Republicans bail on the $700 billion bailout bill. Dow drops another 700 points.

Despite a much hyped bipartisan agreement being reached on Sunday apparently it was still too much for some Republicans to stomach and enough of them voted no that they managed to kill the bill:

A four-hour debate included impassioned pleas for and against the measure from Democrats and Republicans alike. Even some of those arguing the legislation must be approved were quick to point out problems with it.

But the vote began with both Democratic and Republican leadership telling their members the only way to protect the economy from a spreading credit crunch was to vote for the difficult to swallow measure.

After the defeat, Republican leaders accused Nancy Pelosi, the Democratic speaker of the House, of giving a “partisan speech” which “poisoned” Republican support.

Pelosi said the $700 billion “is a number that is staggering, but tells us only the costs of the Bush administration’s failed economic policies.”

But Barney Frank, the top Democrat on the House Financial Services Comnmittee, demanded: “Because somebody hurt their feelings, they decided to punish the country?”

Sure, why not? They’re already rich.

Though I must admit that I don’t know enough about economics to know if this is a good thing or a bad thing. Even with the amendments that were added to the $700 billion bailout plan I was still uncomfortable with hastiness it was being pushed through Congress so, in a way, I’m kind of glad the Republicans were their usual petty and selfish selves and blocked it from passing. I’m particularly bothered by the news reports that the Treasury came to the determination that it needed $700 billion by plucking a number out of their ass as opposed to, say, basing it on an actual need. I’m not against using taxpayer money to help resolve the crisis so long as we’re not using more than we really need to and there’s some guarantees that the government will get it back once Wall Street starts making profits again.

I don’t have any stocks to worry about at the moment, hell, I don’t even have a 401K (haven’t been able to put money into one for a few years now). As it stands we’re keeping our heads above water, but it’s been tight ever since the first layoff back in 2005. I haven’t a clue what’s really going to happen in terms of the economy as a whole, but I think a few more institutions on Wall Street feeling the repercussions of their idiocy aren’t entirely unwarranted. At this point the best I can hope for my family is that we manage to continue treading water until things improve. That makes all the noise and fuss surrounding the bailout hard to wrap my head around, but I’d be lying if I didn’t admit that there’s a little sense of satisfaction in seeing so many rich people freaking out over what their future has in store for them.

12 thoughts on “Republicans bail on the $700 billion bailout bill. Dow drops another 700 points.

  1. Nah, that bailout was just stealing the silverware on the way out. I especially love how things went from “the economy is strong” and “the recession is only in your mind” to “holy crap we’re all going down!!!!” so fast McCain couldn’t keep up with his script. Add to that that a) the $700B was a made up random large number, b) it was a rolling amount, and not a final one by any means, and c) McCain supported it even though he couldn’t be bothered to read the *three whole pages* that the proposal was on and d) Bush was cheerleading for it bigtime, which can’t be good. My favorite, though, is e) that Paulson specifically put into it that his actions would not be subject to court or review of *any* kind. If you called in a plumber to fix a bigass leak, and the first thing he said was “OK, but you can’t sue me later no matter what” wouldn’t that raise a few alarms?

    Screw ‘em all.

  2. Most of my IRA has been in cash for a couple of years now…patiently waiting for the inevitable financial crisis to depress my favorite stocks.

    Government bailouts are offensive to Muslims.

  3. Being a renter in a fairly expensive area, I say let it crash and let it crash good, then refuse any and all bailouts or protection schemes for the rich and the poor…I usually like a little safety net, but I’m going libertarian on this one. 
      I live on the California coast, and the housing bubble here is a nasty beast to behold, even now.  Between the slow-growth philosophy of the area, greedy landlords, house flippers buying up all the bargain properties(then pretending to fix them up and putting them back on the market at a price 20-50 grand higher), and the fact that an unusually high number of houses are rentals, there are houses here that have inflated in value almost 1000% over 20-30 years.
    People were able to buy old, fixer-upper victorians in some towns for $50,000-75,000 in the early 80’s and some of these were recently going for over half a million dollars to almost a million.  I know real estate is supposed to be a good investment, but Jeezus!  When it inflates that quickly, rents go up quickly as well, and everyone who isn’t a millionaire feels the squeeze big time.  Even business space, which is plentiful, is outrageous here, leading to lower wages for all non-professionals and small business employees.  Now that the economy is taking a downward turn, there are empty buildings on the main drags of every town…and I hope it continues for at least two or three more years.  Property owners and landlords have been raping this area for three decades…maybe now some of them are going to have to start bargaining.

  4. Letting the fundamental building blocks of the economy dissolve is bad. You can pay lip service to the free market all you like, but one of the first important things any country ever starts up after they’ve used their military coup to kill off the people who were the country before them is a bank, and that’s because debt is absolutely the cornerstone of the economy.

    What’s that wad of shrinking green in your pocket but a debt that government owes the bearer of the slip of paper? It’s ok when a bank fails here and there, because that doesn’t do diddly about confidence in the debt that’s traded within banks overall. When banks fail all over though, and no one knows exactly who has the poison pills within their debt allotment from the ones remaining, it’s every bit as scary in the long run as a war.

    Maybe violence doesn’t start as directly or as quickly, but people will start losing everything they own because the value of the money lent by other people or even in the monetary system itself will fail. That sort of desperation is nearly the posterbook justification for rationalized violence.

    Maybe it doesn’t come to that, but just the idea of it coming to that? When you know it almost came to that several decades ago and you’ve got several road maps of alternatives that involve government spending money? Well dammit, spend the money.

    It’s only money, and I’d hope that people recall that money is only as useful a tool as it is because you can use it. Libertarian economic principles are great when you can afford them, but you absolutely don’t sometimes anymore that the Soviet Union could cling to all their allotment of socialism when the bottom fell out of that.

    The people who received the bad debts aren’t being bailed out, it’s the rest of the world that’s unfortunate enough to do business at the same places that they do.

  5. Neil- I know its a pisser about the house prices- things appear to be even worse in the UK for prices vs wages- but spreading the shit around hits everyone, not just the guilty.

    The BBC economics editor was saying the problem feared a few weeks ago wasn’t just the banks going, it was the knock on effects.  The next tier is the big money movers who process a lot of money, who rely on being able to get overnight loans.  What happens if the airlines can’t afford to fly planes? Big manufactures have no cashflow (Its great having millions in value, but if its all tied up in circuitboards and no one is buying what happens).

    I agree the buy to let and speculators have distorted the market (the latest bank to be nationalised here- over the week end- had shifted its core business into buy to let mortgages) but take the average “put a roof over our heads” family.  If the bank system collapses we could be looking at an awful lot of people having mortgages called in.

    Pelosi probably picked the wrong time to crow- get the vote in then say “look how we saved them” but a UK politician who throws a wobbly when somebody says something nasty has the life expentancy of butter in a furnace.  What if puppet master Putin sometimes says rude things about the US- I hope Palin has used that time staring across the Bering Strait to stiffen her lip.

    Presidential Debate? Hah- put them at the dispatch box during Prime Minister’s Question time to see how they handle pressure (Bush admitted he was glad he didn’t have to do it every week).

    The money has to be put in.  The reservations have to be about oversight, not rewarding the architects of the problem and risk (to public purse).  The representative who said American citizens “valued Freedom over Bread” needs to understand freedom to starve is no freedom at all.

    “Its socialized, so it’s unAmerican”. UnAmerican is failing to use every tool to protect your economy and make it better, not clinging to an ideology no matter what.

  6. I’m fine with putting the money in, as long as politicians take time to think about it and how much. Also they need to have appropriate legislation to help keep this shit from happening again. Capitalist investing with socialized risk is a recipe for failure.

  7. Last_Hussar: I’m not sure if Neil would agree with me, but I’m not worried about anything being socialized or compromising my economic ideals for the betterment of everyone, I’m worried that those people who had made some pretty stupid decisions will end up being rewarded for them at my expense…at everyone’s expense. That just stinks of a plutocracy taking care of its own.

  8. Trust me, the bailout bill is a bad thing.  Barney Frank is an idiot.  If anyone has crazy ideas that $700 billion that is spent without accountability is going to find its way anywhere near the people who really need it (ie the people being foreclosed on) then they’ve been smoking something.

    Paulson is an idiot.  Barney Frank is an idiot for that statement alone.  The Republicans are idiots.  The mail that congress has been getting from their constituents saying “No” to the bill is phenomenal.  When the people you’re trying to help are telling you that what you’re doing is crazy, then maybe everyone should just take a breath and really think about what they’re doing.

    $700 billion to be spent however Paulson sees fit, and no one can even sit in on the meetings he’s going to have to figure out where to spend it.  This is a guy who never saw this financial crash coming when all the experts were already moving their money around trying to prepare for it.

    Yeah.. I’ll get behind that.  Sure.

    The real story is that they were caught flatfooted and now everyone’s in a panic.  Instead of trying to figure out what happened, how to get out of it with the least amount of pain, and making sure it doesn’t happen again, they’re simply throwing money at it.  It might put some spackle on some cracks, but it’s not going to hold the wall up.

  9. My position is mostly what webs said. Put the money but keep it away from the dickheads who caused the problem. Its the second part thats the problem, not what the Republicans are moaning about.

  10. I don’t think we should discount the idea of pumping in money because in past cases there has been no oversight.

    But better yet, if you don’t like the idea of dropping in money to fix the problem (this goes to anyone) what is your solution? I’m curious because I haven’t heard anything else.

  11. The idea of putting that much money into play with the restrictions that you can’t see how it is used, that no one is held accountable, and that one man will do as he sees fit with it sure scares the hell out of me.  Didn’t we get into this crisis with actions very similar in the first place?  If we have to “spend money to make money” (an old age adage)then let’s at least investigate the sand hole we are trying to poke it into.

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