GWB's Greatest Misses Archive No.5,983 : "The Bailout"

(Just a quick post because I have work tomorrow but this must be chronicled before it is Whirled Dervishly.)

The Trillion Dollar Wall Street Bailout Bummer of '08 is 100% George Bush's. He started early with that "bipartisan" shit so he could pin it on the Democrats ultimately but rest assured, this was his idea to fix the mess caused by his party's irresponsible, trifling and unrealistic financial model.

Bush pushes quick bailout bill passage

Published: Sept. 22, 2008 at 11:50 AM

WASHINGTON, Sept. 22 (UPI) -- Failure by Congress to act on the Wall Street bailout will have consequences beyond the markets it's designed to save, U.S. President George Bush said Monday. While he said he understood there may be differences on the details of the $700 billion plan to fix chaotic conditions on Wall Street, Bush in a statement said "it would not be understandable if members of Congress sought to use this emergency legislation to pass unrelated provisions or to insist on provisions that would undermine the effectiveness of the plan." Among other things, the three-page bill gives Treasury Secretary Henry Paulson total authority and raises the debt ceiling. U.S. Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, said on CBS's "The Early Show" members of Congress think "we're going to need this level of financing for this, and we want to give (Paulson) the authority to do this." However, Congress is concerned about accountability, that taxpayers are footing the bill and homeowners because "the core of this problem is still the foreclosure crisis," Dodd said. "I think we can" provide Paulson authority as well as safeguard taxpayers and homeowners, Dodd said. "It's important we act quickly, but it's more important ... that we act responsibly in this as well. In his statement, Bush cautioned: "Failure to act would have broad consequences far beyond Wall Street. It would threaten small business owners and homeowners on Main Street."

And....

Doubts grow over US bank rescue plan

By Rob Lever

Agence France-Presse

September 23, 2008 07:39am

A PROPOSED $US700 billion ($830 billion) bailout for the banking industry leaves many questions unanswered, but has prompted fears about giving the US government unprecedented power to intervene in the economy, analysts said Monday.

The plan would allow the US Treasury to sell new debt to purchase the vast amounts of mortgage securities and other "toxic'' assets that have caused a freezeup of the financia

l system.

Markets welcomed the announcement of the plan last week, but analysts say the sobering reality may make it highly complex to implement. Some critics say it gives unparalleled authority to the government in the finance system.

The plan is "three pages long'' and "asks for a staggering sum of money with wide-ranging powers to buy the broadest amount of mortgage-related securities with a minimal of oversight,'' said Andrew Busch at BMO Capital Markets.

"This is a huge leap of faith and I suspect that leaders of Congress and the presidential candidates will urge caution or act cautiously.''

One key question is how the government will value the dodgy mortgage-backed paper that the banking

system refuses to buy.

"The Treasury did not provide much detail on how the assets will be priced, other than through market mechanisms where possible,'' said economist Brian Bethune at Global Insight.

"We expect discounts on asset transactions will be anywhere from 20 per cent to 80 per cent, depending on the quality of the assets or the asset package involved.''

Some analysts point out that if The Treasury pays fair value -- Merrill Lynch, for example, sold some of its distressed securities for 22 cents on the dollar -- it could create fresh losses for banks and lead to more failures.

Mark Zandi at Economy.com said the idea was positive but may be hard to implement.

"In practice, a reverse auction for mortgage assets may be tricky to pull off,'' he said. "Auctioning mortgage-backed securities could prove especially problematic, since each security is so idiosyncratic.''

Beyond the technical questions, the plan dubbed by some as "the mother of all bailouts'' has raised hackles among some who fear it gives too much power to the government in the financial markets, especially with a clause providing immunity from lawsuits.

Robert Brusca at FAO Economics said the bailout plan "really isn't a plan and may not bail anything out ... The crux of it seems to be to dump the losses on taxpayers.'

"It gives the Treasury imperial power with respect to a simply huge amount of funds,'' said Yves Smith, a financial analyst with the website Naked Capitalism. "Thi

s is a financial coup d'etat, with the only limitation the 700-billion-dollar balance sheet figure.''

Some lawmakers also were sceptical about the carte blanche authority the proposal would give the government.

Texas Republican Representative Jeb Hensarling said lawmakers should carefully study options before approving the plan.

"Congress is being asked to support an uncertain entity, costing an uncertain amount of dollars, for an uncertain duration,'' he said.

"My fear is that taxpayers will be left with the mother of all debts, the federal government becomes the lender and guarantor of last resort, and our nation finds itself on the slippery slope to socialism.''

Despite the protests, many expect the plan to be approved to help stave off a further meltdown of the financial system with dire economic consequences.

"We were on the edge of the abyss last week,'' said Ed Yardeni at Yardeni Research.

"The question is whether so much government intervention will avert the most dreaded consequences of Wall Street's excesses, namely a financial meltdown and an economic depression .... The answer, I think is that it will work, and that the economy should grow next year.''

And...

Oil price jumps $25 in a day

By Javier Blas and Chris Flood in London

Published: September 22 2008 21:15 | Last updated: September 22 2008 23:05

Crude oil prices jumped $25 a barrel on Monday – the largest one-day rise – as financial investors betting on falling oil prices were forced to cover their positions ahead of the expi

ry of the current benchmark futures contract.

The jump to an intraday high of $130 a barrel – a rise of about $40 a barrel from last week’s low – was exacerbated by a weakening US dollar and data showing w

eaker supplies from Mexico, Nigeria and Saudi Arabia in recent weeks and surging imports by China.

But don't worry, there's still cookies and punch for all in the waiting room. And eye makeup. Lots of eye makeup...

And cake...of course!