Michael Alan Miller

I do feel sympathy for people like this.

They Want To Believe, Fox Mulder-style, that the bailout bill would have made everything all better — stocks would rise, flowers would blossom, ponies would appear in the back yard, and fairies and sprites would dance around and play dulcet melodies as they cavorted in sheer merriment.

Thinking the bailout would’ve helped with any of that is utter bullshit.

The stock market’s just not going back up — period — until much, much more than the bailout bill happens. Here’s a short list of what would have to happen, completely ignoring the bailout bill, before the stock market would rise appreciably over the long term. It’s easy for people like bethcf4p to blame the Reps who did not vote for that heinous bill, but unfortunately that’s not the source of her problems (and long-term, that bill likely would have made her stocks perform worse).

Here’s what will have to happen before bethcf4p gets her money back:

1) Asset prices must stop falling.

2) Companies must get all the bad debt and farcical accounting circus acts off their books.

3) No one trusts what any company says now, especially those in the financial industry. This trust must be restored…somehow.

4) America must reduce foreign debt drastically; the risk of default is extremely high.

5) Leverage above 12 :1 must be disallowed.

6) Stringent, widely-enforced regulations must be put in place (that trust issue again).

7) American standards of living must rise with productivity increases. Companies bethcf4p depends on can’t make wicked good profits if no one has a standard of living that enables them to buy goods.

8) Reliance on credit to fund the average lifestyle must go the way of the Neovenator.

9) Crony capitalism must come to an end.

10) We must meet the challenge of renewable energy and wean ourselves from oil.

All that money bethcf4p thought she had? It was a fata morgana, an illusion, built on the back of speculation, mendacity, irrational exuberance and plain ol’ American-style fraud and larceny.

It’s sad for people like that, as they think they’ve done everything they should’ve, and they’re still getting the shaft. But it’s not Congress who gave them the shaft — but that’s a convenient scapegoat — it’s in fact the entire culture of greed and lying, from top to bottom, that’s put them in such a quandary.

Blaming Congress not passing the bailout for her problems is like blaming the blood spilling out of a fresh wound for killing you — sure, that has something to do with it, but what about the army standing over there, shooting at you? Think that might have anything at all to do with it? No, couldn’t possibly.

I’ve seen more stupid shit written today than I have in the whole year past. People are grasping at whatever makes them feel better, whatever gives them solace and hope. Unfortunately, none of that — not one bit of it — is going to help right now.

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So much for that moratorium, but this is too good not to post.

Dean Baker argues against the bailout bill in extremely cogent terms, saying basically the same things I have been, but more eloquently.

There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.

At this point I cannot identify a single good reason to do the bailout.

Yep, yep. All downside, no upside. It’s a terrible plan, and one that won’t work.

I’m constantly being surprised by how many people have been snookered by the climate of fear the purveyors of this plan have been peddling — and it’s working. Listening to my co-workers, I am amazed at how absolutely little they know, but they are afraid. Some of them very afraid. That fear is why we will still allow $700 billion to be stolen, just a few days later than expected.

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Another crap article.

James Wilcox, a professor of financial institutions at UC Berkeley’s Haas School of Business, has been surprised by people’s reaction to the plan, which called for setting up a system to let the government buy up billions of dollars in bad mortgage-backed debts from banks and other financial institutions. But he understands why people are feeling confused and unhappy about it.

I’m not at all confused about the plan, though I am unhappy. I am against it because it’s a bad plan that has very little upside possibility and absolutely enormous downside risk. It will not help the problem it’s supposed to help, but it will put the US on the road to debt default — something almost no one is talking about in this climate of fear.

And now, I’m declaring a 24-hour moratorium on writing about this, as it’s pissing me off too much. Too many bad ideas from people who really just should know better, but fear does odd things to people.

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I’m seeing so many terrible ideas lately, my head is spinning.

Here’s another one. That dude thinks the Fed should cut rates to zero — just like the Japanese did.

The money that the Fed has pushed through its emergency lending window, now well into the hundreds of billion of dollars, has done nothing beyond strengthen bank reserves. Not a trace of it has shown up in the lending markets.

Repeat after me, kids. The problem is not a liquidity crisis. The problem is a solvency crisis. Loaning money in a solvency crisis will not help much, as that’s a solution to a liquidity crisis.

Actually, the only thing that will really help right now is letting assets fall back to their historical natural levels, allowing the bad institutions to fail, getting all writedowns and losses out in the open, and to reduce any and all leverage to 12 or 1 or below.

Asset prices returning to historically normal levels are absolutely necessary, though — throwing $700 billion down a black hole will do nothing at all to help until the asset price problem solves itself.

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I’m also getting really pissed off about all the people who want to call the bailout some sort of “rescue plan.” My first response contains too much invective for such an august blog as this one.

Top three economics school? Wonderful. Hope it wasn’t too expensive. Unfortunately, in this case, it means nothing. And really, I don’t care if Adam Smith was resurrected in bodily form and annointed her with the title, “Saint of All Economics,” the fact of the matter is that what’s planned will be a bailout. People’s fear is turning them into zombies willing to hand over whatever the financial people want, and she is one such example.

Yep, it’s still a bailout plan no matter what she wants to call it. Here’s the definition of “bailout:”

2. An instance of coming to the rescue, esp. financially: a government bailout of a large company.”

Wow, that definition sounds like exactly what we’re still planning to do! Jesus fucking Christ! Imagine that! Her “rescue plan” is like calling an execution a “saving food” plan.

To stick with her analogy, which wasn’t even well-flushed out, we don’t need to somehow fix the heart, we need to cut it out and replace it with a donor heart that actually works correctly.

The $700 billion is very, very unlikely to help a bank lend again. Judging by what happened to the Japanese, some of that will go into commodities, and the rest will sit in vaults, unused.

What happened to Japan during their “Lost Decade” parallels very closely what’s happening here right now.

Way to wave around complete pompous fearful disingenuousness in the guise of education, Rena. Good job.

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I’ve also been bothered by the mainstream media telling us how woeful and terrible it is that the bailout bill was not passed. And who are their bosses again? Oh yeah….

This Rick Perlstein article is excellent, however.

Also seen elsewhere on Reddit: The bailout is a plan like trench warfare is a plan.

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Obama could have completely sealed up this election by publicly opposing the bailout. He runs a good campaign, but politically he’s a bit tone-deaf, as shown by the FISA vote (which caused many of his most die-hard supporters to stop being die-hard, while gaining no perceptible other advantage).

Of course, all that is now overshadowed by the financial crisis.

Naomi Klein agreed.

The smartest thing that the Obama campaign could do is oppose this bailout.

But who knows? I’m just armchair quarterbacking. I’m pretty sure, though, that if in fact he had opposed the execrable bailout bill, he’d probably be at about 60% in the polls right now, especially given McCain’s demented theatrics.

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Democrats should be stressing every time they get in front of a microphone that the Bush administration was willing to go all in to the tune of $700 billion (actually, $2.5 trillion, if you buy my numbers) for Wall Street, but won’t spring for the $100 billion a year for Americans to have universal health coverage.

That, I think was the big WTF moment for many people, even those who pay little attention to politics: How can we be giving this much money to the malefactors, and my family cannot have health care?

We should be hammering that point home like Paul Bunyan.

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This is likely somewhat true, though the bailout bill — which would’ve turned into a free money potlatch — would’ve ended up costing far more than $700 billion.

However, allowing institutions to fail is a good thing. Ask the Japanse how not allowing their walking dead banks to fail worked out for them.

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This is misleading, but it’s been widely linked to lately.

He gets a very basic — and very, very important — fact wrong. The banks have been experiencing a solvency, not a liquidity crisis.

These are very different things. We’ve been fighting a liquidity crisis, while we’ve actually been experiencing a solvency crisis. I hope I don’t need to stress how pointless and hopeless fighting the wrong battle is.

Also, he really de-emphasizes the moral hazard aspect, which I think is utterly wrong.

The problem is companies do not learn from painful lessons as readily as individual humans do, as corporations are completely amoral and often “forget” things in a matter of months. We’ve seen this over and over throughout history, and I have no doubt it’ll repeat again in this case if we don’t allow failures and then re-regulation to occur.

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So much for The Great Moderation, yeah?

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By the way, if there had been a short squeeze — if shorting, you know, wasn’t mostly banned — and shorts had been forced to cover like mad today, the market would’ve fallen far less.

And to this, I say AHAHAHAHA!

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Someone on a site I read was complaining that the American people were so vituperatively against the bailout bill because they wanted to punish the bad people.

And they’re right. That’s how capitalism works. You do something idiotic, and the market punishes you for it. At least, that’s how it should work. Being leveraged 30 to 1 or 50 to 1 on securities you don’t understand and haven’t vetted deserved punishment, especially if you had loan units making fraudulent NINJA loans to people who might as well have not even existed.

Americans intuitively know that the money these so-called masters of the universe have been using to buy 10 houses and a jet has been pulled from their wallets.

Now, that’s neither here nor there. The shit bailout bill has been defeated. Now it’s time for something better — something that gives nothing at all to the bankers who got us into this mess, but that actually does help the economy.

Because no matter how badly I wish it weren’t true, the times require that something be done.

I favor the federal government capitalizing their own series of banks, and being the lender of last resort to Americans, rather than lending billions to rich people. I favor a tax on all trades in the financial markets to help fund these banks, and eventually that they be sold to private companies. I favor the government modifying loan terms unilaterally to allow people with income and steady jobs to stay in their houses, and assisting those with rent who cannot afford even their modified loans.

I favor far more regulation of financial markets. Far more regulation and control of CEO pay. Far more regulation of all overseas transactions that take place in the US. Far more transparency in the marketplace, and a top tax rate of around 80%.

I favor a massive investment in infrastructure: power plants, improved bridges, roads, alternative power technologies, expert systems and AI, robotics — you name it, we should be throwing some of that $700 billion at it.

I favor universal health care, immediately.

That’s the bill we need, in very basic form. That’s the bill that would actually help.

America had become the rich’s casino, and they expect a handout once they’ve gone bust — a handout no regular American would ever get. But that’s not how casinos work, and neither should this country.

Giving away money to rich people just will not help, unless you like hyperinflation.

Helping Americans who could actually use help is what we should be doing, not making sure some trader can get his $2 million bonus this year, too.

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I know it’s a pipe dream, but if we can keep this bailout bill dead, we can let those institutions fail that need to do so, things will be tough for a while, but in a few years the American economy will be stronger and better-prepared — and, oh yeah, we won’t have given plutocrats all our money for the next few generations.

If the bill passes, the American economy will be hobbled for 20 years, and we will owe plutocrats money for generations.

Keep calling and writing your senators and representatives. As soon as I find out how my House Rep voted, I’m writing him.

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Yes!

The bailout plan was voted down in the House! That was unexpected, and it won’t last. The bill will be approved eventually.

But still, a temporary victory for all Americans.

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