by Teh Nutroots |At TMV, Patrick Edaburn has the story:
In a major upset, the US House of Representatives has voted against passage of the $700 billion bailout bill. The vote was 228-205 against. Democrats voted 141-94 in favor of the measure while Republicans voted 131-67 in opposition to the proposal. There are now discussions as to whether or not a new vote sometime later today.
Reacting to the news, the Dow Jones is down by a range of 400-600 points. At one point the drop was over 700 points so it does seem that the market is stabilizing somewhat....(More).
Kevin Drum comments:
[T]he bill failed, 228 to 205. The House has decided, oddly enough, to try a do-over. Yes, the House is taking up the same bill, again, right now, seeing if the same lawmakers vote differently this time.
The surprise is the extent of the Republican opposition.
If Drum is surprised, Dick Armey's prepared to give his reasons. He'd prefer that you not blame the rich greedy bastards who made it happen. He defends self-interest (enlightened or un-, I guess). To him the crisis is all about the government and its policies, which is something I've heard from the left as well.
[S]ome point to “unbridled greed” as the root cause of the crisis. There are plenty of bad actors to point to, but self-interest is in the very nature of human action, a constant that cannot provide an accurate explanation of the extraordinary distortions in the housing and financial markets. Self interest does indeed drive private economic behavior and the invisible hand of the market, but it equally drives so-called “public” political action. A more serious examination of the current financial meltdown suggests government excesses, not unbridled markets, played a determinant role in today’s market meltdown.
The painful readjustments in the housing market are a direct result of failed government policies that fueled the housing bubble. A political bias that favored home ownership (through the tax code and programs such as the Community Reinvestment Act, coupled with the implicit—now explicit—federal guarantee of the government-sponsored enterprises Fannie Mae and Freddie Mac) led to a housing boom fueled by loans that were often not worth the paper they were written on. At the same time, ratings agencies, under the auspices of the SEC, vouched for the quality of these loans, allowing them to be bundled into new financial instruments and sold around the world. The Federal Reserve aided and abetted these distortions with loose monetary policies that distorted price signals, artificially boosting investments in the housing sector, and ultimately throughout the financial services sector as mortgages were securitized and repackaged for sale across the globe.
But what Armey says here is what a lot of people I trust are also saying.
The difficult question each of you faces today is simply this: do you believe that the political process, having produced many of the perverse incentives that resulted in our economy’s current predicament, can solve these underlying distortions by essentially doing more of the same? I believe the answer to this question is unequivocally NO.
I find it unsettling to find myself agreeing with, say, the Malkin. Has the moon turned blue or to blood? Have the End Times arrived? Will dogs and cats soon be starting families together and elephants roosting in trees? I'm not sure I can deal with this.
I felt better when I saw Deb had posted a piece arguing that Newt Gingrich had said something that sounded rational. She feels the same way about him that I do.
And with all this, it's reassuring to find myself on the same page with Michael Moore:
Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies -- who must soon vacate the White House -- are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door....
No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich....(Michael Moore)
And a big amen to this; if not specifically true, it's generally so.
From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we'll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century.(Michael Moore)
At Sadly, No!, HTML Mencken is even angrier, and he says it better than Michael Moore.
Seriously, though, that Congress could even be thinking about giving 700$ billion to the wealthy criminal class just shows how deeply to heart both parties have taken the philosophy of “socialism for the rich, free enterprise for the poor.” Obama had enough presence of mind during the debate to mention how trickle down economics doesn’t work, yet… that’s exactly what this bailout is all about, and he and his party are going along with it: throwing money at people like this, horrible people who should be set on fire and then maybe or maybe not extinguished with fresh urine, and hoping that the benefits will in turn trickle-down to people like this, the decent if understandably pissed-off people who’ve repeatedly been pissed-on even when the economy was supposedly “great.”
The Congressional Democrats (and maybe even quasi-Populist Republicans) could, at minimum, throw a legislative monkey-wrench into what amounts to the latest and greatest Business Plot, but being strategic reactionaries when it would actually benefit their constituencies really isn’t their bag (on the other hand, when the initiative is, say, the potential impeachment of war criminals, they are pleased to respond with an instant and adamant “No!”). Though alternatives to the bill exist there’s really no need to hurry (hence George Bush’s and Paulson’s insistence that everyone act now before it’s too late!!1!); yet, rushing headlong is exactly what they are doing, closing their ears to the sound of millions of Ackbars yelling, “it’s a trap!”
What the dirtbags want is pretty obvious even to retards like me.
HTML Mencken gives Ben Stein a pat on the head for the following
IMAGINE, if you will, that a man who had much to do with creating the present credit crisis now says he is the man to fix this giant problem, and that his work is so important that he will need a trillion dollars or so of your money. Then add that this man thinks he is so indispensable that he wants Congress to forbid any judicial or administrative questioning of anything he does with your dollars....
The current negativity occurred because of wild, casino-type operations of big finance players, creating liabilities way beyond anything we could have reasonably expected. This looks a lot like theft on a spectacular scale — of our wallets, our peace of mind, our futures.
I am not sure this can be said too often:
[B]y far the most terrifying item I read in my morning paper last week was this: Mr. Paulson demanded that Congress forbid judicial review of his decisions on use of the money in the mortgage bailout. This would amount to an abrogation of the Constitution. Not only would his decisions be sacrosanct and above the law, but so would the actions of his pals in the banking world in connection with this bailout.
The people whose conduct got us into this catastrophe have not only taken our money, hopes and peace of mind, but they apparently also want a trillion or so more dollars to put into their Wall Street Buddy System Fund. This may be the most dangerous attack on the law in my lifetime. What anarchists even dared consider this plan? Thank heaven that minds more devoted to the Constitution on Capitol Hill are questioning this shocking request.
Then there was Mr. Paulson’s insistence that there be no compensation caps for executives of companies being bailed out by the factory workers, the farmers, the schoolteachers and the medical doctors. He told a skeptical Congress on Tuesday that if these caps were put into place, bank executives simply wouldn’t participate in the bailout or sell us suckers their debts. Fine with me. If the banks are in good enough shape so that petulant executives can simply opt out rather than live on a few million a year, maybe we don’t need the bailout at all. (Ben Stein)
Ben Stein asks, and I also don't understand, why does it have to be the banks we have to bail out? If it's the knock-on or trickle-down effect we have to fear, why not protect those who are further down the food chain? Why not bail out the the homeowners themselves, Stein asks?
Yes, price would be a huge issue, but so it is for Mr. Paulson’s plan for buying debt from banks.
Why not? We do it for farmers. Why not for the individual homeowner? Oh, right. Because Treasury secretaries don’t know any of those people. (emphasis added)
Because, as noted, I don't think this can be said too often, here's Greenawald weighing in.
Those who created the crisis, were wrong about everything, drive the process. Experts who dissent from the prevailing Washington orthodoxy, particularly ones who were presciently warning about what was happening, are simply ignored -- systematically excluded from the process. Professor Nouriel Roubini:
It is pathetic that Congress did not consult any of the many professional economists that have presented -- many on the RGE Monitor Finance blog forum -- alternative plans that were more fair and efficient and less costly ways to resolve this crisis.
Last week, Hank Paulson -- who bears responsibility for the crisis in numerous ways -- demanded that $700 billion be transferred to him in order to purchase toxic assets from his Wall St. friends, and while there was much howling of outrage in many quarters, no other framework was ever considered.
Paul Krugman has a more tempered response and is less inclined than I or Moore or HTML Mencken to blame the Dems who pushed for it.
[P]utting myself in Barney Frank or Nancy Pelosi’s shoes, I’d look at it this way: the Democrats could start over, with a bailout plan that is, say, centered on purchases of preferred stock and takeovers of failing firms — basically, a plan clearly focused on recapitalizing the financial sector, with nationalization where necessary. That’s what the plan should have looked like.
Maybe such a plan would have passed Congress; and maybe, just maybe Bush would have signed on; Paulson is certainly desperate for a deal.
But such a plan would have had next to no Republican votes — and the Republicans would have demagogued against it full tilt. And the Democratic leadership cannot, cannot, be seen to have sole ownership of this stuff.
So that, I think, is why it had to be done this way. I don’t like it, and I don’t like the plan, but I see the constraints under which Dodd, Frank, Pelosi, and Reid were operating.
Sadly, nobody can ever put politics aside to do the right thing.
Like the song says, anyway you look at it, we lose.