Originally published October 3, 2008
On Wednesday night of this week the US Senate passed by a margin of 74-25 a revised “Bailout Bill”, now totaling some near $850 billion in taxpayer money. As I type these words on this now Friday afternoon the US House of Representatives is debating HR 1424, the latest and dare we say greatest version of the bill defeated in the House Monday, and passed Wednesday by the Senate as previously mentioned.
C-Span is ablaze with Congressional Representatives fighting for and against this massive pile of money. The rhetoric is especially fiery this afternoon, fueled by the fears of those in and out of the know – fears of financial catastrophe, fears of frozen credit markets, fears of giving a blank check to the Treasury Secretary, who also happens to be the former CEO of Goldman Sachs.
Miles and miles of fear, perhaps thinly veiled to the trained eye, the fear in each of these men and women in the House that more jobs will be lost, specifically theirs. I’ve been watching this pompous collection of our nations legislators live on C-Span for a couple of hours now, unfettered by commercials and analyst guidance. I consider myself a reasonable, intelligent man. I would like to believe I have the prerequisite understanding of law and practice to observe these proceedings in this way, minus the opinions of media.
So many of us rely on the filters of our nations media enterprises to interpret the words of these men and women we elect. Whether it be out of ignorance or the sheer boredom of watching the basic, raw product is a matter of debate, but I’m inclined to believe the latter to be the primary cause. Watch your CNN, your Fox News, your CNBC – who am I to tell you how to watch our nations legislative monotony in action? I beg of you this however, turn on C-Span for at least a few moments to get the natural peanut butter version of this sticky mess, only then can you truly understand the ways of your government.
Whether or not we understand this bailout package and more importantly whether or not it will work, remains to be seen. For every person I have heard screaming that this legislation is neccessary, another has been screaming just as loud that it is socialism. Wall Street loves it, Main Street hates it, if we don’t prop up our markets we will all be begging for soup, the free market is a lassez fair system that needs success and failure to effectively work – rhetoric on both sides of this very expensive coin has been equally noted. What is clear is that we don’t know if this will work. What is clear is that moments ago the US House of Representatives passed HR 1424 by a margin of 263 – 171, so we had better hope that it will.
I sent a text message to some friends seconds after the tally was in letting them know the bill had passed. I got 4 responses, 1 saying “it’s about time,” 1 saying “oh fuck,” and 2 saying essentially “I’m not sure if that’s a good thing or a bad thing.” We are confused, and rightfully so.
For months now we have beared witness to a barrage of reports on our economy from the private and public entities involved. participants of various political and economic viewpoints have given us opinions….on jobs, manufacturing demand, credit, interest rates, stock prices, bond prices, housing indexes and tax scenarios. When you whittle away the opinion and focus squarely on the numbers the sentiment has been resounding – our economy is sick.
We have asked many questions of these people, and have gotten many different answers. I’m frustrated by not being able to get straight answers. My mind operates in such a way where as I can deal with any situation, good or bad, provided there is logic and sense associated. The most difficult issues for my mind to address are those where there is no straight answer, only speculation. It is in the face of such situations where I revert to linear ways of thinking. Give me numbers. Give me facts. I am a functional human being with a functioning brain able to input data and spit out opinions of my own. So, for the purpose of this exercise, I’ll report some of these numbers and let you and I form our own opinions.
Numbers are our friends, here’s to numbers.
$849,600,000,000 – The approx total dollar value of HR 1424
$700,000,000,000 – The approx total dollar value that will be made available to the Secretary of Treasury to dispurse (with Congressional oversight) to the private sector for the purchase and loan assurance of mortgage backed securities as detailed in HR 1424
$149,600,000,000 – The total dollar value of tax incentives, rebates and misc spending (I.E. pork) contained in HR 1424
$2,000,000 – Total tax dollars allotted to subsidize manufacturers of childrens size wooden arrows contained in HR 1424
$2,000,000 – Total tax dollars allotted to subsidize employers reimbursement of employees cost of bicycle storage for those who ride their bicycles to work contained in HR 1424
$91,000,000 – Total tax dollars allotted to extend tax breaks for motorcar racetrack owners to balance depreciation of said racetracks according to HR 1424
$192,000,000 – Total tax dollars allotted to subsidize puerto rican rum manufacturers contained in HR 1424
451 – the number of pages in the revised version of HR 1424, also the temperature at which paper (including stocks, cash, mortgage documents, etc) ignites and burns
159,000 – the number of US jobs lost in September ’08 according to the federal government jobs report released today
761,000 – the number of US jobs lost this year according to the above report
$39,000,000 – The severance bonus paid to now Treasury Secretary Henry Paulson by Goldman Sachs upon his decision to leave the company in May 2006 to become Secretary of the Treasury
91 – number of House Republicans who voted for HR 1424
108 – number of House Republicans who voted against HR1424
172 – number of House Democrats who voted for HR 1424
63 – number of House Democrats who voted against HR 1424
7 – number of times House Speaker Nancy Pelosi called HR 1424 a bi-partisan victory in her speech moments after the bills passage today
0 – number of times House Minority Leader John Boehner called HR 1424 a bi-partisan victory in his remarks moments after the bills passage today
777 – number of points the Dow Jones Industrial Average fell monday after version 1 of the bailout (HR 3997) failed in the House
22 – number of points the Dow Jones Industrial Average is up as of 2:55 PM EST today
288 – number of US mortgage lenders that have failed since late 2006 (according to ml-implode.com)
16 – number of times the US Congress has voted for de-regulation of the mortgage industry between 2000-2006 (according to the lexis-nexis database)
In a time of crises it is fair to say that decisions must be made quickly. When your house is on fire, you put out the fire before you deal with the cause, the aftermath, the insurance company, your family photos and general items. It is however important to note that before you aim a fire extinguisher at the blaze, you should be certain it is not full of gasoline. The extinguisher should also not contain tax breaks for wooden arrows, rum, racetracks and bicycle storage – that’s my opinion, you are of course entitled to yours.
Our nations financial house is on fire. HR 1424 is a fire extinguisher. A 451 page fire extinguisher. Whether this cannister of taxpayer money will indeed snuff out the flames remains to be seen. What is clear however, is that this fire extinguisher is looking increasingly like a Christmas Tree, which last time I checked tends to be a highly flammable item.
To be fair, the bill also includes relief for nearly 20 million Americans from the Alternative Minimum Tax, $3.3 Billion for rural schools, money for mental health parity subsidies, money to expand the FDIC, create oversight of the Secretary of the Treasury and tax relief for renewable energy and research and development in technology based companies. That’s nice, sweet even, but I have a question….
What in the holy hell does any of this have to do with bailing out investment banks that were too damned dumb or greedy or manipulative even to avoid shitting their pants?
Answer….politics as usual. Votes on bills such as this are traded for earmarked spending everyday. While I am amazed at the voracity of our congress stuffing this particular bill with pork knowing how closely the world is watching, I can not fein surprise. These folks are counting on two things. 1 – the bill will work and when it does we will not care about earmarks involved, and 2 – if it fails they’re all screwed anyways, at least this way their pet projects will be funded.
I won’t argue whether or not you and I should pay for the behavior of these banks and elected officials, it’s a moot point, the moment President Bush signs HR 1424 (which he is expected to do today) we will all begin paying for it whether we like it or not. We are left to consider only how we will deal with the results of this legislation, if in fact there are noticeable results. The jury will be out on that matter for some time.
Will this bill be a bailout by traditional standards, or a savvy investment that will yield profits for the American tax payer? I don’t know. I have my doubts, but hope I am wrong. The more important question is what will our nations lawmakers do to keep this from happening again?
Will there be massive regulatory reform, or will our elected officials rely on our short memories and continue selling our system to corporations? Will these failed financial institutions rebound? Will these securities we are buying dirt cheap rise in value, or are we buying rotten fruit? Until such time as we have more concrete answers we are left holding an empty fire extinguisher, hoping the blaze doesn’t spark up again when we turn our backs.
When word first spread that Secretary Paulson sat down with President Bush two weeks ago to recommend $700 Billion in tax payer money be re-allocated to salvage the remnants of private banks his original proposal was 2 and a half pages. HR 3997 was 119 pages. Hr 1424 is 451 pages. I don’t know about you but I’m just as confused at 451 as I was at 2.5. I didn’t know if it was a good idea. I didn’t know if it would work. I still don’t. The frightening part is that a majority of congressmen and women who spoke on the issue this week seemed to be in the same boat. No one it seems has any logical expectation of what comes next.
There is fear, there is hope, there is a throw it over the wall and see what happens mentality in Washington and on Wall Street. Meanwhile we will all tighten our belts an extra notch and go on with our lives. That is unless you manufacture wooden arrows for children or import Puerto Rican rum, in which case I’m expecting to get one hell of a deal the next time I am in the market. At least then if the global financial system collapses and our society falls into anarchy I’ll be drunk and armed.