The Huffington Post breaks it down – I can’t, my head hurts.
Republicans blame the democrats. McCain blames Obama; no one’s buying that, not even the Wall Street Journal.
Paul Krugman was for the bill - I respect Krugman. Bill Callahn pointed out where the bill failed to protect homeowners.
I still need a job.
America, the Bailout and the Cost
Before the Senate votes on the bailout potentially saddling your children and their children with 700 billion in debt I urge you to read Diamond and Kashyap on the Recent Financial Upheavals.
Here is my simpleminded understanding of the crisis. Freddie, Fannie, Lehman and AIG couldn’t get financing so we scuttle Lehman and bail out the others to avoid worldwide financial collapse.
The Players
Fannie Mae and Freddie Mac- the ones we could not afford to fail
The Federal National Mortgage Association, known as Fannie Mae, and the Federal Home Loan Mortgage Corporation, known Freddie Mac, are government sponsored enterprises or GSE’s. GSE’s are government created, but privately owned financial service entities* created to ease the flow of credit (read make cheaper credit available) to agricultural and home finance sectors. In the words of Diamond and Kashyap Fannie and Freddie were
set up to support the housing market. They helped guarantee mortgages (provided they met certain standards), and were able to fund these guarantees by issuing their own debt, which was in turn tacitly backed by the government. The government guarantees allowed Fannie and Freddie to take on far more debt than a normal company. In principle, they were also supposed to use the government guarantee to reduce the mortgage cost to the homeowners …
Pretty much everyone agrees they failed; instead of honoring their mission they used their position to cash out huge profits. As the crisis deepened and Fannie and Freddie couldn’t get financing, they were nationalized (September 8th) but the Treasury could have done so any time after they got authority from Congress in July.
Lehman – lost cause
Lehman operated on borrowed money – lots of it ( $100 billion a month). Their continued well being was contingent upon being able to borrow enormous sums to finance their portfolio of real estate, bonds, stocks and other financial investments. Because it is easy for investment institutions like Lehman’s to change/mask their risk they could manipulate their data to look like a good risk for awhile. As the mortgage crisis deepened, lenders were less than confident in Lehman’s ability to service the debt. The cost of borrowing went up and they could not keep up with the debt. Bankruptcy was the solution.
AIG – insuring mortgages and in turn being insured
Some parts of AIG, the mega insurance company, are healthy, some are not. AIG got a huge bridge loan from the government to cover insurance contracts guaranteeing losses on mortgages. It is pretty easy to see why they are in trouble with the number of mortgages failing. They had to prove they could cover these contracts, if they couldn’t, their bonds which were insured by other financial entity’s contracts would cause a domino effect worldwide. That is why AIG got the loan.
The Tentative Deal – “No one is smiling” (Barney Frank)**
The New York Times reports a breakthrough in bailout negotiations and that congressional staff will work through the night on the agreement and draft of the bill for vote on Monday. The compromise bill apparently
includes pay limits for some executives whose firms seek help, aides said. And it requires the government to use its new role as owner of distressed mortgage-backed securities to make more aggressive efforts to prevent home foreclosures.
In some cases, the government would receive an equity stake in companies that seek aid, allowing taxpayers to profit should the rescue plan work and the private firms flourish in the months and years ahead.
The White House also agreed to strict oversight of the program by a Congressional panel and conflict-of-interest rules for firms hired by the Treasury to help run the program.
…
The centerpiece of the rescue effort remains the plan for the government to buy up to $700 billion in troubled assets from financial firms as a way to free their balance sheets of bad debts and to help restore a healthy flow of credit through the economy.
The money will disbursed in parts, with an initial $250 billion to get the rescue effort under way, followed by another $100 billion upon a report by Mr. Bush to Congress.
The president could then request the balance of $350 billion at any time. If Congress disapproved, it would have to act within 15 days to deny the Treasury the money.
via New York Times
Why the bailout makes it more important than ever to elect Obama
The money will disbursed in parts, with an initial $250 billion to get the rescue effort under way, followed by another $100 billion upon a report by Mr. Bush to Congress.
The president could then request the balance of $350 billion at any time. If Congress disapproved, it would have to act within 15 days to deny the Treasury the money.
via New York Times
The President, Bush or his successor, will have the ability to request further disbursement. Obama is not surrounded by old boy lobbyists tied to the abuses of the past. McCain is.
Read on.
Who is responsible for this mess – or why I am glad Fussypants opened a dialog***
Fussypants posted two YouTube Videos – the first placing blame for the current crises on democratic shoulders, the second of a 2004 hearing on Freddie and Fannie wrongdoing, again, placing blame, this time for lack of regulation on, guess who, the democrats.
I am not sure that blame is placed correctly. A close look would most likely demonstrate that there is plenty to go around, both democrat and republican, but this point must be made: the Republicans were in power in 2004 – the democrats did not take a majority until 2006. So one must ask – why did the republicans fail to enact/provide more stringent oversight of Freddie/Fannie.
In a word – lobbyists. And the troubling thing is that the same lobbyist’s who undermined more stringent regulation of the financial industry are now John McCain’s advisors. These are the poeple who made money blocking regulation. Now, in a McCain presidency, those same lobbyists stand to profit from a taxpayer bailout of Wall Street.
McCain’s lobbyists/advisers
Rick Davis, McCain campaign manager, is an owner currently on leave from his lobbying firm Davis, Manafort & Freedman. According the New York Times Davis received payments from Freddie Mac from the end of 2005 through last month although he had lobbied on on behalf Fannie and Freddie, specifically for LESS regulation, for years.
For years McCain campaign manager Rick Davis was head of a lobbying association that included Fannie Mae, Freddie Mac, real estate agents, homebuilders, and non-profits. According to Politico, the organization opposed congressional attempts at regulation of Fannie and Freddie, along the lines of what John McCain is currently proposing. In his capacity of president of the group, Davis went on record in 2003 and insisted that no further reform of the lenders was necessary, in contradiction to his current boss’s sentiments. “[Fannie and Freddie] are subject to an innovative and stringent risk-based capital stress test,” Davis wrote. “The toughest in the financial services industry.” via MotherJones
Wayne Berman, McCain campaign’s vice-chair, and congressional liaison John Green reportedly made over 1.4 million from Fannie Mae while working for Ogilvy Government Relations; Green made an additional 180K from Freddie Mac.
Arther B. Culvahouse Jr., an attorney who helped McCain pick Sarah Palin, earned 80K from Fannie Mae in 2003-2004.
Aquiles Suarez, the head of Fannie Mae’s lobbying from 2003 through 2006, “oversaw the lending giant’s $47,510,000 lobbying campaign from 2003 to 2006″ was identified as an economic adviser to McCain in a 2007 press release.
Politico reports that at least 20 McCain fundraisers have lobbied for Fannie Mae and Freddie Mac, pocketing at least $12.3 million over the last nine years. via MotherJones
Kurt Pfotenhauer, husband of McCain adviser Nancy Pfotenhauer,was formerly employed as a lobbyist by the Mortgage Bankers Association, who have been lobbying front and center during the current crisis on a particularly important point.
MBA, has been at the center of lobbying efforts — successful it appears — to oppose a provision, sought by Democrats, that would allow bankruptcy judges to modify mortgages on primary residents. The lending industry has long fought such measures, arguing that it would force lenders to increase mortgage rates. In a statement issued yesterday, the MBA asserted that the provision “would throw into question the value of the collateral that backs every mortgage made in this country — the home.” According to one Democratic lobbyist, MBA’s current top lobbyist, Francis Creighton, has lately been “living in the halls” of Congress in an effort to influence lawmakers on the bill. via TPM, McCain Aide’s Husband Headed Trade Group Lobbying on Bailout
In short if you want change vote Obama.
UPDATED:
The 3 A.M. Call, Paul Krugman, New York Times
* If you find the relationship between the government and Fannie/Freddie hard to understand you are not alone, the Federal Reserve agrees the relationship is ambiguous.
** Particularly contentious passages were dropped: “both sides appeared to have given up a number of contentious proposals, including a change in the bankruptcy laws sought by some Democrats to give judges the authority to modify the terms of first mortgages.” The failure of Dems to achieve this is particularly bitter to me.
*** My full comment on Fussypants on the post “Fussy gets political & loses half her subscribers“
The video is catchy and the screen clips play into easy finger pointing but it is a disservice to the extreme crisis we find ourselves to think that a 1980’s rock song can summarize what went wrong. The sub-prime crisis is only part of the picture.
The failure of federal oversight, the failure of Freddie/Fannie to stick to the core mission (which has always been, since their beginnings generations before Jimmy Carter) to provide lower cost financing to the agricultural and home finance sector. No one is talking about it but there is a huge portion of foreclosures that have nothing to do with sub-prime financing. They have to do with otherwise long term good credit risks losing jobs, losing income and going into foreclosure.
Any serious discussion about the current financial situation must include the impact of globalization. The job market, people’s earnings and their ability to pay the bills have been affected by significant and unforeseen forces over the past 20 years. When the Berlin Wall fell and the eastern bloc opened up to the west the job market was affected. When the internet and broadband capabilities opened up off shoring tech, customer service, medical and legal jobs the job market was affected. When the lure of cheap labor and non-existent environmental standards took Wal-mart and other manufacturing jobs to China the job market was affected.
People who have jobs pay their bills – even the ones with outrageous interest charges. One huge impact of globalization has been the loss of the middle working class, black, white and brown.
This is a different world we live in; for me Obama’s intellect, age and education is important in determining his fitness to lead. We cannot make the world into an us and them anymore, it just won’t work. All our children are going to pay for this bailout. All our children will be affected if McCain/Palin lead us into a war in Iran or Russia. The world has changed and we owe it to our children to take it more seriously than sound bites and You Tube videos.
Jewish children can help Obama win Florida – listen to Sarah Silverman. They vote for Obama, you visit. No vote for Obama, no visit.
I think this could work in any state.
Most likely your granparents are voting absentee – help them, help you – be there when they fill out the ballot.
Every Jew who is considering voting for McCain should watch this:
Tip of the hat to @Jillmz of Writes Like She Talks
For more information on the Sarah Palin’s church please read:
I learned about push polling about 16 years ago during a mayoral race in my little city. In one corner was the anointed successor to the retiring Mayor; in the other corner was a dear friend’s father packing more money than sense.
The phone calls started “would you be more or less likely to vote for Candidate ________ if you knew he was/did/said ______ “
The anointed won and I learned two things – I was pretty naive for a lawyer and people do awful things to (try to) win elections.
Though politics lost a little of its gloss for me that year, I remained ever hopeful that elections would be decided on issues, not narratives. That was until Kerry v. Bush introduced the “swift boaters.” By the time the election was over America was polarized as never before and I was fed up, jaded and a little bit scared. Before the 2004 election I never worried about displaying my candidate’s bumper sticker, but the day after after Kerry lost to Bush an 18 wheeler cut me off on the Ohio turnpike nearly hitting me; when I pulled out, shaking with fear, to drive past him he held up a Bush Cheney sign and gave me the finger.
Now I worry about the increasing hate and polarization generated by John McCain’s negative ad campaign. The hate that is spreading everywhere and even permeates my little town. In my mostly Jewish town I hear lots of racial slurs about Obama; I hear educated people repeat the worst lies and I worry. I worry because these are my neighbors, people I know to be educated, kind, decent people, and they should know better.
These push polls give a false veneer of credibility to the lies that distract from the real issues in this election – the economy, the war, the environment, health care and education.
So to my neighbors – if you get a call and they ask you questions suggesting things like:
Obama has had a decade long relationship with pro-Palestinian leaders in Chicago
the leader of Hamas, Ahmed Yousef, expressed support for Obama and his hope for Obama’s victory
the church Barack Obama has attended is known for its anti-Israel and anti-American remarks
Jimmy Carter’s anti-Israel national security advisor is one of Barack Obama’s foreign policy advisors
Barack Obama was the member of a board (sic) that funded a pro-Palestinian charitable organization
Barack Obama called for holding a summit of Muslim nations exlcuding Israel if elected president
please understand that they are lies to manipulate vulnerable people through fear and hate tactics.
Pay attention to the issues. Get the facts before you vote.
UPDATE
A Republican group is taking responsibility for a poll that has roiled the Jewish community by asking sharply negative questions about Senator Barack Obama.
The Republican Jewish Coalition, which is launching a campaign against Obama on behalf of Senator John McCain, sponsored the poll to “understand why Barack Obama continues to have a problem among Jewish voters,” the group’s executive director, Matt Brooks, told Politico.
…
“If the RJC is responsible for these calls, which are designed to frighten Jews and sow mistrust, they have forfeited their place at the Jewish table,” said the co-executive director of the [Jewish Council for Education and Research], Mik Moore. “It is incumbent upon the McCain campaign to speak out forcefully against this and ongoing efforts by his supporters to scare Jews into supporting his candidacy.”
Tip of the hat to @Olevia for the update.
It is depressing beyond belief that the most hard hitting interview of John McCain was on the View. It is depressing beyond belief that with the economy in the toilet and working class people suffering more than ever that good Christian people cannot see beyond Sarah Palin’s glossy lipstick and pro-life stance.
From one Wasillian some advice:
For just 22 months, Sarah Palin has been the governor of a state of just 680,000 people that is “awash” in money (as former Alaska governor Tony Knowles put it) and receives more pork-barrel money per capita than any other state. Alaska has no tricky border or immigration issues with the remote parts of British Columbia and the coast of Siberia. There are no inner cities struggling with poverty and daily violence. There is a lot of drunk driving (Alaska is dark and cold much of the year), though the state police force is well funded, and the road system they patrol is startlingly simple; I can’t think of a stretch of highway lasting 15 miles that has more than four lanes.
John McCain’s choice of Sarah Palin shows that he is moving farther and farther to the right of mainstream America. If he’s doing it for political reasons, he’s no maverick. If he’s doing this for reasons of principle, he is merely out of touch with most Americans. Ninety percent of the delegates to the Republican National Convention were white. That might resemble the America that the Republican Party sees, and it certainly resembles the demographics that shaped Gov. Palin over the many years she’s lived in Alaska. But it’s not the America most Americans live in. Not only is Sarah Palin’s executive experience inadequate, her worldview is not even remotely diverse or nuanced enough to appreciate either the domestic challenges or international complexities that a VP must grasp at the most basic level. A McCain/Palin administration would be risky at best and potentially disastrous.
We Are All Wasillans Now, The Root, Ryan Quinn.
Every democrat and liberally minded American must work to get out the vote for Obama – too much is at stake.
One wonders what McCain supporters, excuse me Palin supporters, are thinking of the headlines this morning. There is a bit of a clue from one of McCain’s advisers – Don Luskin tells us yet again how fucking rosy the economy is* even while Wall Street burns and it is only a matter of time before the bottom completely falls out from beneath the middle class.
* A NATION OF EXAGGERATORS, Quit Doling Out That Bad-Economy Line, Donald Luskin, washingtonpost.com, Sunday, September 14, 2008
And it is awful and terrible at a level that is hard to comprehend unless you are living it. I (usually) don’t write about it because, really, what does it help?
Over the past 10 months of unemployment I have used up all my financial and emotional resources. In the beginning, thinking this would be a temporary situation, I accepted offers of help from friends for groceries, a haircut (before job interviews) or a tank of gas. But no more.
Why do I have regret?
Once you have accepted help from friends and you are unable to pay it back, and your situation worsens, if they stop calling you begin to wonder whether the reason they don’t call is that they are afraid you will ask for or expect help. The calls stop coming, the emails slow down and the isolation deepens.
My situation as a single woman who receives minimal child support means I don’t qualify for any public assistance (even if I could bring myself to take it.) I have a heart condition, no health insurance and can’t afford doctor visits or heart medication. My stomach churns all the time from stress and my jaw aches from gritting my teeth. I think about dying every day. I cannot imagine ever being happy again.
I am educated, competent and middle aged. At least I used to be competent. I obtained an excellent result for a client in December, raised a lot of money for various causes over the past few years, but my previous successes don’t seem to count for much of anything. I have applied for jobs I am well qualified for without success. I have applied for jobs I am over qualified for without success. I have applied for jobs I am ridiculously overqualified for with no success.
Potential employers, if they communicate at all, tell me that so many people apply that they can get exactly the skill set/person they want even without consider everyone’s application, including mine. I would hang out a shingle except that people in my field who have worked for years to build practices can’t pay their office rent – business is tough, very tough.
Job loss makes life more challenging. Family stress rises when there is not money enough to cover basic needs. My family is no different. Things that are hard to deal with become unbearable when poverty is added to the mix.
My mother is slipping into dementia. She lives 65 miles away. I can’t afford to visit her very often. I do call frequently and every time I talk to her she asks me the same question over and over again, “have you found a job yet?” When I answer no, she repeats, over and over again, as if she cannot believe me, “nothing, nothing at all.”On days like today when I am beyond sad I don’t call her because I can’t stop crying. She shouldn’t have to share this burden; she deserves her last days to be happy.
My ex will not pay more child support – that is why my older son lives here. It is my ex’s way of “helping.” In my ex’s defense, he is a good father, but no one disputes that he is the cheapest human being on the planet. For years I let this go because I wanted to spare my child’s feelings. He loves us both and he cannot bear for us to fight.
But something was lost in the process – my child’s respect for me.
My choice to put him first, over career, was important. I was a good mother, and a good mother puts her children first, especially when they need love and devotion through serious childhood struggles. I put him first, I wouldn’t change that, it was my responsibility and what I wanted to do. Always and no matter what I had to do, or do without, I did what I could for him.
But now his first words to me when he walks in the door from school is “have you found a job yet?” His father, lives comfortably (he deserves it – he works hard) has taken him on his college tours, vacations, out to dinner and football games. I am selling the few things I have so I can buy him an 18th birthday present. He tells me I am no fun, I am always depressed, that he is unhappy with the living situation. One home has money, plenty of it, with the security, comfort and luxury it brings. The other has none of this anymore. I understand his anger and frustration.
I was forced to let my older son move in with his family/children/pets to keep the lights on. It is stressful beyond belief. I feel like an intruder in my own home. Last week in a fit of anger he told me in no uncertain terms how pathetic I am. Yesterday he informed that it would be “disrespectful” to him for me to put an Obama sign in my yard.
You can bet I walk on eggshells.
My friends are largely absent. My phone never rings and, even if it did, when you really really have no money, you can’t go for coffee or lunch. And accompanying friends while they buy for parties or fret about, what is now to me, luxury worries, it is a toss up whether being alone is less painful than being a third (loser) wheel.
One friend, in a moment of poignant clarity, told me (in reference to another friend’s troubles) that she cannot bear to hear anyone’s sad news. She doesn’t want to hear it. She herself is depressed.
She asks me “does that make me a bad friend?” I don’t know, but I certainly understand her need for self preservation.
The longer the unemployment, the more challenging it becomes. I send out resume after resume after resume – if you ask people in my situation how it works they will tell you it is like throwing a resume into a black hole. The months wear on. My clothes get shabbier and shabbier. I can’t afford a hair cut or good shampoo. I am looking older and more worn out. After years of not looking my age, I fear that I look even older. Small things that would give me comfort, make me feel younger, cheered up, more well groomed are out of reach. I wonder for the next interview, if there is a next interview, how I will brighten myself up to the point where I feel I can sell what I have to offer.
I started this blog as a writing exercise. Through the first 4 or 5 months of unemployment it energized me. Now I don’t know. Although my real identity is not front and center it isn’t exactly a secret, and let’s face it, what I am writing here is hardly flattering. I guess it is a mark of my pessimism (or stupidity) that I just don’t care.
Maybe it is my optimism; my calling, my dream job is advocacy for the less fortunate, and if my writing here moves one bureaucrat to vote with compassion, or one republican to vote for Obama, it is worth it.
I wonder, with the state of the economy, how many women like me are out there? Over educated elitists who gave freely when they had it, sacrificed job advancement for more time with their children, volunteered and served their communities, who chose unwisely in the “happily ever after” department and who find themselves middle aged, bitter, isolated and broke.
I am sure I am not alone.
You should not be surprised that John McCain, Sarah Palin and their ilk make me want to vomit. I fear for this country where so many clamor “right to life” while so many, once born, suffer their ridicule and abandonment. Think Sarah Palin campaigning in Canton, Ohio with the head of Timken who was responsible for so much job loss. Think John McCain who canceled couldn’t be bothered to send a representative attendance at March’s Foreclosure Forum in Cuyahoga County, Ohio. If it were held today you bet your your unemployed ass he would be here, kissing yours.
Can Obama help? Can he win the election?
With Catholics and the neocons focused on morality issues I don’t know. With Jews focused on G-d knows what, Israel or racism, I don’t know. With the degree of racism that pervades every level of our society, I don’t know.
I only know that I am one of 600,000 760,000* and the past 8 years have been economic hell for me as a single working mother.
And I am tired – damn tired. And fed up, but way too depressed to be angry.
If you are supporting McCain please read my words and consider them seriously. This country faces challenges that are beyond the capabilities of John McCain and Sarah Palin and the folks they surround themselves with. And for you working class republicans – are you really truly better off than you were 8 years ago? Are you safer? Are you richer? Do you have better health care?
I think not.
If you felt safer you wouldn’t be so afraid of Muslims. If you felt richer you wouldn’t fear tax cuts for the middle class or more accountability for corporations. If you believed all that McCain and Palin are selling you would be more compassionate.
I hope Obama wins; I hope, if and when he does, that he has the support of this entire nation, because it will take all of us, taking care of each other, to survive.
* Updated to reflect September job loss figures
What do Hurricane Katrina, Sarah Palin and Pork and have in common?
Ted Stevens – he ignored it, loves her and is good at putting it on Alaska’s table.
Monday, August 29, 2005 Hurricane Katrina (thank you to @Sophmom of DotCalm for the the typo correction) hit New Orleans. As the storm blew through leaving a trail of death and devastation there was plenty of finger pointing and blame going round, much of it targeted an out of touch republican controlled congress and President. It was clear New Orleans and the Gulf Coast needed money for rebuilding and infrastructure repairs and the power and pork brokers were feeling the heat.
What to do?
Alaska, “the richest state in the Union in cash reserves,” is also a pork fed state and on the 2005 dinner table were 2 bridge projects to remote underpopulated areas worth $442 million. Republicans were anxious to cut spending, and the most likely target was an already approved bloated $286 billion highway bill which included about 6,000 other porky pet projects. Cutting medicaid and food stamps (more) just didn’t seem right after Katrina, even to the right.
Suddenly it looked like Alaska was going to be forced to go pork free and that made Senator Ted Stevens mighty angry. How dare money earmarked for his state go to the Gulf Coast when other states were able to keep their pork? He did what any sleazy seasoned politician would do – he threatened to take his toys and go home resign in what must have been an unholy temper tantrum because congress did something they rarely do – they gave Alaska all the money with no strings attached. They didn’t have to build the bridges, but they could keep all the money.
$442 million that could have gone into rebuilding the Gulf Coast* went to Alaska because Ted Stevens threatened to quit.
That was 2005 and Ted and Sarah were the best of friends. She headed up his “Ted Stevens Excellence in Public Service, Inc.,” a 527 group. In 2006 when she was running for Governor he endorsed her. She defended the bridge** in her campaign. It was only after she became Governor that she reversed her position.
But it really didn’t matter – Alaska had the money that could have gone to the Gulf Coast and they could do whatever they wanted to do with the funds. So over the past 2 weeks when Sarah Palin says (over and over and over and over again*** and again****):
I championed reform to end the abuses of earmark spending by Congress,” … “In fact, I told Congress — I told Congress, ‘Thanks, but no thanks,’ on that bridge to nowhere. If our state wanted a bridge, I said we’d build it ourselves.
“Thanks, but no thanks” is not straight talk – it is a flat out bold faced lie. A lie that took money that could have been used to rebuild and safeguard our vulnerable Gulf Coast.
John “I’m Sarah’s bitch” McCain loves to tell how Sarah said “no thanks” and he must know he is lying. You only need to watch his 2007 primary campaign commercial for “straight talk” proof.
Remember this McCain ad from last fall? Watch and listen to the opening line.
* To get a sense of what 442 million could have paid for – check out the DHA News Release of Funding President Bush requested for Katrina repairs.
**In 2006 when the Anchorage Daily News asked Gubernatorial candidate Sarah Palin whether she would continue state funding for the Knik Arm and Gravina Island (the infamous bridge to nowhere) she answered:
“Yes. I would like to see Alaska’s infrastructure projects built sooner rather than later. The window is now — while our congressional delegation is in a strong position to assist.”
*** Apparently today, speaking in her home state of Alaska, she dropped the reference.
**** And it’s baaa-aack. Check out the Bridge to No Where video on 23/6!
Read more:
Two ‘Bridges to Nowhere’ Tumble Down in Congress, New York Times, Carl Hulse, Published: November 17, 2005
