Bailout deal voted down

[The Smoking Man]

Bailout deal voted down

    * Anne Davies, Washington
    * September 30, 2008 - 10:21AM

Wall Street's benchmark Dow index has suffered its worst single-day points hit ever after a $860 billion ($US700 billion) financial bailout package failed to pass the US House of Representatives.

The Dow lost about 778 points, or 6.98%, posting its biggest daily percentage decline since the October 1987 stock market crash, while the benchmark S&P 500 also had its worst day in 21 years after the House sent the bailout plan to defeat by a vote of 228 to 205.

The record Wall Street stock plunge overnight wiped approximately $US1.2 trillion ($1.45 trillion) off the market value - the first-ever trillion-dollar one-day loss.

The 6.98% drop, however, does not make the top 10 greatest percentage losses.
 
By contrast, on ''Black Monday'', October 19, 1987, the Dow Jones index dropped by 22.61%.

Market fear was deep and widespread, as investors dumped stocks for the relative safety of US government bonds. The Chicago Board Options Exchange Volatility Index, Wall Street's main barometer of investor fear, jumped 39% to 48.40, a nearly six-year high, and was at 46.72 at the close.

''I am shocked. Credit markets were struggling even with the prospect this bill was going to get passed. Now the bill doesn't get passed and it just throws one more monkey wrench into the mix,'' said Bob Doll, global chief investment officer of equities at BlackRock Inc, one of the world's largest asset managers.

The failure of the bailout bill means the US Treasury now has very limited capacity to bailout firms in the future, and economists are predicting that credit markets will seize up, preventing businesses and people from getting loans for ordinary day-to-day business activities, for college fees, for cars, and for appliances as well as for housing. Consumer and business interest rates are likely to rise sharply.

House leaders from both parties warned members that without the bill, America was standing on a financial precipice, which could send the US economy into a deep recession.

The defeat of the bill came despite impassioned pleas by the leadership of both Republican and Democrat parties to vote for it. But 132 Republicans and 94 Democrats voted against it. Most had expected that more Republicans would support it as it was an administration bill.

The House leaders were scrambling to find a procedural way to bring the bill back before Congress before the members go home later today to begin campaigning for re-election.

The overriding question for congressional leaders was what to do next. Congress has been trying to adjourn so that its members can go out and campaign. And with the November 4 Election Day looming, there was no clear indication of whether the leadership would keep them in Washington. Leaders were huddling after the vote to figure out their next steps.

Lawmakers are unlikely to vote again on a bailout of the US financial system before Thursday, a Democratic lawmaker said, citing the coming Jewish holiday. On Tuesday and Wednesday, the House will be in a two-day recess to observe Rosh Hashanah.

A White House spokesman said that US President George Bush was ''very disappointed" the bill had failed.

''There's no question that the country is facing a difficult crisis that needs to be addressed,'' Tony Fratto told reporters. He said the president will be meeting with members of his team later in the day ''to determine next steps.''

''Obviously we are very disappointed in this outcome,'' Fratto said. ''There's no question that the country is facing a difficult crisis that needs to be addressed. The president will be meeting with his team this afternoon to determine the next steps and will also be in touch with congressional leaders.''

The mind-numbing vote had been preceded by unusually aggressive White House lobbying, and spokesman Tony Fratto said Bush had used a call list of people he wanted to persuade to vote yes as late as just a short time before the vote.

Lawmakers shouted news of the plummeting Dow Jones average as lawmakers crowded on the House floor during the drawn-out and tense call of the roll, which dragged on for roughly 40 minutes as leaders on both sides scrambled to corral enough of their rank-and-file members to support the deeply unpopular measure.

They found only two.

Bush and his economic advisers, as well as congressional leaders in both parties had argued the plan was vital to insulating ordinary Americans from the effects of Wall Street's bad bets. The version that was up for vote today was the product of marathon closed-door negotiations in Congress over the weekend.

''We're all worried about losing our jobs,'' Rep. Paul Ryan, a Republican, declared in an impassioned speech in support of the bill before the vote.

''Most of us say, 'I want this thing to pass, but I want you to vote for it - not me.''
With their dire warnings of impending economic doom and their sweeping request for unprecedented sums of money and authority to bail out cash-starved financial firms, Bush and his economic chiefs have focused the attention of world markets on Congress, Ryan added.

''We're in this moment, and if we fail to do the right thing, Heaven help us,'' he said.

Asked whether majority Democrats would try to reverse the stunning defeat, House Majority Leader Steny Hoyer said, ''We're certainly not going to abandon our responsibility. We'll continue to focus on this and see what actions we can take.''

Several Republican aides said the leader of the House, Speaker Nancy Pelosi, a Democrat, had torpedoed any spirit of bipartisanship that surrounded the bill with her scathing speech near the close of the debate that blamed Bush's policies for the economic turmoil.

Without mentioning her by name, Representative Adam Putnam, the No. 3 Republican, said: ''The partisan tone at the end of the debate today I think did impact the votes on our side.''

Putnam said lawmakers were working ''to garner the necessary votes to avoid a financial collapse''.

But the defeat was already causing a brutal round of finger-pointing.

''We could have gotten there today had it not been for the partisan speech that the speaker gave on the floor of the House,'' House minority leader John Boehner said. Pelosi's words, the Republican said, ''poisoned our conference, caused a number of members that we thought we could get, to go south.''

Representative Roy Blunt, the Republican No. 2, estimated that Pelosi's speech changed the minds of a dozen Republicans who might otherwise have supported the plan.

Representative Barney Frank, a Democrat, scoffed at the explanation.

''Well if that stopped people from voting, then shame on them,'' he said. ''If people's feelings were hurt because of a speech and that led them to vote differently than what they thought the national interest (requires), then they really don't belong here. They're not tough enough.''

More than a repudiation of Democrats, Frank said, Republicans' refusal to vote for the bailout was a rejection of their own president.

''The Republicans don't trust the administration,'' he said. ''It's a Republican revolt against George Bush and John McCain.''

In her speech, Pelosi had assailed Bush and his administration for reckless economic policies.

''They claim to be free market advocates when it's really an anything-goes mentality: No regulation, no supervision, no discipline. And if you fail, you will have a golden parachute and the taxpayer will bail you out. Those days are over. The party is over,'' Pelosi said.

''Democrats believe in a free market,'' she said. ''But in this case, in its unbridled form, as encouraged, supported, by the Republicans - some in the Republican Party, not all - it has created not jobs, not capital. It has created chaos.''

With agencies

[Polly]

 嘩!股神!

[The Smoking Man]

Amazing isn't it.

America has got to the level where it's not who made the most money in the market but who got out with a pot to piss in.

Bush has destroyed the Republican Party... And America.

[Polly]

Pelosi was out to bury the Republicans, never mind the US financial system, never mind companies folding and people losing their jobs.  I thought she was a bit kinder than that.  But again I was wrong.

[The Smoking Man]

There was something telling about it all though ...

It wasn't just Democrats who didn't vote for the bailout ... It was the REPUBLICANS she convinced not to go for it.

In most countries of the world, this would be considered a vote of non-confidence and force an election.

Most Republicans will toe the party line especially when it involves a hefty payout for their constituents.

They KNOW this is horseshit and would truly put the last nails in the coffin for the economy.

The market HAS to remain free otherwise there is nothing left.

The crash MUST come and the USA must rebuild itself without handouts to prove they still have a reason to be considered competitive.

You can't rebuild an economy with a credit card.

It's like getting into personal debt and using a cash advance from one credit card to pay off another.

Sometimes, you just have to declare bankruptcy or the bank does it for you.

[Polly]

You are right.

However the Democrates have voted to make the regulation-lite and greed-fested and anti-intelligence system the way it is now.  It's not like they can be exonnerated in any way, so the hypocrisy now of condemning Bush and his gang just reeks of stench!

[Polly]

  Do you mean "flip"?

  I think you read politics very well.  Well done Shan!

[Polly]

Sometimes I wonder how much of US hot money has been noosed and hang dry when the Chinese index droped from 6000 to 2000 and as the property markets in Beijing, Shanghai, Shenzhen, Tianjin and all other big cities corrected by up to 40%.  It has to be astronaumical considering the great dearth of liquidity in the US financial and banking system.

China is not HK or Japan or Vietnam, hot money can go into the market very easily but exit is very much monitored and controlled.  In this sense China could be said to have given a push on the knife that is already stabbed into the US lungs and created a sucking wound.

It is predicted by this chap, who has a shocking accuracy, that the US will lose its de facto super power status within 2-3 years and split in 10 years if Obama is elected and beyond 10 years if McCain is elected.

http://cache.tianya.cn/publicforum/content/worldlook/1/168988.shtml

[shan]

   The US wants to inject money into their corrupt economy. If the US wants money, then they should follow this lesson.

1. Stop trying to conquer Iraq and steal Iraqi oil.
2. Stop trying to conquer Afghanistan to expand their military power.
3. Stop spending so much money on their military.
4. Stop spending so much money on overseas military bases.
5. Stop pouring aid into Israel so Israel can steal land from Palestine and continue the superstitious Crusades.
6. Stop funding corrupt, puppet governments in Latin America, Africa, Eastern Europe, and all over Asia.
7. Stop producing so many spies, smear attacks, and sabotages against other nations.
8. Stop consuming too many steaks, hamburgers, Coca-Cola, and junk food.
9. Stop driving very fat automobiles.
10. Etc.

The US hoped they could make money from stealing Iraqi oil but the Iraqi people are very brave and independent. This grand theft by the US failed so now the US economy is in trouble. The US blames their bad mortgages, but this is just US propaganda from their propaganda media.

Now the US wants to "liberate" Iranians and Pakistanis the same way the US "liberated" Native Americans.

[Polly]

YES! MORE CHEAP OIL FOR OUR SUV AND MCMANSIONS TO HAUL AND HOUSE OUR FAT ASSES AROUND, AND AS FERTILIZER FOR THE PRODUCTION OF SYRUP, CHIPS, FLOUR AND BEEF FOR OUR STEAKS AND SUPER-SIZED MCBURGERS!

WE DESERVE IT BECAUSE WE ARE AMERICANS! AND GOD BLESS AMERICA! IT IS A AN UNQUESTIONABLE GIVEN. 

IF YOU MUD-CLADDED STARVING GOOKS IN THE SECOND AND THIRD AND FOURTH AND FIFTH WORLDS MUST HAVE A NAME FOR OUR NATURAL RIGHT AND ENTITLEMENT, IT IS CALLED AMERICAN EXCEPTIONALISM!

[The Smoking Man]

Friends,

Everyone said the bill would pass. The masters of the universe were already making celebratory dinner reservations at Manhattan's finest restaurants. Personal shoppers in Dallas and Atlanta were dispatched to do the early Christmas gifting. Mad Men of Chicago and Miami were popping corks and toasting each other long before the morning latte run.

But what they didn't know was that hundreds of thousands of Americans woke up yesterday morning and decided it was time for revolt. The politicians never saw it coming. Millions of phone calls and emails hit Congress so hard it was as if Marshall Dillon, Elliot Ness and Dog the Bounty Hunter had descended on D.C. to stop the looting and arrest the thieves.

The Corporate Crime of the Century was halted by a vote of 228 to 205. It was rare and historic; no one could remember a time when a bill supported by the president and the leadership of both parties went down in defeat. That just never happens.

A lot of people are wondering why the right wing of the Republican Party joined with the left wing of the Democratic Party in voting down the thievery. Forty percent of Democrats and two-thirds of Republicans voted against the bill.

Here's what happened:

The presidential race may still be close in the polls, but the Congressional races are pointing toward a landslide for the Democrats. Few dispute the prediction that the Republicans are in for a whoopin' on November 4th. Up to 30 Republican House seats could be lost in what would be a stunning repudiation of their agenda.

The Republican reps are so scared of losing their seats, when this "financial crisis" reared its head two weeks ago, they realized they had just been handed their one and only chance to separate themselves from Bush before the election, while doing something that would make them look like they were on the side of "the people."

Watching C-Span yesterday morning was one of the best comedy shows I'd seen in ages. There they were, one Republican after another who had backed the war and sunk the country into record debt, who had voted to kill every regulation that would have kept Wall Street in check -- there they were, now crying foul and standing up for the little guy! One after another, they stood at the microphone on the House floor and threw Bush under the bus, under the train (even though they had voted to kill off our nation's trains, too), heck, they would've thrown him under the rising waters of the Lower Ninth Ward if they could've conjured up another hurricane. You know how your dog acts when sprayed by a skunk? He howls and runs around trying to shake it off, rubbing and rolling himself on every piece of your carpet, trying to get rid of the stench. That's what it looked like on the Republican side of the aisle yesterday, and it was a sight to behold.

The 95 brave Dems who broke with Barney Frank and Chris Dodd were the real heroes, just like those few who stood up and voted against the war in October of 2002. Watch the remarks from yesterday of Reps. Marcy Kaptur, Sheila Jackson Lee, and Dennis Kucinich. They spoke the truth.

The Dems who voted for the giveaway did so mostly because they were scared by the threats of Wall Street, that if the rich didn't get their handout, the market would go nuts and then it's bye-bye stock-based pension and retirement funds.

And guess what? That's exactly what Wall Street did! The largest, single-day drop in the Dow in the history of the New York Stock exchange. The news anchors last night screamed it out: Americans just lost 1.2 trillion dollars in the stock market!! It's a financial Pearl Harbor! The sky is falling! Bird flu! Killer Bees!

Of course, sane people know that nobody "lost" anything yesterday, that stocks go up and down and this too shall pass because the rich will now buy low, hold, then sell off, then buy low again.

But for now, Wall Street and its propaganda arm (the networks and media it owns) will continue to try and scare the bejesus out of you. It will be harder to get a loan. Some people will lose their jobs. A weak nation of wimps won't last long under this torture. Or will we? Is this our line in the sand?

Here's my guess: The Democratic leadership in the House secretly hoped all along that this lousy bill would go down. With Bush's proposals shredded, the Dems knew they could then write their own bill that favors the average American, not the upper 10% who were hoping for another kegger of gold.

So the ball is in the Democrats' hands. The gun from Wall Street remains at their head. Before they make their next move, let me tell you what the media kept silent about while this bill was being debated:

1. The bailout bill had NO enforcement provisions for the so-called oversight group that was going to monitor Wall Street's spending of the $700 billion;

2. It had NO penalties, fines or imprisonment for any executive who might steal any of the people's money;

3. It did NOTHING to force banks and lenders to rewrite people's mortgages to avoid foreclosures -- this bill would not have stopped ONE foreclosure!;

4. It had NO teeth anywhere in the entire piece of legislation, using words like "suggested" when referring to the government being paid back for the bailout;

5. Over 200 economists wrote to Congress and said this bill might actually WORSEN the "financial crisis" and cause even MORE of a meltdown.

Put a fork in this slab of pork. It's over. Now it is time for our side to state very clearly the laws WE want passed. I will send you my proposals later today. We've bought ourselves less than 72 hours.

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

[Polly]

So that's why, stopped by the calls.

Thanks

[Polly]

Here is one of the most scary consequences of liquidity crunch:

The London interbank offered rate, or Libor, that banks charge each other for such loans climbed 431 basis points to an all-time high of 6.88 percent today, the British Bankers' Association said. The euro interbank offered rate, or Euribor, for one-month loans jumped to a record 5.05 percent, the European Banking Federation said. The Libor-OIS spread, a gauge of the scarcity of cash, also increased to an all-time high.

Imagine what the economy would come to when Libor and Prime Rate are sustained at over 10, 12, 15 or even 20% for a period of time because of lack of liquidity in the system?  What else could companies which have to repay loans/commercial papers at Libor + x% and mortgagees repaying banks at PR + x% do but default?

Do not think the chances are remote.  Borrowers and mortgagees in HK had to pay 22% interest in 1997 during the Asian Financial Crisis.  Although only for a day or two as the crisis was promptly resolved by throwing Soros from our back.

People in the Western countries which are used to be on the offensive side of financial exploitation, will not have a clue when a financial crisis hits them.

[The Smoking Man]

[Art]

If America doesn't fix it's financial sector the American economy will go down and if the American economy goes down the rest of the world's economies goes down with it. There are shades of the Great Depression about all of this. That too started with a crash in America's financial markets.

As I've said before, much as you hate America and would love to see her fall, be careful what you wish for.