Bailout Fails: Where Do We Go From Here?

picture-40.pngThe bailout bill in the House just failed, 205-228. Last I counted, the Republicans had fallen short of even delivering the 70 yes votes they promised.

The stockmarket is bouncing up and down like a basketball–down 700, then down 400, and now down 600, now 450. 

Which is as good an indication as anything else that no one knows what happens now. 

I just heard a Barney Frank quote saying he’d wait to see how the markets react before deciding where to go now.

Barney: Think basketball. 

Update: vote total fixed per Hugh.

  1. MsAnnaNOLA says:

    We need more time to see what is really going on.

    This is a good thing. Maybe after the first of the year we can have a real plan of attack with the main focus of the legislation actually changing the way things operate on Wall St.

  2. Albatross says:

    The Rethugs sure have egg on their face, since it’s their party that failed to heed yet another False Sense of Urgency by the Bush Administration. Blame THIS on the Democrats, a#@holes.

  3. emptywheel says:

    Barney’s apparently blaming the failure on the Republicans (which is probably why he refused to accept the GOP efforts to use procedural motions to reconsider and buy more time).

    But I think that puts us in a stronger positoin. Once everyone’s retirement tanks–and once the market gets down to levels it should be at, then we can come in and use a more consumer level plan.

    • scribe says:

      Pretty much the same thing I just said in the previous thread. The market will decline until it reaches a point where people decide that the value is greater than the price then current, i.e., it’s a buying opportunity. And that price – no one knows quite where it is – is predicated upon the (no pun intended) fundamentals of the economy. All the fluff, foam and bullsh*t which have created artificial profits, artificially high market prices, and artificial wealth have to be cut out of the market first.

      Until that market bottom is reached, we can throw money at it until we run out of arms to throw, and nothing will stop that slide.

      The rapid price movements up and down – gyrations like we’re seeing – are the result of group hysteria seizing the traders and “investors” who buy today and sell tomorrow. It goes on all the time in commodity markets and settle themselves out when a new psychology of that herd establishes itself. That will take some time, now, and the best thing for anyone thinking about getting involved would be to sit on their hands. This is all psychological and only tangetially related to the actual value of anything.

      And the idiots in Congress who look at this and decide to push our money into this pit on the next vote, are no better than the herd of idiots getting handed their own heads in trading today. Indeed, they’re worse, because they’re not even playing with their own money.

      • scribe says:

        What’s going to happen is the analog to what I predicted would (and did) happen with the FISA amendments. There, I posited the Dems would wait until after the primaries to do anything, so they could not get f*cked by their voters, then ram through what The Village wanted.

        Here, they’ll wait until after the election to ram this through. Lame Duck session – which we’ll be having to (A) deal with CRs and (B) prevent recess appointments.

        They’ll figure we’ll forget by 2010. Well, I still haven’t forgotten the Torture Act of 2006 and my reps/sens who voted for it and are up for election this year.

        • ubetchaiam says:

          If I am remembering correctly, The spending bill sent to and passed by the Senate to ‘keep government working through the second fiscal quarter specifically indicated that there would be no ‘lame duck session’; perhpas more importantly, time will have passed and the world of finance will not have ended.

        • scribe says:

          Someone noted upthread I’d better vote Democratic, lest the mods tell me to burn in hell, in response to my noting that I’d not forgotten my reps/sens’ votes for the Torture Act of 2006.

          Well, mine are all Dems. In the intervening two years, I’ve told them to their faces that, given their votes endorsing torture, there was no way I could ever vote for them again. Should have seen them flip out – “you gotta vote Democratic!” “What if a Republican gets elected” “Who will you vote for”

          I told them I’d simply be an undervote and they could go f*ck themselves because it was not their personal birthright to hold elective office, particularly where they exhibited such bad judgment. There was and is no way on God’s green earth I’d ever vote for someone who endorsed torture, because it is everyone’s birthright to not be exposed to even the threat of torture.

          It’s a corollary of “more Democrats and better Democrats”.

          You shoulda seen the confusion on their faces when I walked away.

          • selise says:

            In the intervening two years, I’ve told them to their faces that, given their votes endorsing torture, there was no way I could ever vote for them again. Should have seen them flip out – “you gotta vote Democratic!” “What if a Republican gets elected” “Who will you vote for”

            good for you.

            btw, sounds like they were using their own version of bush’s politics of fear on you.

            our enemies, the terrorists the republicans, are so dangerous that we have to give up our rights our vote to be kept safe by the president the democratic party.

            • scribe says:

              You note:

              btw, sounds like they were using their own version of bush’s politics of fear on you.

              The problem for them when they try is, they don’t know (from before I became a lawyer) I worked in construction where mob guys on bulldozers physically chased me off a site and threatened my physical well-being, if not life (for not giving them a free pass on their work) and so on. Nor, for that matter, that I try cases (which demands a whole different, yet similar) level of unwilling-to-be-intimidated-ness.

              If you personally are not bigger than a D8K, don’t even bother trying to intimidate me.

      • i4u2bi says:

        Exactly…overpriced assets will always end this way. Only idiots and the gambling obsessed cannot fully understand this fundamental law of economics.

    • drational says:

      Now is when the middle class gets the wake-up call.

      Tanking retirements is the wall street payback.
      It is their leverage over our phone calls.

      We pay.

      I assume that the worse the markets do, the angrier the populace gets, and the more calls for change come into play.

    • brendanx says:

      Amen. The public, and I include myself in that unwashed mass, is skeptical or ignorant of the nature of the crisis and what the consequences will be, which puts Republicans in a position to reap political benefit from their own abdication of responsibility.

      I want the stakes of inaction to be clearer and for the Republicans to suffer the blame for it. I want Democrats — scratch that: liberals — in a better position to exploit this politically and train the guns back on that Republican minority, to wipe them out and remove them from any role in governing the country. I want a political solution, a final solution to this.

  4. MarkinAustin says:

    Clearly, it’s time for McCain to suspend his campaign again so he can return to Washington and resave America.

  5. Teddy Partridge says:

    Chimpy Pissypants must be rather unhappy, if they’ve even told him.

    Wonder if Paulson will have another woozy spell.

  6. Hugh says:

    EPUed from last fdl thread:

    I say stop playing games. The government can establish a price for the CDOs. Have financial companies declare their losses according to the government’s price structure. Re-regulate and re-capitalize the markets. It really isn’t that hard to do if they just cut out the BS and back scratching.

    BTW the final vote was 205-228 according to the chair.

  7. PraedorAtrebates says:

    I already KNOW what they need to do and they can pass it without a single GOP vote AND without pissing off the REAL electorate:

    10% surtax on all incomes greater than $1 million/year for couples, $500,000/year for singles. A tax of 0.25% on all stock and currency trades. Insurance ala the GOP suggestion for those mortgage securities that haven’t been twisted and torn into a Rube-Goldberg abortion.

    Those responsible, and those that benefited the most from these unacceptable games, should pay the entire cost of the bailout.

  8. dakine01 says:

    Now maybe some adults will take deep breaths and put together something rational that doesn’t screw the taxpayer and actually provides relief where it’s needed.

  9. TheShadowKnows says:

    The bailout COULD HAVE lead to the coup d’grape for the American Dollar.

    When the US told the world the US would not publish how much paper was being magically blessed into currency status, the world kind of shrugged.

    The US has learned the wrong lesson from that con-job – namely, that the sky was the limit in creating money out of thin air, paper, and green ink.

    But there will be reached a TIPPING POINT, in which the US dollar is seen as Confederate money, and dumped into harbors around the world.

    This $700 BILLION of GreenBack Toilet paper MAY HAD BEEN that tipping point.

    (Whew, that was close!)

  10. LindaR says:

    Remember the Enron traders laughing with glee as they destabilized the California energy markets?

    I feel their glee.

  11. Frank33 says:

    White House, Ministry of Truth, Tony Ratto: “This is not a bailout. This is a bright shiny piece of crap. Even the minority leader Boehner, made himself a sandwich. Here, would you like some?”

  12. Teddy Partridge says:

    I don’t understand how we can even have an election in November. Surely we need the calm hand of Dear Leader Bush on the economic tiller for the forseeable future.

  13. Diane says:

    I guess at times they do listen to constituents (an impending election not withstanding). I don’t really know how I feel about this – I’m over 10 years from retirement and don’t want to see my investments go to shit. Then again, I’m enjoying the Karma hitting Bush and his Bushies.

  14. LindaR says:

    If they would institute immediately a 10 percent income tax surcharge on all incomes over 500K that would stay in place until the deficit is eliminated, I would be glad to see some kind of package pass.

  15. Teddy Partridge says:

    Adam Putnam introduces Boehner, who blames Speaker Pelosi’s partisan speech on the floor of the House before the vote for its failure.

    • CouldBeTrue says:

      The Republican leadership is crying that their feelings were hurt by Pelosi’s speech. Didn’t matter if the bill was good or not. Didn’t matter if the economy would tank. Nope. Republicans got their feelings hurt.

      This is the party of Phil Gramm.

    • MayDaze says:

      My asshole Rep Cole (R-OK) voted for it, which means the Rethug bigwigs were definitely on board. He votes with them – always.

    • greenwarrior says:

      Mine voted no – Lloyd Doggett. I’d called him to ask him to vote no earlier and I just called him to thank him. The young man who answered the phone was appreciative for the thank you.

    • Leen says:

      Paulson dropped the economic bomb in their laps 10 days ago. Just enough time for the Republicans to vote no and run as fast as they can away from the Bush administration and the bailout. They can run home and say I voted against the bailout you know the one that was created by the deregulation that the Republicans have been voting for during the last 12 years that we controlled congress.

      How many Republicans will have their races helped out by this vote?

      • ThatGuy says:

        Bipartisanship is bullshit. That’s the one thing the Chimp administration has taught us.

        “Reaching across the aisle” means “We’re in power, you’re not, we’re going to do this, you can come along or not, but we really don’t give a shit about anything you have to say.”

        That is the modern version of bipartisanship.

  16. leinie says:

    Jeebus, Teddy, don’t give them another place to consider implementing that idea.

    I’m happy the damned thing failed, I didn’t like the final version but I’m terrified about what comes next.

    I hate that I’m so cynical now that I believe this failure was a stunt so the markets would go crazy, people would panic, and Johnny Drama would swoop in to save us all. I can’t help it. I think that truly doing something to help is absolutely subordinate to R’s holding onto that unitary executive they’ve created.

  17. AlbertFall says:

    If the Dems are going to be the only ones who act responsible on this, and vote to rescue capitalism from itself, then they should tell Bush and Cheney, resign, Pelosi is interim president, then we have Dems runs the House, Senate executive and just GTF out of our way and let the grown ups handle it.

  18. hackworth says:

    He’s so effing skeevy, if you look up skeevy in the dictionary its got his picture. I wonder how he ever got elected. Must a been one of Newt’s projects.

  19. Minnesotachuck says:

    My wife got an email this morning from the trustee company handling her 401K retirement fund saying that they’ve switched sweep money market funds:

    Specifically, Putnam Investments closed the Putnam Prime Money Market Fund, the fund that served as the cash sweep vehicle in your account, and subsequently merged that Fund into the Federated Prime Obligations Fund.

    We’re checking now to make sure nothing was lost in the transfer.

  20. Hugh says:

    You know one of the things that irked the hell out of me listening to the telephone call that got leaked to the internet of Paulson talking about this bill to 800 national and international bankers was how he treated the issue of recoupment. This was the part of the bill that said that in 5 years an accounting should be done and if the government had not made back all of its $700 billion then it should place some general fee on the financial industry to make up the difference. Paulson’s take on this was that this was just some usual boilerplate the Congress put in bills, that 5 years was a long time away, and that any such recoupment would require new legislation. IOW it would never happen.

    There were several issues like this in the call and Paulson’s attitude was this is all BS. I will get the money and I will take care of you guys.

    • Cacambo says:

      Mr. Obama, in a statement, said: “When taxpayers are asked to take such an extraordinary step because of the irresponsibility of a relative few, it is not a cause for celebration. But this step is necessary.”

      Well, the Candidate of the Democratic Party said it is “necessary” so there is nothing further to do but agree, is there?

      Like when he said:

      “I often get questions about impeachment at town hall meetings. And I’ve often said, I do not think that would be something that would be fruitful to pursue. I think impeachment should be reserved for exceptional circumstances.”

      then we’ll just have to wait for some exceptional circumstances to occur, and defer to his wisdom.

      As with his bold choice of Joe Biden for VP, the Netroots quickly rallied to explain why such an early supporter of the War against Iraq was a good choice now that a substantial majority of Americans oppose the war.

      So, speaking to Obama’s support of this venture would be counterproductive in a Democratic Party online outreach forum, because most of the people across the country strenuously oppose a bailout of venal Wall Street playaz whose Ponzi scheme is collapsing.

  21. oldtree says:

    Lettuce be certain that the list of who voted for and against is publicized widely. I vow to help retire anyone that voted for this bill. Their replacement might just be a person. Their replacement might just be someone more concerned about the people of their territory than those willing to bribe for their desired outcome.
    Isn’t allowing this nonsense even to come to a vote the worst thing we have seen? It shows you the ones in favor are the willing recipient of some big money. Who else would sell out the middle class of this country and hide and lie and obfuscate? Please eschew them, then spit them out. Do not swallow something that you know will harm you.

  22. SDC1 says:

    Thank the lord. Socialism is not a good form of Government. Maybe I should have said, thank Polosi since the R’s had enough votes to pass this abortion until she spoke.

    • nonplussed says:

      Socialism is not a good form of Government.

      Isn’t that an overly broad statement? Considering how many different schools of socialism there are, I find it difficult to accept such a blanket generalization. Socialism need not be authoritarian, it can be democratic, and as you have been seeing, can even incorporate capitalism.

      • SDC1 says:

        It hasen’t incorporated capitalism in this country yet, but we’re not too far from it, and if it happens watch capitalism crumble.

  23. jayt says:

    Boner has switched from crying to whining. Blames Pelosi for giving a partisan speech.

    heh – guess we really *did* separate the men from the boys today, huh, Boner?

  24. wavpeac says:

    I apologize for always coming back to the language that is most familiar to me. But from an addictions point of view. (and I treat greed as an addiction) Letting go, and letting the market suffer it’s consequences is exactly what a 12 step program would suggest. Tough love. I have a predatory lender and am in Chapter 13 bankruptcy. Of course, I would love to see reform that would allow my judge to regulate the ungodly fees and the violations of TILA and RESPA that forced me into this position to be regulated as well. This gives America time to see what has really been going on.

    These banks and buy outs are to cover the illegal behaviors and law violations. There are folks who will be owed a home back. I am telling you the violations have been substantial. (Just like you would see with any addiction).

    If we had bailed them out again it would have been no different than the woman who’s husband has just gambled the mortgage. So she goes to Uncle Harry and gets him to loan her the mortgage back, and life goes on. Right? That’s called enabling. When will America learn?? Have we hit rock bottom yet? I would love to leave this bank but they have trashed my credit so I can’t get a refinance. How perfect is that?? I could sell my house, but I would still owe money because of the outrageous pile on of miscellaneous fees. They are so brazen that even with the bankruptcy judge they referred to these fees as miscellaneous. My bankruptcy judge was furious, but the feds have his hands tied.

    I have been suffering the consequences of this crises for 3 years now. I have never missed a payment and have paid an extra 50.00$ plus paying through the bankruptcy courts. These banks say I owe another 13 thousand that I don’t owe. But there is no one to go to who can regulate those fees. Currently the judges are not allowed to regulate those fees and these banks fight it. The republicans fight this every single time. Why won’t they allow the fed to give these judges the ability to regulate fees so that the homeowners can pay off these mortgages themselves with fair fees?? Because then america would know the truth and right now, they still want you all to believe that the problem resulted from giving poor people the chance to buy a home.

    In many cases these foreclosures were forced by the behaviors of these banks. One guy was in foreclosure cause his lender paid someone elses taxes instead of his. But they wouldn’t talk to him so he was having to buy out his loan that was now three times the buy out figure. These foreclosures many of them were wrongful.

    Why do they even have foreclosure specialist companies who negotiate with the lender for you? I know why. Because if you read complaint after complaint you find that these lenders violated TILA laws and refused to speak to people the entire time they were in foreclosure sending only a work out deal refinance of the late payments at 24% interest added to the next 6 payments. They were violating laws brazenly. I couldn’t believe it and neither could most the folks I told about it. I was always given well meaning advice about how to fight them, but this advice was not realistic given their fearless illegal behavior. They won lawsuit after lawsuit in court because of huge legal teams and the loop holes regarding fees.

    The truth will come out and my story will finally be vindicated. I knew it wouldn’t come out if we just bailed them out quickly. It needs to be told. Some folks are going to be owed houses…I kid you not. I don’t want a house. I just want a fair loan where my payments are applied as they are paid, without all those fees. I want to be credited on my loan for all those fees to go toward the equity. Finally I want to be refinanced with a lender that will follow the law.

    If we provide this, americans will pay their mortgages and the defaults will go back to the old percentages. And houses will have equity again. The market will no longer be glutted with these foreclosed homes that are worth the value of their pay offs.

    No more enabling the greed and law violations.

    • ubetchaiam says:

      I don’t know if this helps but people -at least in CA- are challenging their foreclosures saying those that are foreclosing are not the mortgage holders and judges are agreeing with them that until it can be ascertained that those doing the foreclosure are actually the mortgage holders, they have no standing to foreclose.

  25. Hugh says:

    The attitude of Americans toward socialism is schizophrenic. Government’s two most popular programs are Social Security and Medicare. Both are out and out socialist in nature. Universal healthcare? Socialist. Universal education? Socialist. Conservatives act like socialism is a bad word. But socialism is about taking care of people’s basic needs, and it says a lot that conservatives find something wrong in that

    • ubetchaiam says:

      “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

      Promote the ‘general welfare’ which ,in my worldview, means housing, health, education, and hunger.

  26. SDC1 says:

    Question? What would the Speaker make that stupid speech just before a vote was to be taken? Another question: Why doesn’t the Speaker just tell 13 of the 90 Democrats that voted ‘no’, to vote ‘yes’?

  27. Ann in AZ says:

    MSNBC. Pelosi spoke, then Hoyer, Frank and others. Then they took questions, and one was that Boehner said that he had the votes but due to a speech Nancy Pelosi made that left 12 of his votes “deeply offended,” they voted nay. They asked her to respond, but Barney responded. It was classic. Paraphrasing, so he’s saying that due to Nancy hurting their feelings, they’re going to punish the country. He said, tell you what I’ll do. If they’ll come back and negotiate again, I will speak to those twelve who are identified to me uncharacteristically nicely! Pretty funny, and very pointed!

    • Phoenix Woman says:

      Atrios and others are reminded of Newt Gingrich’s similar hissy fit in 1995. You know, when Newt shut down the government because he didn’t get the seat he wanted on Air Force One on the way to Yitzak Rabin’s funeral? (Clinton was being generous just by allowing Newt to go with him, and of course Newt, being the creep he is, didn’t see it that way.)

  28. TLinGA says:

    So this fiasco today leads us to a preview of the interaction between Congress and the two potential Presidents. McCain would not only be working against the Democrats (not counting DINOs) but also against a large portion of the Republicans as well.

    How would anything get done with that breakdown?

  29. Ann in AZ says:

    Yeah, and that worked out as well for him as this did. Barney Frank said in a public TV interview that he was appalled that Rethugs would even bring up such a thing. The idea that someone would put his hurt feelings over the good of the country was beyond the pale (pail?). Good point, I thought.

  30. ThePug says:

    New bailout plan (actually same as old bailout plan):

    From: Minister of the Treasury Paulson

    Dear American Friend:

    I need to ask you to support an urgent secret business relationship involving with a transfer of funds of great magnitude. I am been told that you are a person of great trustworthy and therefore have your contact via this email.

    I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 700 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.

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

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

    Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to [email protected] so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds. You can be sure that the funds transaction will be held in utmost secrecy.

    Yours Faithfully, Minister of Treasury Paulson