Unsettling american economic bail out bill

[Thriller]

(avenger, I found you something to really get upset about... GET on this right away!!!)

A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.


Is this starting to sound familiar? Robert Kuttner cuts through much of the gloss in an article in today's American Prospect:

The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc. He plans to retain Wall Street firms as advisors to decide just how to cut deals to value and mop up Wall Street's dubious paper. There are to be no limits on executive compensation for the firms that get relief, and no equity share for the government in exchange for this massive infusion of capital.

Both Obama and McCain have opposed the provision denying any judicial review of decisions made by Paulson -- a provision that evokes the Bush administration's suspension of normal constitutional safeguards in its conduct of foreign policy and national security. [...]


The differences between this proposed bailout and the three closest historical equivalents are immense. When the Reconstruction Finance Corporation of the 1930s pumped a total of $35 billion into U.S. corporations and financial institutions, there was close government supervision and quid pro quos at every step of the way. Much of the time, the RFC became a preferred shareholder, and often appointed board members. The Home Owners Loan Corporation, which eventually refinanced one in five mortgage loans, did not operate to bail out banks but to save homeowners. And the Resolution Trust Corporation of the 1980s, created to mop up the damage of the first speculative mortgage meltdown, the S&L collapse, did not pump in money to rescue bad investments; it sorted out good assets from bad after the fact, and made sure to purge bad executives as well as bad loans. And all three of these historic cases of public recapitalization were done without suspending judicial review.

Kuttner's opposition here is perhaps the strongest language I've seen used, pushing back on this piece of legislation, in any publication of repute, and even here, Section 8 is not cited by name or by content. McClatchy Newspapers also alludes to Section 8 with concern, citing the "unfettered authority" that Paulson would be granted, and noting that the "law also would preclude court review of steps Paulson might take, something Joshua Rosner, managing director of economic researcher Graham Fisher & Co. in New York, said could be used to mask previous illegal activity." Jack Balkin also gives the matter the sort of attention it deserves on his blog, Balkinization.

But elsewhere, the conversation is muted. The debate over whether Congress is going to pass the Paulson bailout package, or pass the Paulson bailout package really hard seems to have boiled down to a discussion of time and concessions. The White House has made it clear that they want this package passed yesterday. Congressional Democrats seem to be of different minds on the matter, with some pushing back hard, and others content to demand a small dollop of turd polish to make the package seem more aesthetically pleasing, at which point, they'll likely roll over and pass the bill. Neither candidate, John McCain or Barack Obama, seem all that amenable toward the bailout, but neither have either demonstrated that they are willing to risk their candidacies to do much more than exploit the issue for electoral purposes.

Sunday morning came and went, with Paulson traipsing dutifully from studio to studio, facing nary a question on Section 8. Front page articles in the New York Times, Washington Post, and the Wall Street Journal detail the wranglings, but make no mention of this section of the legislation. On TV, cable news networks are stuck in the fog of the ongoing presidential campaign.

Throughout the coverage, one catches a whiff of what seems like substantive pushback on this power grab, but it largely amounts to a facsimile of journalistic diligence. Most note, in general terms, that the bailout represents a set of "broad powers" that will be granted to the Department of the Treasury. Yet the coverage offsets these concerns through the constant hyping of the White House's overall message of "urgency."

But one cannot overstate this: Section 8 is a singularly transformative sentence of economic policy. It transfers a significant amount of power to the Executive Branch, while walling off any avenue for oversight, and offering no guarantees in return. And if the Democrats end up content with winning a few slight concessions, they risk not putting a stop-payment on the real "blank check" - the one in which they allow the erosion of their own powers.

Over in the Senate, Christopher Dodd has proposed a bailout legislation of his own, which critically calls for "an oversight board that not only includes the chairman of the Federal Reserve and the SEC, but congressionally appointed, non-governmental officials" and would require the President to appoint an "independent inspector general to investigate the Treasury asset program." In Dodd's legislation, Section 8 is effectively stripped from the bill.

Nevertheless, the fact that Section 8 of the Paulson plan seems to strike few as a de facto dealbreaker can and should astound. The failure of Congress to hold the line on this point would be truly embarrassing. But if we make it through this week with nobody in the press specifically informing the public about the implications of this single sentence - in the middle of a complicated bill, in the middle of a complicated time - then right there, you have the single largest media failure of this year.

__________________________________________________ ___________



This means that if the bill passes with this sentence as part of the legislation, that GW could re-write our entire fiscal policy without any oversight whatsoever.

He is asking for complete autonomy and complete freedom to do whatever he wants with the federal reserve without any checks or balances. No courts, no legislative body, no law enforcement, no FBI, nothing.


Don't wait to hear about it on the news next week. Write an email to your congressman NOW to vote against it.

http://www.senate.gov

http://www.house.gov

If you are a republican, who really does believe all that Jeffersonian ideology, for the love of god don't swallow this **Filtered** pill. It is a complete abdication of checks and balances putting far more power into the hands of the executive office than he should have.

Neither John McCain nor Obama support section 8 of this bill. It's a fundamental violation of the constitution. It can't be allowed to be signed into law. This provision is not meant for John McCain, it's meant for GW Bush.

[Juliette]

Will this provision be extended to the person of the present President?

[[KMA]Avenger]

(avenger, I found you something to really get upset about... GET on this right away!!!)

i already know of this and i know of MUCH MUCH more, trouble is trying to get people to wake up to the fact that they are buying up the economy for pennies on the $/£ and are consolidating EVERYTHING...i have 2 words for whats going on "Totalitarianism" and "socialism".

i'm long past being upset and i am now classing myself as an activist (AKA, a terrorist according to the anti-terrorist laws we have both in the UK and the US).

make no mistake, this bill is only a small part of the global collapse which is all being engineered by the fed and the bank of englands true owners, (also known as the NWO).
its all in the limelight but nobody seems to care enough to look deep enough to see for themselves UNTIL, it affects them directly

Plato said it best, quote in my sig.

thriller, everyone knows my opinion without having to read this post but i would be interested in reading your opinion of the bigger picture of whats going on with the global and national economy's because this is only 1 part of the bigger picture.


edit:

something else i've just found out is that the US govt needs 3.2 billion dollars a day to function and china is not buying up anymore of the US debt putting a huge strain on the taxpayer because they are now footing the bill for all these bail outs as well as the national debt.

the fed reserve is now printing money by the bucket load and lending it to these mega corps and the govt, and are not borrowing money to the smaller banks and businesses...think about whats going on there!

the dollar is going down and will never recover from here on in. this theft of the peoples wealth and the economy by the bank of england and federal reserve owners is happening on a scale thats unprecedented in the history of banking and makes the great depression of the 30's look like a test run of whats coming next.

people laugh when i say the NWO is real, but what is a key part of the NWO agenda?

when (not if) the dollar collapses and takes all other currency's with it the bankers will cry "if we had a 1 world currency, this would NEVER have happened" which is EXACTLY what they did to get the creation of the federal reserve, a depression hit and they said "if we had a central bank this would never have happened".

they use the same formula over and over again and we sheople never learn, maybe when they actually hear for themselves the words "1 world currency" they will FINALLY open their eyes and ears but by that time it maybe to late!

ANYONE who thinks that this is just a storm, something thats going to pass with time, and things will return to how they were is SERIOUSLY deluded and nothing short of a global economic collapse will get them to start asking questions and to get up and join the fight against the NWO.

congress right now is TOTALLY oblivious to whats going on and simply cannot comprehend any of this which is why they seem impotent and incapable of setting things straight...

oh to have an Andrew Jackson in the congress right now

[Juliette]

Sacrifices must be made to regain our former glory.
Not willing to make those sacrifices? Then yes, the world is gloomy.
Willing to make those sacrifices for God and country? Then we will meet in Paradise.



Or something like that.


Anyway, we all know America is doomed. Ever since the Founding Fathers, it has been doomed to fail in the end.
Democracy might be the system that 'works best among the systems', but even democracy has its expiration date. And we, dear friends, are way past it.

Now where is my chieftain-stick? I need to dance around my tribal fire.

[weilandsmith]

maybe when they actually hear for themselves the words "1 world currency" they will FINALLY open their eyes and ears but by that time it maybe to late!

the one world currency idea has already been floated before.

the association of south east asian nations (ASEAN) is thankfully slow in it's consolidation of a trade block. once you get that trade block established, the one currency proposal will eventually follow through. EU is an excellent example of a trade bloc that was turned into something more.

at any rate, the collapse of the US dollar will not be enough to push for one world currency. china will certainly never allow this to happen to them. something more has to happen before the NWO starts the push for one world currency.

in all reality though, one world currency seems far fetched. the sub-cutaneous chip is more likely to succeed. the chip will be your one world currency.

[Cole]

maybe when they actually hear for themselves the words "1 world currency" they will FINALLY open their eyes and ears but by that time it maybe to late!

the one world currency idea has already been floated before.

the association of south east asian nations (ASEAN) is thankfully slow in it's consolidation of a trade block. once you get that trade block established, the one currency proposal will eventually follow through. EU is an excellent example of a trade bloc that was turned into something more.

at any rate, the collapse of the US dollar will not be enough to push for one world currency. china will certainly never allow this to happen to them. something more has to happen before the NWO starts the push for one world currency.

in all reality though, one world currency seems far fetched. the sub-cutaneous chip is more likely to succeed. the chip will be your one world currency.

I hope it would be euros chosen as unique currency!

[[KMA]Avenger]

maybe when they actually hear for themselves the words "1 world currency" they will FINALLY open their eyes and ears but by that time it maybe to late!

the one world currency idea has already been floated before.

the association of south east asian nations (ASEAN) is thankfully slow in it's consolidation of a trade block. once you get that trade block established, the one currency proposal will eventually follow through. EU is an excellent example of a trade bloc that was turned into something more.

at any rate, the collapse of the US dollar will not be enough to push for one world currency. china will certainly never allow this to happen to them. something more has to happen before the NWO starts the push for one world currency.

in all reality though, one world currency seems far fetched. the sub-cutaneous chip is more likely to succeed. the chip will be your one world currency.

in a nutshell, thats what i'm saying, 1 world currency/rfid chip...its all the same crap.

[Thriller]

maybe when they actually hear for themselves the words "1 world currency" they will FINALLY open their eyes and ears but by that time it maybe to late!

the one world currency idea has already been floated before.

the association of south east asian nations (ASEAN) is thankfully slow in it's consolidation of a trade block. once you get that trade block established, the one currency proposal will eventually follow through. EU is an excellent example of a trade bloc that was turned into something more.

at any rate, the collapse of the US dollar will not be enough to push for one world currency. china will certainly never allow this to happen to them. something more has to happen before the NWO starts the push for one world currency.

in all reality though, one world currency seems far fetched. the sub-cutaneous chip is more likely to succeed. the chip will be your one world currency.

in a nutshell, thats what i'm saying, 1 world currency/rfid chip...its all the same crap.

NO its not... You took my real life concern and twisted it into some NWO gloabl take over scheme, can we stick to the facts plz.....

AS for global economics
Oil will be traded in euros soon and hit the american economy with a sledge hammer
china will bail them out(being their largest trading partner) and emerge as the 2nd largest economy in the world. Next to the EU (this is all very long term)

[weilandsmith]

yes it is. if the RIFD chip becomes the be all and end all of being able to buy stuff, then it doesn't matter if you have one world currency or not.

[[KMA]Avenger]

:lol: yes it is. if the RIFD chip becomes the be all and end all of being able to buy stuff, then it doesn't matter if you have one world currency or not.

what weiland said...

thriller, you know this is all wrong, you say as much in the 1st post, i cant understand how you could (rightly so) sound the alarm and yet still refuse to accept that what i've been saying about the NWO is true

i'm not twisting anything, i've been warning people for weeks on these boards and now its all coming to a head and you see the evils happening before your eyes you deny your eyes and the logic of your mind


edit:




that picture tells EXACTLY what "bailout" means!

they are out socializing the socialists!

[spoiler]The shadow banking system is unravelling

By Nouriel Roubini

Published: September 21 2008 17:57 | Last updated: September 21 2008 17:57

Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self­fulfilling and destructive run on its ­liquid liabilities.

But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that ­prevent runs.

A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up.

The next step was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days. The Federal Reserve then extended its lender-of-last-resort support to systemically important broker-dealers. But even this did not prevent a run on the other broker-dealers given concerns about solvency: it was the turn of Lehman Brothers to collapse. Merrill Lynch would have faced the same fate had it not been sold. The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits.

The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders.

The fourth stage was panic in the money markets. Funds were competing aggressively for assets and, in order to provide higher returns to attract investors, some of them invested in illiquid instruments. Once these investments went bust, panic ensued among investors, leading to a massive run on such funds. This would have been disastrous; so, in another radical departure, the US extended deposit insurance to the funds.

The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.

Even private equity firms and their reckless, highly leveraged buy-outs will not be spared. The private equity bubble led to more than $1,000bn of LBOs that should never have occurred. The run on these LBOs is slowed by the existence of “convenant-lite” clauses, which do not include traditional default triggers, and “payment-in-kind toggles”, which allow borrowers to defer cash interest payments and accrue more debt, but these only delay the eventual refinancing crisis and will make uglier the bankruptcy that will follow. Even the largest LBOs, such as GMAC and Chrysler, are now at risk.

We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.

The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.

European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.

Thus the financial crisis of the century will also envelop European financial institutions.

The writer, chairman of Roubini Global Economics (www.rgemonitor.com), is professor of economics at the Stern School of Business, New York University

Copyright The Financial Times Limited 2008[/spoiler]

[Thriller]

:lol: yes it is. if the RIFD chip becomes the be all and end all of being able to buy stuff, then it doesn't matter if you have one world currency or not.

what weiland said...

thriller, you know this is all wrong, you say as much in the 1st post, i cant understand how you could (rightly so) sound the alarm and yet still refuse to accept that what i've been saying about the NWO is true

i'm not twisting anything, i've been warning people for weeks on these boards and now its all coming to a head and you see the evils happening before your eyes you deny your eyes and the logic of your mind


edit:




that picture tells EXACTLY what "bailout" means!

they are out socializing the socialists!

[spoiler]The shadow banking system is unravelling

By Nouriel Roubini

Published: September 21 2008 17:57 | Last updated: September 21 2008 17:57

Last week saw the demise of the shadow banking system that has been created over the past 20 years. Because of a greater regulation of banks, most financial intermediation in the past two decades has grown within this shadow system whose members are broker-dealers, hedge funds, private equity groups, structured investment vehicles and conduits, money market funds and non-bank mortgage lenders.

Like banks, most members of this system borrow very short-term and in liquid ways, are more highly leveraged than banks (the exception being money market funds) and lend and invest into more illiquid and long-term instruments. Like banks, they carry the risk that an otherwise solvent but liquid institution may be subject to a self­fulfilling and destructive run on its ­liquid liabilities.

But unlike banks, which are sheltered from the risk of a run – via deposit insurance and central banks’ lender-of-last-resort liquidity – most members of the shadow system did not have access to these firewalls that ­prevent runs.

A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up.

The next step was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days. The Federal Reserve then extended its lender-of-last-resort support to systemically important broker-dealers. But even this did not prevent a run on the other broker-dealers given concerns about solvency: it was the turn of Lehman Brothers to collapse. Merrill Lynch would have faced the same fate had it not been sold. The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits.

The third stage was the collapse of other leveraged institutions that were both illiquid and most likely insolvent given their reckless lending: Fannie Mae and Freddie Mac, AIG and more than 300 mortgage lenders.

The fourth stage was panic in the money markets. Funds were competing aggressively for assets and, in order to provide higher returns to attract investors, some of them invested in illiquid instruments. Once these investments went bust, panic ensued among investors, leading to a massive run on such funds. This would have been disastrous; so, in another radical departure, the US extended deposit insurance to the funds.

The next stage will be a run on thousands of highly leveraged hedge funds. After a brief lock-up period, investors in such funds can redeem their investments on a quarterly basis; thus a bank-like run on hedge funds is highly possible. Hundreds of smaller, younger funds that have taken excessive risks with high leverage and are poorly managed may collapse. A massive shake-out of the bloated hedge fund industry is likely in the next two years.

Even private equity firms and their reckless, highly leveraged buy-outs will not be spared. The private equity bubble led to more than $1,000bn of LBOs that should never have occurred. The run on these LBOs is slowed by the existence of “convenant-lite” clauses, which do not include traditional default triggers, and “payment-in-kind toggles”, which allow borrowers to defer cash interest payments and accrue more debt, but these only delay the eventual refinancing crisis and will make uglier the bankruptcy that will follow. Even the largest LBOs, such as GMAC and Chrysler, are now at risk.

We are observing an accelerated run on the shadow banking system that is leading to its unravelling. If lender-of-last-resort support and deposit insurance are extended to more of its members, these institutions will have to be regulated like banks, to avoid moral hazard. Of course this severe financial crisis is also taking its toll on traditional banks: hundreds are insolvent and will have to close.

The real economic side of this financial crisis will be a severe US recession. Financial contagion, the strong euro, falling US imports, the bursting of European housing bubbles, high oil prices and a hawkish European Central Bank will lead to a recession in the eurozone, the UK and most advanced economies.

European financial institutions are at risk of sharp losses because of the toxic US securitised products sold to them; the massive increase in leverage following aggressive risk-taking and domestic securitisation; a severe liquidity crunch exacerbated by a dollar shortage and a credit crunch; the bursting of domestic housing bubbles; household and corporate defaults in the recession; losses hidden by regulatory forbearance; the exposure of Swedish, Austrian and Italian banks to the Baltic states, Iceland and southern Europe where housing and credit bubbles financed in foreign currency are leading to hard landings.

Thus the financial crisis of the century will also envelop European financial institutions.

The writer, chairman of Roubini Global Economics (www.rgemonitor.com), is professor of economics at the Stern School of Business, New York University

Copyright The Financial Times Limited 2008[/spoiler]

You've been warning us about many things for months, none this is a substantiation of your paranoia. Nostradamus

and yes The us economic collapse will affect the European market adversely. I agree. But since the eu's infrastructure is pretty solid it will rebound quickly.

[[KMA]Avenger]

1, i'm NOT nostradamus and you don't need to look into bowls of water to see the future when the NWO have written books about what they have been planning.

2, i'm not paranoid, call me educated or don't call me anything please.

3, rebound quickly? lol it will never stop bouncing since the entire worlds reserve currency IS the dollar!

[Thriller]

Nope the eu is developing into the controlling interest in that sector

[[KMA]Avenger]

thats IF the euro survives the dollars inevitable crash and burn, and even if it does survive, believe me when i tell you that the NWO will push for the RFID chip just so the same thing doesnt happen to the euro...

their words, not mine

[Thriller]

thats IF the euro survives the dollars inevitable crash and burn, and even if it does survive, believe me when i tell you that the NWO will push for the RFID chip just so the same thing doesnt happen to the euro...

their words, not mine

won't happen, ill buy you a drink if it does