Ok, now that President Bush has signed the “Bailout/Rescue” Bill, I feel the need to clarify my thoughts on the bill.
Do I oppose the passage of the bill as it appeared in both the House and the Senate? Absolutely.
Do I oppose the basic principle of the bill? No.
Unfortunately, and as much as I hated it, the bill was necessary. Period. No if’s, and’s or but’s.
Who was at fault?
In a word… everyone… from the banks, to the politicians on both sides of the aisle, to the public. This is AMERICA’s fault.
Why Did/Do I support the basic principle of the bill?
Well, the large amount of unstable and insolvent debt the banks owned caused an immense amount of fear and distrust within the financial markets to such an extent that the banks stopped loaning each other money, much less loaning money to corporations and businesses.
While I agree that the “bailout” of stupid decisions is less than ideal, the consequences of doing nothing were so dire that it had to be done.
Coming on the heels of a general economic downturn, and the YTD loss of more than 750,000 jobs, the credit crisis becomes all the more dangerous. The credit markets were completely frozen this week. At the highest levels, money stopped. Dead. Literally.
This could not happen any longer. If it did, it is entirely possible that by the end of next week, the economy would come to a screeching halt and we would be completely dead in the water, plunging into a horrendously bad depression… potentially even worse than what we saw in 1929. Really.
Companies would not be able to get short term credit (usually overnight borrowing) to meet payrolls, businesses would see the lines of credit they use for inventory purchasing and general operations shut down, and good luck getting a car loan or a mortgage.
By purchasing the questionable mortgages and mortgage backed securities, this allieviates much of the balance sheet strain on the financial institutions, making them much more stable, freeing up cash so that they become able to lend and also so that other banks are willing to lend to them.
So why did I object so strongly to the bill if I think it was necessary?
In a word… Pork. This bill got so overloaded with “sweeteners” and pork that it is unreal.
I am very, very upset over this.
Am I against everything that got added to the bill?
No, absolutely not. I support many of the things that were added. Many.
For instance… the tax credits encouraging green energy and energy efficiency are fantastic. I whole heartedly support those provisions. Also, the mental health parity provision is one that has been a long time coming.
They do not belong in this bill though. They deserve thier own.
Was everything that got added total crap?
No. As a matter of fact, there were a couple things that were added that were very smart.
The temporary increase in FDIC insurance to prevent withdrawal of funds from banks was an intelligent and necessary move that retains a lot of liquidity in the banks. In addition, the provisions on executive compensation were good… not ideal, but at least they were there.
So what got added that was crap?
Tax breaks and earmarks got added for Hollywood, NASCAR, Puerto Rican Rum Producers, Virgin Island Rum Producers, the makers of wooden arrow shafts that boy scouts use, fisherman, businesses in American Somoa and all sorts of other little goodies.
Why does this make me so upset?
The reason this makes me so upset is that while working on the most sweeping and important piece of legislation that most of the people in Congress, House or Senate, will probably ever work on in their entire careers… these selfish, greedy, pandering, blame shifting, irresponsible (ARRRRGGGGHHH) politicians decided that they would spend some of their time thinking about and fighting for other things, and some of those things as insignificant and friggin wooden arrow shafts!!!
Raise the price of the arrows by 2 cents! I don’t give a crap!!!
Pay attention to the potential bankruptcy of the United States and the precipice of a world wide depression the likes we have never DREAMED of.
Jesus… stop thinking about yourselves!!!!! Keep your eye on the god damned ball!!!
Is there more coming or are we close to the end?
I hope we are close to the end, but I don’t think we are. This was a necessary first step.
So far, the mortgage meltdown and credit crunch has been like a really angry Bull Mastiff sitting in the corner impatiently waiting to take us down.
When the derivatives market and CDS’s start unravelling… then we will see a really pissed off gorilla of a problem charge into the room. Hopefully the “Rescue” has put a bit of a leash on this bad boy, but who knows?
I will be discussing the derivatives and debt/default credit swaps in coming posts, so stay tuned… it’s going to get really interesting, but I will leave you with this little tidbit…
Warren Buffett said that he stay away from the derivatives market because he didn’t really have a good understanding of how it worked….
If Warren Buffett was afraid of the market and essentially said it was nonsensical, can you imagine the mess that sector is in?
What effect has this had on my political stance?
Now, more than ever before, this process has solidified my feet in the McCain/Palin camp.
Washington needs to be reformed. The culture of pork and earmarks has to stop because it is exactly this sort of selfish shortsightedness that got us into the damned problem in the first place!!!
Only one person on either ticket had the judgement and foresight to predict this crisis… John McCain.
Only one person has a career long record fighting against earmarks and pork… John McCain.
Only two people have a reputation of fighting corruption in both the other party as well as their own… John McCain and Sarah Palin.
Only two people have lived the words “Country First”… John McCain and Sarah Palin.
McCain/Palin. Country First.