It was not a bad thing that this vote failed to ratify the bill today.
It is bad that both Pelosi went out of her way to make a political point, and McCain did likewise. It's not fucking prom night here...
I heard Obama's speech, which began immediately after the failed vote, and I liked just about all I heard.
Four of Colorado's representatives, if I remember what I heard accurately, including 2 dems and 2 republicans, voted against it. I'm not sure I heard that right; I was listing to 850 a.m. KOA in the car.
There are serious problems with the bill as written. Namely:
- Oversight (for the first 350 billion, it's not nearly strong enough)
- How much the US Gov will purchase these shit assets for (Have I talked about that before? That's THE key about whether this bailout turns into kleptocracy or a stopgap measure).
- Who will manage the assets once the government purchases them (which is a subset of oversight, probably more important than general oversight).
The more I think about this situation, the more I think waiting is good. I'm really teetering on saying to the government, fuck you, you let this happen, now let the chips fall where they may.
On the one hand, lack of transparency coupled with de-regulation, coupled with the end of the hard division between investment banks and commercial banks, let to accounting slight of hand.
To paraphrase Theo: they tortured the numbers and made them say what investors and stockholders want to hear. It looked like profit was rolling in, and liquidity was sufficient. The profits were based on the confidence that real estate would continue to rise, and the liquidity was grossly, bordering on criminally inadequate.
By virtue of the fact that the real estate market really started being noticably fucked in July of 2007, everyone should have started crunching "what-if" scenarios last year. No one did. Well, I can't say for sure. Certainly no one in the government did, including Bernanke and Paulson. This negligence should cost them their jobs, they should at a minimum resign.
It could be that the solid banks now out there saw this coming and either sold or were never in the shady business. Dunno. It'll be interesting to see.
It's a foregone conclusion that the US is going to see a recession (meaning two back-to-back quarters of negative economic growth). That puts you in roughly Summer of 09.
How bad this all gets is a lot of guess work and probability models, and of course, whether we allow the US government to borrow $750 billion dollars to do something.
No one can predict the probable outcome, so it's understandable no one can predict what $750 billion will do. It may be a large enough number to stop a steep decline in economic growth (i.e. depression). It may not. But it's also not known how steep, or how long this predicted recession will last. So it could be that $750 billion is not needed much, though almost no one says it's not needed at all.
My problem with this bailout is two-fold.
First, I'm not responsible for this mess, so don't come to me and ask to mortgage my future retirement to fix it. Fuck you principle. Very American response.
Second, (point A) if we do this, we are fundamentally changing the economy of the US. The government will be an owner/operator in anyone from whom it buys these shit assets. I doubt their profit will be as good with the government overseeing operations than if it weren't.
Second (point B) the government could run this so incompetently, that it enables the same kind of bullshit speculation to continue with the money. Capital is capital, and all investing is gambling. Given the revealed lack of responsibility that investment bankers showed with money they were responsible for soliciting, why should I believe they are going to have any more intelligence, diligence, or ethics in how they use money Uncle Sam throws at it. It could be like giving a credit card to a gambler (this is why oversight has to be huge in any bailout).
The problem is that not doing something will certainly be painful. But doing something won't reveal how much pain we endured (with the invested billions) for many years to come. My conservative fiscal nature is saying: Fuck everyone, let it sort itself out. That means lots of problems for the country, but since I have little extended risk here, and 25 years before retirement, at LEAST, I'm fine letting it sort itself out.
For the time being, I've decided to pursue a policy that this shit should be allowed to sort itself out until November 5th, and then whether the douchebag or the shit sandwich is President, let his administration work with congress to direct what will be done.