Republicans are going to lose the house, the senate, and the presidency.

There is NO way that McCain will win the elections this November after the Republicans BOTHCED the bail out. The stock market is going to collapse and more banks will fail this week. The average person is going to get freaked out, won’t appreciate being freaked out, and will vote  non-Republican accross the board this November.

Obama, who is perceived as more competent in domestic and economic issues was basically handed his victory today.

Unfortuantely, he will inheret one pretty messed up country and wil lspend the vast majority of his presidency un-doing the damage…

CAVEAT—If McCain somehow gets up and saves this thing by rallying his party, there is a chance he’ll come out victorious. It seems unlikely though.



Congress rejected the bail out? Now the DOW is literally crashing? WTF WTF WTF!!!!! I understand that the bailout isn’t perfect. I understand that they are nervous about signing their names to a bill that may be disasterous in the long run. But, they still needed to act in order to fight off major damage to the financial markets. 

Instead of acting, they rejected the plan and came out empty handed. Rejecting the plan ONLY makes sense if they had a better alternative. They did not. Now the economy is screwed and voters are probably going to blame them for the fall out.

I bet you ANYTHING that the people who voted Nay did so because constituents back home lobbied them saying “vote for the bailout and we will make sure you lose the election this November.” Well. They’re going to lose the election anyway unless they fix this mess FAST.

On a side note—I’m beginning to think that career politicians are the least qualified people to run the government. They don’t have real-world experience. They vote based on whether xyz is popular and not whether xyz is the best decision.

I am LIVID right now.

Accelerated Decomposition
September 29, 2008, 11:25
Filed under: Market Trends, Politics | Tags: , ,

I literatlly left the computer for 50 minutes to go for a quick run, and in that time the Dow slipped 290 points.

I have hope in the bailout, but it’s possible that it will pass too late to hold the markets up. A recession is all but certain. How can the financial market recuperate it’s confidence in the face of such a spectacular meltdown?

It’s like asking a jilted bride to forgive her fiance after he embarassed her infront of their 300 closest friends. It takes time, and even that is no guarantee.

Things to watch out for:
-Regional bank failures, like Suntrust or PNC

-What happens to the average consumer after a takeover? Do their lines of credit continue to fund? Can they run their business accounts without interruption?

-Republicans blocking the bailout plan.  Republicans are supposed to be in line with “free market” economic theories.  The bailout goes against the very nature of free markets, and Rebpublicans are probably getting significant pushback from their constituints. Oh well. This is bad and they need to sacrifice their seat in this upcoming election if it means passing the bill and saving the financial industry.


This video is HYSTERICAL.

On the record just reported that Congress approved a bailout plan. I do not know the specifics of the plan yet, but I wanted to go on the record for the following:

  • Given available information, I think that the bailout plan was the correct step necessary to help the economy recover.
  • The congressmen and congresswomen that voted for the plan made the most rational decision they could given the information available.
  • I predict that the bailout will be a success because 1) It will help stabilize the market and 2) The government will be able to turn a profit on its $700 billion investment if it holds the assets long enough.

I think it’s going to work.  I truly, truly hope that Paulson keeps his post in the Treasury no matter which party takes the White House this November.

With that said, this bail out gives the Fed and Treasury an unprecedented amount of power.  These two bodies must be governed with care. There must be oversight.  Paulson and Bernanke make a good team.  We got lucky. These two men are modern day Renaissance Men, much like George Washington and Thomas Jefferson.  They are extroardinarly capable of leading the country through difficult terrain. However, there is no guarantee that the next people in their position will be as capable.

We must place a system of checks and balances in place over the Fed/Treasury in order to mitigate the risk of an all powerful position held by weaker individuals than Paulson or Bernanke.

Washington was aware of this risk…that is why he stepped down after two terms, setting an example that was followed by all other presidnets (minus FDR).  That way, a bad leader would only stay in power for 8 years. 

I am not sure what checks must be in place, but some oversight, some rules, some balances must exist so that the Fed/Treasury do no harm.

Just a thought

The $700 billion government bailout may turnout a pretty profit.  How? There are very few institutions in the world that have a big enough war chest and strong enough stomach to hold distressed investments of this magnitude long enough for them to turn around.

The government has the money and the patience to wait for its garbage bin of mortgages to ferment into something more positive.

Even if the return is minimal, the sheer size of the transaction ($700 billion!) ensures a sizable net profit.  Some economists are estimating a profit of $1 trillion dollars.

Just a thought—what if this profit is reserved for bolstering the social security plan?  After all, deficiencies in the social security program could very well be a crisis the USA faces in the future. Imagine all those baby boomers freaking out when the government tells them they will not receive their social security benefits that they counted on for their retirement.  An entire class of citizens would suffer if social security does not shore up its funding pool.

Use any profit from the bail out to help the social security program, to help tax prayers….just a thought. A good thought.

Bypass Main Street

It is hard to stay loyal to the Democrat party when representatives on the Hill start shouting populist chants in the face of America’s most significant economic crisis in several generations. Politicians are generalists—they know only enough to sound somewhat intelligible during tv interviews.  They are not experts, especially in complicated fields such as finance.

The experts in the room are Bernanke and Paulson.  Bernanke is a world expert on the great depression. He studied that era like no other student before him, diagnosed which government policies helped/hampered the country’s recovery from the Great Depression. The man knows what he is doing.  Then there is Paulson, former CEO of Goldman Sachs. He knows banking. He knows the system, in fact he ran it for a few years. The man knows what he is talking about.

Senators and Congress(wo)men do not.

This bail out is dangerous as it is.  The financial industry forced The Fed into a corner so that it now has to buy an entire trash bin of bad loans.  Even if the Fed purchases these assets at $0.30 to the dollar, it will still lose close to every penny that it spends filling the bin.  Pricing and structuring these loans will be madness, yet Congress is now talking about a Main Street tax rebate? Bailing out individual home owners? That makes the bail out plan THAT much more expensive and difficult to manage. Adding populist lines to the plan undoubtedly increase the odds that something will go wrong by complicating an already unfathomably complicated matter.

Here are some common arguments:

-How is it possible that taxpayer money will be used to rescue these idiotic bankers on Wall Street

WRONG. Wall Street’s problems are Main Street’s problems too.  The risk of another bank failure lowers the value of the average American’s retirement savings. Mutual funs and all other types of investment vehicles are losing value.  The Wall Street Journal even printed an article stating that people are opting to retire a few years later than expected because their savings have plummetted and they cannot afford to live without a steady income. Bailing out the banks will stabilize the markets and stabilize people’s life savings.

-We should help Main Street out by giving out another tax rebate or bailing individual homeowners out.

WRONG.  A tax rebate of $600 will not help John Doe’s 401K recuperate value.  A tax rebate will provide only short term relief. What we need is long term relief, long term stability, a chance for the markets to breath easy and become productive once again. The Fed needs every dollar in can get to properly clean up the mortgage mess. Diverting cash towards a rebate program sounds good, gets votes, but will not improve the average American’s life in a tangible way.

The same applies to the homeowner rescue bailouts that some Democrats are suggesting.  If bailing out a handful of banks is complicated, imagine bailing out millions and millions of individuals. It will be hard to determine who really needs a bailout and who doesn’t. It is a mess. It will produce gross inefficiencies that will hurt the general economy.  People will game the system to get their share of bailout money.  An individual bailout is an undesirable method for stabilizing the US economy—it’s a misuse of taxpayer money.

I’m ranting. All I can say is that Paulson and Bernanke know what they are doing—getting in their way will only make things worse.

With that said, it scares me that the Fed has as much power as it has. It is now the most activist part of the US government.  I trust the expertise currently at the Fed but I’m not entirely sure that I’ll trust its next leaders.  The Fed needs some massive oversight.