Bailout Bill Fails in House Vote (!)

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The "Bailout Bill" has failed to pass the House by a vote of 228-205. There were defections in both parties. (By my count, that leaves two individuals not voting - hiding in the restroom maybe?)

This has to mark one of the most important watershed moments for the people of this country. They were heard and represented over and above those of the well-connected and paid.

From the Wall Street Journal:

[quote]WASHINGTON -- The House of Representatives delivered a stunning defeat to legislation designed to rescue the nation's troubled financial system, sweeping aside a call from President Bush to "send a strong signal" of confidence to markets at home and abroad.

The 228-205 vote Monday exposed deep unease among rank-and-file lawmakers in both parties with what would be an unprecedented intervention in the private sector. The vote came as turmoil in financial markets widened, prompting the Federal Reserve to inject new capital into credit markets and forcing the government-arranged sale of Wachovia Corp. to Citigroup.[/quote]

The main problem for the Bush administration was committing an enormous strategic blunder in their chosen approach to selling the bill this close to an election..

Ahead of the vote, Mr. Bush and Vice President Richard Cheney, along with Treasury Secretary Henry Paulson, joined in lobbying for the bill, telephoning wavering rank-and file Republicans.

Given the fact that Bush and Cheney have highest disapproval ratings ever recorded, this would have been a good time to wing off on an important junket to Rangoon. Instead they called Republicans. Awk-ward. I can only hope that recordings were made.

My largest complaint, even with the reformulated bailout bill in its 120+ page glory, was the fact that it was completely unconstitutional and rewarded an enormous amount of money and power to an administration that, frankly, should not be entrusted with anything more serious than assuring they remove all the electronic snooping devices from the White House upon their departure. And even then I'd check their work.

What I am referring to is that the proposed oversight committee for the bailout funds was to be composed of the Treasury Secretary and 4 other folks of his choosing. Period. Nobody from Congress or the Senate. Given that the Treasury Secretary is appointed by the President, this means that the largest single appropriation of money would be effectively overseen only by people directly under the control of the executive branch. Who want to reward this particular administration at this time with that power?

Only fools.

For a complete list of fools, we can visit the roll call for this vote. Apparently there were 205 of them.

I will vote for exactly zero of them if any happen to show up in my district.

This is a companion discussion topic for the original entry at https://peakprosperity.com/bailout-bill-fails-in-house-vote-2/

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Chris,

Do you think that this is the beginning of a larger drop? More important, can you give us a predicted timetable for events.

Nate L.

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Hi Chris,

What would you change or add to the bill that would be less evil? What could be done to make this bill ethical and constitutional?

David

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Now the real questions need to be asked, like "what kind of action will not only put us on the right track, but what can be done on the grander scale to fix the systemic problems that are currently plaguing the international financial markets as well"? As I and others had commented on in other threads, ours is not the only system that is in dire need of repair. It seems that the market’s reaction to this ridiculous attempt at looting and the values both gained and lost in todays trading clearly indicate the desire of the other markets to save themselves. This could be in part to the perception that because all our current congressional activity has focused solely on ourselves, they figure we are not only throwing them under the bus, but we may very well be driving that bus! It’s an atmosphere of "Run for your lives - Save yourselves first"!
Mine and my children’s lives will be changing, as will ALL those around us.
Chris, My question to you is this: I’m 47 years old with an entire life’s investment in an IRA (money markets primarily). Is there any hope that those funds will ever recover to a point that I can consider any form of retirement before my life is relegated to drooling and feasting on applesauce? I can’t be the only one here in the same or similar situation!

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This is the beginning. The stock market is certain to drop over the medium term.

I’m glad the bailout didn’t pass, for ethical reasons. For the economy, it is a drop in the ocean. It won’t make one bit of difference one way or another over the medium and long term.

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This is a vote on the American people’s trust of their government, at least partially. Bush and company have proven how scary and venal they are for 8 years. They have no trust left to ram through such a horrendous document.There is also Americans’ sense of "fair play" here, with no desire to bail out multimillionaires (who would laugh on their way to the bank anyway). Finally…the upcoming Congressional elections…they know that most folks hate this bill.

BTW, a lot of the online goldsellers are fairly out of coins to sell (:<(.

SG

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So much for wiping away third world debt, that’s history when there is so much other debt to forgive.

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I suspect that Paulson’s Plunge Protection Team will be engineering a market plunge until they get their bailout bill.

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People really use this phrase far too often. There are a lot of bills pressed through congress that are unconstitutional. This wasn’t one of them.

[quote]What I am referring to is that the proposed oversight committee for the
bailout funds was to be composed of the Treasury Secretary and 4 other
folks of his choosing. Period. Nobody from Congress or the Senate.[/quote]

Uh, Chris…

1) Congress is in complete control of all government spending. As such, any bills passed that rely on government funds, by default, put Congress in charge. So, yes, the House and the Senate had in effect direct oversight.

2) Scattered in about 30 of those 120 pages is repeated and continuous references to reporting standards. To be frank, Congress was going to get a number of reports that was less than hearing the low down every time Paulson takes a piss, but probably far more than was strictly necessary.

Between the two, Congress was very much in charge of the whole operation. As much, anyway, as they can constitutionally be. You can’t put senators directly in control, that would be unconstitutional!

[quote]

I will vote for exactly zero of them if any happen to show up in my district.[/quote]

I can’t really say much about how you vote, but I’d again repeat my view that single issue voting is dangerously shallow. If such ‘power to the banks’ bills bother you, you’d be better served looking at your congress man’s voting history (and the views of his opponent!). Many individuals that are generally good about favoring the people over the banks probably were undoubtedly scared into voting for this (though to be fair, a large number with good records likely voted against it as well). Likewise, those who didn’t vote for this weren’t necessarily looking out for the public good, but may rather have been attempting to coerce a bill with even less oversight and controls.

Me, I wouldn’t vote for any of those bastards that put forward the Republican stealth bailout ‘alternative’. That to me tells more about a representatives real thoughts than a dumb ass bill leveraged through with repeated scare tactics.

But, your vote is yours to cast.

–

Steve

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I’ve had the same question. I have retirement accounts with limited funds to choose from. Does one take the tax and penalty hit now, or hope things get better in 5-10 years?

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Hi All, this from Reuters says it all!

NEW YORK, Sept 29 (Reuters) - As panic gripped the stock market on Monday, just one member of the S&P 500 Index escaped the sell-off: Campbell Soup.
Are investors betting that when times get scary, consumers will stock up on food that is cheap and easy to store? Wouldn't be the first time.
In the aftermath of the Sept. 11, 2001, attacks, Campbell Soup experienced an unexpected jump in sales and earnings as consumers' fear of another attack led many to hunker down. From the day before the attacks to early November 2001, Campbell shares gained 10 percent. The S&P 500 added just 2.4 percent over the same period.
On Monday, Wall Street plunged, with the Dow posting its biggest one-day point drop ever, after U.S. lawmakers unexpectedly rejected a $700 billion financial bailout, spooking investors who saw it as essential to halting a global market meltdown.
Campbell Soup's stock rose 0.3 percent, or 12 cents, to close at $37.75 on the New York Stock Exchange. (Reporting by Kristina Cooke; Editing by Jan Paschal)
Cheers,
David
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Hew–thats exactly what happened—in essence they said—"If you cant give us our bail out at 300-400 points down…then maybe you will at 700-800 points down and in dramatic fashion." "Now maybe we will get the screaming loud enough from every channel media outlet etc. for 10 more votes" all be it thursday friday. But in the end—the bail out will be approved—and until then 10’s of billions pumped into the markets nightly----and plunge protection manipu;ation as you put it----after all "we don’t want another 500 point drop if we don’t need one" They will try and pick up the pieces later…

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For those who are interested in who voted yes or no, here’s a link:

http://online.wsj.com/article/SB122272578436987773.html

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clearly the lesson is we need less banks and more soup :slight_smile:

Nice find larina, thank you.

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You can have gold as your IRA and not take any kind of hit. Unfortunately, my understanding is the gold has to be stored at an approved place of storage, but you can still do it. I’ve never done it before, but I imagine it wouldn’t be much more complicated than any other retirement fund transfer/rollover.

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Steve,

I think the question becomes - in a period of requests for cataclysmic government action, what should comprise our bearing, our compass?

So perhaps we have a single issue at hand (although I wouldn’t argue that…) or maybe not.

Regardless, why wouldn’t we expect that the US Congress would first reference the US Constitution for some frame of reference and guidance? Isn’t that the document reference, and that which they are sworn to uphold?

You are correct that there a myriad of unconsitutional bills passed during any session, but that doesn’t make it sufficient that we should agree with it.

In fact the US Constitution was framed in a manner which anticipated the potential disruption to citizens lives, should their currency NOT be based and fixed upon the best standard reference - i.e., gold and silver.

Both ARTICLE I SECTION 8, and ARTICLE I SECTION 10, were both written to insure that the US Treasury shall issue the country’s currency, and that it would be based on gold and silver (there are numerous historical references as testimony on WHY, and the fears which the Founding Fathers had, should this NOT be followed… and those fears are/were directly in-line with the events seen today…)

Jefferson, Adams, Madison, Jackson and others, all wrote in detail on the outcome of events, should the US stray from the tenents and principles behind these Articles and Sections (I won’t go into them here, but suggest you Google any of these Founding Fathers, and their quotes on Banking and currency…)

Certainly on other "single-issue" events, (e.g., events which the US might go to war over), the reference would be the US Constitution, and should be the same here.

The "What Now" which rlee refers to below in this blog, is equally covered by my response here:

First - Congress should enact legislation to remove the responsibility for issuance of coin and currency away from the private Federal Reserve, because it is UNCONSTITUTIONAL, and through it’s fiat-currency regime, has produced the very state and status of our financial knot today.

Second - they should exchange US Notes for Federal Reserve Notes 1-to-1, and set their value and ration upon whatever remains of the US trust of secured gold, and silver in the strategic reserve.

Third, all interest generated through borrowing could then be appropriately funneled back into US Infrastructure.

Otherwise, the alternative reference to action, during times of duress should be what - the speeches of Benito Mussolini? Marx’s Das Kapital?

Single-issue results and Congress votes, can be paramount to the future of the Republic, and might rightfully be considered as-such during times of extreme duress.

While certainly there is pain in upholding these proven principles (isn’t there pain in defending such principles during War?), we should expect no less.

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Well, if you can, move your money to a self-directed IRA or self-managed 401(k) where you can invest in anything you want. But you may be one of the majority of people that can’t do this.

In the short term, I think as long as credit markets are effectively frozen (i.e., the banks aren’t even lending to each other), the dollar will remain strong as people sell their dollar denominated assets, effectively "buying" more dollars. But when that is done watch out, because the Fed is flooding the market with dollars and countries/sovereign wealth funds who hold them may decide to put their money elsewhere. Then you will see tremendous loss of value in the dollar and other currencies will look really good. And oil again. Note Paulson came out and said today that they are going to pull out all the stops to inject more money into the system to stem the deflationary tide. It will "work" eventually but I think it will have a larger boomerang effect.

In the period of 1929-33, you did really well if you held dollars or gold (which were really the same thing when the U.S. was on the gold standard) because there was tremendous deflation. The value of almost everyything else declined. We are in a short period of near deflation right now, because there is very little private lending. But because the dollar is not tied to anything like gold anymore, as that money supply increases, the dollar will be devalued in the longer term. And perhaps sharply so.

Where I come out is: Dollar/treasuries OK in very short term. Gold ok too short and long. Swiss Franc is holding value as well and should increase when dollar begins its decline. Oil/commodities very speculative, but would be good long-term. U.S. equities bad short term and probably long term, with possible exceptions for companies with lots of cash. Foreign equities bad short term and better long term. I am holding on to my emerging markets stuff even though it is taking a big beating right now, because I think it will recover dramatically when the dollar eventually resumes its decline.

These are only my own opinions. I don’t speak for anyone in particular. Good luck too you.

 

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Oh my - news flashes. . . "companies operating on borrowed money . . .will your pay check be affected?" (What respectable company . . other than a bank or financial institution operates on<I> borrowed</I> money?). Or, how about "banks will freeze lending". . . and then what? they don’t grow and expand. . and can’t pay employees on borrowed money?

I didn’t see it. I didn’t see panic and doom. . . (nor do I see weapons of mass distruction) . What I do see is Central Bank loosing TRILLIONS since the average investor isn’t playing the bail out game. And the more they loose - the better we will all be. I did see Central Banks world wide scramble only slightly, oil dropped - only a little and currancies withdraw a bit. nothing tettered out of the last years’ boundaries.

Maybe if markets keep dropping it will be time to re-invest a little at a time since the playing field will look a little flatter. After all, besides Campbell’s soups - some market sectors still show signs of life. I like the "Green -Sustainable Goods Market". I think there’s a lot of potential there and the idea that people become less dependent on "junk goods" seems to have the big boys wondering how to maintain control. How do you make money if everyone has what they need - where they need it? How do you sequester 15%+ of the average spendable income if they don’t need electricity, gasoline, heating oil, credit cards, mortgages or are growing their own food?

PHASE II - find real methods of pooling funds together for issueing real loans for real business and real goods. Credit Unions, People’s Banks and Farmers Banks are good places to start using as a bank - just ask them about thier lending practices, rates and other details - you want to do business with a transparent institution. . . many haven’t been touched by these events!

And, this is no time to take the eye off the ball. These scoundrels still have something up their sleeve - I didn’t see anyone crying their eyeballs out so their are most likely think tanking a revenge scheme.

 

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Yes, according to Elliott wave - markets will drop a lot further, farther than you care to know. The market correction follows after the Grand SuperCycle that began around 1720 to 2000 top. The correction takes three huge wave, each lasting several years. We are in the very early stages of wave.iii or 3 of wave C down. This wave C began in October 30 2007 high, and may find a bottom in 1-2 more years. The price level where bottom reaches is comparable to DOW in 1974, which retraces to the previous 4th wave of a larger degree. This correction is the largest in 300 years, larger than 1834, 1874, 1929, 1966, or 1987 to name a few smaller cycle valleys.

Congress not passing the vote has no change to cycles even much smaller than this one.This wave C cycle does historically result in huge wars, that seems to be brewing now (Iran/Russia), and will likely erupt 2-3 years or less.

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Hail Speaker Pelosi!

What if Nancy Pelosi, herself, and the Dems, didn’t ACTUALLY want this thing to pass, but they don’t want the blame for killing it either.

Well, all Pelosi has to do is play on House Republicans’ egos in an introductory speech, and they’ll be pissed off and kill the thing as emotional individuals.

Boom, Republicans look bad in the media for "failure of leadership," and the bad bill is killed.

Ok, that’s an optimistic theory from a Dem, who wonders to what extent this whole proposal from the Bush Administration has been a political ploy to use against Democratic Leadership in Congress. I have no doubt that Paulson could get behind a crooked move for profit, though it is harder to believe that Bernanke would get behind shenanigans. Of course, he wouldn’t be the first that Bush / Cheney have made fools of (Powell).

It’s not like the Fed isn’t perfectly capable of handing out huge sums of cash as needed to avoid catastrophe, seemingly with very little oversight.