The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.
WisPolitics reports that the Republican National Committee has not bought any ads in the Eau Claire, Green Bay and Milwaukee markets for the week of 10/15-10/21. I do not know whether they had or still have buys in the Madison (doubtful), La Crosse or Wausau/Rhinelander markets. WisPolitics also notes that the McCain campaign still has buys active through the 19th.
I can’t say I’m surprised. While Wisconsin was the closest state in 2004 and one of the 3 closest in 2000, the ‘Rat Fraud Machine has solidified its position here over the last 8 years. Worse, recent polls, whose internals appear to be heavily-skewed against Republicans, show Obama with a double-digit lead.
If you don’t find me here 11/5, I’ll be face down.
Revisions/extensions (2:55 pm 10/15/2008 and re-arranged 4:27 pm 10/15/2008) – Word on the ClearChannel news stations (somehow had WOKY on instead of WISN) is that McCain will keep buying through the 26th.
I saw this ad on Fox News this afternoon, and went to the Paul Ryan campaign site to see if they had an embeddable version to help spread it around. They didn’t, so I asked the campaign for permission to put it on my YouTube account. They said yes, so here it is.
I don’t know if I could keep up with the ACORN sprouts if I were back at the bunker, but I definitely know I can’t on the road. Fortunately, Jon Ham over at Right Angles has, even though he’s termed the explosion of ACORN stories as growing faster than kudzu.
Dean Reynolds from CBS news writes an interesting article. In it he provides comparisons between working and traveling with the Obama campaign and the McCain campaign. Under normal circumstances this wouldn’t be material worth a post but then, this isn’t a normal Presidential race.
After painting Obama as the campaign master with a full, aggressive schedule, he goes on to the comparisons.
Reynolds complains that the Obama campaign is so full that it has a tough time making and sticking to schedules:
Obama’s campaign schedule is fuller, more hectic and seemingly improvisational. The Obama aides who deal with the national reporters on the campaign plane are often overwhelmed, overworked and un-informed about where, when, why or how the candidate is moving about. Baggage calls are preposterously early with the explanation that it’s all for security reasons.
If so, I would love to have someone from Obama’s campaign explain why the entire press corps, the Secret Service, and the local police idled for two hours in a Miami hotel parking lot recently because there was nothing to do and nowhere to go. It was not an isolated case.
About McCain’s scheduling he says:
The McCain folks are more helpful and generally friendly. The schedules are printed on actual books you can hold in your hand, read, and then plan accordingly. The press aides are more knowledgeable and useful to us in the news media. The events are designed with a better eye, and for the simple needs of the press corps. When he is available, John McCain is friendly and loquacious. Obama holds news conferences, but seldom banters with the reporters who’ve been following him for thousands of miles around the country. Go figure.
Reynolds makes specific examples of how the campaigns work to accommodate and make best use of the press traveling with them. About Obama:
Nor is there much sympathy for those of us who report for a newscast that airs in the early evening hours. Our shows place a premium on live reporting from the scene of campaign events. But this campaign can often be found in the air and flying around at the time the “CBS Evening News with Katie Couric” is broadcast.
In comparison, regarding McCain:
The other day in Albuquerque, N.M., the reporters were given almost no time to file their reports after McCain spoke. It was an important, aggressive speech, lambasting Obama’s past associations. When we asked for more time to write up his remarks and prepare our reports, the campaign readily agreed to it. They understood.
Even the plane environment is different between the two campaigns:
The McCain campaign plane is better than Obama’s, which is cramped, uncomfortable and smells terrible most of the time. Somehow the McCain folks manage to keep their charter clean, even where the press is seated.
Some may dismiss this as the whining of a broadcast ego having to do actual work. While I can’t rule that out, it doesn’t really matter to the larger issue I note in his writing.
In Reynolds description I see the definition of the two men that Reynolds has been following. Knowingly or not, of Barack Obama Reynolds writes that he is:
Egotistic – He sees no reason to keep the folks responsible for supporting him informed. People appear to be required just to assume that “The One” has a good reason without need for explanation.
Self Centered – yea I know running for President is important but don’t you think a could at least let people know what the plan is for the day?
Insensitive to other people’s needs and issues – unwilling to let the people who are trying to get him elected attend to the jobs that will help that cause? Can’t even provide for common cleaning and
Reynolds’ article describes McCain as, well, the exact opposite.
There’s nothing really new in what Reynolds describes of Obama. The traits that come to the forefront are traits that we’ve known about him for awhile.
If Reynolds’ assessment is typical of other reporters who have traveled with both campaigns, I find it odd that while the MSM wants Obama to be President, they find no qualities in him that would make him a friend.
To paraphrase an old adage: Character is what people see in you when the camera lights are off!
If only people saw more of Obama without the Hollywood wrapping. If they did, this would be a far different race.
Comments Off on Yet This is “The One” They Want to be President
While Steve is off drinking in a public establishment, I’ll be here handling the drunkblogging responsibilities and drinking by myself at home! We should start about 7:30 or whenever I get cleared by Mrs. Shoe. Come join me for what should be a very animated debate. Bring your best Snark!
R&E (4:11 pm 10/7/2008, steveegg) – Embed code added and post bumped to the top.
The “News agency who shall not be named,” along with others, is reporting that the last few weeks of the campaign could get VERY personal.
On Saturday, Sarah Palin finally led the campaign in whacking Obama with his Bill Ayers connection:
“This is not a man who sees America as you see it and as I see America,” Palin said today. “We see America as the greatest force for good in this world. If we can be that beacon of light and hope for others who seek freedom and democracy and can live in a country that would allow intolerance in the equal rights that again our military men and women fight for and die for, for all of us.”
She then continued, “Our opponent though is someone who sees America, it seems, as being so imperfect that he’s palling around with terrorists who would target their own country.”
Of course, the MSM quickly ran to Obama’s aid with retorts along the line of the following:
But as the New York Times reported today, Obama was never “palling around” with Ayers. “A review of records of the schools project and interviews with a dozen people who know both men, suggest that Mr. Obama, 47, has played down his contacts with Mr. Ayers, 63. But the two men do not appear to have been close. Nor has Mr. Obama ever expressed sympathy for the radical views and actions of Mr. Ayers, whom he has called ‘somebody who engaged in detestable acts 40 years ago, when I was 8.'”
Those vapidity of that retort has been covered time and again so no need to rehash that. Now that Palin has taken up the line of attacking Obama about the company he keeps, the Obama campaign, responding as if this is a second grade playground fight says: “Oh yeah, well, so are you!” The Obama campaign threatens to drag out the Keating 5 history as their retort of “bad associations.”
Bring it on!
No one of the MSM outlets have spent ANY time investigating Obama’s links and involvement with Ayers, Rezko or the Chicago Political machine. On the other hand, they have spent inordinate time trying to dig up dirt on Palin, to no avail, creating false scandals for McCain….and, they’ve looked into the Keating 5 and have already tried to do McCain in with an attachment to McCain!
In case you forgot, the New York Times tried to resurrect McCain’s involvement to the Keating 5 back during the primaries, February, 2008 to be exact. They tried to derail McCain’s primary run. Not for a lack of effort, they were unable to make the charges stick. In fact, Bob Bennett (Bill Bennett’s brother) came to McCain’s defense, both during the original Keating 5 investigation and again in February:
ROBERT BENNETT, DEFENSE ATTORNEY: Well, Senator McCain did not want a repeat of what occurred years ago in South Carolina, namely a real smear campaign, and asked me to assist them, and I have been assisting him. And this — I’m just — I think what the “New York Times” did here was shameless, just shameless. As you pointed out in the lead, it’s almost entirely unsourced.
You know, I’m in a pretty unique position to talk about John McCain. First, I should tell your listeners I’m a registered Democrat, so I’m not on his side of a lot of issues. But I investigated John McCain for a year and a half, at least, when I was special counsel to the Senate Ethics Committee in the Keating Five, which, by the way, this “New York Times” article goes back to and discusses, goes back years and years.
And if there is one thing I am absolutely confident of, it is John McCain is an honest and honest man. I recommended to the Senate Ethics Committee that he be cut out of the case, that there was no evidence against him, and I think for the “New York Times” to dig this up just shows that Senator McCain’s public statement about this is correct. It’s a smear job. I’m sorry.
and
BENNETT: Well, you know, maybe I was prophetic. I wrote that chapter a long time ago. If your listeners want to know about the Keating Five case, I have a whole chapter on it. What happened was that I had recommended that John McCain be cut out of it and not go forward. And, you know, I call it the way I see it. As I said, I’m a Democrat. And I recommended they go forward against Senators DeConcini, Senator Cranston and Senator Riegle.
But if you cut out John McCain, you would have had 28 days of public hearings with just Democrats in the dock. So, it’s probably the first time in the history of the Senate that they rejected the advice of their counsel to exonerate a senator.
Obama has shown time and again a lack of understanding about history. That’s a trait that should be a concern to many people. However, in this case, I’m happy that Obama has no awareness of history. If he had, he would know that Keatin 5 has been beat to a pulp by all of his best historical corrupters. Despite their best efforts they haven’t been able to twist the facts far enough to indict McCain.
If “associations” become the issue during the last 4 weeks, expect the Obama bus to be hitting a lot of road bumps!
The expectations are very low, so let the alcohol flow. The fun will start about 7:45 pm, assuming I’m awake that is.
If I’m here, and I remember to actually blog the thing (heh), the questions will be in italics, the answers in normal type, and my comments in-line with a question or answer in parentheses. Since this is a drunkblog, the etiquette lamp is out.
At least I would be drunkblogging with CiL if it were up. Instead, we’re doing it the old-fashioned way below the window.
We’re more-or-less back, though CiL is at capacity. Sorry about that.
20:05 – Biden praising socialism, Palin reminding us McCain was pushing reform 2 years ago.
20:22 – My bull-fucking-shit meter is pegged on Biden.
20:24 – Palin – I fought “Big Oil” while Obama voted for them?
So you’re not taking anything off the table? Palin – Oh Hell No!
20:25 – Biden – Obama voted for the alternative fuel while he wanted to screw Big Oil (and keep us dependent on your friends the Mad Mullahs, Plugs?).
20:26 – Would you have supported tightening up bankruptcy rules? Palin – Yes, but things have changed. It’s a toxic mess on Main Street that’s affecting Wall Street.
20:28 – To Biden – We need to let bankruptcy courts screw the lenders (fuck that shit).
20:30 – Palin – Energy independence is the key to our future. It’s not about who is getting a tax break.
What about Gorebal “Warming”? – Palin – I’m in the only Arctic state, but it’s not just man.
20:31 – Palin – An “all of the above” approach also helps other countries keep the environment clean.
To Plugs – It’s EVIL AMERICAN CONSERVATIVES’ FAULT! (FUCK YOU!)
20:33 – If you hit refresh, the CiL SHOULD be working.
The bill previously referred to as “The Bailout” but appropriately classified as a “workout” (I’ll explain more later) looks to be heading for another vote. While the timing is still to be determined, some sources are suggesting that the Senate may vote first and do so as early as Wednesday evening.
Folks have been working to figure out what adjustments need to be made to pick up the additional 12 votes that the first vote lost by. While there were rumors, and frankly I thought the likely path, that SanFranNan was going to load up more socialism into the bill to get her more liberal folks on board, it now looks like there are a combination of items that are being considered.
Included in the “let’s get more libs on board” are these items: my comments in italics
Banning some forms of short selling – I’d have to see more details but I can’t imagine a situation that I would support long term. We have seen in the current short selling curb, numerous examples where the removal of short selling has actually hurt the price of the stock. How can that be? Turns out that folks who buy long on companies use short selling to help protect themselves from unexpected down turns in the stock. If they can’t protect their downside, especially in situations of high volatility, they won’t play on the long side.
Extending Unemployment Benefits – No and hell no! This is the kind of stuff that would allow the Republicans to sit out another vote. This bill needs to stay focused on restarting the credit markets. This issue does nothing in that area!
Double the Property Tax Deduction for People Who do not Itemize Deductions – Again, no and hell no for the same reasons as #2
More Spending on Transportation and Infrastructure – Ditto 2 and 3. The argument is that this is putting money into the economy. If Paulson is right, there is no money needed in the economy. In fact, Billions of dollars have already been pumped into the economy. We don’t need the Govt. borrowing more especially when we don’t know where the next fire is that we may need to fight.
Other ideas being proposed:
Increase FDIC insurance to $250K for each depositor – OK, sleeves out of your vest on this one. It may provide some help in stemming runs on banks but I don’t know that it addresses the credit issues. My understanding is that during the RTC days, and even today, FDIC uses some pretty broad authorities to determine the amount that actually gets covered by each depositor. I believe many depositors with balances over the current $100K mark, were fully covered by the FDIC.
Remove/Adjust Mark to Market requirements –As I understand it, the SEC could do this on their own. In fact, there are rumors that they may do that even if not in the bill. This absolutely needs to happen. Mark to Market works when their are fluid markets for the assets you are valuing. When the market become illiquid or worse, functions essentially as multiple fire sales, mark to market can actually mis price assets. Many people will debate the level, or if mark to market has impacted our current financial situation. Trust me, Mark to Market has not caused this mess but it has surely exacerbated and accelerated the deterioration of balance sheets.
Where does that leave us? it looks like for the most part, the bill will come back as it was on Monday. I don’t expect any changes that do more than allow some group of Representatives to change their minds. After rereading Monday’s bill again, my biggest concerns remain that Paulson can buy assets from pensions and (and I just picked this up in my last rereading) no where in the bill do I see that he must specifically buy only the mortgage backed securities.
In short, this bill leaves me feeling like the guy who has a bomb ticking down from :30 and he needs to decide which of 50 wires to cut. I know we have to cut a wire. If we’re right, we live. If we’re wrong, well, stay tuned for tomorrow’s show!
Postlude: I referred to this as a “workout” earlier. This bill has been badly sold…that is if it is as many are selling it i.e. a situation where Paulson will buy assets, hold them for a while and place them in the hands of a healthier institution later, hopefully without a loss. If the program works as that, this looks much more like a typical financial system workout i.e. at the end of the day we get our money although we may have to adjust the terms or payment amounts along the way. If this really is a “workout” (as I believe it is intended to be) than Paulson and others should be making that point and selling it as such. If it is a bailout, buyer be ware!
If you think that representation from San Francisco could not get any more leftist than San Fran Nan, take a look at this video of Cindy Sheehan’s discussion of her economic platform.
I firmly believe that the Democrats do want the market to crater itself for their political benefit. Unlike Shoebox, I think they’ll be successful in conning the public into believing that they are not at fault, and that one-party Socialism (formerly known as Communism) is the “answer”. After all, where else but this end of the blogosphere and talk radio (and portions of Fox News) are you going to hear about the massive role the hyper-enforcement of the Community Reinvestment Act, ordered by Bill Clinton and the Democrats, had in creating the supersized-and-crashed subprime market? Where else are you going to hear that a sufficient number of Democrats on Barney Frank’s committee voted against it to kill it?
That is not to say that the financial sector didn’t have their own hand in this. They took that mandate and ran very hard with it, with ridiculously-easy-to-get very-low-to-no-interest loans on items such as cars and credit cards. They also joined the “don’t blame me” generation, demanding that others cover their losses or else VERY BAD THINGS WILL HAPPEN! Unfortunately for us, they are virtually unique in the private sector in their ability to cause those bad things to happen, and yesterday’s historic market crash and the complete lockup of institutional credit outlined by Shoebox are but a taste of what they can cause to happen if they don’t get their way.
Still, I am glad the “grand compromise” was killed yesterday. It combined both Socialist approaches of buying up the “distressed” paper and seizing effective control of the financial sector (i.e. the Fannie/Freddie/AIG approach that failed spectacularily with those 3 entities) with almost no actual upside for those few of us that still believe in the free market. Indeed, almost everything that was sold as an “upside” merely stripped out the further overreach from the Dems’ counterproposal.
There was no addressing the government’s role in creating the subprime bubble. There was no assurance that the assets bought/seized by the government would ever be turned back over to the private sector. Indeed, if the government refused to turn a sufficient number of assets back to the private sector to pay back the $700 billion (or whatever they ultimately would have spent), they would act to make it a non-paid seizure.
So, what now? If I thought this had a snowball’s chance in Hell of flying, I’d go back to the Paulson proposal, get the decision on which securities to buy up out of the Treasury (Shoebox mentioned Mitt Romney, Asian Badger mentioned Michael Bloomberg, T. Boone Pickens mentioned the FDIC this morning on CNBC), and make it very clear that “RTC 2.0” was a temporary, one-time solution that is focused on reintegrating those securities into the private sector ASAP. Further, I would repeal the Community Reinvestment Act. Beyond the modified Paulson plan and the elimination of the CRA, nothing, and I mean NOTHING, would be a part of this. No death to golden parachutes, no tax cuts, no giveaways to ACORN, no earmarks, NOTHING!
Of course, the Democrats won’t like that; they want Communis…er, one-party Socialis,…er, screw it, Communism. Unless there is something even worse, from a free market point of view, that comes up, I don’t see any action until the next Congress. I honestly don’t know if the markets can or will hold on for another quarter, and if that crash happens in the next month, 2008 will make 2006 look like a major win.
In a close vote, 205 – 228, the “bailout” bill was defeated. Bush, Paulson, Pelosi and everyone else who was interviewed after the vote, still say we are in a crisis. I guess the natural question is: Now What?
First, let’s take a quick look at how the bill was defeated.
The defeat began with Nancy Pelosi giving one of the more partisan speeches I can remember hearing given by a Speaker in a situation where the Speaker knew the vote was close and really wanted the bill to pass. Rather than fight for a common purpose, Nancy took her 2 minutes to point fingers at every Republican ever elected. You really need to see it to believe just how insultingly partisan her comments were:
After experiencing Pelosi’s petulance and seeing that the Dem’s were only able to get 60% of their caucus to support the bill, I’m inclined to agree with Soren Dayton over at RedState.com. I too believe that Pelosi intended this bill to fail so that she could continue to scream Buuuuuuuuush for at least another week of the election season. Pelosi believes, incorrectly, that doing nothing will provide her Presidential candidate, plausible deniability and the same ability to cry Buuuuuuush/McCaaaaaaain up until the next debate.
Perhaps the first question is: Do we need to do anything? I think the answer to that, sadly, is yes. Here are just three stories of commercial financing ending or having terms attached that are a dramatic change:
In my perfect world, I would like to see the original Paulson bill come back. Strip out the pension support the mortgage term renegotiation and a few other ornaments from TARP and I would support it. That said, I don’t think that’s going to happen.
If Pelosi is at all interested in getting a bill done, an assumption we have to work with or the remainder of the discussion is moot, I’d be willing to bet that right now she has all kinds of piglets lined up waiting to be inserted in any bill she may bring back. As has been pointed out before, she has enough Democrat members that she doesn’t need any Republicans to pass a bill.
In order for Nancy to get her caucus to fully support the bill she would likely need to be even more draconian on the pay issues. She would also likely add the provision that sends earnings from the asset sales to ACORN and La Raza back in. Finally, I would expect to see some provision that would have direct help for homeowners who are facing foreclosure. While this may be Nancy’s druthers, I don’t see that a bill with those provisions would get through the Senate unless Wall-street had a dramatic, sustained meltdown. If a true panic sets in, all bets are off.
Another possibility is that nothing is done. I don’t think that’s going to happen because Nancy is not going to let the meltdown be hung around her neck even if she really believes it’s Buuuuuuush’s fault. No, she’s likely to do something.
The final option (assuming the Republicans can’t just rewrite the bill from scratch, and I don’t think there’s any possiblity of that) is to rebring essentially the same bill to the floor. There are two problems with this approach: First, there’s no chance that Pelosi would risk another shoot down unless she was absolutely sure the votes were there. Second, if the bill is the same, how do you get Republicans to change their vote when the public appears to be behind them and elections are getting even closer?
Here’s my plan:
First, we need to get someone to talk to the American people and communicate clearly the challenge we face. No more finger pointing, politicking or use of nebulous terms like “crisis!” If this is truly a crisis than explain it to us. We’re smarter than you think and we tend to band together across ideologies when we see a true National crisis in front of us (think 9/11). If you can’t put it into terms that the majority of Americans can understand, regardless of whether we agree with them, than you haven’t done your job as a National leader!
Second, the current group has lost all credibility! President Bush, Paulson, Pelosi, Reid, Frank, Dodd etc. all have personal skins to lose in this. Of them, the only one that I believe has personal integrity, but won’t allow himself to get into the gutter far enough to fight this out, is President Bush.
We’ve been told every couple of months for the past year that we have a “Crisis!” Housing, Bear Sterns, AIG, Lehman Brothers. We’re worn out from crisis’! Worse yet, each one that comes up is supposed to be “the act” that gets us past any further crisis. To date, that hasn’t happened.
As I said, the current crop has lost all credibility. I believe that is a big reason why the bailout bill failed. The public says “fool me once shame on you, fool me twice, shame on me!” They want to know that the money that they are about to put up will actually be used for the purpose it is intended for and that the folks running it are not just mouthing “American Taxpayer” but actually working in the best interest of the American taxpayer!
To that end, I propose that we need a new leader for this effort! I propose that if Paulson really believes this to be the crisis he has been telling everyone it is, he should work with President Bush and Congress and get Mitt Romney to run the effort.
Putting Mitt in would serve two purposes. First, while he did run for President, Mitt is outside of the Washington establishment. You won’t find anyone who has no political affiliation to handle the job but Mitt should be close and seen by most folks as a strong problem solver with an excellent financial mind. If you ask most people, they would say he is known for saving the horribly mismanaged Utah Olympics and that would go a long way towards credibility. Second, if Paulson handles the program, he will be replaced when the next President is elected. This is a role that needs continuity and needs to stay apolitical if it is to be successful. Putting Mitt in now would satisfy both of those needs.
Perhaps the most important reason for Mitt to be involved is that it would give a reason for Republicans to change their vote. While they may still not like all aspects of the bill, if a cogent explanation for the need was provided (something Mitt could do better than anyone in Washington) so that the public understood the need for the plan, adding Mitt’s name would allow Representatives to tip toe down the middle with a line that sound like: “I don’t like this. However, the case has been made and it’s important that we try this. If anyone can return all the money and perhaps a profit to the American taxpayer it is Mitt Romney.”
There is no easy answer here. I believe the bill that was voted down today is now the best possible hope we have. If we can get it back and get a trusted and capable overseer, we could yet find a silver lining in this mess.
Revisions/extensions (6:54 am 9/30/2008, steveegg) – Cleaned up the formatting slightly.
I wish I had one of those flashy light thingys that Drudge has….maybe I can get Steve to get me one for Christmas!
Speaking of Christmas….
It was closing in on midnight as I was tearing into the sausage last night. I tried to give a bit of editorial but honestly had though through it well enough. Today is another day and I have now had a chance to drink some coffee and think through this mishmash of legislation.
One line from last night’s post popped out at me this morning:
Treasury is also to focus on purchases assets held by retirement plans
Huh? I thought the purpose of this bill was to reflate capital in companies that are at the core of our lending. What have retirements funds got to do with that?
Sure, large pension funds invest in assets. Sure, they invest in debt backed securities. Some of them even do a small amount of direct lending. While there could be some, I’m not aware of any pension fund that lends directly to homeowners.
This provision, this single paragraph in the bill, is there to provide political cover for Democrats. They have inserted this provision to reflate numerous union pension funds. Merry Christmas pension funds! This is a horrible provision!
If the purpose of this bill is to restart our lending and pension funds do little if any direct lending, why are we allowing any of these funds to be allocated to them? This will siphon some amount of funds and move them away from their primary target. Which brings me to my other concern with this bill.
This bill gives far too much latitude without even so much as guidelines to the folks who brought this disaster to us. They didn’t make good decisions in the past, why should we expect them to now?
I remain conflicted on this bill. I feel a little like the first person who received chemo for cancer felt:
Doctor: “You have cancer. We believe that the best way to cure it is to give you poison! We think we can poison you to the fine point where your body throws out. If we miss by just a little bit, well, you die.”
I’ve read the bill…all 110 pages. You can to, it’s here!
While most of this has been reported, there are a few clarifications that are worth noting:
Trouble Assets Relief Bill – TARP
Gives the Secretary of the Treasury the ability to Purchase or Insure these assets. The combination of the amount purchased and the net amount, after premiums paid, can not exceed $700B
Several times in the bill there are notations that TARP should act to maximize the taxpayer’s dollars…nice sentiment, we’ll see what happens.
While generally saying they are to be non discriminatory, there are areas where the bill says Treasury should consider uniquely:
Treasury is instructed to consider the financial health of the institution they buy assets from. If the asset purchase will not help the financial viability of the entity, Treasury is “instructed” to put that institution at the bottom of their purchase list.
On the other hand, the Treasury is to look favorably on institutions that have less than $1B, were adequately capitalized as of 6/30/08 and served low or moderate income populations…..isn’t that part of what go us into this problem?
Treasury is also to focus on purchases assets held by retirement plans
The Board of TARP includes: Chair of the FED, the Secretary of the FED, Director of the Federal Home Finance Agency, Chairman of the SEC, Secretary of HUD…none of these people seemed to have forseen this problem. Are they the best folks to have giving oversight to this? I’ve heard Mitt Romney’s name proffered to handle this thing. Wouldn’t it be best to have some folks that are outside of those who created or allowed the problem to direct the resolution?
All revenues recouped go to the General Fund for reduction of Debt – This is a big issue! How do you suppose the Dems will glom onto this and play games like have been done with Social Security?
The “Golden Parachute prohibition” does not apply to existing contracts and only applies as long as TARP owns securities or debt of the particular institution as a part of the asset purchase
As has been reported, TARP gets $250B now, $100B after the President sends a report to Congress and the remaining $350 after a second Presidential certification. The final amount does not need Congress’ consent but Congress may vote to block it.
The bill does require TARP to receive warrants for non voting shares or Senior Debt of each company it buys assets from. The bill leaves up to the Secretary for the Treasury to determine what price the warrants will be or what amount of debt. The bill does not have a provision for how or when the warrants or debt would be extinguished. There ought to be a provision that requires sale or forfeiture of the warrants within a certain period after the debt is cleared. We don’t want the Federal Government being stockholders of any publicly traded stocks for an extended time.
Any gain (Ha!) or loss from the sale of preferred stock of Freddie Mac or Fannie Mae will be allowed to be recognized as an ordinary loss (no gains here) for financial institutions as long as they were purchased prior to 9/6 2008. Typically, if they were held over a year, these loses would be capital and limited to certain limitations. This is a nicety, I don’t know that it means much to these institutions.
The institutions that have assets purchased from them will not be able to deduct more than $500K of executive compensation. This only applies to institutions that have at least $300M purchased from them and applies until TARP terminates which would be 2011 at the latest.
A few thoughts:
This program should not cost the taxpayers anywhere near $700B. If Paulson and company do their job properly, this should cost no more than administrative costs and may return positive money to the treasury.
I can’t seem to find a provision that says TARP needs to do something with the warrants by a certain date. Typically, warrants have an expiration date so perhaps that is part of the negotiating. I’m nervous that the Secretary of the Treasury gets to negotiate all of the warrants or debt received. When you get to negotiate not only the amount you will pay for the debt but the amount someone will pay you to take it, well, that sounds a whole lot like loan sharking to me!
I like the continued references to focusing on managing for the taxpayer. Unfortunately, this is a governmental agency that they are asking to do it. Can anyone name me one governmental agency that is careful with taxpayer money?
I wrote last week that McCain’s gambit of suspending his campaign made the events of this weekend something like the gunfight at the campaign corral. It was going to be a high stakes gamble that would put the possibility of McCain’s election in the balance. It’s 7:30 PM and the House leaders have just had a brief news conference. Based on what it appears now will be passed, I’d say that as the smoke clears, McCain wins.
Remember that when McCain suspended his campaing last week, many people believed he did it as a political stunt. Blame John McCain for that as not doing a good job of communicating what he walked into. According to Bloomberg.com Lindsey Graham is quoted as saying:
“The fact is the House Republicans were not in the mix at all” until McCain arrived at the talks, said Graham, a South Carolina Republican. McCain “was decisive in regards to the House being involved.”
Tonight during the press conference, John Boehner, House Minority leader said:
OK, so McCain was involved. Now the question is whether his attendance made any difference? To that, I’d have to say yes.
The latest bill has had the following positive changes:
Funds that were to be siphoned to ACORN and La Raza have been stripped from the bill.
The provision that allowed judges to reset mortgage terms has been stripped
If the “work out” (no longer called a bail out) costs taxpayers money after 5 years, Congress has an affirmative responsibility to present a plan to recoup the cost.
There will be an insurance program available as part of the program.
In comparison to what was inkled to us on Thursday, as Barney Frank and Chris Dodd frantically tried to head off McCain’s appearance in Washington, this bill has more accountability and doesn’t throw all vestiges of free market economics into the abyss.
While I’m far from happy about having to do this at all, I’ve concluded over the weekend that something needs to be done and the pure insurance option that the House Republicans were offering had too many shortcomings to effectively change the trajectory in any short order.
Had John McCain not arrived when he did, we would have had a 100% socialist, Big Government “solution” provided. Admittedly, this may only be 92% socialist, Big Government. Under the circumstances, I’d say that was an important 8%.
With the American public as anti “bail out” as the poles have suggested, the House Republicans have a good story to tell about how they, and only they, fought at all for the Taxpayer. If the Republicans point out McCain’s intervention and the changes made, I think the American public will see once again, who was a Leader and who merely tried to manage through a situation.
You know I wouldn’t miss this fun. John McCain and Barack Obama will be focusing on foreign policy and national security tonight from Ole’ Miss. Jim Lehrer will provide the “moderation”, and Shoebox and I will provide the libation.
For those new to the NRE liveblog experience, I do paraphrase a lot, questions will be italicized, answers will be in plain text, and my commentary in-line with either a question or an answer will be in parentheses. Commentary outside of a question or answer will also be in plain text. Let the drinking begin.
Fox News is reporting that Sen. Ted Kennedy (D-MA) has been taken to a Cape Cod hospital, and that his condition is not immediately known.
May the Lord extend His healing hand on the Senator.
Revisions/extensions (11:00 pm 9/26/2008) – Sen. Kennedy suffered a “mild seizure”, and should already be back home (the update in the linked Fox News story said that he had been cleared to return home sometime before the debate started).
I’ll state up front that while I can toss numbers like nobody’s business, I’m not an expert on Wall Street economics. Like Shoebox, I don’t know which way, if any, is the right way out.
First, we have to remember why we are where we are, with an effectively-frozen credit market and the largest of the financial institutions teetering on the brink of collapse. It is because of an insistence by the federal government that the financial institutions lend to the credit-unworthy, combined with the gusto with which the financial institutions did lend to the credit-unworthy with the beliefs that housing prices would perpetually increase and that the federal government would step in if they got into trouble, that we got to a point where a correction in the housing market would threaten to bring the entire system down.
Compounding that is the Red Chinese factor. They hold a lot of debt, and the word is they’re calling it in right now.
There are essentially three things that can be done. The first is to essentially do “nothing”. The reason why I put that in scare quotes is that there are mechanisms in place to bail out individual financial institutions that fail, like Washingon Mutual. Indeed, I have to point out that the FDIC didn’t have to use any of its funds to complete that transaction. However, the fact that there is somewhere between $1.7 trillion and $7 trillion in “distressed” loans out there (or if one prefers, between 11% and 46% of the total value of the real estate) makes it improbable that, if a significant portion of those loans were to default, the current mechanisms can deal with that. True, not all of that is truly bad, but if even half of that is bad, it will make the S&L crisis look like a blip. It also does not address the immediate lack of liquidity in the markets in general and in the credit market specifically.
The second is the Paulson Socialism plan (the government buying that 11%-46% in value of the real estate) or the current Democratic Takeover of the Financial Sector alternative (the feds buying controlling stakes in the form of preferred stock in certain companies holding mortgage-backed securities). The model for the former is the successful Resolution Trust Corporation’s disposition of the assets of failed savings and loans at the end of the 1980s and the beginning of the 1990s. The main reason that worked in the long term is that the RTC actually sought to get rid of those assets when the private market was able to reabsorb them. That is something I am not at all confident the government will be able to do so this time around for two reasons.
First, we’re talking trillions of dollars now instead of a few hundred billion dollars then. The RTC took 6 years to get rid of just over $300 billion of assets. While inflation makes a straight ten-fold increase in the time for the market to recover sufficiently to reabsorb this not quite accurate, it is fair to say it would take far longer than 6 years to reintegrate the “distressed” mortgages into the private sector.
Second, we’re within 120 days of potentially having both the executive and legislative branches of government in the hands of the Democrats. The fact that the RTC existed for several years before the election of Bill Clinton, and then the Democrats only had total control of government for 2 years, had something to do with the ability and indeed the willingness of the RTC to actually return the assets to the private sector.
I will stipulate to the likelyhood that injecting that money will have the effect of at least temporarily restarting the credit market. However, what happens when that money is burned through, especially with more social economic engineering likely in the bill and almost certainly no fundamental fix of the governmental demands that caused this? The lack of long-term positive effect the similarily-sized economic stimulus return of welfare package earlier this year had ought to provide a clue.
There is even less of a guarantee that government will get rid of any stake in financial companies. Given that government policy played a very large part in this mess, and given that this approach is being pushed by those that are at their core anti-business, I do not want the government in complete control of those companies.
Finally, there is the House Republican plan, which Shoebox and I briefly touched on. It would make it easier for Wall Street to heal itself without the takeover of either real estate or corporations by the government, but there wouldn’t be a lot of immediate relief to the credit market. Whatever direct savings in tax and regulatory breaks the financial sector would see would flow back to the federal government in the form of insurance for the half of the MBS that aren’t already backed by the feds. Depending on the range of tax and regulatory breaks, there would be a lessening of the pressure on the credit market from businesses who, with additional cash in their pockets, wouldn’t be as dependent on the credit market to operate.
It also isn’t what Wall Street is looking for; they have their own immediate self-interest at heart. They like “free” cash like anybody else, and they like not having to take responsibility for their role like anybody else.
Here is the plan being offered by the House Republicans. From Politico.com:
* Rather than providing taxpayer funded purchases of frozen mortgage assets, we should adopt a mortgage insurance approach to solve the problem.
* Currently the federal government insures approximately half of all mortgage backed securities. (MBS) We can insure the rest of current outstanding MBS; however, rather than taxpayers funding insurance, the holders of these assets should pay for it. Treasury Department can design a system to charge premiums to the holders of MBS to fully finance this insurance.
* Have Private Capital Injection to the Financial Markets, Not Tax Dollars. Instead of injecting taxpayer capital into the market to produce liquidity, private capital can be drawn into the market by removing regulatory and tax barriers that are currently blocking private capital formation. Too much private capital is sitting on the sidelines during this crisis.
* Temporary tax relief provisions can help companies free up capital to maintain operations, create jobs, and lend to one another. In addition, we should allow for a temporary suspension of dividend payments by financial institutions and other regulatory measures to address the problems surrounding private capital liquidity.
*Immediate Transparency, Oversight, and Market Reform. Require participating firms to disclose to Treasury the value of their mortgage assets on their books, the value of any private bids within the last year for such assets, and their last audit report.
* Wall Street Executives should not benefit from taxpayer funding. Call on the SEC to review the performance of the Credit Rating Agencies and their ability to accurately reflect the risks of these failed investment securities.
*Create a blue ribbon panel with representatives of Treasury, SEC, and the Fed to make recommendations to Congress for reforms of the financial sector by January 1, 2009.
My gut reaction:
Insurance – OK but what are the rates and do the companies have the cash to pay for the insurance? Liquidity has been a huge issue so how does making them pay more $ help that problem?
Private Capital – Yeah, motherhood, apple pie, “God bless America!” Capital isn’t coming into these markets until they see opportunity. You can’t just say “do it” and expect seriously spooked investors to hop back in.
Tax relief – I don’t get this one at all. These companies are writing off these loans and creating significant tax losses. I can’t imagine that many of them will have much net income that this even matters.
Transparency – Amen
Executives not benefiting – Amen
Blue Ribbon Panel – haven’t seen one yet that really helped but OK
My gut is that while this probably protects the taxpayer more, I don’t know that it would provide the enema that these markets seem to need.
Your thoughts?
Revisions/extensions (4:15 pm 9/26/2008, steveegg) – There’s a couple of bullet points not mentioned by Politico in the release from Paul Ryan, my Congresscritter and main sponsor of the House Republican plan:
– Limit Federal Exposure for High Risk Loans: Mandate that the GSEs no longer
securitize any unsound mortgages
– Call on the SEC to audit reports of failed companies to ensure that the financial
standing of these troubled companies was accurately portrayed.
I haven’t seen the specifics of the tax and regulatory relief, but I strongly suspect that relief will extend beyond the financial sector. Additional cash would allow companies to rely less on the non-existent credit market to function.
Revisions/extensions (4:15 pm 9/26/2008, shoebox) – One thing I haven’t seen in any of the information being debated is an elimination or a set aside of the requirement to “mark to market.” As I understand the issue, the “liquidity crunch” is being largely caused by two issues 1. banks are afraid that lending to another institution could leave them exposed as the perception is that any institution could file bankruptcy at any time, therefore, no inter institution loans. 2. the bankruptcy scenario is being created because the institutions have insufficient capital as they continue to write down loans each time someone else has a fire sale. The point being that much of this problem is not a liquidity issue in the sense of their not being enough money floating around but liquidity in the sense that they cannot lend anymore because the the capital they have remaining is already “pledged” for their existing loans
As more and more information becomes available about the meeting yesterday at the White House and the Republican revolt against the bailout plan, it is more and more obvious that political gamesmanship is what has occurred during his week and not any kind of “successful negotiations!”
It first appeared that John McCain’s announcement to come to Washington had caused the Democrats and Republicans to find a compromise. I thought that’s what had happened when Chris Dodd announced about noon yesterday that an agreement in principle had been reached.
It appeared then, that the White House meeting would be nothing more than a bunch of handshaking and self congratulations amongst the Washington political leadership from both sides.
Instead, according to various articles, Republicans announced that they were not supportive of the amended proposal and argued for a different plan.
How do I know that the entire negotiation was just a political manuevering? This quote from an article by the “News Agency Who Shall Not be Named:”
The Massachusetts Democrat said leading Democrats on Capitol Hill were shocked by the level of divisiveness that surfaced at Thursday’s extraordinary White House meeting, leaving six days of intensive efforts to agree on a bailout plan in tatters only hours after key congressional players of both parties had declared they were in accord on the outlines of a $700 billion bill.
(emphasis mine)
How do you negotiate one of the largest, market impacting deals ever, announce you have a “deal in principle” and then get “shocked by the level of divisiveness?”
Simple, the “negotiated” plan was never negotiated. As the Dems have done time after time, they decided what they wanted to do, found a couple of invertebrate Republicans to pick off to perform ventriloquist acts with and announced “an agreement in principle” that never, ever was agreed to.
The Dems are now grousing that without Republican support, they won’t pass the bailout bill! Why not? If they’re so sure that what they’re doing is the right thing, do it! They have the votes in both chambers and the support of the President. Nothing prevents them from passing their bill immediately!
Nothing that is except for a complete lack of leadership and spine. The Democrats are great at sniping and Monday morning quarterbacking but don’t have the courage of their own convictions when real leadership is required!
We haven’t dragged this out for a while but it seems appropriate. This is a video that describes what the Dems believe leadership to be:
It’s time for some leadership. The public has not been convinced that a bailout needs to occur. Someone needs to chart a course of action and convince both Congress and the American People that it is the right thing to do. If John McCain and Barack Obama want to be the next President, now is the time for them to show their ability to lead. I’m still convinced that this is the gunfight at the OK campaign.
Americans are hungry for leadership on this issue. Will we find any leaders, anywhere, in Washington?
All parents of multiple children have to deal with sibling relationships from time to time. When I was growing up, because I was the oldest, sibling relationship management for my Dad usually amounted to,
“You’re older and should know better so leave your sister alone!”
While you could technically use that solution with twins (Thing 1 is 10 minutes older than Thing 2) it really only works when you have a sibling who is/should be more physically, mentally or emotionally developed.
When working with our twins, Mrs. Shoe and I use a different sibling management technique. When Thing 1 and Thing 2 get into one of their bickering contests and we get to a point where an end doesn’t seem imminent, Mrs. Shoe or I will intercede with,
“Listen, you have a choice. You can solve this issue yourselves or I can step in. If I step in, I will guarantee you that neither of you will be happy with the solution.”
That is the threat that John McCain brought to Washington today!
As I surmised yesterday, McCain was in fact, asked to come and help with the bail out bill. According to an interview with Bob Schieffer, McCain was invited by Paulson to help wrangle a solution because Republicans were balking at the Democrat’s proposal.
As an aside, but to make sure the nattering nabobs didn’t miss this; McCain went to Washington NOT as a POLTICAL STUNT but because he believed it was important for him to be there and that he could make a difference!
What’s this got to do with sibling relational management? Well first, after McCain essentially said,
“Don’t make me come in there!”
The first thing that happened was that Harry Reid denied that McCain needed to be involved! Then, about noon today, Chris Dodd dashed out and announced that they had an agreement in principle! Wow! that’s amazing when just yesterday morning only 4 Senate Republicans were willing to vote for the bill!
So what happened? It seems there’s only two choices. Either the Republicans caved or Democrats backed off of some of their more egregious demands. We’ll know which, more likely how much of both, happened later. My guess is that neither would have happened had John McCain not announced that he was suspending his campaign to work on the issue.
With McCain’s reputation for find bipartisan solutions coupled with the intense scrutiny that the negotiations were going to get because McCain had suspended his campaign to join, there was a message sent to both the Democrats and the Republicans. The message was:
“Listen, you have a choice. You can solve this issue yourselves or I can step in. If I step in, I will guarantee you that neither of you will be happy with the solution.”
Sometimes you need an adult to manage childlike petulance.
Comments Off on Talking to Four Year Olds – Sibling Relations Edition
Jim Geraghty has been wondering how John McCain could be gaining among independents and still be losing to Barack Obama overall in various national polls. The popular conventional wisdom is that the current crop of polls are oversampling Democrats. Because he specifically asked for the oddly-missing party-identity numbers from the most-recent Los Angeles Times/Bloomberg poll, which has Obama up 46%-44% among registered voters now compared to him up 45%-43% among registered voters in August (conducted before either running mate was made known), despite a swing from a 46%-35% Obama lead among “independents” in August to a 49%-34% McCain lead among “independents” in September, I’ll focus on that. I will ignore the “likely voter” component, where Obama leads 49%-45%, for now partly because I need to compare apples to apples (the August poll did not include “likely voters”), and partly because there is not a partisan breakdown among “likely voters”.
Before I get to the party identification explanation, I must note that Obama’s support among Democrats jumped from 78% to 87%. While some of this came from “McCain-ocrats” (McCain’s support among Democrats dipped from 9% to 5%), most of the gain came from the undecideds, as that dropped from 11% to 5%. In any case, I guess the PUMAs are coming home to roost.
Similarily, McCain has also strengthened his support among Republicans, albeit slightly. That went from 90% to 91%, and appears to have come at the expense of Bob Barr. More-pointedly, the percentage of “Obama-cans” remained unchanged at 6%.
Now, to the math. In order to do a comparison between the August and September polls, one has to know the party-identity internals from the August poll. Fortunately, those numbers are part of the August release, and were 34% Democratic, 29% Republican, 29% Independent, 4% Other Party, and an unmentioned 4% “refused to answer”. Since the remainder of the internals grouped the Independents, Other Party’ers, and “refused to answer”‘s together under the “independent” label, that becomes 37%.
I must point out that the 5-point advantage the Democrats had in the August poll is greater than the biggest of recent election-day splits (4 points in favor of the Democrats in 1996 and 2000, which actually beat the 3-point advantage they had in their historic 2006 election).
This is borne out, within rounding errors, by putting the results of a given early-in-the-poll question with three (or more) distinct answers into equation form (specifically, 3 equations) and solving for the three variables of the Democratic, Republican, and “independent” portions of support for each answer.
Since there are several questions in the September poll that meet those requirements, one can average the rounding errors out. I specifically solved the equations for questions 2, 9 (and the composite “ticket splitter” table), 13, and 15, and came up with an average of 34% Democrats, 43% “independents” and 23% Republicans in the September poll.
While there isn’t a massive increase in the percentage of Democrats included, there are a couple of things of note:
– The split between Democrats and Republicans (+11 D) matches the inflated numbers in other recent polls.
– The 21% decrease in the percentage of Republicans belies the conventional conservative wisdom that the selection of Sarah Palin energized the Republican base, at least on a statistical level. I can cite piece of circumstantial evidence (an incredible number of conservative bloggers jumping on the Straight Talk Express) after piece of circumstantial evidence (60,000 for Palin in Florida) after piece of circumstantial evidence (McCain/Palin outdrawing Obama in Green Bay) why this decrease is a bunch of macaca, but regular readers of this place already know why the decrease is a bunch of macaca.
For grins, let’s apply the August partisan split to the September poll, and the September poll to the August split. Had the August partisan split been applied to the September poll, McCain would be up 46%-44%. Had the September partisan split been applied to August, Obama would have been up 48%-39%.
I’ll briefly discuss the other oddity from the Times poll; the 4-point Obama lead among “likely” voters. There is one question that is somewhat relevant; number 3, or the “are you sure?” question. Again, there is not a specific breakdown of “likely” voters, but neither the partisan split among registered voters (91% of Democrats are sure of their choice, 88% of Republicans are sure of theirs) nor the split between the tickets (85% of Obama/Biden supporters are sure, 84% of McCain/Palin supporters are sure) fully-explains why Obama has that increased difference among “likely” voters.
John McCain just announced that he will be suspending his campaign to return to Washington and participate in the bailout negotiations. He has requested that Obama to the same and join him.
In his statement McCain said:
"America this week faces an historic crisis in our financial system. We must pass legislation to address this crisis. If we do not, credit will dry up, with devastating consequences for our economy. People will no longer be able to buy homes and their life savings will be at stake. Businesses will not have enough money to pay their employees. If we do not act, ever corner of our country will be impacted. We cannot allow this to happen."
McCain has also requested that the debate, scheduled for Friday evening, be delayed until the negotiations are complete.
As of this writing, 2:55 PM, Obama has yet to officially respond.
If Obama chooses not follow McCain, this will be fodder for McCain ads during the remainder of the elections. Can you imagine the ads showing on Obama was more concerned about his campaign, election and himself than he was about the American people?
Whether Obama follows McCain or not this is a “High Noon” move. In the old Western movie genre, you almost didn’t need to watch the 2 hours of movie prior to the “High Noon” event as long as you just saw that part of the Western. After the “High Noon” event of the old Westerns, you knew who the winners, the losers, the living and the dying or dead were. I believe the same will be so of this “High Noon” event.
McCain’s suspension will be viewed either as a political stunt or an “America First” move. McCain will be viewed as either more partisan or a uniter. McCain will either further invigorate the Republican base or again, poke them in the eye. McCain’s choice to personally participate in the debate may well be the factor on which he either is or isn’t the winner of the November election.
We all know that Obama will pander his way through this event regardless of how he chooses to respond.
The problem for McCain is that I don’t know how, now that he has personally inserted himself in the debate, he can appear to be both a uniter and a holder of conservative values.
It’s High Noon at the campaign corral. We’ll have to wait until the smoke clears to see who wins and who looses.
Update 3:50 PM. Barck Obama has declined to suspend his campaign and says “the debate is on.” In one of the weirdest quotes of the campaign Obama says he told Reid and Pelosi “If you need me, call me.” Perhaps the fact that Reid and Pelosi haven’t picked up the bat phone says more about what help they think Obama could provide than it does about the seriousness of the situation?
I hope McCain has been practicing his quick draw. The bullets will be coming fast and furious until this thing is decided!
