McCain caused a lot of pain today

Largely because of John McCain, a huge number of Americans are considerably poorer today. Like, me.

My wife and I have balanced investments in stocks and bonds, so we aren't down as much as the 7% to 9% drop in the equity markets. Still, we've lost a bunch of money.

And if the House Republicans don't get their act together soon, putting the country before politics, it's likely that even more financial blood will be on their hands.

Those Republicans voted against the bailout by more than 2 to 1. McCain said at last week's debate that he likely would vote for the bailout. He made a big deal out of coming to Washington to show what a great leader he is.

Yet he couldn't bring along members of his own party, and he sat mute during the White House meeting on the bailout proposal.

Pretty crappy leadership.

The differing reactions of Obama and McCain to the House vote say a lot about what sort of president each would be. Obama called for calm and patience, while McCain made partisan attacks.

This is just what we saw at the first presidential debate: Obama's firm crispness, McCain's sarcastic snippiness.

Economist Paul Krugman wrote about the readiness of the two men to take a 3 am economic crisis call.

So what do we know about the readiness of the two men most likely to end up taking that call? Well, Barack Obama seems well informed and sensible about matters economic and financial. John McCain, on the other hand, scares me.

Krugman describes how McCain has flipped and flopped his way to his current whatever non-stand on the bailout bill.

The real revelation of the last few weeks, however, has been just how erratic Mr. McCain's views on economics are. At any given moment, he seems to have very strong opinions — but a few days later, he goes off in a completely different direction.

Early on, Obama laid out principles that the bailout plan should adhere to. I haven't seen anything like that from McCain. He just meanders in the direction that seems most apt to score political points for him and shore up his faltering poll numbers.

I don't like losing money. But I can get some satisfaction from the fact that today's historic drop in the Dow shows up the incompetence of McCain and his Republican cronies in the House.

The day's loss knocked out approximately $1.2 trillion in market value, the first post-$1 trillion day ever, according to a drop in the Dow Jones Wilshire 5000, the broadest measure of the stock market.

The bailout price is $700 billion, at most (probably much less, since the government would recoup a good share of the cost when the housing market rebounds).

McCain admits that he doesn't know much about economics. His failed leadership on the bailout plan demonstrates this.

Memo to Senator McCain: $1.2 trillion is more than $700 billion.

[Update: It took me a while to understand Rep. Barney Frank's comment about today's bailout vote being "one of the truly great coincidences in the history of numerology."

But now I see what he meant about "the number of deeply offended Republicans who put feeling over country turned out to be exactly the number you would need to reverse the vote."

Frank is referring to the absurd GOP claim that Nancy Pelosi's floor speech before the vote, where she properly castigated eight years of Bushonomics, caused the bailout plan to fail.

Cleverly (almost too clever for me), Frank points out that it would indeed be a remarkable coincidence if the number of Republicans offended by Pelosi's remarks was exactly the margin by which the plan was defeated. That's what would need to have happened to be able to pin the blame, however loosely, on Pelosi.]

Comments

[Rain]

Well I didn't favor the bail-out as it appeared to be structured right now. I think there has to be some method of getting outside oversight as currently only administration appointees would have had any chance to do that. I also didn't like that the CEOs who created this mess continued to be richly rewarded. Yes, new contracts would be lower but if they had a good one, why would they renegotiate a lower one?

I also am not sure where the money was coming from to fund this. Possibly they didn't intend to use a lot of it but hoped just saying big numbers would cause wall street to suddenly sigh and go oh big daddy is here and it's all okay. If they didn't, that's a lot of money for a government already paying $.22 of every tax dollar on interest with no pay down on the debt.

Also you didn't lose anything yet unless you sell out with the stocks down. They go up and they go down and what the real losses will be, right now, who knows. Companies that go under will be total losses but anything else is possibly going to recover. We haven't looked at our losses yet because it doesn't gain much unless one wants to bail-out themselves-- and they lose the most if the market recovers in a year or two or three or four. We have tried to go for reasonable rate of return, conservative investments in companies than make things, not just turn over dollars.

If the country goes into a depression, some of the same things apply. And I don't say this because we have nothing at stake. We do but more important is the future of this country and what kind of legacy are we leaving for the next generation.

Some Republicans think the solution is more tax cuts in the capital gains rates. Okay so let me get this straight. These companies are failing but they have profits? Very strange accounting system here.

[condor]

Cheer up folks, today was a good day...the worst is yet to come.

[Roger]

Half of my 401k is in Fidelity Cash Reserves (FCR). This is the $1 per share money market fund, that is very safe and stable. Throught the years, the FCR has never lost any value from the $1/share. Even today, I noticed, my cash value is OK.

However, I now am kinda concerned. I have no plans to bailout of my retirement stratigy, however, I am slightly nervous about the future.

If I do lose all my savings, is there someone that could put me up for a few months, rent free? Hahaha....just kidding.

Does anyone have FCR type account? Do you have similar concerns?
Thanks for any reply,
Roger

[Erik]

It's sort of silly to blame the Republicans when the Democrats could have passed the bill without a single Republican vote. They do have a majority, after all. Why not focus on those Democrats who voted against it? Your analysis is completely one-sided.

[Rain]

Paul Krugman says this is something he calls recapitalization. The problem is most of us are clueless on what any of this means. We listen to experts and they disagree. http://krugman.blogs.nytimes.com/2008/09/30/where-will-the-money-come-from/ The problem is it still confuses me because if there are toxic debts and these aren't the original home loans but the bundles that got sold and resold, doesn't someone somewhere get stuck holding a bag with nothing in it but that they paid good money for it?

[Rain]

And Roger, we are keeping our money in its investment portfolio (which is also conservative) and hoping to ride it out with losses, if any, being made up eventually. Naturally we are uneasy about it also. I believe in the concept of some investing so that others can build up businesses and all can prosper. I don't blame those who have chosen to pull out but if everybody does, that's when we are in big trouble.

[Brian]

Erik, the reason I focused on the Republicans is because they failed to hold up their end of the deal.

Can't remember how many votes they were short, but it was quite a few.
Nancy Pelosi delivered almost all of the promised Democrat votes, but the House Republicans reneged on their deal.

It's amazing how the Democrats are putting country above party and going along with a modified version of Bush's bailout plan. All the Republicans needed to do was drum up a majority of votes from the President's own party.

Didn't happen. So much for McCain's leadership, since he says he's in favor of the bailout bill, but can't convince his own party to go along with it.

[Erik]

Yes, more than half of Democrats supported the bill, while more than half of Republicans opposed it. Final counts were: Republicans: 65 for, 133 against. Democrats: 140 for, 95 against. To place this all on McCain doesn't make sense. Does Nancy Pelosi deserve blame for the 95 Democrats that opposed the bill? If she had delivered their votes, it would have easily passed.

Maybe there was a good reason that people on both sides of the aisle opposed the bill. Democrats were concerned that it gave too much unchecked power to Bush, something that I'm surprised that you favor. Rep. Lloyd Doggett (D-TX) said, "My vote was a vote to say protect the taxpayer first [and] don't give President Bush unlimited discretion. We know where that's taken us before on other matters."

I have mixed feelings about the bill. Quite a few non-partisan economists are opposed to it. Here's one example: http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf

[Rain]

Oregon's representatives voted 3 against it and 2 (surprisingly one of those was our only Republican Representative) for it. I was proud of the reasons they gave. Thinking is why we elect them and I don't want Pelosi telling them how to vote. I think a bill is likely to pass but possibly less money. This rush to do something has worried a lot of people as it's very like so many other similar rushes during the Bush presidency. By now, if you still trust them, I have a bridge to sell you. It goes nowhere but that's very fitting. I hope whoever we get next time, they use a lot more judgment, deliberation, and don't enjoy this drama queen stuff, or have Americans gotten addicted to that kind of excitement and actually like it. Gee, I hope not!

[Roger]

Rain,

Thanks for the reply. I agree with your message. I don't plan to withdraw from 401k, there is a 10% up front penalty. Over the last 20 years, there have been a number of slumps in the stock market. With time, the values came back.

[condor]

Brian wrote: "Can't remember how many votes they were short, but it was quite a few.
Nancy Pelosi delivered almost all of the promised Democrat votes, but the House Republicans reneged on their deal."

--95 DEMOCRATS voted against it. It was a crappy bill. Some fat needed to be trimmed. The one that gets passed will be better, but not good. In the long run it won't matter much. However, it will give a little breathing room for people to transfer their assets before they are lost. The Greatest Depression has begun. Conditions will drastically deteriorate over the next few years. People should take proactive measures before it is too late.

The "Panic of '08" that has hit the financial markets is but one symptom of a much greater crisis. Empire America is collapsing. The crash is under way. Those in denial refuse to see it. Others pin their hopes on politicians, bankers and brokers to miraculously repair the irreparable. This is beyond Obama or McCain or petty partisanship. The wheels have been set in motion.

There is no denying the economic facts and figures. While there is no turning back, there will be short-term respites. Use them wisely.

It's not only America that's crashing. As the giant falls, the earth trembles. The proof is everywhere.

In America, political insiders and the economic high and mighty know the ship is sinking. As they ready the lifeboats to save themselves, they keep assuring the worried masses they know what to do to keep the ship of state afloat.

Do you believe the captains of commerce and congress? These are the people that ignored the warning signals and willfully charted the course toward destruction. Are they going to save us?

Will Washington put your interests above their special interests? Who do you look up to with a greater mind than yours? Bush, Paulson, Bernanke, McCain, Obama, Dodd, Reid, Pelosi, Frank, Laurel, Hardy?

By their deeds you shall know them. They are committed to saving the "too-big-to-fails" while leaving the "too-small-to-save" to save themselves.

Know where the exits are. Make sure you can find your way to the lifeboats. Understand that at a certain point, the hatches will be closed, and under the "rules" of government, only first class passengers will have guaranteed seats.

The pillars of America's financial system were symbolically destroyed when the Twin Towers were toppled on 9/11.

The foundation of America's free market capitalism were literally destroyed when an Economic 9/11 took out Merrill Lynch, Lehman Brothers and A.I.G. ... the world's largest investment banks, brokerages and insurance companies. Yet, despite the deafening sound, when the biggest bank failure in US history happened several days later, it barely made the headlines that Washington Mutual, with 2,300 branches and $310 billion of assets, had gone under. Wachovia, the sixth largest bank in the US has been gobbled up by the imperiled Citigroup. Do you need more proof than that?

We are facing a crisis of unparalleled proportions. You must rely on your own wits and good judgment. No one will save you but yourself.

I predict many more bank failures occurring across the United States and around the world. There is a high probability for the government to call a bank "holiday," at which time withdrawals will be drastically limited. Thus, while deposits will be FDIC insured, restrictions will be imposed on withdrawals.

Obama will be elected in reaction to the current administration's bungling, but will be helpless to stem the tide. He won't even know where to start. People will continue to blame Bush for everything even as they worsen under Obama, but it is ultimately the public's fault. Banks and governments can't force you to accumulate escessive debt. The value of saving and EARNING what you have disappeared long ago from the mass consciousness, and the time to pay the piper has come.

Gold will hit the $2000 mark. Absent draconian government measures, similar to the 1933 Emergency Banking Relief Act which gave the Secretary of the Treasury the authority to "relieve" (confiscate) the gold of private citizens, prices will surpass $2000.

Get ready. The party's over.

[Rain]

Some believe that, Condor, and time will tell. Your scenario could well be right; but I read another opinion today that said we have a lot of things going for us today that they did not have in the Depression. Our economy is fundamentally stronger than wall street (although $44.7 billion in personal debt could make you wonder). It is possible that our stock market has gotten out of bounds (being polite as it has definitely gotten out of bounds). There may need to be some failures, some downing of the market where people think they lost a lot of money but it's money they actually never had due to the faulty system. When it corrects, if they let it correct, we could have a better understanding of where we actually are.

The future world powers may well not be the United states but China or even India. I thought maybe it'd be Russia butI read that Russia isn't putting into their infrastructure anymore than we have been. They have all been petrodollars with a few getting most of them. They are not building their economy from the bottom up. A few wealthy Russians doesn't make for a healthy Russia.

We could learn from this and rethink our attitudes toward making our educational system work, accepting that some kids need trade schools, rebuilding our infrastructure. We could emphasize real growth and having less frills and less debt. Americans are not innocent in this with the pay someday mentality that has led to refinancing homes to buy vacations. It's not all the fault of wall street and maybe everybody needs to take a look at their own role in responsible living. Fat chance of that though if people aren't forced to do it. We have become a lazy people, entertained on a media that is all about ensuring we stay fat dumb and happy. We weren't always that kind of people. We don't have to be.

And Obama has never said he could do it-- not to win the election or afterward. It's always been up to Americans buckling down, being informed, and demanding the government that actually works to improve lives.

[Skylark]

Socialism is NOT an option. Vote McCain.

[Rain]

and get fascism? *s*