But .... it's socialism! It cannot be a good thing! In the long run, we're all dead. John Maynard Keynes
See Krugman's relatively mild assessment; I'd have thought he'd be raising holy hell. Bush fatigue, indeed. If I can't rant, I don't want to be part of your revolution
I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.
It is no surprise the meltdown happened 6 weeks prior to the election as Paulson and friends knew it would give them the leverage to get something passed immediately and with power vested in Treasury.
What the Dems should do is say we will pass an emergency relief measure which will be expiring at the end of 3-4 months but will give liquidity to the credit markets but any permanent solution to the banks and anything else proposed by Paulson will be delayed until the new Congress and President are elected. There will be no definitive rescue and workout plan unless the American taxpaper and homeowner are rescued which will include a total rewriting of the bankruptcy bill which was passed by Congress but bought by the finance sector. Everything else Sanders has proposed will be incorporated in an overall bill after the election. Another caveat the Dems should require in the extensive bill should be the indictments of the criminal and fraudulent people including the CEO's who knew they were selling fraudulent investments.
And a total reregulation of the finance industry. Regardless of what the markets will do if Paulson doesnt get his way.
What no one has said is Paulson very well may be a crook just as the entire apparatus of corrupt government and the finance sector who corrupted it. And Bernanke hasnt been correct in anything he has done so who can trust these guys.
Bob Rubin is Obama's chief economic advisor, and McCain has K Street lobbyists dominating in his campaign. The average American cannot win in a no win situation.
The securitized mortgages are dead letters. Where's his story about supporting US public as mortgage origination values deflate? Why not set a "floor" at arbitrary percentage at that basis rather than MBS price per share to clear the secondary market. That was the original mission of FRE, FNM --minimum risk rate and assurance. The only losers in this weeks "crisis" are firms who rely on RMBS trading to capitalize their operations -- no real productive value.
Investors (including passives like 401(*) participants --defined contributors in employer and pension plans) pay by accepting their losses on securities income. End of story. US public doesn't pay investors par by accumulating public debt, then attempting to recover increasing interest payments by marginal tax rate increase! And this ...
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up.
Dividends? Does he mention actual dividend payments to each and every "shareholder." I didn't think so. See, after we've commited treasury debt for equity in a REIT valued at ZERO, whatever dividend is paid to Treasury's general fund from which Congress appropriates. Same goes for interest and principal corporate bonds (CMOs) collateralized with bullshit RMBS. Otherwise, US is waiting years for private sector to repurchase stocks from the Treasury in order for US public realize some nominal capital gain which, again, is deposited with Treasury general fund. And when THAT happens, you can count on US public having proved its ability to service their inflated RE. Then Congress will authorize funding of discretionary programs to build public works and universal health care. Everybody benefits. Yeah.
Sanders can't even bring himself to commit the words Glass-Steagall to his plan to restructure the finance industry? Oh fuck that "brilliance." Diversity is the key to economic and political evolution.
I'm sorry, you have once again been given a choice between two evils.
It was never going to be the sort of brilliance you wished. It is COMPARATIVE brilliance. It is RELATIVE brilliance. Pardon my inadequate rhetoric. I was THRILLED to see this, knowing full wel what would be offered in its stead.
Check out the Bush Administration's disastrous blackmail -- and blackmail it is; if Obama refuses it, he is doomed. If he accepts, WE are doomed. If I can't rant, I don't want to be part of your revolution
Second, Obama hasn't refused jack shit proposed by Paulson Geithner LLC. Read it. Senate Democrats have given him cover ever since he declared his candidacy. Virtually every "housing" related bill enrolled since Bush/Bernanke's presser Aug 2007 is engrossed by H.R.3221. There are no coincidences. But you can play shock 'n' awe of Paulson's congressional debrief til the cows tip. Obama's your senate's shill. And that does not make a McCain presidency a worse proposition, when all the DP "strategists" will bray is, "loose canon."
Third, GAO 1996 Financial Audit 1994, 1995 Financial Statement (pdf). Same fucking operating strategy and conditions EXCEPT this time around non-depository firms are covered.
Grow up and break ranks. I already clean my own house. Diversity is the key to economic and political evolution.
And no need for Glass-Steagle if you nationalise the institutions and keep them that way...it would be a completely different regulatory framework. Glass-Steagle is yesterday's paradigm, tomorrow's may call for something entirely different.
Bernie knows socialism, and he knows socialism for the wealthy, paid for by everyone else, when he sees it. Fai de bèn a Bertrand, te lou rendra en cagant
Talk about regulation second, first solve the immediate problem though
The "immediate problem" is the answer beggaring a truthful question. Is it (1) mortgage lenders have no income? or (2) investment banks have no "liquidity"? The question determines whether the US government's trust obligation is to finance primary or secondary market.
And no need for Glass-Steagle if you nationalise the institutions and keep them that way
The concept of nationalization is meaningless in the US as you very well know from your own experience. Further, one has only to read history and the law to confirm that federal (national) government authority exists to enforce private property rights in every market. This particular financial panic will not in itself divert that political mandate, especially given material concentration of rights in corporate entities.
This is the regulatory goal of the FRB Paulson published in March, citing legal authorities extending into the 19th century. The teal bands represent national licensure supervised by FRB/Treasury agents, given primacy of FHC rights in USC and FRB exclusive supervision of FHCs in the global capital market. H.R.3221 engrosses those facilities.
That is to rationalize core banks and implement US Basel II, Tier I conforming assets. That is to market US private debt. Now if you believe there is any financial or social benefit due US "taxpayers" resulting from this restructure, please share. I think Sanders is falling for a AUMF fake, again.
Oh, wait. He did not vote for either. So I'm not about to presume what he thinks he knows about "socialism" in Vermont or for the US. Diversity is the key to economic and political evolution.
Anyway, Exchange Stabilization Fund use is supposedly limited to short-term, ForEx lending. The proposed financing for domestic "Troubled Asset Relief Fund" is entirely extraordinary. It implies some of the funding is for foreign domiciled financial firms or central banks.
voila
Treasury Secretary Henry Paulson said Sunday that foreign banks will be able to unload bad financial assets under a $700 billion U.S. proposal aimed at restoring order during a devastating financial crisis. "Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."
"Yes, and they should. Because ... if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Paulson said on ABC television's "This Week with George Stephanopolous."
Treasury FAQ, 20 Sep
H/T Calculated Risk Diversity is the key to economic and political evolution.
OTOH, there is more than one way to skin a cat, and given the likely ways our "opposition" on the Democratic side are going to express that opposition, I'm going to cut Sen. Sanders more than a little slack.
There's no reasonable solution to this mess other than either a very deep (Argentina-style, -20% GDP contraction over a couple of years) recession or a decade of Japanese stagnation accompanied, unlike the Japanese, by inflation and a noticeable secualr decline in living standards across the board. That's what's in store and really I don't think there's any getting 'round that.
Given this, the fact there's no reasonable economic solution, we are left to the way to politically frame the situation in a way which sensitizes the greatest amount of people to the real reasons they're about to get fucked.
That's the import of Sander's letter. It's an ideological statement, not an economically logical one. And one that bears repeating, though I'm sure we can't count on Schumer et al to even say parts of it. Fai de bèn a Bertrand, te lou rendra en cagant
Scroll to Paulson talking about the Fannie Mae bailout.
"The government is going to be paid before the shareholders get a penny..."
But...
"subordinated debt holders should come ahead of the taxapayer" (at about 13:25)
Now, who do you suppose he's thinking about? Fai de bèn a Bertrand, te lou rendra en cagant
Release Date: September 21, 2008 For release at 9:30 p.m. EDT The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies. To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve's primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF); the Federal Reserve has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. In addition, the Board also authorized the Federal Reserve Bank of New York to extend credit to the London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be eligible to be pledged at the PDCF.
The Federal Reserve Board on Sunday approved, pending a statutory five-day antitrust waiting period, the applications of Goldman Sachs and Morgan Stanley to become bank holding companies.
To provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve's primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility (PDCF); the Federal Reserve has also made these collateral arrangements available to the broker-dealer subsidiary of Merrill Lynch. In addition, the Board also authorized the Federal Reserve Bank of New York to extend credit to the London-based broker-dealer subsidiaries of Goldman Sachs, Morgan Stanley, and Merrill Lynch against collateral that would be eligible to be pledged at the PDCF.
CR is incorrect. The result is neither more oversight nor a change in the firms' business models. Being financial holding companies (per GLB Act) both firms were supervised by the FRB and the SEC and, informally, the Presidents Working Group (PWG a/k/a "the Plunge Protection Team"). But Paulson's "Blueprint" does explicitly seek expansion of the PWG. The latter observation implies only that regulators will recommend that the firms acquire state- and national-chartered banks and perhaps apply for charters for some of their existing banking and trust subsidiaries. Further, this measure does not revoke firms' privileged brokerage licenses. Rather, it cements market risk in depository institutions --all of whose undercapitalized operations were regulated by the FRB.
Recall: currently, - $122B non-borrowed funds of the reserve bank system. The FRB is shifting cost of banking to Treasury and revenue generation to debt marketing entirely. Diversity is the key to economic and political evolution.
Unfortunately, it will fall on deaf ears in the Democratic caucus - Schumer is bought and paid for by various Wall Street interests, Dodd by the Insurance companies and Biden by the Credit Card companies...
PS - I don't think Sen. Sanders would call himself a liberal ;-) Fai de bèn a Bertrand, te lou rendra en cagant
The North American Union that doesn't exist! 47,400,000 doesn't exists! http://www.google.com/search?hl=en&q=North+American+Union&aq=f&oq=
