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What Obama should say

"The bailout bill failed in the House today, and Senator McCain blames Democrats for putting politics ahead of country. Looking at the facts, 59% of Democrats voted for the bill, and 32% of Republicans did. This is clearly a controversial issue that crosses party lines; some, like both Senator McCain and I, believe the bailout to be essential to the continued health of the American economy, while others see it as a handout to the rich, or as unprecedented government meddling in what was once a free market.

"We should not belittle the opposition's apprehension at this large a move. Each member of the House of Representatives has considered the bill at hand, and decided that it was their duty to vote as they did. To call such a vote unpatriotic is an affront to the very core of our government. The idea that congress must in times of crisis act as a rubber stamp to the executive branch's whim is one that must be attacked, and must be exposed as ridiculous in the national discourse.

"I consider it my own duty now to phone up my colleagues in the House, schedule meetings with those that voted nay, and attempt to convince them, through rational discourse, to change their votes. To use intimidation or demagoguery, in this critical time for our nation, is unconscionable. Any attempt to attack individuals based on their vote at this time should be rebuked by the people; every single member of the House of Representatives is doing their duty.

"Except that one guy who registered no vote, what's up with that?"

Comments

( 17 comments — Leave a comment )
(Anonymous)
Sep. 29th, 2008 10:10 pm (UTC)
To change their votes, or to work out compromise legislation? Repeating "it's a great bill" isn't likely to succeed.

I like the closing statement. :)
dcltdw
Sep. 29th, 2008 10:10 pm (UTC)
Lies, that wasn't anonymous, that was me. :)
gentlescholar
Sep. 29th, 2008 10:43 pm (UTC)
Bravo, Sir.
tirianmal
Sep. 29th, 2008 11:04 pm (UTC)
And yet, instead we saw both McCain and Obama attack each other and Pelosi continue to be a sad sad little woman.

I don't like the bailout myself but the Congress needed to get something done today and they failed.

Edited at 2008-09-29 11:24 pm (UTC)
mjperson
Sep. 29th, 2008 11:26 pm (UTC)
If you don't like the bailout, in what way did they fail? That congress *needs* to pass the bailout is exactly the argument crs was objecting to.
tirianmal
Sep. 30th, 2008 12:41 am (UTC)
Even if they had said we're only giving 100 Billion to mortgage owners in trouble, it would have been -something-. Right now there's a lot of anxiety and mistrust in the financial markets and they need to know that "big brother" will do something. Not that big brother will bail out bad companies, but that he'll step in and help the kids dig themselves out if they really need to. Remember, your 401k and our parents' pensions are involved here too now.

(edit: "I disagree with crs that nothing need be done." was what I said originally, but even in crs's faux dialog above, that's not what he has Obama saying, so I guess I'm disagreeing with you, mjperson.) I agree that bailing out the banks and investment banks and the insurance companies that made bad decisions is not the way to go. But in the end Congress should have either said, "you know what, Mr. President, we disagree. We think that the markets are robust enough to handle this (lie)" or "here's our plan, and we're gonna make it work (lie?)".

Instead, they end up playing at trying to do something and now they're looking like a bunch of school ground children bickering over who broke the swing. And that's NOT going to instill confidence in anyone.

Edited at 2008-09-30 01:03 am (UTC)
gentlescholar
Sep. 30th, 2008 03:24 am (UTC)
It's not exactly trivial to write legislation to cover this kind of situation in all its intricate goriness.

I am impressed that the Democrats refused to be railroaded and write another goddamn blank check to Bush and Co.

I am also impressed that they worked hard enough at compromise to get even a first draft attempt at legislation up for a vote so quickly. This is radically swift for any kind of legislation, let alone one this vast and important and tricky.

And somebody should be saying, "There *will* be a deal. It may take us a few more days to get it right, but better to wait three days for a good solution than to have a bad solution right now."

Sure, some people are trying the "fearfearpanicpanicquickdoexactlywhatIsayit'souronlyhope!" trick again. It's not going to work again. Shocking as it may seem, even Congress appears to have a learning curve.
tirianmal
Sep. 30th, 2008 12:47 pm (UTC)
Actually, looking at the numbers, 60% of Dems voted for it and about 60% of Reps voted against it. So if anyone refused to do anything it was the GOP.

Just sayin'
abce
Sep. 29th, 2008 11:49 pm (UTC)
There is some discussion on the right that a lot of the Democrats who bolted did so in hopes to now get a House bill on a party line vote. As a lot of the special interest provisions got stripped out ("affordable housing" slush fund, union membership on boards of participating companies, et al) of the compromise bill, there is some fear that a new bill will come along with all of those provisions back in.

I must say, this morning's photo op with Barney Frank and Chris Dodd almost made me gag - if you had to pick two legislators most responsible for blocking earlier reforms of the GSEs that might have mitigated this crisis, that'd be them....
tirianmal
Sep. 30th, 2008 12:46 am (UTC)
had to say it.
"blocking earlier reforms of the GSEs that might have mitigated this crisis"

"might have" being operative words in there.

Incidentally, this all so important bill now that everyone thinks might have saved the world had it passed in 2005(6?) ... from a candidate that this spring admitted the economy was not his strong suit? I had to be reminded that McCain was awfully skittish about commenting on financial and economic matters on the campaign trail. How'd he suddenly become this maverick financial pre-cog? [fact check: McCain made the quote I'm remembering from the papers in Jan originally in late 2005 to the Globe. He was called on it a number of times at debates and in the media but he claimed by then that he was well versed in economic issues. Still, to make that sort of comment in 2005 about the time of S.190, seems telling.]

Edited at 2008-09-30 01:05 am (UTC)
awfief
Oct. 1st, 2008 03:52 am (UTC)
Re: had to say it.
of course he's skittish.

He was one of the Keating 5, remember?
marcusmarcusrc
Sep. 30th, 2008 01:31 am (UTC)
Or we could blame the Glass-Steagal repeal. The massive growth in CDOs. etc. etc. Plenty of blame to go around, and I'm not sure that the GSEs are the highlight.

While I certainly think the GSE's should have been reformed to be more conservative, I will point out the parallels between the rush to CDOs and subsequent market collapse and the days of Long Term Capital Management, in which there was no Fannie/Freddie equivalent. My understanding is that Fannie/Freddie followed rather than lead the rush into these exciting, new, no-lose repackaged mortgage products.

Having said that, I have trouble finding really reliable, well-vetted information on this. Next month I'll get a chance to ask economics experts I trust, and see how wildly off my opinions are from theirs...
abce
Sep. 30th, 2008 03:47 am (UTC)
Or really, the Community Reinvestment Act.
animal2nd
Sep. 30th, 2008 04:10 am (UTC)
The CRA does not apply to independent mortgage lenders and that didn't stop them from handing out loans like candy. More than half of the sub-prime loans came from these institutions.

http://www.house.gov/apps/list/hearing/financialsvcs_dem/barr021308.pdf

Lenders who could get away with it approved bad loans and sold them off to make money. Period.
marcusmarcusrc
Sep. 30th, 2008 12:10 pm (UTC)
Thank you for the link. Portions of the blogosphere seem to be going wild with the "Oh noes! GSEs! CRAs! Democrats bad!" meme, which I don't see properly reflected in what I consider to be good analysis, but like I said, I'm having trouble finding good numbers on things like "what % of the failed mortgages come from which source" (and really, I'd like that data over time, too).

(admittedly, the other half of the blogosphere is saying "Oh noes! CDOs! Glass-Steagal! Predatory lenders! Republicans bad!", and perhaps I see them as marginally better only because I personally tend to lean democrat. It is kind of disturbing how easily reality can warp depending on where one is standing. Again, this is why I want to go talk to the Sloan school professor that I know who I consider to be thoughtful and well-informed about both politics and economics because at this point I'm failing to have confidence in my own ability to rationally evaluate this stuff given that I can't devote much time to it)


kirisutogomen
Sep. 30th, 2008 04:07 pm (UTC)
It's a complicated situation, with many causes, but the partial Glass-Steagall repeal is definitely not one of them. The chief effect of the partial repeal of Glass-Steagall was to allow financial services companies to diversify, and that doesn't concentrate risk, it reduces it.
mama_pipa
Sep. 30th, 2008 11:11 pm (UTC)
I would only like to point out that at this time, foreclosures are at 3% in this country. This is not a horrible number, given historical reference. The fact that once again we see fear & greed as the biggest factors in this particular market. Right now, fear is winning, because the investors at large believe that CDOs are categorically bad, doomed to fail, because of unscrupulous lending practices. The folly is that this fear causes CDOs across the market to be devalued significantly, or even deemed worthless in the marketplace. This causes the balance sheets of several financial corporations to go out of whack, and said corporations do not have the financial wherewithal to meet their new margin requirements in other non-CDO style assets. The smart ones are able to sell themselves to cover, others are not so lucky, and have/will fail. And then we have the ripple effect.

Given the japanese economic example in the 80s and 90s if the government does absolutely nothing, it will take an awfully long time for things to come back. Those on Wall St. know this, hence the tremendous drop yesterday. Today, we were given hope that action, in some form, will be taken, and here we go, up today, earning back most of those losses. What the general public doesn't seem to realize is that if they buy up all these CDOs (which are pennies on the dollar), they are going to make a tidy profit in the next 10-20 years as those who do not default on their mortgages will be paying their payments and eventually their principal on their home. Even if that foreclosure number goes into the 20s or 30s, there is still money to be made here.

Most investors, including your 401Ks and pensions, need to turn off their flavor of financial television, make sure their investment strategy and risk are in line with the goals of the investment and that said investments are of quality (low debt, strong balance sheets, well diversified for your mutual funds, etc.), and hang on for the ride.

Me, I am having fun with the volatility, selling today what I bought yesterday, and turning over a nice 20% return in my retirement accounts between answering phone calls for my less than comfortable clients. Not bad for two-days worth of work.


( 17 comments — Leave a comment )