Friday, October 03, 2008

Bailout Is Passed


What will we do when this bailout fails? Answer: We'll never know if it succeeds or fails, since no measurement for success was included. If you define success as avoiding an immediate credit seizure, you might count this as a win. If you think this will keep us out of recession, keep your house from dropping in price, or save your job, you might take a different view.

10 comments :

Patient Renter said...

Where's agentbubble been lately?

Nooge said...

Interesting comments from Kruman - Bush hater #1, Nobel prize economist Joe Stiglitz, and Nouriel Roubini - every bubble heads lord and liege. The decision was unanimous - pass this POS bill and then fix it.

http://krugman.blogs.nytimes.com/2008/10/02/the-hold-your-nose-caucus/

We were playing with fire here people - thank god we came to our collective senses. Had this not passed today, that 1.2trillion dollar loss in the stock market could have looked like childs play.

So sleep well tonight, we did the right thing. We live to fight another day.

Deflationary Jane said...

S&P still dropped below 1100 on the signing. So much for the Failout

Max said...

DOW:

January 20, 2001: 10,659
October 03, 2008: 10,325
% Change: -3.1

Has there ever been a president who presided over a net loss in the DOW?

Bryan said...

Well, that's done. I wouldn't start waving the victory flag just yet. All that's happened is that Operation Overlord has been approved. We haven't even seen the shores of Normandy, to say nothing of winning the war.

We'll watch closely.

Bryan said...

Wouldn't some kind of an average be more appropriate?

Darth Toll said...

nooge, I respectfully disagree with your optimistic assessment. This bill will allow Paulson and company to hand off large portions of our real estate and other assets to foreigners for pennies on the dollar. It will also allow the Treasury to "buy" large amounts of FCB paper, such as bad FNM paper etc. which are nothing more than losses.

IMHO, this will mark the beginning of the end of the US economy for many years and will probably lead directly to a credit and stock market meltdown. In time, the Asians and Arabs will remove treasuries support anyway, so this ploy is a looting operation for the elite bankster oligarchy to hunker down before the K-Winter. Only time will tell of course, but call me unconvinced.

Darth Toll said...

"Has there ever been a president who presided over a net loss in the DOW?"

Maybe Herbert Hoover? :-) This may also be true for the next few presidents, depending upon whether we have a full-blown crash and take the hit all at once or if we adopt the Japan bank-zombification model of constant recession and deflation for 18+ years.

Nooge said...

This bill will allow Paulson and company to hand off large portions of our real estate and other assets to foreigners for pennies on the dollar. It will also allow the Treasury to "buy" large amounts of FCB paper, such as bad FNM paper etc. which are nothing more than losses.

Darth - I think you misunderstood what I was saying. Ever since this crisis started 3 weeks ago, DC has been telegraphing a message to the markets "help is on the way".

Then, when the bill failed on monday, it was stunning. That 1.2 trilion dollar stock market loss was a vote of complete no confidence in the ability of our leaders to lead. Look at what that did to the Ted spread in just 1 day! Its as if all the markets collectively realized, "my god were doomed".

The reason the markets did not get worse during the week was because of the quick reassurance from DC - its ok, we'll have SOMETHING by friday. Now had the capitol pulled another rope a dope on friday, that really could have been it. You can only mess with the markets psyche so many times before they dont believe you any more. Had we not passed something on friday it would have been a crippling blow from which we perhaps couldnt recover.

In essence thats why all these economist haters quickly got on board - it was the realization, we have to show we can do something. As they said, pass it, and then fix it - quick.

So my "optimism" is literally only that we live to fight for a while longer. As I see it, we just bought ourselves 60 days to come up with something better. Lets just hope that 60 days is enough!

DrDoom said...

A couple of measures of success are obvious...Does the fund get used to the limit and by which firms. In the long term does the fund get paid back completely. In the short term do interbank loans and rates return to normal.

Also it will be interesting to see as the damaged securities are collected together do ways emerge to stablize their values and reduces losses.