As most of you probably already know, the bailout plan has been declined by a vote of 228-205. As a result, the stock market has begun a record plunge of almost 800 points in one day. With the government scrambling to figure out the next move to make to heal this crisis and prevent a potentially devastating depression, many people have attempted to decipher this 228-205 vote. Prior to this vote, both parties experienced mixed feelings toward the bill. After the revision of Bush's original bailout plan, most people believed the plan would be voted through in the House due to the potential danger of the current economic crisis. However, after this vote-down, many people are pointing fingers across party lines. Republican House members are associating the failure of this bill passing with Pelosi's speech given right before the vote. They blame the vote-down on Pelosi's seemingly partisan attack on the Bush administration and Republican Party. Here's a clip of part of Pelosi's speech given earlier today:
This week is likely to become more hectic and this ongoing economic crisis will be an interesting factor in this year's presidential election.
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September
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- A Little Jingle
- Voting for President can be Hazardous to your Health
- Update on the Bailout Plan
- a short little rant...
- Is Sarah Palin Hiding From the Media?
- UK Reaction to the Rejection of the Bailout Plan
- NO bailout
- Obama Maintains a Healthy Lead?
- SNL's Take on the Presidential Debate
- Tying Up Loose Ends
- The Candidates Take Da Bait, Round 1
- Open Thread: First Presidential Debate
- Is Palin Losing It?
- Jon Stewart's Birdseye View of our Economy's "Dive...
- Was McCain's "suspension" Just an Attention-Gettin...
- Letterman Responds to John McCain's Campaign Suspe...
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- Anonymous Comments & Trolls
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- GOP Campaign Tries to Get VP Debate Postponed
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- Thoughts Inspired by Insomnia
- Oh, those crazy liberals puttin' Mac down again!
- Because It's Wednesday
- US Embassy Attacked in Yemen
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- The Play of The Year goes to: The Federal Reserve ...
- Yes, Sarah Palin looks like Tina Fey
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- The World has Made Up It's Mind
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- A New Leader in Israel?
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- Helping Iraq - We Could Be Doing Worse
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September
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21 comments:
While that plan might have worked, at least the government isn't just giving up completely. I was reading an article on Yahoo and it explained a few other things that the government is trying to do to fix this economic problem. http://biz.yahoo.com/usnews/080929/29_bailout_take_ii_what_the_feds_do_next.html?.&.pf=banking-budgeting
-Kimiya Bahmanyar
I think that it is completely ridiculous that people are blaming the opposing parties for this. When the vote is so close, both parties are to blame for the denial of the bailout. If 12 people from either party had flipped it would have passed! They have no right to play the blame game.
Also, I think Pelosi was out of line calling out the Republicans like that. "You catch more flies with honey than you do vinegar."
Finally, I think we're all a little worried about the stock market. The losses of the DOW and the NASDAQ were, point-wise, the largest in history. We're on a very slippery slope of economic downfall here.
What's interesting, though, is that tomorrow's Jewish holiday may do some good for the market. According to my dad, many of the large stock brokers are Jewish, so they won't be working tomorrow. Note that I couldn't find actual data on the religion of wall street workers, but does anyone think that this could help lessen the blow? I know that the senate is supposed to reconvene on Wednesday, so this could be all the extra time the country needs.
While I applaud Ben for looking for a silver lining, I'm either misunderstanding him or he's hopelessly optimistic. A single day off will hardly make a dent in the economic crisis, on the political side at least. Maybe the absence of Jewish stock traders will "lessen the blow," but I'm certainly not holding my breath. It's going to take a lot more than a one day holiday for lawmakers and stock brokers to pull out of free fall...
That's a good thought, Ben, but unfortunately, I'm not sure that a one-day holiday is going to be able to pull us out of this one. I do agree that Pelosi's speech was a little extreme and inappropriate, I don't think that either side should be pointing fingers. As I was driving to Longs today, I heard on the radio that 95 Democrats voted down the bill. For this reason, the Democrats cannot be blaming Republicans. And if the Republicans were so set on voting yes to this plan, a little speech by Pelosi shouldn't have been powerful enough to sway their beliefs. All of this arguing and blaming is ridiculous. In this crises, we definitely should be focusing on getting a plan together that WILL be passed.
Though I understand most of your points that a measure should be passed quickly in regards to bailing out the financial companies that are currently either bankrupt or teetering on the edge of bankruptcy, there are definitely upsides to this legislation being discussed and refined. History shows that in emergency situations like this measures are often passed quickly and without as much thought as some would hope for, and though some turn out well (New Deal legislation) others leave us wondering who was reading the fine print when it was passed (Patriot Act). Though action now could help bump up the nasdaq's numbers right away, with investor confidence as shaken as it currently is there will still be long term effects on the markets, which seems to me to say that the time should be spent in preparing a plan that will not only help our economy in the long term and prevent this from happening again but make the best possible use of the enormous amounts of taxpayer money that they are currently discussing using. Can that be done in a few days? Only time will tell.
Bryan put it quite succinctly in my opinion. The stock market is going to be hurting for a long time now, no matter what happens in regards to the financial bailout, so rushing $700 billion tax payer dollars (which will no doubt come out of the pocket of our generation, and possibly even the next) out to the people who messed this up in the first place seems a bit hasty. And maybe I'm more inclined to patience as a relatively comfortable member of the middle class, but long term needs dictate that thoroughness and, more critically, correctness are of the utmost importance.
I think it is ridiculous to blame the failure of this bill on Nancy Pelosi's speech. I believe that the bill failed to pass because not enough politicians were willing to take the political risk of supporting such a risky proposition five weeks before an election.
"We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., declared in an impassioned speech in support of the bill before the vote. "Most of us say, 'I want this thing to pass, but I want you to vote for it not me."'
I personally cannot seem to understand why politicians are more worried about loosing their jobs than about the plummeting economy. We elect leaders who we believe are capable of helping America to their best ability, not to act cowardly and selfish. Politicians should stop worrying about their own reputations and do what they truly believe will help our plummeting economy.
Yes, I'll admit that it probably is cowardly and selfish for these lawmakers to put their jobs on the line over the well-being of the economy, but maybe we should try to give these politicians a little credit. First of all, the government doing anything within the next five weeks, which certainly is not a given, would almost definitely have no chance of causing any great change to the economy. This crisis has been brewing for years and throwing money at it isn't going to be a miracle cure. But the public is still going to judge the success of any potential bailout five weeks from now at the ballot box. Seems a bit of a lose-lose. Also, do we really want an influx of new congresspeople thrown into the crucible of the economic crisis? Maybe, just maybe, our politicians are smarter and more morally correct than we like to think, and that stability and deliberation are more important than blindly throwing a bone to every armchair politician who demands action...
Myself, being a free market conservative, am pleased that this bill did not pass. All it would have done, if anything, would have been to forestall the impending mortgage apocalypse and give the CEOs of large financial banks a small pay decrease (mostly because the congressmen all owe the companies something). The only good it may have done if it had passed through is to give lawmakers a few more months or years to correct the markets,which they shouldn't. Also, can anyone say socialism? the bill would given ALL control of these companies to the government,in which case Palins knowledge of Russia would have benefited her quite a bit...
Every time I hear talk about our economic crisis, I can't help but think back to the assignment from last year written by John Maynard Keynes.
People are recreating the events that led up to the Great Depression in the 30's. With that being said I must ask, exactly how stupid are people today? I would imagine that an experienced participant in the stock market should hold some knowledge of the Great Depression. So unless they had no idea WHY the Depression occurred, they are stupid to be recreating the fateful events leading up to the Depression. It was because of the people pulling out of the banks and stock markets that all of it happened and everybody is doing that today.
Maybe someone in government should simply hold a press conference lecturing America about the history of the Depression history class style (maybe broadcast McGlashan?). I think that would at least help people to realize what they are doing and how they are only contributing to the crisis we are facing.
I must diagree with Garret, Bryan, Max, and Elijah on the overall merits of the plan. While I do not like it and agree with you that it would be nice to wait a while and hammer out a better plan, allowing the credit markets to go on as they are now would be foolish. Right now there is very little liquidity in the credit markets because banks either cannot or are not willing to give out loans.
I for one dislike the notion of being a country in which the economy is based off of debt. I also, as a staunch free-marketer, dislike government intervention like this. But allowing the banking sector to fail as it is currently doing would cause irreparable harm to our nation's economy. Therefore, some sort of bailout must be approved.
The only silver lining in this: If no bailout plan gets passed and the banks all fail, perhaps our culture we become less based off of debt and more off of buying what we really can afford.
I disagree with my well-articulated twin (we argued part of the way home today). Garret makes some good points: The economy seems to react when you give it something to react to. By proposing this "plan," party leaders, Bush, and Paulson have essentially put a really, really, really big bone in front of Wall Street without the guarantee of following through with it. The volatility of the markets is based not on the current status of the economy but the perceived status of how the economy will be in the future. In setting up a situation in which the bone could easily be yanked away from Wall Street, the government is entirely to blame for today's little dive. Although I am not nearly qualified enough to comment on the actual bailout plan itself, I am familiar with politics, and Bush's speech, Pelosi's pleads, McCain's suspension–they are people-pleasing as usual. This is not to say that the bailout is a bad plan (although something in me suggests it is). I just think the government should take its time in constructing a solution–not some save-the-day superhero sort of thing. As long as the promise of an eventual solution is present, the markets should remain fairly stable. The last thing Congress should do, though, is have another drastic vote on a similar piece of legislation (akin to going all-in with $700 billion). Let's just bet the blinds for now while we consider how to play our cards best.
To be honest Max, I find your argument to be completely invalid. If the free market is such a wonderful, all-powerful tool, how did we end up with this mess? (Hint: it has something to do with deregulation of greedy corporations) And I also thought it quite ironic that you would point to Russia as proof of the failure of socialist economic policy when overall economic growth in Russia has been steadily increasing for nine years, average monthly salary has gone up, poverty and unemployment are both decreasing, and has run a budget surplus every year from 2001 and 2007. Oh, and also, they currently aren't the cause of a huge economic crisis that could derail the entire world economy...
And Scott, maybe your last paragraph was intended slightly in jest, but that seems like a pretty decent course of action to me. Realistically, even if we do successfully bail out the financial giants, the economy is still going to be weak for at least a few years, if not more. Then the economy will eventually regrow and everything will happen again. The only way out, as I see it at least, with my minimal training in worldwide economic systems, is a complete overhaul of the system. Unfortunately, the systematic inertia of America's economic policy is so great that only a completely devastating implosion is the only thing that could change things. Of course, that sounds like Max's beloved free market control, except that the economy that results from the rebirth ought to be heavily regulated.
Garret- I completely agree. I think that while limited debt can sometimes work (i.e. Hamilton's National Bank), perpetual debt does not. There is a reason my parents have taught me not to get into credit card debt (if, of course, I had a credit card)--you lose! It is unfortunate that our economy is based off of a system like that. For me, it's a double-edged sword; I want the system to "start over," but I don't want a market crash. This is why I have very guarded support for the bailout. As a free marketer, I am against the concept of government intervention except in Depression-like circumstances, yet I don't want a market crash. Sadly, I think that the belief that everyone in America, regardless of income and ability to pay, can live an upper-middle class lifestyle is so ingrained in us that we will be entrenched in endless debt cycles indefinitely.
Another point for those who defend Bush's trade policies--America keeps on compiling debt, through mortgages, credit cards, government debt, banking debt, trade deficits. We sell it to China and other countries. The truth is that we are no longer in control of our own economy. Isn't this a major national security threat, especially if Hu Jintao's sovereign wealth fund has the power to control America's banking sector?
I feel that I should point out that discussions with Mr. Silton led to some of the aforementioned thoughts (though I do disagree with his idea of a homeowner's bailout plan, but I digress). Plagiarizing a teacher would be the last thing I want to do.
While many people are definitely pointinf across party lines, trying to shift the blame to the other party, i think they also need to do a bit of finger pointing within party lines and maybe even at themselves. I don't think Pelosi is solely responsible for the plan's failure to pass, but rather the combination of all the partisan politics present in our nation. Sure the founding fathers made it intentionally difficult to pass new laws or acts but maybe this is one of those dire situations that simply needed decisive action. But hey, you never know, maybe this was somehow a good thing (doubt it) or maybe its' passing would have merely been a prolonging of the inevitable (I actually think that's actually a very possible possibility). The failure to pass the biggest bailout plan to date can and probably will have some sort of disastrous effect on our nation. the record plunge in the stock market is a clear indication of what might potentially come in the future, though i pray that I am wrong.
In response to what Scott said about there being relatively little liquidity in the credit markets right now, and the fact that that is hurting the markets as people can not borrow money, i would have to say that an overabundance of borrowing was first and foremost what got the economy into this mess and also that the bailout will not necessarily solve the current situation in relation to tight credit. Do you really think that after what has happened in the past few years and especially in the past few weeks banks are going to go back to their ways of lending freely to all comers? Even if these financial giants get bailed out i would have to guess that there will still be to one extent or another a lack of credit available while the economy recovers as banks will be wary to loan to anyone that they think might even have a remote chance of not paying off their loan and in an economy like this those people are becoming more and more few and far between.
I just realized that this failure to pass the bailout plan is going to be a major setback for McCain. I mean, didn't he "suspend his campaign" last week to rush off to help negotiate for a solution to our economic woes? This will likely hurt his campaign as it seems pretty clear that he failed to succeed in "saving" our economy...?
Hmm. I like what max had to say. I think the economic bailout is going to be an uneffective bill (It got passed now last friday). As garret said, the economy is going to be hurting for the next couple of years and the bailout plan is only going to temporarily stall a greater crash and prevent the economy from repairing itself. Congress cannot fix the economy in a capitalist system, it's just not possible. In the New Deal, many of the governmental plans were unsuccessful and what did work only slightly aided the terrible economy. The United States was headed towards socialism and would not have been able to pull out of the Great Depression without becoming completely socialist if World War II had not come along and helped our economy out. With capitalism comes greed and with greed comes exploitation. Im going to disagree with garret on his idea of a heavily regulated economy when it starts to rebound because it just wont work. The government heavily regulated the stock market after the 1930's in order to prevent further economic recession and it didnt work. As long as the country remains capitalist, the cycle of recession and depression is going to continue, it is just going to rear its ugly head in a different form. So the greedy are going to exploit some form of the economy in order to make money, and even if it wont be the stock market or mortgage loans anymore, banks will find other ways to risk money in order to make more. The solution to exploitation would have to be government regulation and control of every facet of the economy. That sounds a Lot like socialism. OR a free market could punish the banks that risk insane amounts of money by sending them into bankrupcy and instead of the government stepping in, the economy will impose regulations on itself. That would maintain capitalism and personally, i favor capitalism over socialism. In order to remain in a capitalist country, the citizens have to recognize that recession is going to happen. It is simply impossible for an economic system to be perfect and one of the benifits of capitalism is its ability to repair itself.
I <3 you aaron j cutts.
I can't believe people actually support using taxpayer money for this. Failed companies should not be given taxpayer money when they mess up.
Keep supporting legalized theft.
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