over-housing-bubbly states. Hastings(WA) = no, Hastings(FL) = yes. based on my unsophisticated sample of 2…
Bernanke’s Big Bank Bailout will not pass. Discuss.
I think it will pass. Only 1/3 of them are up for re-election, right? That means that 2/3rds (rhymes with t*rds) can count on the American public forgetting what they did by the time the next election rolls around.
See peter a’s post above and call your congress persons. I actually got somebody on the line when I called my senator and I said “Pass this message on to the senator: that a few years ago when Ron Wyden shook my hand he said ‘Hi, I’m your senator’. Well, you can tell him ‘not anymore’ if he votes for this bailout”. I felt better immediately.
Like it’s been pointed out, this is a bailout with money that doesn’t even exist. They are creating debts that will never be paid off. If Wall Street dives then those of us with money get to buy in at much lower, and more realistic prices. I’m sitting on my $1.97 just biding my time.
Hey NYCityBoy, I’ve got $1.98.
I think I agree with everything you say except for the part where you only have $1.97. But I’m curious how what you’re saying has to do with whether or not the Bernanke’s Big Bank Bailout will pass
He says it won’t. I think it will. Looks like the market thinks it won’t. What do you think?
1/3 of the Senate, but the entire House, which still makes for a lot of people who could be pressured to say no.
Let me be the first to say that I was incorrect.
If the plan does not pass, Black Swans will cover the earth and the sun will not rise. What’s more, jelly will forever be removed from doughnuts.
I hope they first remove the jelly from Capitol Hill spines
lots of black swans in Europe today, did they trade places with the birds from Oz?
“jelly will forever be removed from doughnuts”
NoooOoooOOooo…all right I’ll give in. I have put a check in the mail for BN 700. Let me get my pen…OK, done. It’s post-dated: October 1, 2108. With inflation you can buy maybe, a dozen doughnuts when you cash it.
Next you’ll be threatening the cream in eclairs or the custard in canoli…don’t make this ugly, fella.
Short selling’s illegal, eh? I bought Wachovia puts on Friday. Woo hooo!
You should prepare for persecution.
That’s better than prosecution. Sticks and stones….
You should also prepare for prostitution. One thing that always sells no matter what the market does…..
NOT TRUE.
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/27/AR2008092702169_pf.html
High-End-Girlfriend-Index and High-End-Stripper-Index suffers big time due to economic crisis. Hookers aren’t far behind.
Prices are sticky on the way down (sorry, had to do it)!
Drill here, drill now, pay less.
Sorry, I couldnt resist.
I’ve got Nat City next in the “death pool”
Fifth Third’s down 25% today, maybe we have a regional failure or two on deck.
Fifth Third is my bank — because it bought up smaller regional players. It’s off 19.6% at the moment (still not great, obviously).
Far as I can tell, they’re in better shape than most regional banks. If you know anything to the contrary, I’d love to hear it.
Fifth Third is fractionally better than most banks, I wouldn’t worry.
Hah.
Fifth Third was at work last week trying to get people to open up new accounts. As I walked past their setup the manager pretty much pushed a timid coworker into my path to deliver the pitch.
It was a little sad, you could tell the pressure was on, but I had to tell her - “the last thing I need right now is dealings with another bank”
Now down 35%.
Wheeeeeeeeee.
US wealth in shrink mode
By Spengler
The US Congress went into labor this weekend, and gave birth to a gnat. With some cosmetic adjustments, Treasury Secretary Henry Paulson’s US$700 billion bank bailout plan will be adopted this week. Markets barely budged on the news, which was punctuated by government bailouts of two giant banks - America’s Washington Mutual and Belgium’s giant Fortis group. A third rescue, of Britain’s Bradford and Bingley, sees it taken over by the government.
http://www.atimes.com/atimes/Global_Economy/JI30Dj08.html
“US wealth in shrink mode”
For many, wealth has come to equal their access to credit. So, what’s the deal with the “rumor” of BoA cutting credit card lines? Is this legit or just more static?
In consideration of the fact that so many are living off lines of credit, BofA cutting credit should have a dramatic effect. These are events that *ought* to happen but I’m not seeing it yet… unfortunately. If there is anyone watching that element, combotechie would be the guy. Any on the ground observations combo?
A lot of junkies go through withdrawal when they stop doing lines.
BOA cut my credit card line of credit in half, from 10K to 5K
RE: Wealth in shrink mode…
Not according to this front page story in today’s Beantown Glob.
Man, with all the shit goin’ down from the actions of all the high rollers, you’d think the editors of this rag would tone down their
“envy the rich” storylines.
I mean this isn’t even buried in the Lifestyles section but right on page numero uno paired up with a beaming Nana Pelosi puttin’ her touch to the $700bil bail-out.
It’s a sick, bizarro world out there.
http://www.boston.com/realestate/news/articles/2008/09/29/back_bays_tower_of_wealth
“…tone down their “envy the rich” storylines.”
Agreed 100%! Yet, who really are the “rich” right now anyway? Is it the speed demon in the range rover trying to drop the kiddies off at private school before going to work?
I’m starting to think the winos in the ped tunnel under the highway might actually be closer to being “rich”.
RE: Is it the speed demon in the range rover trying to drop the kiddies off at private school before going to work?
The urban workforce completely baffles me…
While the lumbermen, paper mill workers, small scale farmers, fish catchers, shirt & shoemakers et., el., are a vanishing species, a million commuters a day snake their way into Boston on collapsing infrastructure to peer away into a computer screen and punch a keyboard…
This is wealth creation?
As a software developer myself, I’ve found there are two major forms of wealth that are created from the software industry:
1) Entertainment (ipods, video games, etc).
2) Scaling up and improving the efficiency of existing businesses (manufacturing, distribution, etc).
The relevance of these to an economy that is shrinking instead of expanding is questionable.
Could be worse…. could be a debt-pusher for a living!
As for why we do this, it’s because all the real jobs have been outsourced or reduced in salary to the point where one cannot live doing them.
Someday, we will achieve the ultimate goal of not having to pay Americans, yet somehow magically having them spend infinite money… or something!
Don’t you love the MSM articles that go, Golly Gee, Americans aren’t spending as much money as they used to. Imagine that. They criticize folks for being spendthrifts, then when they pull back from spending money they don’t have, it’s a big mysery, I mean mystery.
“While the lumbermen, paper mill workers, small scale farmers, fish catchers, shirt & shoemakers et., el., are a vanishing species, a million commuters a day snake their way into Boston on collapsing infrastructure to peer away into a computer screen and punch a keyboard…”
It’s what we’ve become. Sickening isn’t it?
I watched the vidio and almost vomited…
Wow, I had to stop watching when the long-haired yokel with the fakey British accent was explaining how it took them four years just to pick out the front doors. I liked it when they were stroking the doors and “feeling the movement”. Door masturbation ?
there’s a lot more bailouts in Europe today, also in Germany and Denmark.
Dutch AEX stock index is down nearly 8% today. That’s what you get if you copy the Great American Business Model with an economy that is built on financial speculation …
If only the Dutch housing market would start to follow suit, it still refuses to capitulate :((
That just means you’re in for an extra special crash when your number is up.
any more it seems as if this day could be the day the sucker went down.
A recession is not only unavoidable, it’s probably even necessary. It would be a good thing if it shook out all the weak sisters from the financial and other economic sectors, but all the bailout money is simply preserving a system that according to the “free market” has proven itself unsustainable.
I would also like a recession to finally convince the government to finally pursue a coherent and open-minded national energy policy. That should be the New Deal of the 21st century.
Keys to 21st prosperity
- Sound money
- Energy independence
- Strong property rights
- Effective regulation of the financial monster
- Political stability
How close are we?
ROFL
Missed by it THAT much…
Depends upon what goals the person in question has… based upon our “leadership” I can say that they are VERY close… too bad their list of goals doesn’t match with this one anywhere!
Heck, if Iceland can go energy sufficient in a short time and become prosperous, and Israel is going
sans oil in one yrs time and will also be prosperous, why can’t we?
Why can’t the US get its act together and aggressively go energy efficient, do high speed trains from coast to coast, wind and solar and geo thermal and wrench itself away from oil and those who own us lock, stock, and barrel?
Why don’t we have a politician who will stand up and say what we HAVE to do to change the status.
It seriously is another prosperous growth industry, so why don’t the “free marketers” grasp this with both hands?
Why don’t we have lots of politicians who will take their heads out of their dark spots and stand up for Americans?
I do believe it could be profitable. I know we have entrenched ideas that are stuck. Maybe with this 777 down,
and by the way, 777 is a good # to bet on!,
maybe this will jar loose the idiots in their firm beliefs?
NOpe, just saw that idiot Maria Bartiroma.
They are all blaming the dems. Nice one you idiots.
“Why can’t the US get its act together and aggressively go energy efficient, do high speed trains from coast to coast, wind and solar and geo thermal and wrench itself away from oil and those who own us lock, stock, and barrel?”
We need to pursue all energy independence options : oil, nuclear, solar. wind, geo, green sustainable technologies, electric hybrids, hydro, ect. This will help create high paying jobs in energy infratsructures , green jobs,ect. The need right now is for jobs in building & maintaining energy infrastructures: solar panel installation, desalination plants, oil refineries,ect.
CA and the nation is moving toward this direction and environmentalism will take a temporary back seat in this economic crisis/recession/depression. The EU masses demand jobs & job training programs, whether in oil refineries, gov’t make- work highway projects, or whatnot .
CA is at 10% UE right now, and UE rate is going up each month. Next year CA will be at 12-15% UE( REAL UE RATE-not the offical Gov’t rate).
I must have the wrong information re: Iceland.
Looks like we will all combust.
Good morning,
I don’t have the time this morning to cut and paste a bunch of articles together, but there were three suspicious fires over the weekend in the Tampa Bay Area. It looks like we still have some inventory to burn off. How’s your area cookin’?
Smoke ‘em if you got ‘em.
Just had one this weekend. Newer house with good wiring in a very nice neighborhood and an out of state owner had a funny fire Saturday. Funny in that the fire started in the middle of the floor. The neighbors saw it before it got out of control, so the place wasn’t a total loss.
/sarc on
I’m sure the owner is relieved.
sarc off/
This is new for West Michigan. Around here we mostly just leave the house untended until it’s a total write off. Or a chicken coop.
Where in west Michigan??
“…an out of state owner…” “…new for West Michigan…”
A Chicagoan perhaps?
Unsure about the exact location - got it from a friend’s wife. He’s a fireman in the GR area, but that’s all I know. He was still on duty when she told me the story, so I assume it was Friday or Saturday when it happened.
Edgewater John - don’t you know? All out of state property owners in West Michigan are from Chicago!
I’m doing my best to reverse the trend though. Once the condo market finishes tanking in Chicago, I’ll look into buying a place over there. I think I have a awhile…
No rush there P4N, but things are making progress now.
BTW - those who fight fires make excellent fire bugs. Seriously, a few years back a veteran C.F.D. tried to burn down my then favorite hamburger stand. The dude had like three decades of service too! Go figure.
Believe me. I’m taking my time. I just started following the downtown condo market and won’t even think about it seriously until I see that Newsweek cover that says “Condos: Worst investment ever?” THEN, I’ll know it’s time to buy. The same way I knew the tech bubble was over when I saw “The Long Boom” on the cover of Wired.
The impending trainwreck of the downtown Chicago condo market will be dramatic, lurid, and overacted — just like a ’70s disaster movie. (I’m lookin’ at you, Poseidon Adventure.)
Better to be Red Buttons than Gene Hackman.
Just don’t make me be the one to push Shelly Winters through a ventilation shaft. I was thinking more of Airport ‘77 anyway though, since they’re all trapped underwater with no way out.
Speaking of Chicagoland, I saw my first ginormous billboard advertising a condo auction around my hood. New condos that went up around north avenue and 1st avenue over past 2 years. Lousy location, ridiculous prices, who would’ve guessed?
Paid4Now, in Poseidon, our star-studded gang is trapped underwater and upside-down. Get it? Get it?
Sigh. I’m rather ham-fisted today.
(PS: Poseidon Adventure was the top-grossing film of 1972.)
(PPS: the tagline: “Who will survive — in one of the greatest escape adventures ever!”)
Ok. I like the upside down bit. I hadn’t thought of that angle. But the Poseidon was still on the surface and sinking slowly, whereas the 747 in Airport 77 went down fast and was under water on the ocean floor. Besides, I didn’t buy Gene Hackman as a preacher.
(Just got back from lunch to see the Dow down 581 points. I think I’ve already got a show to watch….no popcorn though, just some McD.)
“Capsizes early, sinks slowly.”
-Critic on TV reviewing the remake
In the next town over from me a real estate office had a “fire” picture all the company files in a corner with nothing around it and it burst into flames with no sorce of fire around the files . Fire department is not buying the owner’s story.
Hey, spontaneous combustion, happens occasionally in barns and places where the muck’s thick. A RE office would be pretty thick.
LOL
Too bad it doesn’t ever seem to happen in DC.
It would be nice to see Paulson/Bernancke spontaneously combust.
And maybe some of those egghead talking heads.
It would be funny to see the seat of their pants suddenly ignite.
I really like that last image!
And another one gone
Iceland
nationalises Glitnir bank
And another one gone
B&B
nationalisation confirmed
Hey, i’m gonna get you too
Deal agreed for euro bank Fortis
How’s Iceland doing these days? I mean relatively speaking.
Seemed like they got reamed pretty good in the last year, but I haven’t seen any followups in the news recently.
not sure about Fortis, they crashed another 20% on the stock exchange today and their prospective buyer ING crashed just as hard.
I think a lot of Dutchies have their money with Iceland banks at the moment, because they offer the highest rates. I guess their accounts are really frozen now ;-(
Similar island outlier country New Zealand, has no insurance coverage for people’s bank accounts, and their real estate market has crawled to a stop…
Oh WAH WAHcovia…down 60% premarket
http://www.youtube.com/watch?v=Pj7W2afylVY
MarketWatch.com
September 29, 2008 8:45 A.M.ET
BULLETIN
U.S. CONSUMER SPENDING FLAT IN AUGUST — WEAKER THAN FORECAST
Global turmoil roiling Street
Citi to acquire Wachovia banking operations; FDIC: It’s not a failure
“Citi to acquire Wachovia banking operations; FDIC: It’s not a failure”
Last week J.P. Morgan “buys” WaMu, and this week Citibank is going to “acquire” Wachovia?
Sweeping debt under a dirty rug doesn’t mean it isn’t there…
But it won’t cost the FDIC a dime. I heard that on CNBC so it must be true. There’s nothing like musical chairs so early in the morning.
Thank goodness it wasn’t a failure, eh? I wonder what Citi will do with the $122,000,000,000 in Pick-A-Payment loans they just acquired.
when the bailout money comes, thats where it goes. It’s all arranged.
Sell them to us, at the bargain basement price of only 85 cents on the dollar…
Indeed - we need to keep housing prices unaffordadable, inflation roaring, and executives in their mansions, because that is what is good for Amerika!
Let’s not forget that “Walk-over-yah” was still selling “Pick-your-noose” mortgages this spring - durrr!! Good thing there wasn’t a housing bubble! Sounds like most people are picking the best payment of all - no payment!
Citi is cutting dividends and raising capital to pay for this. Better outcome than giving FDIC/tax payers the entire bill (however FDIC had to backstop loss on loans beyond $42B).
I know there are are lot of FDIC/Shiela Blair bashing on this board, but in the last two cases (WaMu and Wachovia) the outcomes were probably as good as they could have been from tax payer’s perspective. So let’s ease up a bit on poor Shiela for the time being.
Her magic wand must be sputtering by now, though.
looks like a 90% haicut pre-open on the WB.
no biggie FDIC got warrants on the hold to maturity toxic goodness.
somebody better call Washington and tell ‘em the crops need more Brawndo.
And wasn’t Charlotte held out as a shining example of house price stability? They just lost one of their twin towers. That, and all of the overbuilding, should really help Charlotte keep their prices high.
dont tell anybody,
but the shorts on TMA just covered, it was only up 450% or so at the open.
There is alot of homes for sale in Clt. More than is reported. We need this here…to cool the jets of the hotdogs out here. NYCboy I know you lived here so I don`t need to tell you but this place has a lot of hot shots. I think there will be a lot of hot shots will their tale between the legs. I just talked with a co worker which is a member at Providence C.C. he said their club president is a young hot shot at Wachovia.
Lane
Providence CC - a well deserved shot of pain would be a blessing. Just look at that area. Providence Road is a nightmare. Charlotte was busy building for a demand that did not really exist. How many mansions can one town, built almost completely on banking, have?
Long after the Mania was obvious they were still building 5,000 and 6,000 square foot homes. Good luck on that. Plus many are far out from downtown (Uptown - I always hated that). I miss South Boulevard like I miss Yasser Arafat.
check that TMA: bad call on my part, 10 for 1 reverse split.
WB has a trade printing at a penny.
you wanna shot at any Financial, plug in 1 penny.
might jsut get the miracle follow through doudble down capitulation bid for the WINNER!
‘cuz Brawndo has what stocks crave…
80% and climbing.
Couldn’t have happened to a nicer crew of screwballs!
“Walk-over-yah” has been a wonderfully corrupt group, heavily involved in fun things such as: toxic loans, telemarketing scams, and even laundering drug money. They are nothing if not diversified!
In my own dealings with them, they have proven to be greedy, stupid, lazy, and utterly lacking in any basic economic sense. I only use them as a “spill-over” bank for stuff over the FDIC limit and as a holding company for my Roth IRA. I’d probably cry if they were my primary bank! But they couldn’t even manage my small account correctly - idiots!
I was hoping Wells Fargo would get them, but instead we get $hitigroup - argh! Whatever… if they just can the “everything only goes up!” financial “advisor” I talked to a few years ago who barely even remembered the tech crash, I’ll be a bit closer to happy… ugh…
How safe is your bank?
http://www.heraldtribune.com/article/20080929/ARTICLE/809290305/2055/NEWS?Title=How_safe_is_your_bank_
Two local banks, Freedom Bank of Bradenton and Community National Bank of Venice, received BauerFinancial’s lowest rating of “zero” stars.
Both banks have high percentages of problem loans — 13.57 percent of Freedom’s loans and 9.79 percent of Community’s are nonperforming.
Freedom has eaten through much of its capital and is looking to raise up to $20 million. It has a $5 million commitment from an equity fund, but only if it can find $15 million more from other investors.
Freedom is just another word for nothing left to lose …
LOL
“How safe is your bank?”
This begs to put to the Bee Gees - “How deep is your love”. Any of you court jesters gonna take a crack?
Or … “Jive Talkin.’”
Or, for the fans of the pre-disco Bee Gees, “Swan Song.”
“Jive Talkin.’”
hee!
I see your eyes in the morning Sun
reading an article on Franklin Raines
and the moment that you wander far from me
I know your thinkin’ ’bout those ARMS again
And come to me with a new CD
Offering 5 percent, askin’ pretty please
but its me you need to show
chorus
How safe is your bank
(is your bank, how safe is your bank)
I really need to know
cause we’re living in a world of fools
bringing us down
when the FED should let us be
please don’t ‘help’ us Bernanke
I believe in gold
the only rest for my weary soul
You’re the light in my deepest darkest hour
You’re my savior when banks fail
And while others say they don’t care for you
I can tell by the price that they really do
and it’s me you need to show
chorus
Bankapaloser 2008: bigger and bettor
oops,
1st line of chorus should be:
And you come to me with a new CD
Thanks for staightening that out. I had my Karoake machine ramped up and couldn’t figure out why the song wasn’t working for me!
I didn’t do it for you, I did it for me
Prepare to benefit from Bush’s plan
http://www.heraldtribune.com/article/20080929/COLUMNIST/809290303/2127?Title=Prepare_to_benefit_from_Bush_s_plan
The new entity will need companies and individuals that can manage properties, find renters and repair the properties that are in dis(repair?). Appraisers and real estate agents will also be in demand.
Because of the horrendous volume of real estate to sell, the government will look for vulture-fund buyers that are willing to purchase assemblages of homes at bargain prices. If the new entity mirrors RTC, the government will prefer bulk purchasers rather than buyers of single units.
While the new entity will want to dispose of the housing inventory quickly, a better strategy for the mortgage-backed securities will be to hold them until the market becomes more liquid and the portfolio values become better known.
There will be opportunities to make some cash off of your taxpayer bailout. The tough part will be selling all of this “horrendous volume of real estate.”
I can haz affordable housing?
Hahaha - nope!
Instead, we’ll sell to a new round of infestment scum, who will jack prices up, and then we’ll have another wave of defaults down the road. Whatever it takes to avoid the horror of people being able to afford to buy a decent house for themselves while not being part of some debt-based pyramid scam because no scams = no money for the bankers!
what about pairing the bailout bill with immediate withdrawal from iraq, bush said he would never do it, but now he needs a democratic congress vote.
Traitor! How dare you question their wisdom?
Collect the $700 B from Iraq. They owe us at least that much.
actually, the US government (I refuse to call it “my government’ or use “we”) owes them that much for all of the death and destruction it has caused.
bullseye Dan.
You could always move, I hear houses are cheap over there and everything was perfect before “we” showed up.
owe: before or after deduction of the xx billion damages to Iraqi infrastructure and lives? I’m still waiting for some lawyers with balls to sue the hell out of the US government for what they did there.
Isn’t it interesting that the media is dying (lack of advertising) at about the same time as the financial brahmins?
The 4th estate has been 4th rate and not forthright, unfortunately.
“Isn’t it interesting that the media is dying (lack of advertising) at about the same time as the financial brahmins?”
Newspapers are going down, for sure. But I wouldn’t mind seeing the TV news shows contract their staffs down to one talking head or two, from the national level right down to local cable. I’d love to see Brian Williams out on his posterior, for example. Oh, and OOOPSIE, Mr. Williams, your pension just disappeared!
I’m a little bemused by my local Bright House cable station. It has an awfully large on-air staff, seems like to me. Not shrinking fast enough for me. And I’d love to see the on-air staffs of the local network affiliates sweating bullets, for all the lying crap they put out about the Florid RE market.
I watch Katie Couric, if I watch the national news at all. Just curious why you don’t like Brian Williams?
NoSingle, I used to rather like Brian Williams. When he was up and coming, he used to go on Letterman and give Dave as good as he got and with great humor. When he “inherited” the mantle from Brokaw, he just got annoyingly preachy. Bellowing Brian, telling us what to think, is how he comes across to me. He got very offended, too, by bloggers who had the audacity to comment on him. “Vinny in an efficiency in a bathrobe at a computer”, I think was how he characterized bloggers. Thank God for bloggers like Ben, with or without a bathrobe.
Well, Bellowing Brian wasn’t exactly telling anyone the truth about housing and the financial markets, was he? And don’t think he wasn’t privy to a lot of what was going on. After all, he’s connected to the “very best people” in the financial industry, being based in NY. So much for investigative, hard-hitting journalism. He’s no Murrow, however much he’d like to think so, just a hollow suit reading what he’s told to from a Teleprompter. He’s no Peter Jennings, either, who had the gumption to ask Henry Kissinger at a dinner party “How does it feel to be a war criminal, Henry?”
My wife detests Katie Couric. We usually watch the CBS local news (WUSA), and as soon as the national news comes and, my wife dives for the remote and switches it to ABC.
I refuse to watch ABC network news after the atrocious dem primary debate they moderated. I might start watching CBS after seeing the job Couric did w/ Palin.
I am feeling right now very compassionate towards all news anchors. They all face the incredible task of reporting on the upcoming ‘debate’ between Biden and Palin with straight faces. Don’t know how anyone can pull this off.
“Watch” news….like on TV? Damn I haven’t watched any news on TV in a couple of years now. At least online I don’t have to listen to ‘em.
Poor Katie,blinking like a mad woman trying to figure out what the hell PA IN was talking about.
She musta been thinkin, ‘what the hell, how do I get outa this’.
And Brian…I thought for sure he would have taken his sisters cancer as “wake up call” to be more real in the rest of his life.
His alarm call must not have gone off.
No wake up call.
No watchy.
Local news is unwatchable in New York City. They could shut down all of these talking heads and I wouldn’t even know it. I wouldn’t miss Rosanna Scotto one bit.
Fresno tv news always starts out bad (murder, robbery, misc crime) and then they throw in a feel-good story about a hamster that fell down a well, and how a cadre of 11 concerned citizens saved it.
Jeeze, alad! You left out the importantest detail: what was the hamster NAMED?
I’m pleased to say that Virgil Gerbil is safe back in his cage, on that thing they run around all day on going nowhere fast.
RE: Local news is unwatchable in New York City. They could shut down all of these talking heads and I wouldn’t even know it. I wouldn’t miss Rosanna Scotto one bit.
Abysmal here in Beantown Mazzland too.
You get 3 storylines…a domestic abuse arrest; a breast cancer survivor story; and a some sort of rescued animal story. And I’d say you get 12 minutes of news for 18 minutes of local advertising. Getting to the weather is pure hell.
Only thing of interest are the plunging necklines and changing array of hooker-style fashions on all the females desk anchors and reporters.
Its the same in Charlotte. I thought we were different.
Lane
Faux News in “Bedlam by the Bay” (Maryland) is great “fun” - I have no idea how this counts as news!
Here’s how it goes:
- Latest Blood and Gore story from Baltimorgue. Assorted death, destruction, mayhem, corruption, etc.
- Just enough weather to miss the important parts.
- Hints at a big news story that they will get to “in the next hour,” which really means 50 minutes from then.
- Advertising posing as news for a “Hometown Hotspot” for some random local event. This is usually advertised a day before the event closes for the year, thus ensuring that the airtime was completely wasted.
- Prattling about American Idol when it on.
I only watch it briefly in the morning since they do have a running weather display in the sidebar… and the traffic girl is rather buxom… but that’s about it!
Is the local news watchable anywhere?
(Crickets.)
Here in South Florida they recently went HD on the local news. 60 year old permatanned anchors are not a pretty sight on a 57″ wide screen, let me tell you.
LOL! No…here in Missoula they can’t pronounce the word in their own copy. The stories seem to be planned weeks in advance and NO breaking news is going to upset it by God!
And it’s the same stories over and over ad nauseum from the night before to early morning to the noon news. And yeah, the hamster down a well thing and the “aren’t we wonderful” group hugs, with nary a word about the housing slump here. Blechh.
Two years ago I saw Lou Holtz the football coach in HD and it scared the sh t out of me. His face looked like a 30 yr. old catchers mit.
I thought local news was unwatchable anywhere? It’s no surprise as national news is damn near unwatchable as well.
Is this what a soft landing looks like ?
Yep. Right in the middle of the ocean.
My uncle had to ditch his F4U Corsair in the Pacific during WWII. He received some injuries, but nothing too serious.
When he told me the story as a kid, he said, “Don’t let anyone tell you a water landing is soft or easy or safe. It’s terrifying.”
Ahhh, I had almost forgotten that term…. soft landing… hahahahahahahahah.
Got change for a $700,000,000,000.00 bill? How about a $100,000,000,000.00 a $350,000,000,000.00 and a $250,000,000,000.00?
Do they really think this hand waving will really fool us into thinking that this pig can fly??
I was just thinking, what if no one will lend to the U.S. Treasury anymore and the Fed has to print Federal Reserve notes to cover this.
If they go with Benjamins ($100 bills), you’re still taking about printing $7 billion of them. They might have to start putting bigger bills in circulation.
From the U.S. Treasury:
“On July 14, 1969, David M. Kennedy, the 60th Secretary of the Treasury, and officials at the Federal Reserve Board announced that they would immediately stop distributing currency in denominations of $500, $1,000, $5,000 and $10,000. Production of these denominations stopped during World War II. Their main purpose was for bank transfer payments. With the arrival of more secure transfer technologies, however, they were no longer needed for that purpose. While these notes are legal tender and may still be found in circulation today, the Federal Reserve Banks remove them from circulation and destroy them as they are received.”
OK, you only need 70 million $10,000 bills.
please tell me that you don’t think that in order to create money it has to actually be printed?
Nah, you just whip out that card and say CHARGE IT!
The U.S. can`t afford that much ink.
I think possession of a $10,000 bill would get you tossed in the clink pretty fast.
http://www.pennylicious.com/2006/09/05/largest-denomination-us-banknote-the-10000-bill/
They exist. Modern times $100 is the largest, but that hasn’t always been.
A decent looking 1928 or 1934 series $10,000 is worth around $40-50k, and completely legal to own.
Interesting tidbit I ran across this weekend:
If you were to spend $1 million a day (something which I haven’t done in my lifetime, by the way) and you were to spend that amount EVERY DAY, from the day Christ was born until today, you would have $745 Billion dollars.
Sortof puts the magnitude of this thing into perspective…
1 billion seconds = 31 years
1 trillion seconds = 32,000 years
Closing on my new house today. I insisted on getting the docs a week beforehand so I could read every word. Yuck! Mostly boilerplate, but no fast ones or bait and switch that I could detect, or prepayment penalties. I made it clear to everyone involved that if I did not like the terms, I would not sign. I told them that I would only sign docs given to me to read ahead of time, without substitutions at the signing table.
No: tell us how much you paid compared to asking.
Super, Nosing! Tell us all about it. Like, is there a garden space, an ice-block sleeping platform for visiting Eskimos, a stuffed moose head on the wall, things like that.
Nosingleone, you’ll never get bailed out in the future if you handled it that way. You need to be able to claim that you didn’t read it, it wasn’t in your native language, you signed it at gunpoint, and or course (the biggie) that you have been disenfranchised.
The place totally rocks…2 BR, gas stove and fireplace, garage, new pipes and two heating (boiler and central air) systems, TONS of storage, 2 offices (I actually need both), a place to store my toys (4 wheeler, kayak, skis, bikes, and hopefully a skidoo), a 1BR mother-in-law apt, a long private driveway and forested hillside with only 1 neighbor who can see into my backyard, and about a half-mile from downtown…close to all the bike trails, my part-time job, the “artsy” movie theater, 3 gyms, my favorite restaurants and ethnic grocery stores, and a huge yard with a dog run and soon a Japanese bonsai/rock garden. A view of downtown and the Chugach mountain range.
All that, and a bag o’ chips!
I paid 490K, but it’s almost 100K below asking and still less than twice my yearly income. The mudda-in-law I can rent for $1100-1200/mo, which makes the remainder of the mortgage on the main house comparable to my current rent. Got a 5.8% rate on a 30yr loan, but only cause my mommy talked me into it. I plan to pay it off as if it were a 10 year mortgage or even sooner, if my income doesn’t tank too much with the coming recession.
I plan to get a dog, too. And a hot tub. And I want to build a 4 man sauna and then a greenhouse for some tomatoes and basil. I plan to make daily visits to the pound until I “connect” with the right one.
Crappy time to buy a house, but I guess I’m more excited about it than I thought!
congratulations!!
Congratulations, NSO! Sounds like you’ll really enjoy your new home.
I guess I better buy Wachovia stock , they`re not making anymore.
Wachovia will be Jim Cramers’ waterloo. He was pumping it hard on TV and in print, even last week. Expect lawsuits against him and CNBC; the bad press will be so intense I think Cramer is done.
Oh, and the reason they don’t call the Wachovia deal a failure is because they don’t want to trigger the CDS with a ‘credit event’. But try telling a shareholder it isn’t a failure.
I can’t wait to see how he justifies having the CEO on there what, a week or two ago?? This oughta be good.
MarketWatch.com
CURRENCIES
Dollar rallies as euro and sterling plunge
European banks’ woes send currency traders fleeing to greenback
By William L. Watts, MarketWatch
Last update: 6:58 a.m. EDT Sept. 29, 2008
LONDON (MarketWatch) — The government rescue of Belgian-Dutch financial giant Fortis and the decision to nationalize another U.K. lender over the weekend put the euro and the British pound under heavy selling pressure Monday.
Further signs of slowing euro-zone economic activity in September and data showing that the U.K. mortgage market virtually ground to a halt in August also added to the gloom, analysts said.
Meanwhile, an agreement between Congress and the Bush administration on a $700 billion plan designed to stabilize the financial sector provided limited support for the dollar, strategists said.
Not to take too much credit, but this happened because I bought a 3-month CD at Everbank denominated partially in British pounds last week.
I’ll let everyone know a few days before it matures so you can all benefit from the dramatic rise in the pound afterward.
MarketWatch.com
IRWIN KELLNER
Don’t call it a bailout. Or a depression
Commentary: The nattering nabobs of negativism have it wrong. Here’s why
By Irwin Kellner, MarketWatch
Last update: 10:41 p.m. EDT Sept. 28, 2008
PORT WASHINGTON, N.Y. (MarketWatch) — We are nowhere near a depression, so let’s stop talking ourselves into one.
That kind of message is best delivered with short skirt, a tight sweater, and a pair of pon poms.
Yeah team! Sock it to me now!
RE: We are nowhere near a depression, so let’s stop talking ourselves into one.
Go tell it to the thousands of laid-off paper mill workers in northern New England.
Pontificators from the ivory towers can kiss my azz.
Same for the lumber cos. in the West….
I read the article yesterday. What is funnier is the comments. They were eviserating Keller.
I spent the summer of ‘69 in Port Washington, it was quite a shock for a 7 year old boy (oh, how desperately I wanted to be
from the city of angles, that had no street smarts compared to my contemporary counterparts back east.
My dad was quite a wheel on the Pacific Stock Exchange back in the day, and it’s hard to believe now, but it was very much considered a rival the the NYSE at the time.
My mom made sure I devoured the Big Apple, and we hit up museums between bike rides in Central Park and elevator rides to the top of the Empire State Building.
Apollo 11 landed on the Moon and the crew came back to a ticker-tape parade just across the sound from me, my childhood heroes so close, yet so far away.
We’re the same age Laddie
Mike
Hi Mike,
It was a fun time to be a kid, the 60’s…
Yes, the 60’s were a good time.
We had a lot more freedoms back then. My friends and I would go like hell to early evening almost everyday. I wouldn’t feel comfortable letting my kids do that today. In a rural environment yes, not in the city.
Mike
We are not in a depression, we are in a recession, a longer and more severe one than the typical 2-3 quarters recession for sure, much like what Buffet and NBER’s Feldstein has said the last several months. Unemployment may approach double digits or go over it, but I do not believe it will be 25% and GDP won’t fall by 29% like it did between 1929 and 1933. We need a serious recession to shake out the excess credits and mispriced risks in the economy and if Roubini is right and $1.6T of bad debt exists, we are only 1/3 way done ($500B write off so far).
If you really believe that (depression) would happen might as well take all your cash, turn them into gold bars, stuff them in your mattress and build a bomb shelter and buy a AK-47 to guard it. Or is someone already doing that?
for the gold bars some people already did that: Euro goldprice is up again 4% today and has been rising at the fastest pace ever over the last two weeks.
It might depend a lot on how you define “unemployment”. Many who want to work are not officially “unemployed” today. I wonder what percentage of the population was on the government roles then vs. now as well. In 1929 government spending was only 10% of GDP. Now it is closer to 40%. If official unemployment goes double digits now, it might coincide with a larger loss of productive private sector jobs than in the GD.
Excelent point….What is the unenployment rate in the private sector only ?? 15% + ??
Historically, recessions are not typically “only 2 or 3 quarters”.
They are often longer.
“2 or 3 quarters” might apply to the postwar period.
Umm, well, we have more $$ on hand than prior, a lot more, and umm, well, we’re buying more AU, although they’re rounds, not bars, so well, I guess the AK 47 is next ? Husband just got laid off from 2nd job this year. He’s depressed. Also, quite unemployed. Recession ? Depression ? I guess it depends on who you’re talking too.
By the way, came home from work tonight, and my neighborhood had a house fire, too. It was a “grease fire”. The house is for sale, too.
Sorry to hear about your husband’s job, Silverback.
This is the one thing we DO need to help with, IMHO. I believe in work programs (my Dad, who grew up during the Depression, couldn’t speak highly enough about the work programs).
People need JOBS, not more debt.
The nattering nabobs of negativism have it wrong.
The man who made the phrase “nattering nabobs of negativism” famous, of course, was Vice President Spiro Agnew (though the phrase is attributed to his then-speechwriter William Safire, who always had a way with words).
Another crooked, cranky, and crappy vice president from another tumultuous time.
Agnew also spat this one out, which the writer of the article might also enjoy: “the hopeless, hysterical hypochondriacs of history.”
I don’t know what gives me the worst case heebee geebee’s; Agnews nabob comment or words out of Palins mouth. Both make me shudder.
Thanks for recalling the asinine, acerbic, alliterative acrimony of yesteryear’s meanest politicians…
http://www.nytimes.com/2008/09/30/business/30bank.html?hp
“Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc on an open bank basis with assistance from the F.D.I.C.”
“This morning’s decision was made under extraordinary circumstances with significant consultation among the regulators and Treasury,” Ms. Bair said. “This action was necessary to maintain confidence in the banking industry given current financial market conditions.”
It’s curious that the FDIC was so intricately involved in the negotiations since “Wachovia did not fail”.
“Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc on an open bank basis with assistance from the F.D.I.C.”
“The Man In Black is not following us. He’s probably just some local villager with an avid interest in mountain climbing who happens to have the same general destination as us.” - Vizzini, commenting on the fact that the Man In Black was following them up the Cliffs of Insanity.
“Inconceivable!” - Vizzini
“You keep using that word. I do not think it means what you think it means.” - Inigo
http://www.nytimes.com/2008/09/30/business/30bank.html
Citigroup Buys Banking Operations of Wachovia
By ERIC DASH and ANDREW ROSS SORKIN
Published: September 29, 2008
Citigroup will acquire the banking operations of the Wachovia Corporation, the Federal Deposit Insurance Corporation said Monday morning, the latest bank to fall victim to the mortgage market.
The F.D.I.C. said that the agency would absorb losses from Wachovia above $42 billion and that it would receive $12 billion in preferred stock and warrants from Citigroup.
“Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc on an open bank basis with assistance from the F.D.I.C.”
““Wachovia did not fail,” the F.D.I.C. said, “rather it is to be acquired by Citigroup Inc on an open bank basis with assistance from the F.D.I.C.””
In other words, they failed.
Should we call this “a soft failure,” Nattering Nabobs of Financial Deception?
get our money back “?
what was the payback on 1990’s RTC and how does this compare ?
if we get half back that would be ok
PV? Opportunity cost$. Only depression - taxpayer bunghole!
Just some of the players behind the bailout…read the entire article to see all the cozy relationships (Yingling and Dodd…both of their fathers had similar dealings with each other in past lives…)
——————–
Lobbyists for Financial Institutions Swarming All Over the Bailout Bill
“This is not following any normal process,” said Ed Yingling, chief executive of the American Bankers Association.
Most financial trade groups are banding together to urge passage of the bill this weekend. But, with so much money on the line, there is also intense jockeying on specific provisions.
The United States Chamber of Commerce is pressing Congress to oppose limitations on executive pay and some mortgage modification provisions, while the A.F.L.-C.I.O. called on its members to lobby for them. Trade groups for home builders, credit unions, auto dealers and even agricultural equipment all had extensive campaigns.
http://www.nytimes.com/2008/09/27/business/27lobbyists.html?_r=1&ref=business&oref=slogin
And NAR:
Daily Real Estate News | September 22, 2008
NAR Gets Behind Efforts to Restore Market
The NATIONAL ASSOCIATION OF REALTORS® on Monday gave its support to the ongoing bipartisan efforts to finalize a financial bailout plan.
The proposed plan would allow the Treasury to buy questionable mortgage loans from U.S. and foreign-owned banks. At a potential cost of as much a $700 billion, the bailout package aims to repair U.S. financial markets and keep mortgages flowing to consumers.
“NAR will work diligently with Congress and the administration to achieve these goals as well as the broader goal of reforming the housing finance system,” he said.
Source: Washington Post, NATIONAL ASSOCIATION OF REALTORS®
http://www.realtor.org/rmodaily.nsf/page...
The NAR is our friend.
The NAR is our fiend.
With friends like the NAR, who needs enemies?
CDS regulations a’comin?
http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080928/REG/809269969
I’m a liberal, bleeding-Dem by nature, and at this point, I’m willing to say the NRA is much more our friend than the NAR.
Boots on the ground report from my neck of the woods: MM funds need liquidity by quarter end and are cashing out of VRDNs and anything else halfway liquid at an alarming rate late last week and today.
In no way is this bailout plan the long-term answer. We need more and will get more pain . . . just how soon is the question.
Now’s the time to commit money to MM funds, IMO, while fear is rampaging. The risk is low because the guvment can’t/won’t allow a run on MM funds.
King, so this would be your final fallback position, the last bastion for banknotes?
MM = money market funds? If so, I’m sort of confused. They don’t offer much of a return and I don’t see how rampaging fear would have much effect on increasing their return. Are you just thinking that they’ll be a safe place to keep money because more and more people will deposit money into MMs (out of fear) so they’ll get stronger? Or do you think that interest rates will start going up?
Last week I moved 1/2 of my retirement $$$ into a couple of Fidelity money market funds.
Out of PTTRX.
The other half consists of 41,500 SLV.
Cash may be King but there’s a lot of demand for gold and silver
If I were to design a Potato Chip ETF, would it really be that different from what SLV or GLD looks like?
ETF Phone Home, and stop being a cog in their system.
SLV now down below what it was a year ago. Good call!
does this effect the outlook on the MM?
The draft bill, released yesterday, gives the Fed authority as of Oct. 1 to pay interest on reserves held at the central bank by financial institutions. That would encourage banks to deposit excess funds with the Fed rather than dumping them into the money markets and distorting its overnight federal funds rate.
http://www.bloomberg.com/apps/news?pid=20601069&sid=abdbSgsxVGt8&refer=fedwatch
There’s an interesting variant of Gresham’s Law being played out…
Bad Money (CDO, MBS) is chasing out Good Money (bank and money market withdrawals), just like back in the days of old, when silvered copper coins were valued the same as a coin struck out of silver, because initially nobody could tell the difference. but once the coin wore down and the copper composition was visible, the game was exposed.
http://en.wikipedia.org/wiki/Gresham’s_Law
Thank you aladinsane for the example of Gresham’s Law. I believe we are witnessing today an election of sorts in the marketplace.
Which leads me to postulate:
Do bad candidates drive good candidates out of the running?
Yes. Politics is survival of the fittest and the fittest is determined by whom can manipulate public opinion, use logical fallacies, and is willing to promise the impossible to a gullible public.
In the event that a good candidate gets elected, they are quickly debased.
Exactly.
I still remember the day it occured to me that being a good governor/legislator/policymaker was completely different from being a good politician, and that unfortunately, Washington is mostly filled with the latter.
Made in China… or…even near China
Made in China = Toxic Warning Label
“…Meanwhile, two U.S. food makers were investigating Indonesian claims that high traces of melamine were found in Chinese-made Oreos, M&Ms and Snickers.”
What’s next reese’s peanut butter cups & almond joy?
Cadbury says Chinese-made products questionable:
http://biz.yahoo.com/ap/080929/as_cadbury_chocolate_recall.html
I must admit that I like the way these FDIC assisted deals make it so
people don’t have to wait in lines anymore .Whatever deal making goes on now we know who the big 5 are .Maybe Paulson should of just Motioned
the Taxpayers for the government assisted Bank Merger Act .
Depositors at weaker banks ought to just start lining up at the nearest chase or boa branch since their deposits will wind up there…sooner or later.
Just think. One bank, One government, One world!
We are the world….
John, I have been saying on this board that one of the thing a thinking-ahead depositor can do is go over to one of these trouble banks, open a < $100K CD for very high yield, and watch it get transferred to a healthy bank, AS LONG AS YOU DON”T HAVE AN ARMAGEDDON view of the banking system and thinks that all banks will fail. I did that with a WaMu 5% CD and now my account is at JPMorgan and it looks like the rate will be honored.
Another thing you can do, is that given the turmoil in the credit market, municipal money market fund is having ridiculous yield right now. I mean Fidelity Municipal MM fund is yielding 5.33%, giving you 7-8% before tax yield and the NAV is kept at $1. In addition the US Treasury is including municipal MM funds in it’s new guarantee for money market funds and given size of Fidelity the risk of NAV breaking a buck is very low. I think I will be transferring a large chunk of my free cash into this instrument this week.
“…now my account is at JPMorgan and it looks like the rate will be honored.”
How long until you know for sure?
When your monetary behind is on a spit, all one has left is believing in self-fulfilling prophecy painted by the numbers…
I don’t have a definite answer yet, but received this via another source:
“JPMorgan Chase accepted Washington Mutual’s interest bearing accounts including CD’s at the contract rate; therefore, they are not waving early withdrawal penalties.”
I know of a bunch of people trying to get in on the 5% WaMu CD now that JPMorgan is taking over. However I have no idea about these new accounts opened since take over last Thur; I opened mine 3 weeks ago.
Is the interest rate spread really worth the risk??? I’d need +2.5% or more to even begin to think about it.
I wouldn’t think that they’re bound to honor the WAMU rate, being that they are not WAMU. But that’s just my guess.
They will be happy to honor it once interest rates are above 10%
IMHO …..I think that the whole concept of the GOOD Bank/BAD Bank is what is operative in these plans . Government assisted Banks merge their Good parts together and the taxpayers get left with the BAD BANK parts
in the final analysis .
So what defense company exactly painted the “Green Zone” in Baghdad & how much have they “expanded” …since the “urge to surge”?
America…fear the Democrats…they are “unpatriotic” & they’ll just “tax & spend” your tax dollars.
“For Washington, the driving motivation is to create a “zone of influence” around the new $700 million U.S. Embassy, whose total cost will reach about $1 billion after all the workers and offices are relocated over the next year.”
U.S. has plan to develop Baghdad’s Green Zone:
http://www.iht.com/articles/2008/05/05/business/green.php
Hmm, tax us directly and spend, vs. borrow like madmen from the Chinese and Japanese and spend…
Gosh, how’s a voter to decide??
Two questions for the more experienced trading gurus:
How long will it take for WM and WB and associated options to start trading again?
Hypothetically, if an individual had Jan 7.5 puts in WB, would a limit order to sell for 7.10 likely get hit when trading starts up again?
And as always, thanks to all HBBers who contribute so much knowledge. I’m not worthy!
(talking to myself)
Well, question #1 got answered by the market and question #2 as well, at least in part.
The 7.5 Jan put topped out at 7.30, but with insufficient volume at that level to fill my order at 7.10, so I could say I was 1/2 right. Unfortunantely it wasn’t the half that actually makes the money. Oh well, there’s always tomorrow.
i wonder if all the market players were dreading the opening today? PPT to the rescue!
Does anybody think that the liar loan gamblers and set up artist
commissioned real estate agents and loan agents see in any way what they caused by their self-serving fraud and greed and leverage gamble? Will any of these opportunist see the cause and effect of their actions
that help create this melt down ?
Interesting how you see a lot of comments about who is to blame these
days as the mainstream media and people in general all know about
the net effect of the mania . Some are trying to blame the regulators ,other are blaming the other political party ,and still others are blaming
capitalism . I think people in general don’t really understand how faulty
over-leveraged security instruments backed by real estate was and just how much of a gamble Wall Street was taking on these investments .
These market makers on Wall Street really made alot of money on these
house of card investment instruments . I remember when the REIC
was pushing this concept of using leverage on real estate with statements like make you equity work for you ,buy another house ,etc.
In my view this real estate mania was the biggest crime wave on different levels of the ‘System ” from the top to the bottom in the history of the United States .
“In my view this real estate mania was the biggest crime wave on different levels of the ‘System ” from the top to the bottom in the history of the United States .”
REtards were merely the hatchetmen and Town Criers. Those at the top level of international banking are the perps. I’d still love to see the RE sales model in the U.S get torn to smithereenies.
Very eeenterestink….
…watching CSPAN at the moment, listening to the 3 hour debate before Congress votes on the Bill.
More Dems than Repubs seem to be in favour. Weird.
Though, my Rep - Brad Sherman (D) - is calling for the House to come back and do it right, and not get steamrollered into this.
Good man! You get my vote in november.
The elephants took a piss and the donkeys dumped right on top of it.
LOL, couldn’t have said it better myself Lad.
Oh, and Maxine Waters? Find a bus and throw yourself under it, wouldya?
Amazingly, I find myself in agreement with the GOP-critters on this one.
At least they have the chutzpa to stand against it on principal.
Here is one Dem who is not walking lock step. Although she will probably be shunned.
Marcy Kaptur warns “there are domestic enemies to the Republic”
http://www.dailynewscaster.com/2008/09/28/marcy-kaptur-warns-there-are-domestic-enemies-to-the-republic/
Sonoma County Congressman Mike Thompson also voted no.
Marcy Kaptur has been awesome during these bailout hearings.
She’s a bit too generous with the FBs, but I’d rather have our money go there than to Wall Street (assuming we **have** to bail one or the other out).
everytime Barney Frank feels he has to defend his party over the GSE’s reform he states that his party were the ones that reformed them. wasent that reform done as a part of this crisis? and wasent he the one screaming to raise the $ limit on the loans they could buy?
Limbaugh’s radio show today seemed to feature lots of 2004-2005 era congressional investigations where the democrats praised Raines (ex-FNM CEO) and FNM as fine, upstanding people and corporate citizens who could do no wrong because of their fine record in helping people buy houses they couldn’t afford. The purpose of which was to witchhunt the OFHEO for daring to suggest that they actually found malfeasance there after they had been directed by congress to look for it.
Luckily, Limbaugh repeated what Barney Frank said in the hearings played back. I could barely understand Frank’s voice, and barely believe what I was hearing anyway. Twin incredulities made for pretty bad communication.
Brad Sherman has some caveats for sure, but he is a CPA, and knows this bailout is not without massive inflation. Caught him on KNX News Radio, and he sounded like Ron Paul.
My congresswoman voted against it. Diane Watson, D-CA-33.
I’ll be emailing to say thanks.
Knowledge is Power. We all saw this coming months… even years ago. What a relief to not be worrying about what’s going to happen next. g.
Ron Paul just summed things up in 2 minutes. He reminded us that many economists predicted the exact outcomes of a loose fed and the housiong bubble. None of those individuals were called to testify on this bill. Not one contrarian expert opinion. Only those pushing the plan were ever consulted. I honestly can’t compute if this is a good or a bad bill. But I know that I would have preferred to hear both sides in testimony.
For some reason, I started thinking of the Uranium Boom back in the 50s in W. Colorado and E. Utah. I wasn’t around, but I know people who were and it’s interesting history.
Cold War. The govt. established a buying scheme to stimulate exploration for uranium, complete with $10,000 bonuses (real money back then).
People went nuts, quit their jobs, sold out so they could come West and get in on the U-Boom and get rich quick. The govt. used propaganda to stimulate exploration by focusing on the two guys who struck it rich, Charlie Steen and Vernon Pick.
Salt Lake City became the center of a huge penny stock market which sold stocks on anything that had a glimmer of uranium, I have some of the paper from this, stocks in uranium mines. Con artists got rich quick. The average citizen who wanted to play (and everyone did) got fleeced, invariably, but always came back for more. Lots of hype. Lots of unregulated illegal activity.
The little podunk towns in the area (like Moab) boomed like crazy, people camping in the streets, real estate went nuts. The stories are legion, people stood in line to make phone calls for 6 to 8 hours. Rumors of riches would set off near riots. The AEC (Atomic Energy Commission, now the Dept. of Energy) would send out planes to rim fly with scintillators and people would follow them on the ground, staking claims. People got shot, claims jumped, etc.
The govt. announces it has enough uranium and will no longer be buying.
Huge crash. Real estate in the little towns drops overnight to nothing, economies crash, people migrate out. Nothing left but destruction and memories. Lots of people lost everything.
Sounds vaguely familiar. Just another boom and bust. Another reason the oldtimers out here are pretty skeptical about anything the govt. is involved in, they’ve seen it in action.
History rhymes/repeats, and the magnitude seems to increase each time.
Interestingly, uranium exploration and production is now ramping up again on speculation that our national energy policy will get fixed in such a way that new reactors can be built in this country.
Of course, building reactors will be much more expensive now than it would have been back then, but they will be much better designs, at least.
Thanks for that perspective. I saw that area with the old uranium mines a couple of years ago, and wondered about the history. I didn’t realize it was quite so much a boom/bust thing.
I’m curious about the quantity of uranium. One thing everyone seems to assume is that nuclear energy is limitless; that the only issue is safety and cost (inexorablied tied). However what about just the supply of uranium? It must be mined I believe correct? Is there not then a limited supply? Assuming so - how limited is the supply? Is it - for all intents and purposes - unlimited - like say thousands or millions of years-worth? Or is it also limited, such that a shift from fossil fuels to nuclear would be just another temporary measure?
(I’m sure I could find this all out given enough time - just being lazy and seeing if anyone can say off the top of their head)
Yes there is a limit. Earth is closed system, Uranium enriched and refined is very energy dense. I believe one pellet which is 3% is equal to 180 barrels of oil.
There is a lot of uranium is ocean water, but its more expensive. There are also options such as breeder reactors India, and Japan use them. The idea being that at the end of the life cycle of the plants fuel, you can re process the spent fuel and use it again.
Keep in mind with energy the name of the game is cost. The planet has alot of un tapped hydrocarbons (oil) but it would be very expensive to extract and refine them. But if you want gas or heating oil it could be had for a long time, if you want to pay for it.
Also regarding nuclear waste, the hotter something is the more radiation (enegery) it gives off, the higher the rate of decay. Meaning that alot of the very nasty stuff will cool off in a couple of hundred years, when people talk about the stuff with the super long life span (say 10,000) years They forget to mention that it doesnt put out as much energy and as a result is not the biggest environmental threat.
And the uranium tailings continue to cause illness and high cancer rates amongst the Navajos. Their land is still poisoned. There was a great series of articles, I believe in NYT Mag. a year or so ago.
So the 700 Bn is just a start, how about the huge infusion of “liquidity” into all the TAF and other funds, along with central banks from around the world doing the same. Then some head on the tube claims that the real number is more along the line of 7 Trillion needed to defuse the housing bubble crisis. Does this stop anywhere short of total collapse of the dollar?
I think this hangover is just getting started, and not over by a long shot. This is just going to get worse as more news and revelations are put out there, one at a time to get us used to it. Didn’t hear anything about helping out any of the other areas of the economy, must just be financials and banking that need the money. Seems rather short sighted to me.
“Does this stop anywhere short of total collapse of the dollar?”
Don’t confuse vanishing dollars with collapsing dollars. Trillions of dollars have vanished; this makes the remaining dollars more scarce thus more valuable.
Radio cheerleader this afternoon to “expert” (financial advisor):
Well, what I don’t understand is if the entire (US) mortgage market is around 1.2 trillion (1 years GDP), and only a few percent of mortgages have gone bad, then why do they need 700B? Everything must be all right, really, huh? And those mean Democrats are just trying to scare people.
sigh. The expert pointed out that FNM has 5T. I guess he didn’t want to give the guy a heart attack. He didn’t mention the 22B figure for the entire housing market (?) I’ve heard bandied about here. Nor did he mention the rest of the mortgages likely to go bad as housing prices continue to fall back to fundamentals as prime mortgage people skip out. So even with a small dash of facts, everyone was still happy at the end of the show.
Oh yeah: according to the expert, the reason for the crash was decades of pushing to sell mortgages to people who couldn’t afford them and FNM being forced to buy them via “overregulation”
- so as not to be discriminatory. Not sure if he felt that housing prices had ballooned out of control in response: that might imply that people shouldn’t invest, and this guy was a financial advisor.
Got a prospectus today from one of my piddly Mutual Funds. A mid cap “value” fund. They had 40% in “financials”, gulp. I didn’t recognize any of the names really, being mid cap. Gee, can’t wait for next year.
The bickering and the stalemate in Congress as whether to fund or not fund was broken by asking the single most important question in America; which group of people are the most dependent on money for private jet fuel?
mikefolkerth dot com
While the media has been focused on the latest bailout, a new spending bill for the Pentagon was also being pushed through. The 78-12 vote sent the $634 billion measure to President Bush, who was expected to sign it even though it spends more money and contains more pet projects than he would have liked.
Those “pet projects” include $23 billion for disaster-ravaged states, a doubling of low-income heating subsidies, and smaller spending items such as $24 million more for food shipments to the elderly. Also, a loan package for automakers was included that would reward them with $25 billion in below-market loans. Trust me, they will need more.
mikefolkerth dot com
Listing of the roll call votes, as well as text of the bill, is available at:
http://thomas.loc.gov/home/rollcallvotes.html
Also available at senate.gov or house.gov.
The House of Representatives site is extremely slow right now — I imagine it’s been hit hard today, what with all the financial kerfluffle.
As of 2 pm CST, the House of Reps site is overloaded and unreachable.
Still stunned, at 9pm EDT.
They can just look at their web records to gauge interest. And we are the lazy ones who aren’t even calling to yell at them one way or the other.
Long-time lurker, but only my second post… thanks for all the info everyone provides here. Because of you, I was able to sell my house in Florida 18 months ago when no one else in the neightborhood could! You made me realize I was “following the market down” and needed to make an aggressive price cut. Sold within 2 weeks.
Now, my boss is asking for my advice regarding his bank accounts. I went to him last week because I was concerned that he has so many accounts at the same bank, and one account in particular is close to a million dollars. It’s not my money, but I’m worried because if his bank goes belly-up, there goes my job…
But, the idea of maintaining 10 different accounts at different banks seems complicated, to say the least. Are there even 10 safe banks out there anymore?
Thoughts?
Don’t mean to be a pessimist, but I think I’d steer clear of giving my boss financial advice (as well as personal advice) - could come back to haunt you, you could become the fall guy. Give him this blog site and let him decide.
check out CBSH - about as solid as you can find right now
I can’t comment on the stability of the bank or of this particular strategy/CD but I heard that http://www.everbank.com has a CD out that is FDIC backed up to 50 million. I don’t know that it is true or not.
It’s true; it’s called a CDARS. It’s offered by banks accross the nation. You read about it here:
http://www.cdars.com/index.php
Basically, it’s a service that takes your money and invests it in banks across the country to bypass the FDIC limits.
2 words for you (your boss):
Credit Union
I am surprised US based bloggers even use banks for their personal $$$.
If you think “maintaining 10 different accounts at different banks seems complicated” imagine how it would seem to lose a million in a single bank account.
Joint accounts are FDIC insured to $200k, so he only needs 5.
BAC, ING, Chase and 2 credit unions.
Banks crusade vs credit unions every few years, but they seem to be losing the important fights. My local government employees credit union’s affiliation group seems to be open to anyone who lives in Houston
(Literally: that is how I joined. Since my company was purchased twice since they got onto the membership qualification list, I was happy not to have to prove I was qualified.)
“Thoughts?”
I have to agree with Lost in Utah on this. Give generic advice and recommend books & blogs.
I haven’t been able to participate much in real time lately, so I want to thank Ella here for recommending a couple of days ago the Adam Curtis BBC documentary, Century of the Self.
I haven’t had a chance to look at it yet, but I look forward to doing so. Adam Curtis’s 3 part BBC documentary The Power of Nightmares was awesome. I had been thinking about that documentary for a few days - the promulgation of fear to manipulate public opinion regarding the bailout kept reminding me of it.
Thanks, Ella.
Century of the Self has completely changed the way I look at American society. I was cynical before, but you’re in for a mind blowing experience.
I haven’t been able to participate much lately, so I want to thank Ella here for recommending a couple of days ago the Adam Curtis BBC documentary, Century of the Self.
I haven’t had a chance to look at it yet, but I look forward to doing so. Adam Curtis’s 3 part BBC documentary The Power of Nightmares was awesome. I had been thinking about that documentary for a few days - the promulgation of fear to manipulate public opinion regarding the bailout kept reminding me of it.
Thanks, Ella.
Hi hip,
I just rewatched the beginning this week. It’s eerie watching that documentary right now, actually, because it begins in the 1920s…very little has changed. I haven’t seen The Power of Nightmares, but I’ll look for it, thanks!
It’s made me much more cautious when I “feel” things about a current event or politician. With emotions running so high right now, I wish everyone would watch it.
Heard a good story this morning. A girl I work with was awakened last night by some commotion. When she got around, there were sirens and such. A few houses over, a house was on fire. She said the house had been empty and the builder was unable to sell it.
Apparently one of the neighbors heard a sound, got up and went to the window or door, then heard a car door shut and a vehicle drive off. The house was on fire. They found gas cans around the burned house. Apparently someone got the license plate number. Don’t know yet if it was the owner’s vehicle.
Smoke ‘em if you got ‘em:
http://tinyurl.com/4w3r25
The new (old) sound of the bubble:
http://www.youtube.com/watch?v=Ye0k-qRDSno
I just caught the tail end of a conversation on NPR. I don’t know the names of the guests. One guy said the government is looking at ways to keep people in their homes. If they don’t qualify for a re worked mortgage they are devising a plan where they can rent the house at a percent of their income.
He said it is better not to allow these home to be unoccupied.
“Section 8 upscale homes and Mc Mc Mansions.”
I wonder how the neighbors will feel when they are cutting corners to pay their mortgage while their neighbors get to stay in their home as Section 8 housing.
If they think the people are furious about the bailout wait until they hear about this scheme.
Tough vote today.
If the bailout is going to pass, you can’t vote yes, because we are going to have a deep recession anyway.
But if it is going to fail you can’t vote no, because then you’ll be blamed for the depression!
Every single Congressperson I’ve seen comment on feedback from their constituents has said that voters are overwhelmingly opposed to the measure. That’s across the board, ideologically speaking.
Vote for: piss off the public.
Vote against: piss off the people that fill your campaign coffers.
The House rejects the bill (228-205).
Wow, didn’t think that would happen.
This link should contain the final roll call for the bailout measure when the House web server stops wheezing like a chronic pork belly eater:
http://clerk.house.gov/evs/2008/roll674.xml
LOL. Even the little guy’s whoismyrepresentative.com is overloaded.
printing presses on overdrive:
WASHINGTON (MarketWatch) — The Federal Reserve on Monday announced that it was providing more liquidity into global money markets to ease recent strains. The Fed said it was boosting the size of its auctions of liquidity to commercial banks and the size of its swap agreements from a number of foreign central banks to $620 billion from $290 billion.
You read that right. 620 BILLION. and yet…
euros runs for the exits:
http://finance.yahoo.com/intlindices?e=europe
Assume crash positions.
The House is getting ready to pass the Bill ,or not .
I just wonder why they came up with a Bill that gives this kind of Authority to Paulson on 700 billion , and gave so little legal teeth of real protections for the taxpayers for repayment of bail out . I think the Bill is a Trick Bill
that gives Paulson the discretion to protect the taxpayers ,or not . I want a new Bill that is writtn without the fear hanging over the heads of the
lawmakers so it can be drafted with more thought . Congress can give emergency powers to the Feds to inject capital to the banks for a time while they craft a more well thought out bill . I just think that not enough creative options were considered because the fear tatic to craft a bad Bill took over .I’m not saying that something doesn’t need to be done ,
but haste makes waste ,and the Big Bully Paulson is getting his idea of a bail out ,rather than what is right .
September 29, 2008
Fed Throws in $620 Billion In Swaps For Dollar Liquidity
It appears that a US-led bailout package may only be part of an effort to calm market fears. The Federal Reserve has announced a massive coordinated liquidity package to provide U.S. dollar liquidity. The Federal Reserve announced today several initiatives to support financial stability and to maintain a stable flow of credit to the economy during this period of significant strain in global markets. It says it will continue to adapt these liquidity facilities as necessary and, more importantly, will keep them in place as long as circumstances require.
The Fed is increasing the size of the 84-day maturity Term Auction Facility (TAF) auctions to $75 billion per auction from $25 billion. It will have two forward TAF auctions totaling $150 billion in November. It is also increasing swap authorization limits with the Bank of Canada, Bank of England, Bank of Japan, National Bank of Denmark, European Central Bank, Bank of Norway, Reserve Bank of Australia, Bank of Sweden, and Swiss National Bank. This takes the total swap authorization up to a total of $620 billion, far above the $290 billion previously authorized.
The Federal Reserve wants to reassure financial markets that financing will be available against good collateral, lessening concerns about funding and rollover risk.
Not sure what good throwing in more hundreds of billions of dollars will do when banks are stuffing cash under their proverbial mattresses.
Money-Market Rates Jump as Bank Rescues Stoke Lending Concern
By Gavin Finch and Lukanyo Mnyanda
Sept. 29 (Bloomberg) — The cost of borrowing in euros for three months rose to a record after government-led bailouts of banks heightened concern that more in Europe will fail, prompting financial institutions to hoard cash.
This vote for the package is about as enthralling as the clinton impeachment vote.
We watched it in live time.
Wow. It’s failing.
for those of you w/o tv, dow is down 416 and the nays have it so far.
490 513 536 600
Long Live The Republic!!!!!!
I can’t leave you kids alone for a minute without the Dow dropping 300 or so.
It’s over. The bill failed!
Wait a tick. They are trying to switch.
They will keep voting until they get the right result.
Yep. Motion to reconsider. They are going to vote again. Changing the rules cause they don’t like the result.
It’s over. Back to the drawing board. Was it a setup?
Similar to what the Europeans have tried to do when the EU constitution has not passed referendums. They will try to keep voting until the desired result is achieved. It’s not clear to me how this play out, but I still think we should expect to see another attempt at some sort of legislation.
“They will try to keep voting until the desired result is achieved.”
Just like when schools keep trying to pass millage increases. That really ticks me off.
holy moly let’s hear for the pubs.
And nearly 100 Dems.
This was great. This is the second time in a year that I am glad the democracy side or our Republic prevailed. The first time was when public pressure against Congress defeated the amnesty bill for illegal aliens.
Lou Dobbs said it on Sirius this evening - that this shows the best of Democracy.
This is a good day and I feel good about my countrymen, my fellow Americans, today.
Congressman John Shaddegg’s office (I contributed to him, since he is a staunch opponent of big spending) e-mailed me this morning and gave me a link to reply to Shaddegg on the topic of the $700 billion bailout. I told Congressman Shaddegg that I’m against any taxpayer bailout 100% and that it’s unconstitutional. Anyway I thanked the Congressman for requesting my opinion. A stronger opponent of taxpayer aid is Jeff Flake. My current congressman is Harry Mitchell, who also voted against the bailout. All Arizona representatives voted against the bailout. I’m proud of them all (including Democrat Harry Mitchell, for once).
Market just tanked big time. S&P now down 6%. Dow down 500.
Vote just fail?
They are leaving the vote open, it has lost, but look for a lot of arm twisting to go on and for it to eventually pass.
does anyone think they were watching the markets after the votes to see if they needed to change their minds?
According to Yahoo, they were watching in real time. As they were voting, some congressman was shouting the Dow numbers as they dropped.
I say stuff them into a sweaty room in Philly in wigs until they thrash it out with dignity and decorum.
Huge move down to -555 on the DOW before a 150 pt rebound… what is going on?
See Frank’s comment above. Looks like they need to turn 11 votes to pass.
Republicans:
133 No
65 Yes
As you said, 11 short of passge. The 165 Republicans voted against their president and for the American public.
Finally.
“Voters around the country just did not like this whole idea of a bailout…”
It is funny that the bailout pushes gold up, and the bailout vote failure pushes it up as well…
Stunning upset here . Its looks like the House is voting the Bill down . I guess they are saying we need a better crafted Bill . WOW . The only thing that can change it now is if someone changes their vote .
Did Wall Street throw in the towel, or was it Congress?
MarketWatch.com
September 29, 2008 2:03 P.M.ET
BULLETIN
Dow falls 700
Blue chips off as much as 700 points at Monday low, Nasdaq off 6%
— stocks sell off as Wall Street begins to throw in towel on bailout.
independent dot co dot uk
US stocks plunge after shock House vote against bailout
Monday, 29 September 2008
The US House of Representatives tonight held open its vote on a $700 billion financial rescue plan well after a majority already cast votes against the bill.
If those votes hold and the vote is closed, the bill will die. At 1:55 p.m. (1755 GMT), 226 lawmakers had voted against the bill and 207 had voted in favour.
CLICK!
MarketWatch.com
September 29, 2008 2:09 P.M.ET
BULLETIN
HOUSE REJECTS $700 BLN FINANCIAL BAILOUT
Dow falls 700
Blue chips off as much as 700 points at Monday low, Nasdaq off 6%
— stocks sell off as Wall Street begins to throw in towel on bailout
Time to buy the dip?
I thought about it, but don’t have the conviction to do so. This political turn of events is so unexpected that my crystal ball is shattered into a million tiny shards.
This is why I tell everyone to get out of the market. You are not investing if your investment depends upon the whims of government officials.
Unless you’re the world’s most experienced investor, and really, who’s all that experienced with the rules changing almost daily, I think it’s wise to get out of the market for awhile. If you can’t short over 700 stocks, then that’s one nuance that noboday has any experience with. I think that until this sorts out, it’s probably wise to put up your tradin’ money. But, that’s my personal opinion - probably in this crowd, someone made a million dollars today. Who knows.
The problem is that this is not their whims. This may be as studious as it gets
The nays are changing votes to more nays.
No chance of passing this bill!
Is this a short squeeze?
How can you squeeze the shorts when shorting is illegal? And for that matter, how can you blame the shorts for the market falling? Time to cast blame somewhere else now…
Well, that’s really the long & short of it right?
Guess they will be extending that “no shorting” rule.
Google down 40 points.
In the past week, the SF Chronicle (aka the “LNAA” - the Lamest major city Newspaper in All of America) talked with some “economic and business leaders” to get their perspective about the financial crisis.
No one, of the panel, sounded more elitist and out of touch than Eric Schmidt at Google. He completely missed an opportunity to sound like a leader of some kind.
I’m beginning to see that the PR people at Google are not very good.
Go ask Alice if you can feed your head.
As a Democrat (Mongol) I want to publicly thank the House Republicans for stopping the bailout bill.
And no, I’m not voting for McCain!
Let’s be thankful too for the 94-95 Dems who voted against it as well.
Hallejiah.
The repubs voting no must be running for office again.
But at least they voted for the american public they claim to represent.
And to the dems…sending out faxes ad nauseum.
Still not voting for Palin.
Um, everyone voting is running for office this year. (ref: U.S. Constitution)
Never thought I’d ever say this, but God bless the Republicans!!!
Yes…the Repubicans have written the final chapter of Cheney-Shrub Legacy…”we don’t love you quite so much anymore.”
God bless the Republicans that voted against this bill.
They may have saved McCain. I will pray for McCain’s health.
No, McCain is toast. The bailout may have pushed back the Day of Reckoning. There is no pushing it back now.
Hopefully VP choice Palin will step up and explain this to us all. lol!!!
Stan the man,
Where abouts are you at 6500 ft.
My guess is Tahoe City!
“God bless the Republicans that voted against this bill.”
On the other hand the alternative plan put forward by the Republicans (Hell’s Angels) sounded kind of mental.
Sorry to drop a sprinkle of rain on the parade.
I hope everyone will be writing to their representatives with congratulations and scolding according to the vote that was cast by the individual.
Maybe this will be a chance to unite members of the Mongols & Hell’s Angels, and that would be quite a party!
I wrote this post so badly, ugh. Let me try again. That I heard, Senator Shelby had great, coherent comments, Barney Frank was frustrating as usual. However, when I heard the description of the alternate plan, it made little sense to me either. I’d like to know what Thornberg, Shiller, and others think. (I already heard Schiff).
WASHINGTON — The $700 billion bailout is uncharted territory not just for Washington lawmakers, but also for lobbyists.
And the window to possibly influence the outcome is short, meaning there is little time to develop coalitions to shape the plan before it is completed.
“This is not following any normal process,” said Ed Yingling, chief executive of the American Bankers Association.
By noon, he and his staff had sent a detailed letter to the Treasury and Federal Reserve outlining eight points of objection. “We told them that they’ve got a real problem,” he said.
Mr. Yingling, in his meetings with federal officials, also conjured up images of runs on banks if Treasury did not change course by the time banks opened their doors on Monday morning. [CA renter's note: interesting to note that he managed to arrange last-minute meetings with federal officials while the legislators' constituents were talking to low-level clerks]
He made his case. Treasury did scale back its proposal so that only investors who had already suffered losses in money market mutual funds would be covered, not those who might lose money in the future.
Most financial trade groups are banding together to urge passage of the bill this weekend. But, with so much money on the line, there is also intense jockeying on specific provisions.
The United States Chamber of Commerce is pressing Congress to oppose limitations on executive pay and some mortgage modification provisions, while the A.F.L.-C.I.O. called on its members to lobby for them. Trade groups for home builders, credit unions, auto dealers and even agricultural equipment all had extensive campaigns.
Mr. Yingling directs his campaign with a small army of lobbyists, and also calls on hundreds of community bankers to make the association’s case to their local members of Congress. Lately, he’s been working from 6 a.m. to 11 p.m.
Mr. Yingling does seem to be born for the job. His father was a bank lobbyist and chief of staff of the Senate Banking Committee in the 1950s. As a child, Mr. Yingling remembers visiting his father in the same banking committee room where he now meets with lawmakers. Today, Mr. Yingling lobbies Senator Christopher J. Dodd, chairman of the Senate Banking Committee, just as his father once lobbied Senator Thomas Dodd, father of the current senator. [CA renter's note: nothing like "keeping it in the family" and also note the cozy relationship as dad was a bank lobbyist AND then chief of staff of the Senate Banking Committee...no conflict of interest there, nosiree!]
While the association had no hard stand on the merits of the bailout, it did join with other financial institutions on Friday urging its passage. But, for the association, the real lobbying was over a series of issues that it wanted to make sure were included in the final package.
http://www.nytimes.com/2008/09/27/busine...
[I suggest reading the entire article.]
“While the association had no hard stand on the merits of the bailout, it did join with other financial institutions on Friday urging its passage. But, for the association, the real lobbying was over a series of issues that it wanted to make sure were included in the final package.”
Interpretation:
The American Bankers Association never really takes a stand on the future of this country - all it **cking cared about was what it could grab for its members from Congressional action.
Part two:
Can’t we get rid of lobbyists in some fashion?
Thank you republican party for going back to your roots.
the party did not go back to its roots, some of the members who still care about public opinion went AGAINST the party establishment including Bush and McCain… The party sucks, individuals rule the day.
well said!
Ok, I will amend my comments; I thank the 133 individuals in the Republican Party that voted against this bill and the 95 in the Democratic Party.
“Ok, I will amend my comments; I thank the 133 individuals in the Republican Party that voted against this bill and the 95 in the Democratic Party.”
You said it better than I did upthread. Go for broke and take back both parties.
Our Democratic representative voted against. I don’t think it hurt that he was up for re-election this November. I know I sent him a letter saying that if he voted for this bill, a Rheses monkey could run against him and I’d be voting for his challenger. (Paraphrasing, of course.)
I’m sure it was all me.
“I’m sure it was all me. ”
You know, I had a close relative who was an advisor to a finance minister. When they arrived in office, they found the numbers were different, and they couldn’t do all the stuff they promised in their campaign (big surprise). Anyway, when they were reshuffling the numbers and deciding on spending, they really did worry about votes and letters and stuff like that. So, I bet you did help!
You go, girl!
Where can I find a list of who voted yes and who voted no? I might have a few letters to write, still.
http://clerk.house.gov/evs/2008/roll674.xml
I have the link in this post… http://sonomahousingbubble.blogspot.com/2008/09/your-democracry-is-illusion.html
Buck Mckeon (R) AV, SCV, voted yes? That rat bastard SOB!
What kind of fiscal conservative votes yes on this piece of crap!
I’ve got some work to do between here and Nov. 4th.
(happy because it failed, steaming mad at my rep. for his vote against his constituency!)
Now we will have to have a fund to bail out equity investors.
Game over, man. Game over.
Now this looks Deflationary to me
This was totally predictable so those who are running for office this Nov could say hey I voted against it when it was in bad form. We got a better deal after we went back in there and fought for the American people.
Ante=$700 Bn
Oh, the humanity! I’m stunned.
From: Coffee House
Why Bail? The Banks Have a Gun Pointed at Their Head and Are Threatening to Pull the Trigger
By Dean Baker - September 29, 2008, 6:09AM
If you have a real story, you don’t have to make up phony stories. That’s pretty straightforward.
I’ve heard lots of phony stories. Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system (I actually had taken the latter seriously). These stories are absolutely not true.
There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.
At this point I cannot identify a single good reason to do the bailout.
i just heard on bloomberg that if they dont get something passed then we are looking at the unemployment rate going to 7%. also Mr. Dodd says that constituents are very angry that this bill did not pass. that makes me wonder WHO is he thinking the constituents really are? Wall Street? this clown needs to be retired!
Dodd is from CT. It may very well be that his constituants are mostly Wall Street types.
Greenwich = hedge fund central
They must already want his head over the short sale ban.
Dean Baker
TPM Cafe
“There has been a mountain of scare stories and misinformation circulated to push the bailout. Yes, banks have tightened credit. Yes, we are in a recession. But the problem is not a freeze up of the banking system. The problem is the collapse of an $8 trillion housing bubble. (It was remarkable how many so-called experts somehow could not see the housing bubble as it grew to ever more dangerous levels. It is even more remarkable that many of these experts still don’t recognize the bubble even as its collapse sinks the economy and the financial system.) The decline in housing prices to date has already cost the economy $4 trillion to $5 trillion in housing equity. This would be expected to lead to a decline in annual consumption on the order of $160 billion to $300 billion.”
Well, duh! How can we be in danger if we aren’t even in an official recession yet? AND we still have checks!
All this dust & noise…did Phil & Wendy offer Goldilocks a ride in their limo and disappear into the West Texas plains?
McCain’s top economic adviser Phil Gramm tells America to suck it up and stop complaining about the economy:
“…this is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”
“We have sort of become a nation of whiners,” he said. “You just hear this constant whining,”
I’ve never been happier to loose money. I called all my reps to oppose the bill but placed some bets that they would. Fortunately not big bets as deflation in housing was baked in regardless. Now we’ll see if Paulson is right, my guess is no. It’s better the gov have this money to create jobs if unemployment goes up which it will (regardless of if this bill had passed or not).
well all i have heard id the businesses cannot get a loan to make their payroll’s. WTF that means those businesses should not be in business, they are insolvent. this downturn is only going to clean-out the ones that need to go and make room for others.
I was wondering about that too. None of the business owners I know pay their employees with borrowed money. Successful businesses make money.
Giving more money to banks etc. that are underwater doesn’t make sense. Throwing good money after bad just makes for more bad. Throughout its history, this Government has bailed out a lot of huge businesses, and most of them have not survived. A business owner who doesn’t know how to make money isn’t very likely to find out with another, and another loan.
I’ve never worked for a business that didn’t take out loans to work through the rough spots. Most medium to larger businesses use tons of credit to buy product for sale & manufacture. Most work off a fairly short-term, 60-120 days. Take that away, and they don’t work anymore, if only because they don’t have the short term cash flow, even as they are very profitable.
Don’t get me wrong, the bail-out sucks in a big way. But this is very, very, very scary.
Back before the federal reserve system, companies use to have their own cash cushion called “savings”. They would use their savings (ie, capital) from previous profits to fund growth and new investment.
When everyone else can use cheap credit to grow then they quickly leave you behind. Just another example of the problems with our monetary system.
You may not support gold/silver as an investment option, but you would be CRAZY to support ANY debt based currency.
I watched PBS’ Nightly Business Report tonight, and the Moody’s economic advisor went on and on about how all these businesses needed an uninterrupted flow of credit to make their payroll. Nobody questioned his assertion. This is a business program!!! Has it become conventional wisdom that you don’t need to generate enough profit from your business to pay your staff? Isn’t that what the IRS calls a hobby?
yeah!! Lets spend $700B on alternative energy production and jobs! That would help get us off oil and save us all.
“It’s better the gov have this money to create jobs”
You speak as though we have this $700B sitting in a box. This is debt=wealth thinking.
We are living in interesting times. Today was a good day for America. The majority were against this bailout and their voices were heard. What Americans really want is a voice and not a shadow government run by the bureaucratic, educational and financial elite.
It has been easy to go after the CEOs and CFOs. However, what about the rest of the investment bankers. Why did not anybody stand up? Why did not the congress stand up? Why did not the educational elite stand up? Why did not the media stand up? Here is the answer. They are all in bed together.
Finally, why is the troll Andrea Mitchell even on TV discussing this issue? Her lame brain husband was the idiot who is mostly to blame for our crisis.
Ah, keep your eyes on the loan, your hands upon the deal
Keep your eyes on the loan, your hands upon the steal
Yeah, we’re goin’ to the Loanhouse
Gonna have a real
A good time
Yeah, back at the Loanhouse they got some bailout show
Yeah, back at the Loanhouse they got some bailout show
And that’s for the people
Who like to go down slow
Let it roll, baby, roll
Let it roll, baby, roll
Let it roll, baby, roll
Let it roll, all night long
Do it, Paulson, do it
You gotta roll, roll, roll
You gotta fill Wall Street’s soul, all right
Roll, roll, roll, roll
To fill their soul
You gotta beepa concha too chomp
Ko ko ko kah don-ta
Ate japoona may-jah
Bop a lula he-cho
Bop a mee-cho
He some funk, hey ride
Ashen lady, Ashen lady speaker
Give up your vow, give up your vows
Save our democracy, save our democracy
Ah right now
When I woke up this morning, I got myself a beer
Well, I woke up this morning, and I got myself a beer
The future’s uncertain, and the end is always near
Let it roll, baby, roll
Let it roll, baby, roll
Let it roll, baby, roll
Let it roll, ah, all night long
http://www.youtube.com/watch?v=HCapv8UcrcY
you can tell pelosi needs a spa day.
I love that song
Matter (gold) is pulling away from anti-matter (stocks)
I’ve decided that every time you pimp gold, I am going to announce that no matter what happens, I declare that I will assist my neighbors in securing their homes and food supply. That I won’t run from this fight with satchels of “mellow” strapped to my thong.
Bug out, dude, bug out.
Get out of the way of the people that are ready and willing to step in and preserve whatever we can of this great country. I imagine myself rebuilding America with like minded people, while you roll in gold flakes on some snake-infested Pacific island.
We haven’t decided if we’ll let people like you back in.
I’m just sayin’…
muggy is gettin’ buggy.
Me too.
Wouldn’t all the pimps properly be on Wall Street, their harem being a bunch of bold-faced lies that are all looking long in the tooth?
The Roaving Hoardes of Starving Masses welcomes you, Battalion Commander Muggy. Grab your pitchfork and torch and follow me.
Muggy, Nice!
“willing to step in and preserve whatever we can of this great country.”
too late…. was gone a long time ago. Although I too, think gold is pushed too much. It might be outlawed in the West.
There was clear intervention as it approached 930. I doubt the Asians will be as accomodating though; 1000 seems in the cards.
I take the stock market selloff as a sign the bailout would involve a massive wealth transfer from Main Street to Wall Street. Otherwise, why would stock traders care much about the outcome of the Congressional vote?
BULLETIN
DOW ON TRACK FOR BIGGEST POINT LOSS EVER, DOWN MORE THAN 700
MARKET SNAPSHOT
U.S. stocks hammered as House rejects rescue
Dow industrials plummet as much as 700; Nasdaq Composite down 6%
By Kate Gibson, MarketWatch
Last update: 2:58 p.m. EDT Sept. 29, 2008
NEW YORK (MarketWatch) — U.S. stocks sank, with the Dow Jones Industrial Average plunging as much as 700 points, with legislators in the House of Representatives rejecting the government’s $700 billion rescue plan for the financial sector Monday afternoon.
“So far, stocks are holding their own above lows amid expectations that House members will head back to the negotiating table, though it appears unlikely that there will be a second vote today,” analysts at Action Economics said.
The big banks are probably buying every small bank in sight with the 50 billion in capital they raised this week. That’s 500 billion in assets they can buy.
GS never loses.
can someone tell me what is wrong with oil and commodities crashing? isent this a good thing?
Bad economy equals demand destruction, equals less need for oil and lower price. Gold should be holding up, but the PMs that aren’t best in breed or are actual useful/industrial metals and not an inflation hedge, like Silver may be hit hard. Sort of like owning WaMu instead of Goldman.
PS - Its a great thing unless you own DIG or SLV or other commodity ETFs …..
As to what’s wrong with oil prices crashing: If we really want to become energy independent, if we want to develop alternative energy sources, then high prices for oil will give us the incentive to make the necessary long-term financial commitments.
Now let’s impeach Paulson.
Absolutely!
What a weird day. I really wondered if the politcos were going to hold up under “every voter who understands this bill hates it or has serious reservations about it”. Most of the articles were clearly for the bailout which is why they couldn’t see it coming.
Could care less about the ongoing financial meltdown. Even if we end up belly up (which I doubt) because of this, I think America won today.
I have been watching today’s events with absolute fascination. I have seen a press conference where Barney Frank and Nancy Pelosi attacked Republicans for not supporting the President. I have seen a coalition of Republicans and Democrats who agree on absolutely nothing kill this bailout bill. A former CEO of Goldman Sachs has aligned himself with left leaning democrats. Up is down, black is white, not a damn thing makes sense.
SHOW ME THE MONEY!
RE: Up is down, black is white, not a damn thing makes sense.
Biblical indications of living in the end times.
So it is written.
Impeach ACORN
Holy C**p!
DOW down -748 points at close of play.
Don’t know whether to scream or cheer?!?!
And, in wierd sychronized news from the cosmos - it started raining here in Van Nuys at the exact same moment one of my cats puked up in the carpet.
My head’s exploding.
Wall Street gangstas should be running scared, but who knows what tomorrow brings…nah, I don’t trust our congress one inch.
And in turn, some members of Congress do not trust markets one inch, as their faith has effectively been destroyed by naysayers preaching from bully pulpits on national TV.
Wall Street Journal
SEPTEMBER 29, 2008, 4:30 P.M. ET
Bailout Bill Fails in House Vote
Amid Defections in Both Parties
By GREG HITT
WASHINGTON — The House of Representatives delivered a stunning defeat to legislation designed to rescue the nation’s troubled financial system, sweeping aside a call from President Bush to “send a strong signal” of confidence to markets at home and abroad.
…
After the vote, House Minority Leader John Boehner (R., Ohio) said there would be an effort to bring back another bill, with further changes. “We’ve got to find a true middle ground,” he said. “We need everybody to calm down and relax and get back to work.”
Lawmakers on both sides of the aisle suggested the legislation is not dead. House Speaker Nancy Pelosi (D., Calif.) said at a press conference that the “lines of communication” remain open between policymakers and that Congress needs to take another “bite at the apple” on the market rescue plan legislation.
“It is difficult for me to imagine we would leave the market to its own devices and fears until Friday,” said Rep. Adam Putnam (R., Fla.), the third-highest ranking Republican in the House. “We’re encouraging members to understand the consequences to doing nothing, but I think members have strong convictions about this bill.”
We need everybody to calm down and relax and get back to work.
But don’t forget to panic while being calm and relaxed. We have to “do something!!!” because the banker’s paper castles are on fire.
Also, since everyone needs to leave to campaign in their districts, I’m sure they will all relish having their feet put to the fire again to vote on a highly controversial bill that may have already cost them their seat.
And the DOW is in the crapper anyway, so what’s the point?
Oops, I wasn’t supposed to say that, was I?
Cheer! I was out a year ago.
Seriously, today was more important than money. The markets were going to tank anyway.
Reversion to the mean and the law of gravity have a whole lot in common. Ignore them both at your peril.
Newton’s Law felled the Big Apple.
Fast forward 3 days from now. Bill passes and markets soar 800. Any takers?
DOW dropped 777, isent that a jackpot in vegas?
“DOW dropped 777, isent that a jackpot in vegas?”
think it’ll bounce back 111 points tomorrow?
Nope. Look at the Dow/Gold ratio. We’re headed the other way.
Also, analysts have not yet lowered their estimates for Q4. They will probably do that in a few days.
Why would anyone even care to spend time on another version of the bill? We were assured that if nothing passed by last weekend, the world was doomed, and nothing passed. Wouldn’t further efforts to pass a bill be moot in this case?
Dems can come back with a more liberal version, put ACORN etc goodies back in and get their own D votes that they lost. Good for them in the election.
Everyone has to come up with a new game plan tonight. They have only 2 days to do “something” - it will be interesting to see what comes next.
Variations of this bill aren’t necessarily going to work. Time as only increased public resistance. As along as everyone still has access to money, food, and shelter by the end of the week, nothing might be done.
Voters smell blood in the water now.
Isn’t hillary still a senator?
Why can’t she come save us from this mortgage massacre.
“Variations of this bill aren’t necessarily going to work.”
What the Dems should do is bring in the best economists, put together a completely new package, pass it on a party line vote if necessary, then send to the president to be signed or vetoed. That’s the most they should do prior to election.
No one is ever again going to buy doom peddled by Bush. He has been completely discredited with almost everything. The only type of plan that can possibly pass prior to the election is something in which he has no role other than to sign.
It’s been a very long time since the people spoke loudly and together and it was, barely, able to make the difference. The people should accept nothing less than a credible, transparent plan that is not rushed.
If this is an election ploy, a candidate can say his opponent not only voted once to give Wall St a trillion dollar handout but twice!
I’m watching CNBC right now, watching people on both sides of the political spectrum try to convince us that this is necessary. This thing is not dead, we will see it again soon.
Like Frank points out, these guys are gonna keep at it ’til it passes in some form, just like some local school board.
Well, yes and no.
Yes, they are going to try to keep working on it. I expect that they will try something again in the next 48 hours, but they need to come with something significantly different than the Paulson plan.
But no, they don’t have endless amount of time, unlike the local school board which will keep meeting at 6pm every 3rd Tuesday from now until when people stop having children.
Congress should have hit the campaign trail today. Thursday is it for any “emergency” bailout. I’m not saying this won’t come back from the dead or not be readdressed after the election. However, today’s defeat has left all the organizing parties in disarray. I’m not sure they even have time to come up with something new.
Even with that, it’s pretty obvious that the party leaders are ignoring rank and file concerns. Most reps are concerned about November and the last thing they need is to vote on hugely unpopular, highly visible bill with threats of financial Armageddon making daily headlines. Stop pushing the bill and those fear, on quiet days (sans WaMU failures, etc), will be page 8 stories.
I’m convinced that timing of the bill and the deadlines had much more to do with Bush attempting to steamroller Congress than any real significant change in the financial situation. (Which I admit is highly unstable….)
Bush has operated that way for the last 8 years - any major piece of legislation that he has gotten passed has been in a no-win, highly emotional charged situations. He really has no clue about how to work with legislators. If I were a Republican, I would have ditched him years ago as someone to worry about.
“The stock market was definitely taken by surprise,” said Drew Kanaly, chairman and CEO of Kanaly Trust Company, referring to the House vote. “If you watched the news stream over the weekend, it seemed like it was a done deal. But the money is being held hostage to the political process.”
from cnn money
What money? It’s just a concept, dude.
i found the link to the votes on the bill. (see below)
http://clerk.house.gov/evs/2008/roll674.xml
The bill is titled/described as:
“To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes”
Hello! Congress! You are completely f’d up!
yeah, that threw me off when i saw the title, but it is the “no banker left behind act”. it looks like this bill has been in the system since 2007 and there was a bunch of crap tacked onto this monster.
wrong link?
I think it might be the right one.
It wouldn’t surprise me that they would have to amend the tax code to get this done.
Once legislators decide on what to do, they hand it over to a bunch of lawyers who decide on the actual wording of the bill.
*If* ‘86 was the last major overhaul of what kind of authority the Treasurer had, that might have to amend it to given him the authority to spend all of our money.
Financial Times
Central banks rally to ease market stress
By Krishna Guha and Alan Beattie in Washington
Published: September 29 2008 20:07 | Last updated: September 29 2008 20:07
The Federal Reserve on Monday prepared to pour an extra $630bn (€437bn, £350bn) into the global financial system in coordination with other central banks around the world, in a massive effort to curb extreme stress in international money markets.
The move is designed to reinforce the impact of the $700bn bail-out bill proceeding through the US Congress and directly relieve market stress in the near term, before the new government fund can start operating.
Really stupid question of the day: If the Fed has a spare $630bn in liquidity available to pour into the global financial system, then is $700bn really needed from taxpayers? Wouldn’t $70bn be enough to get up to the magic $700bn?
That’s why I’m ambivalent about “confidence” raising measures at this point. Bernanke’s passed out his 800B of ammunition. Now the troops have to stand in line, take their casualties, and shoot it.
Except his troops are bankers. As the British comedians the two Johns put it best: If you don’t support us, “We can always go somewhere else and screw up their economy.”
Turns out politics and real estate have much in common.
Analysis: The Failure of the Bailout Bill
Troubled skies over the Capitol. AP Photo/J. Scott Applewhite
The failure of the financial bailout bill in the House is a classic example of an old adage: all politics is local.
Do not be surprised if Citigroup bails on its purchase of Wachovia.
Bank of America & Citigroup are at risk. Many corporate credit lines were drawn.
Wells Fargo backed out of the proposed purchase of Wachovia because Wells would have to revalue assets (bring them closer to reality). Investors would not be happy. Citigroup had little residential RE exposure.
Night.
Perhaps Wells Fargo felt they maybe weren’t too big to fail, after all.
I bet a lot of bankers wake up in cold sweat tonight screaming “But we ARE too big to fail!”
we are about to print 1050 on the S&P500….
thats been my all in number since August last year.
none of the currencies are safe: ergo: Yen.
gold saw another top today….and a weak one at that.
this is the Hedgi-stan liquidations I was talking about….should get one more day at least of donwside.
Voz — Why have ye so little faith in the PPT?
I wonder if stock market trading will be halted until a bailout bill is passed ? If the market opens up tommorow 100’s of points lower I wouldn’t be suprised .
My congresswoman, Anna Eshoo voted yes! Apparently she doesn’t read my mail. On her website, she said: ” Rep. Eshoo Votes to Stabilize Economy, Protect Taxpayers and Main Street”. She says it will help house prices!
Anyway, I couldn’t be happier it failed. What a great New Year’s Miracle.
Happy New Year–it’s 5769–to everyone here.
I just got off the phone with Anna Eshoo’s staffer.
I voiced my displeaseure with her votte.
Mike
No Banker Left Behind: Wall Street Works the Phones as Dow Drops 777 Points
Posted by Heidi N. Moore
“No banker left behind” has been the sarcastic tag pinned by critics on the $700 billion bailout bill currently in Congress. One online petition protesting the bill currently has just over 5,000 signatures.
…
The Securities Industry and Financial Markets Association, for one, is a whir of pinstripes and Gucci loafers. The organization, which represents Wall Street and particularly anyone involved in the capital markets, sent out a red-festooned, aggressively capitalized “Immediate Action Alert!” email to its members at 11:38 a.m. today with the subject line “Please call Congress this morning.”
The organization urged, “We urgently need you, and your employees, to make calls before noon today to the House of Representatives and ask them to pass The Emergency Economic Stabilization Act of 2008 to bring stability to our economy and increase credit availability for the benefit of every American citizen…There are no viable alternatives and doing nothing is not a reasonable option.”
The electorate is so far unstinting in its outrage. Some news reports suggest that some members of Congress have received up to 2,000 calls or emails a day, each. Some shake their heads that the public reaction has not been this great since the impeachment of President Clinton.
Wall Street doesn’t have enough people to fight back the unpinstriped masses. But that’s lobbying for you. There is one thing we do know: if Treasury really wanted to win this thing, it shouldn’t have revealed that the $700 billion number was pulled out of thin air. “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes last week. “We just wanted to choose a really large number.”
The 700 billion was enough to get bankers to smack their lips and drool.
The Congressional vote may have stimulated some bodily functions that occur at the opposite end of the alimentary canal.
Dear Anna Eshoo:
There is an inconsistency in your logic. You said you voted for the bailout “to restore our credit markets with no rewards for those whose greed and foolishness have so jeopardized our economy.” Yet the legislation had a provision to help people who have mortgages they can’t afford.
May I point out that if people didn’t take out mortgages they couldn’t possibly pay back, we wouldn’t be in this mess. Certainly, these folks were as greedy and foolish as Wall Street. Let’s not reward them either.
Sincerely,
Reuven Avram
I’m watching a guy on CNBC Asia who says the bill didn’t pass just because it wasn’t “properly explained” by the House members to their respective districts as to it’s good points. Ridiculous.
They did do a horrible job presenting & explaining it. I’ll give old CNBC Asia guy that!
When Guy from london speaks he is so loud it wakes me up. I think he is handsome but i never open my eyes that early. My ears are open from 3 am on.
Thank you Blano, for earlier pointing out that ALL representatives are up for reelction this November.
Now’s the time for follow up, follow up people…whether your rep voted yes or no…follow up with them.
“Lack of understanding” is quite often used to manipulate people.
For instance, my current landlady (soon to be ex), quite literally will not understand (nor believe) the issues I bring up. When I complain to her about those issues, it’s because I don’t “understand” the culture of the people creating problems.
In other words, “lack of understanding” is used to prevent discussion of the actual issue and mentally strong-arm the party into thinking they’re stupid or the issue lies with them. How effect that technique is really depends on the people involved.
I think most Americans pretty instinctively understood what this bill which was, at it’s core, about bailing out the bankers. I’m aware we’re connected to the bankers and I think so are most Americans.
My sense is that the average American against the bailout a)doesn’t have enough assets to care, b)might be very happy to see the bankers fry because their close to bankruptcy themselves, or c)like me, has enough assets to care but is willing to see them tank to see that the wrong people aren’t rewarded.
The “lack of understanding” gambit can work both ways. People will say “I don’t understand” when they want to talk an idea or project to death, or when they are trying to avoid doing something that they do not wish to do.
“I’m aware we’re connected to the bankers and I think so are most Americans.”
Making loans to everyone who can breath was a pretty good way to connect all of us to the bankers, don’t you think? That would appear to be a pretty good first step in setting up a financial crisis with popular support for large cash infusions to the banking sector as the natural remedy to fix the problem.
Ne’er-do-wells sweating the armpits out of their bespoke shirts, Priceless.
So - I was dismayed to see that my congressman - Frank R. Wolf of VA - voted for the bill.
I tried going to his website to send an email protesting - but lo and behold they’re having technical difficulties with the email server. Yeah - OK.
Not only that, but he’s got a link to the bill on his website, but when you try to down load it, it downloads an erroneous document (only 189k pdf file, which I know is *way* too small), and Acrobat gives an error when it tries to open it.
I’m bummed since generally he’s a good guy, in fact did vote against the Foreclosure Prevention Act.
They ballooned 3 pages to (only) 100 pages over the weekend, according to the radio. So maybe you did get the entire file.
I’m willing to vote them out just for that. If you wnt to steal my country, you need to do it in under 10 pages or I’m just going to laugh at you.
And if you use any of those three syllable words in the bill I’m going to question your heterosexuality - per the voting rules of “Idiocracy,” the movie.
We are collectively over the edge when a Republican bailout plan is defeated by a combination of Republican and Democrat idealogues backed by an overwhelming groundswell of voter support.
Wall Street Journal
* SEPTEMBER 30, 2008
How Voter Fury Stopped Bailout
Left-Right Combo By Opponents Put Plan on the Ropes
By STEPHEN POWER and GARY FIELDS
The defeat in Congress of a proposed $700 billion economic-rescue package followed an intense outpouring of voter anger, fanned by politicians, interest groups and media on the left and right, that overwhelmed calls from the president and top lawmakers to pass the deal.
Voters opposed to the deal deluged Capitol Hill with letters, emails, phone calls and faxes over the past week. Some 23,000 signatures were collected over two days by Sen. Bernie Sanders, a Vermont Independent, calling for a five-year, 10% surtax on the wealthiest Americans to help fund the bailout. Some prominent conservatives and bloggers criticized the deal as an unwarranted intervention in the free market.
[Fierce resistance from both ends of the political spectrum drove lawmakers to vote against the economic-rescue plan.] Getty Images
Fierce resistance from both ends of the political spectrum drove lawmakers to vote against the economic-rescue plan.
“The vast majority of my voters looked at this as a bailout for Wall Street,” said Rep. Darrell Issa of California, one of the most outspoken Republican critics of the proposal.
On his Web site in recent days, Rep. Issa has posted letters and emails from some of the more than 2,000 constituents he said had contacted him about the proposal, including one from “Greg” in Temecula, Calif., who called the proposal “poorly thought out and rushed to the floor.”
“I am 45 and a husband and father of 4. I am outraged and appalled at the arrogance of my President and the lack of regard for what is right,” the message said.
What we have here is something extraordinary, which is a silent, peaceful voter revolution which has captured the attention and conscience of Congress. Bravo to Congress folk who care more about saving our country’s special form of government than pandering to big money interests. Your grandchildren and future generations of Americans will be in your debt.
Perfect political-economic storm: The anger stage of housing bubble stages of grief coincides with a rush to bail aided and abetted by an open effort to incite financial panic, just before a presidential and Congressional election.
There is a very important lesson on the importance of open and transparent political process here for future generations of American politicians.
WASHINGTON WIRE
Political Insight and Analysis From The Wall Street Journal’s Capital Bureau
September 29, 2008, 5:43 pm
Bailout Bill’s Failure Crashes U.S. House Web Sites
Easha Anand reports on Congress.
To add to the list of things crashing in the wake of the financial sector rescue bill’s failure—which includes the Dow Jones Industrial Average, personal credit lines, and Treasury Secretary Henry Paulson’s sleep schedule—congressional Web sites.
As of 5 p.m. EDT, http://www.house.gov , the House of Representatives Web site remained down, overwhelmed by traffic. So, too, were the official Web sites of House Speaker Nancy Pelosi of California and House Financial Services Committee Chairman Barney Frank of Massachusetts.
The site of House Minority Leader John Boehner of Ohio was still up and running, however.
For what it’s worth (I should post this tomorrow also) - It seems like to help matters with this bill - it would be good to “spread the word” as much as possible to help shoot it down, or at least minimize and/or guide it’s impact/content.
For instance I’m discussing this on a really good general message board with some folks, in a few threads - and getting hammered pretty good for my negative views on the bill, including suggestion for an alternative.
http://accboards.com/forums/forumdisplay.php?fid=2
(my login is WolfStock - wouldn’t mind if some folks helped get my back
)
It’s nice for us to slam it here on HBB - but generally it’s “preaching to the choir”. It may be good to preach it out on some of the other more active message boards (in addition to contacting your congressperson directly of course). The more public opinion helps guide (or kill) this - the better.
I’m dollar cost averaging into my beloved Vanguard fund so its all good. ‘course I worship Zardoz and I’m never gonna die…
MinnPost.com
House vote throws Congress and market into turmoil
By Steve Berg | Monday, Sept. 29, 2008
“After today’s failure, it wasn’t certain when the House or Senate would try again. Supporters vowed to try to bring the rescue package up for consideration again as soon as possible, perhaps late Wednesday or Thursday, but there were no definite plans to do so. Despite outrage from voters, deep anger over the greed, betrayal and naiveté that led to the worst financial crisis since the 1930s, there seems little choice but to apply taxpayers’ money to try to clean up the mess. Unless the tide of toxic housing loans are sucked out of the system, credit will be hard to come by and without credit, jobs will be shed by the millions and the economy will head faster into the tank.”
This is where I get lost. Why can’t the financial entities that bet on toxic mortgage loans sell them at prices the market will bear? At the very least, why can’t these firms be required to sell enough to establish market prices, before appropriating an arbitrary amount of taxpayer money to set arbitrary purchase prices?
Just asking…
I do not understand the headline; Fed pumps $630 Billion into the banking system. I thought their ammo was running low. How does this work? Were they promising to give the money they now don’t get from the $700 B bill that failed, or do they have a way to do this without having it?
Will there be a headline: FED CAN”T INJECT $630B?
Will the story be: OK taxpayers, we’ll do this on your dime without your approval?
I don’t get where this $630 comes from.
It sounds like taxpayers will now only need to inject $70 bn instead of $700 bn, as the Fed some how found an extra $630 bn to inject?
I agree with you PB .Its just greed that the banks don’t want to sell assets at a reduced price . Change the mark to market rule and they get to hold on to them longer But, if you were a bank why would you want non-performing loans for very long ?
I too originally thought that was it for Bernankes 800B, but now rereading, the 630B is probably the total in concert with the other foreign central banks also acting.
Many have marveled over the many tales of unbelievably stupid behavior by both lenders and borrowers during the bubble boom years. How could markets behave so irrationally?
The big push to bail out the lending market, and the obvious presumption by the smart money crowd on Wall Street that bought politicians would play right along, pretty much puts it all into perspective, neh?
God Bless America and her Republican rebels!
Don’t forget, there was Democrats that rebelled.
As a feisty Dem (Congressmen Peter DeFazio, Oregon) on NPR’s Marketplace pointed out today :
DEFAZIO. …. Henry Paulson sent down a three-page insult to Congress, saying: You let me either borrow or give me $700 billion — authorization to print it — and you get out of the way. That was what he sent down. People said, oh, he’s just a tough bargainer. And I said no, that is not a bargaining position, plus I reject the basic premise. We should have put his plan up for a vote on Tuesday last week. It would have gotten zero votes, then we would have been in the negotiating position to push him back. They then started negotiating with him, and, you know, you just can’t get very far starting from a failed premise.
RYSSDAL: Do you reject the administration’s premise that the credit markets are still frozen?
DEFAZIO: There are apparently problems in the big money parts of the credit market, not yet locally. My credit union’s community banks are still lending. They’ve all, I’ve been in touch with them. They did say there’s a new phenomena where some businesses locally were very solvent are having their credit lines cut off by commercial banks under orders from the FDIC. So the FDIC has to stop making things worse and start thinking about how they can regulate to make things better.
RYSSDAL: How’s your constituent service phone line been doing this week?
DEFAZIO: Hasn’t stopped ringing. We’re getting up over 3,000 phone calls, over 3,000 e-mails running well more than 100-to-1 against it, but that’s not what I based my opinions on. I was the first member of the House of Representatives to speak out against this plan last Monday morning.
The Dems rebelled for all the wrong reasons.
And what makes the Republicans rebellion correct. The whining about Nancy hurting their feelings?
I’m just glad both Demos and Repubs voted this god awful bill down.
This article was penned before the bailout vote.
What I wonder about the bailout proposal is, with the myriad bailouts already attempted that have had so little apparent mitigative impact on the credit crisis, why would simply throwing a far larger sum of money at the problem be expected to have a qualitatively different effect (other than shifting ownership of some of the dodgiest loans from private banks to the Treasury)?
The most incredible part of the whole story, IMHO: Not only did lenders offer loans to anyone who could breath, but nearly any bank which could lend managed to somehow get itself entangled in the mortgage mess. How so many financially astute individuals could make the same foolish mistake will be a topic for generations of researchers to ponder.
SPECIAL REPORT AMERICA’S MONEY CRISIS
Bank bailouts sweep Europe
European governments, including Belgium, Netherlands, Luxembourg and Britain, intervene to prop up weakened banks as crisis deepens.
September 29, 2008: 11:13 AM ET
LONDON (AP) — European governments had to step in with a flurry of major bank bailouts from Iceland to Germany as fear and turmoil from the U.S. credit crisis spread through the financial system.
Even as U.S. lawmakers were preparing to vote on a massive $700 billion (€490 billion) rescue of their own banks, the governments of Belgium, the Netherlands and Luxembourg took partial control late Sunday of struggling bank Fortis NV (FORSY), while Britain seized control of mortgage lender Bradford & Bingley (BDBYF) early Monday.
Germany organized a credit lifeline for blue-chip commercial real estate lender Hypo Real Estate Holding AG, while Iceland’s government took over Glitnir bank, the country’s third largest.
The rapid-fire European bailouts were quickly followed by news that U.S. financial giant Citigroup Inc (C, Fortune 500). was acquiring the banking operations of troubled Wachovia Corp., (WB, Fortune 500) the latest U.S. financial institution to fail or be sold. Citigroup will absorb losses of up to $42 billion in a government-facilitated takeover.
European shares fell heavily and money markets remained frozen, with banks refusing to lend to each other for all but the shortest periods.
“All banks are having difficulty with long-term loans and short-term financing. It’s difficult to say which could be affected,” said UniCredit economist Alexander Koch in Munich.
“Despite the rescue packages in the U.S. (and Europe), that doesn’t fully correct the problem. I see the problem flowing until late next year,” he added.
Cargo cultists in Asian financial capitals are buoyed by renewed U.S. bailout hopes.
MarketWatch.com
September 30, 2008 2:05 A.M.ET
BULLETIN
Asia pares steep losses
Partial recovery on investor hopes U.S. eventually will approve bailout
After initial plunge in reaction to Wall Street losses and rejection of financial-sector bailout, Hong Kong and Japan lead comeback on belief that Bush, U.S. Congress will agree on a new plan.
Whenever I worked on any type machine in a factory, producing things, there would be some things I was required to avoid. If I presented myself as someone who is well skilled and knowledgable and other Yahoos started saying I was, “just guessing” and all my current activities were done in a desperate effort to keep the machine running correctly. And, if I failed to have a plan to improve the situation or determine what exactly needs repaired and I cannot communicate well with others as to what needs to be improved to safely and effeciently operate my equipment, all the while whineing for a promotion over you, simutaneously breaking alot of other related equipment. Does that indicate I am qualified to be in charge of operations? If I admittedly failed to operate this equipment correctly for a long period of time, how does that reflect on management & the owners? Is a promotion, a pay raise, and extra break time a well deserved reward? If I operate a machine at a loss for years, perhaps it is encouraged? Who benifits the most?
When I talk to younger employed people who just discovered housing price drops, I might tell them to wait at least two more years before buying, to save up some money, and I still get, “that look”.
The garage sale signs have really improved this year, more glitter and fore-thought. My Midwest city is building, umm skate parks in flood plains and painting bike lanes on the city streets for the first time.
Fall down, go boom - get back up. Duh.