Use the discount window,auction facilities, DIRECT LENDING or the various other liquidity tools Helicopter Ben created for these reasons. Those can fund those in need and turn our attention to finding out which banks are worthy of survival. You can not force banks to lend with this bill. In fact it would appear it's going to encourage more hoarding of cash and Treasuries (oops). There are better ways to alleviate commercial paper strain other than taking toxic paper off one balance sheet and putting it on another. The strong is supposed to survive, and the weak get consumed. This is natural selection, and the free markets. The United States government can not be playing the role of GOD. You are just transferring balances between two credit cards. The WORLD's top economist have spoken. They have provided reasons why this is certain to fail with undesired consequences. They have also provided alternative solutions for consideration. What you are only hearing is how if you do not act now on this bill small businesses will not be able to make payroll and that the stock market will continue to fall, 401k and pension funds will lose money (fyi, those 401k's and pension funds had BILLIONS speculating on the commodities market, bet you didn't think about that when the speculator witch hunt was in full force). And, take a look at the Japanese stock market for 15 years after their 100 trillion in various bailouts, recoveries and stimulus packages. Didn't work.
[source Naked Capitalism reader submission]
The bailout, I mean rescue plan, can be seen as nothing less than a new Ponzi scheme. It works like this:
Fed as only lender, in an attempt to keep the financial system from imploding;
TARP needed to keep Fed balance sheet intact so that it can continue as only lender;
Treasury will need to significantly increase the amount of Ts (public money) auctioned to fund TARP;
Panic serves to encourage T. buyers, especially for bills;
This represents a liquidity trap: TARP recipients of Ts will hoard cash to buy Ts: rinse and repeat.
This results in drying up of lending to corporations/crowding out private capital - no new credit lines;
The Fed becomes a holder of private capital, the later of which is now frozen to protect that capital from deteriorating, The rollover scheme will restrict even more lending in the private sphere for purposes of keeping the financial sphere on life support, but with the consequence of furthering the deterioration of the 'real' economy.
The counterargument is that the TARP will end the fear, breaking the Treasury-hoarding. But with banks (presumably) able to use the new phony prices paid by the TARP as marks for asset valuation purposes (whether they sold to the TARP or not), you get less transparency and hence less faith in bank balance sheets.
Fed as only lender, in an attempt to keep the financial system from imploding;
TARP needed to keep Fed balance sheet intact so that it can continue as only lender;
Treasury will need to significantly increase the amount of Ts (public money) auctioned to fund TARP;
Panic serves to encourage T. buyers, especially for bills;
This represents a liquidity trap: TARP recipients of Ts will hoard cash to buy Ts: rinse and repeat.
This results in drying up of lending to corporations/crowding out private capital - no new credit lines;
The Fed becomes a holder of private capital, the later of which is now frozen to protect that capital from deteriorating, The rollover scheme will restrict even more lending in the private sphere for purposes of keeping the financial sphere on life support, but with the consequence of furthering the deterioration of the 'real' economy.
The counterargument is that the TARP will end the fear, breaking the Treasury-hoarding. But with banks (presumably) able to use the new phony prices paid by the TARP as marks for asset valuation purposes (whether they sold to the TARP or not), you get less transparency and hence less faith in bank balance sheets.
We didn't learn from our own lessons in the 1800's, in the roaring 20's, in the S&L crisis, the modernatization act, nor is it apparent we will learn this time. We chose to ignore the lessons Japan learned and the Banana Republic. The list goes on and on. We are doomed to repeat these mistakes with the passage of this bill.
Here will be the next rating's downgrade you'll be reading about: 'United States Loses AAA Rating', just like Japan went to a single A. The phase 'Backed by the full faith and credit of the United States' will take on a whole new meaning. But I suppose if we can take over the ratings agencies too we can control that just like this bill attempts to control the prices of assets and continues to use marked-to-fantasy price. The largest power grab attempt ever. In fact, Uncle Sam, the 10 Trillion Dollar Man, is hoping to keep a lid on a credit derivative market implosion that is too big to be bailed out by all the central banks. Classic reactionary lawmaking at the Hill. Band-aid it now, fix it later? Oh, we already went over those lessons in history up above, so scratch that. But this time is different, right? RIGHT? Why you all did not have two parallel bills being worked at once is beyond me. One that addresses the specific problem at hand with the credit market, FDIC limit increase, etc... That one would pass. Then you have this other bill, one that stands a chance of not passing if only our congress would listen to the nations smartest people. Those people aren't always the Federal Reserve and Treasury. Instead, now you forced yourself into having to pass something just for the sake of passing something in an act of desperation. This $700 billion is merely the buy-in for this high-stakes poker game.
Now I will take the remaining US dollars after this bill gets passed and hopefully have enough left to purchase some WOODEN ARROW SHAFTS imported from CHINA. I will need these arrows to provide food for my family.
Overall during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100 trillion yen, and each failed to cure the recession. What the spending programs have done, however, is put Japan's government in poor fiscal shape. The "on-budget" government spending has caused public debt to exceed 100 percent of GDP (highest in the G7), and even more debt is apparent when the
"off-budget" sector is included.
Kindest Regards,
John Q Taxpayer, United Socialist States of America
Pork Barrel amendment added to bailout bill. A good chance these amendments were originally authored by those who voted 'NO' for this rescue package the first time.
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED
FOR USE BY CHILDREN.
'(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.-Subparagraph (A) shall
not apply to any shaft consisting of all natural wood with no
laminations or artificial means of enhancing the spine of such shaft
(whether sold separately or incorporated as part of a finished or
unfinished product) of a type used in the manufacture of any arrow
which after its assembly- ''(i) measures 5⁄16 of an inch or less in
diameter, and ''(ii) is not suitable for use with a bow described in
paragraph (1)(A).''.
