People Get Ready, There's a Vote A-Comin . . .

The Senate Deliberated on Wednesday


(Note: This was posted on October 3, 2008 even though the header indicates differently.)

It looks like another close vote is ahead in the House today on the Senate-passed version of the Rescue or Bail Out Plan. Some converts from the recalcitrant House Republican and Democratic "Nay" voters have apparently been gained by the Senate's tinkering. The addition of beefed up FDIC powers and the increase of federal deposit insurance from $100,000 per account to $250,000 are perhaps the most important changes that may change House votes. Also helpful are certain tax breaks, such as the suspension of the Alternative Minimum Tax and other energy-related tax provisions generally acceptable to both sides.

However, in the fractious House of Representatives where there's a general weakness of leadership of either party to force party line discipline, there are some warning signs that the votes may not be there again. Yet, this time the "Nay" votes may very well come from others, for example, the so-called Blue Dog Democrats, some of whom voted for the original House bill last Monday. Why? Well, the Blue Dogs are the "fiscally conservative" wing of the Democratic party, and they have objected to the addition in the Senate of certain tax breaks that are not offset by spending cuts. Also, they are angry that the Senate has actually accomplished this via a back door -- you see, in separate legislation, the House had already passed certain of these tax provisions earlier in this Congress but had offset them with spending cuts. To the Blue Dogs this is a craven bit of nasty Senate work. And they may be upset enough to vote no, although, realistically, some Blue Dogs have indicated that they will simply "hold their noses" and vote "Yea."

Another group of primarily Republican House members want the amount of money made available to the Treasury to be slimmed down initially to $250 Billion with the Treasury being thereby forced to ask for more later. They maintain that the Treasury has indicated that they cannot spend more than $250 Billion between now and when Congress reconvenes on November 14, 2008, so why, these House Members ask, is there any need to provide the entire $700 Billion now? Mr. LaTourette of Ohio presented an amendment the other day in the House Rules Committee asking that the House be permitted to vote on this proposal, however, the Committee voted out a closed rule (i.e. no floor amendments permitted). Yet, some supporters of the LaTourette amendment may then vote against the bill this afternoon.

In any event, what has happened to the Republican party lately is earthshaking. The monied establishment Republican wing has been torn from the wing representing the socially and fiscally conservative middle class. And remember, this was the very coalition of strange bedfellows that brought about the two Dubya victories. It lately ruptured very noisily over the immigration issue with the Republican establishment wing desiring somehow to keep its low wage labor force of illegals primarily intact while the racist/bigot wing of the party fought vehemently against those interests. Now we're seeing another disconnect with the bail out or rescue plan. It's very hard to deliver a united Republican vote, and the establishment types, the wealthy business wing, are left wondering why the rubes in the other wing don't just get in line. Well, it's simple, the "rube wing" actually believed those free market, laissez faire principles that they learned while sitting on the lap of Grandad Reagan . . . They didn't learn that those principles were simply a hypocritical ruse that ought to be jettisoned when business interests (i.e. Wall Street) calls for help . . . Let's see how this all works out today, about Noon . . . High Noon.

The House Responds Today

"Hatin' Bush ain't gonna save you from the meteor, people!"

So says Jackie Broles. Murfreesboro, Tennessee economist, joined by his colleague Dunlap. Keep that in mind, House Republicans.

Meet Sarah Palin's Debate Coach!

I think she'll be helpful with organizational skills, and, uh, like such as, the Iraq.



With thanks to anewdawn

Gridlock or Clusterf*ck?

The Bush Administration is the overturned truck at the side of the road. See if you can find the "Straight Talk Express" . . .



John McCain (hereinafter "Pappy McCracky") to the rescue? Well, it appears that the GOP set-up is in place, at least in the House of Representatives where some 120 Repub super "conservatives" are in full revolt against the bail out plan being pushed by the Administration. They also are holding their noses quite publicly about the Senate machinations that attempt to add taxpayer protections, accountability, and oversight to the so-called Paulson Plan.

So, what is the House GOP Gang of Approximately 120's plan? How about we just let the "invisible hand" of the market work its wonders? How about, actually implementing the Depression era advice of Uber Free Marketeer Andrew W. Mellon and allowing the markets to "purge the rottenness out of the system;" i.e. "liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate." The details that are leaking out appear to point to almost exactly that, no federal bail out money, oh, and of course, more tax breaks. Let the market work its "wonders" without government assistance, or, as they put it, government interference. Watch out below! They are literally betting their laissez faire ideology all in. If the markets fail to react as they hope and the private money they guarantee will rescue the economy does not appear, then a recesssion flirts with depression.

But, is there a trap somewhere lurking here? After all, the Gang's hold out appeared just about the time that Pappy McCracky rode into town. I'm wondering if the House GOP Gang's revolt is a rather inspired bluff cooked up with the McCracky campaign staff. Pappy arrives in town; we House Gang members revolt; we petulantly sit on our hands for a few days so the voters really worry that no deal will be struck; and then, early next week - or, craftily, just before the debate tonight - we House Gang members issue a statement that "thanks to the strong leadership and helpful advice of Papppy McCracky we recalcitrant ones are ready to vote for a modified federal bail out." And then, their hope is, McCracky's poll numbers soar and Obama's input is marginalized! Oh yeah, and best of all, the actual economic results for the country won't be visible until after the election! This is quite a play, one of the great bluffs of our history. And they are all in not just with Wall Street's future, but with Main Street's as well.


UPDATE 1: 9/28/08, 1:05 p.m. The House GOP Gang of Approximately 120 is right now holding a presser. Minority Leader Boehner, Roy Blunt, and all the rest. They opened the presser with a "thanks to the leadership of Senator McCain . . ." and went on to say, quite petulantly, that they would not agree to any tax payer money being used for a bail out. Yes, I think I'm right about this one, the McCain campaign fix is in. Stay tuned.

(An amusing note: No-federal-money-for-the-bail-out fighter Roy Blunt's official House website heralds "9.24.2008: Congressman Blunt Announces Federal Funding for Area Projects. Southwest Missouri Congressman Roy Blunt today announced area priorities he secured federal funding for in the Defense Department’s Appropriations bill for the 2009 fiscal year. ")

How to Prepare for the Upcoming Announcement about the Financial Bail Out Plan:

"As for me, except for an occasional heart attack,

I feel as young as I ever did." Robert Benchley (1899-1945). Lately, anyone watching those Wall Street high wire artists demonstrate once again that gravity does indeed matter would understand the irony in Benchley's quip. He lived and wrote through the Great Depression -- when words like "great" had real meaning. He also produced and starred in short films of the "instructional" type, hilarious takes on everyday things like "How to Take a Vacation." From his Algonquin Round Table vantage point he also produced, in 1934, a grand explanation of the Great Depression. In case you're confounded by last week's financial gyrations, I provide Mr. Benchley's video below. It provides very helpful information that is as true today as it was in the 1930s.

Hope that's helpful! Remember though, that Benchley also warned, "After things have gone from bad to worse, the cycle will repeat itself."

Ruh Roh . . .

Over at Bonddad there's a good summary of the loan package granted to insurance gigantus AIG by the federal government, We now collectively own nearly 80% of AIG! Perhaps we can turn it into a facility for delivering national health insurance . . . ?

In another vein, a Bonddad commenter, double d, wrote, "Ruh roh...Reserve Primary Fund, the oldest U.S. money-market fund, became the first in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers Holdings Inc... Losses on the securities firm's (Lehman Bothers Holdings) debt forced the fund to break the buck, meaning its net asset value fell below the $1 a share price paid by investors, New York-based Reserve Management Corp., its closely held owner, said yesterday in a statement. Redemptions were suspended for as long as seven days."

"Ruh Roh" indeed . . . Maybe FDIC insured bank deposits are looking better? For awhile at least. Yet, as the Reserve Primary Fund story illustrates, the credit impairment that exists now as a result of those nutty Wall Street quants and statisticians and JPCs (just plain crooks) is expanding to cubbyholes where regular folk stash their dwindling bucks. Runs on money market funds? In main street terms that's a Steven King novel . . .

And there's an even bigger question looming, one I asked in the "AIG Deal in Detail" comment section today at Bonddad:

"On another point: It's becoming clear that the world economy is entering recession, with particular strain in the U.S. Now, my question is, where will the credit necessary for the economy to pull out of this recession come from? Who will be willing to issue it? Can it seriously be monetized -- i.e. will the U.S./Fed. take on literally ALL of the losses from bad loans, CDSs, Lehman-Lemon debt, etc.? If so, where do you predict the price of the $$ will be in a year or two in relation to the Euro and other currencies at the end of what would have to be an orgy of monetization?? Does this create a hyperinflation scenario for the eventual economic rebound?"

Any thoughts? All I can summon up is another "Ruh Roh"

UPDATE 1 (9-18-08, 12:35 p.m.): A CNBC analyst just opined that the MMF Reserve Primary Fund that "broke the buck" (i.e. its value fell below the $1 a share price paid by investors) was an anomaly caused by some technical considerations that do not exist in the vast majority of MMFs. Of course, this kind of opining reminds me of the opening days of the housing crisis that so understated the problem. I'm still in "ruh roh" mode . . .

UPDATE 2 (9-18-08, 9:25 p.m.): Readers note, I'm not sitting on my hands, During after hours trading, I'm personally negotiating with the Canadian Central Bank for a bridge loan for tomorrow's lunch. Ive offered to cover the tip with 10,000 shares of AIG which I cleverly acquired this very day! With any luck I hope to purchase a "frigidaire" for my efficiency apartment's kitchen within fiscal year 2010. Oh yes, this is MY gilded age!!!!