Some supporters of the bailout bill explained their vote for that package in large part as a reaction to (and intended fix for) the stock market decline. Recall that on Sept. 29, when the House voted "no" on the first version of the bill, the Dow Jones Index dropped to 10,365. Although that was indeed the biggest one-day point drop in U.S. history, that drop was after an unwarranted runup on Sept. 26, much like the one on Sept. 19. The Sept. 29 plunge merely returned the Dow to the direction it had been heading on Sept. 15 when it finished at 10,609. In truth, the market had already been in bear mode for 11 months. By Sept. 15 it had already shed 25% from its peak in mid-October, 2007. The Sept. 29 decline was not the largest percentage-wise in history, and was only another 2% off the Sept. 15 close - hardly warranting a panic reaction by a legislature.
But let's assume that Congress was warranted in passing the bailout bill in order to prop up the stock market. Or was scared stiff by an industry that took them in a backroom and said "give us a trillion dollars or we'll trash all your constituents' 401Ks." Let's assume that the bailout was "about protecting people's retirement accounts and pension plans." How's that working out?
I previously wrote a long, technical post on problems with the 110-page bailout bill, analyzing it as if a client had brought me a contract to review. When the Senate passed the 451-page amended version, I drafted another critique, but did not post til now out of respect for giving space to other voices; also the sands seemed in perpetual shift, with the "crisis" being given a new label daily: mortgage crisis, credit crisis, liquidity crisis, stock-value crisis...Some fact-checking was really necessary. Also, my initial draft was just way too friggin' long!
Having slept on it, still being convinced that the White House shredding operation prior to new occupancy may include a shredding of the economy, and having made attempts to pare down, this (below the fold) is as good a place as any to post the floor speech I would have liked to hear, rather than the many statements in "reluctant support" of the bailout bill:
Today, he has further thoughts on the events of the last week, along with his analysis of the Paulson-Bush bailout Bill that the Senate will vote on tonight.
Prof. Ramirez's analysis is below the fold, published with his permission.
The Emergency Economic Stabilization Bill of 2008 failed today in the House, 205-228-1. 59% of Democrats voted yes, but the bill was disfavored by Republicans by a 2:1 margin. Obviously, the split was not purely partisan.
The Illinois delegation split 9-9-1.
Yes: Gutierrez (D-4), Emanuel (D-5), Davis (D-7), Bean (D-8), Schakowsky (D-9), Kirk (R-10), Foster (D-14), Hare (D-17), LaHood (R-18)
No: Rush (D-1), Jackson (D-2), Lipinski (D-3), Roskam (R-6), Costello (D-12), Biggert (R-13), Johnson (R-15), Mazullo (R-16), Shimkus (R-19)
Rep. Gary Miller (R.-CA) today urged Congress to ignore the voters, saying
"If you just solely rely on the phone calls we're getting from home, listening to people who don't understand the complexities of our marketplace and what we're dealing with here, the easiest vote for you to make would be a no vote today. You have to go beyond that."
With all due respect to all those "fighting for us," I think we activists owe it to ourselves, to our children, to our neighbors, to our country, to call up each and every one of our congressional representatives and ask them point blank the following questions about the bailout bill a/k/a the Emergency Economic Stabilization Act of 2008:
1. Have you read it?
2. Do you understand it?
3. Do you agree with it?
4. Is this the best we can do?
5. Are you willing to be held politically accountable for its consequences?
If the answer to any of the above is no, then a Yes vote should not occur today. For that matter, if the answer to either 1 or 2 is no, the representative should not be in office. I don't expect every rep to read every bill -- there are too many. But some, you have to.
At the risk of being labeled Beyond Wonk, I have read the summary of the bill, the congressional section-by-section summary, and now the entire 110-page bill itself. Much of my life consists of reading the fine print. It's clear that some of the things most progressives wanted to see in there just didn't happen. That's to be expected. More important, tho, I think it's not all that it's stated to be, and at the same time more. This bill seems to me to be a lot like many of the mortgages that people signed, that led us into this mess in the first place. If you don't really understand all the important terms of the paper you're signing, you shouldn't sign it even if someone is holding a gun to your head saying the deal will fall thru otherwise.
I am hard-pressed to see why there needs to be such a rush job on this for the House, or how 48 hours' consideration -- what the Senate is being given -- would kill us.
The last time so important a piece of legislation was passed so quickly, with so little debate, it was called the Patriot Act. Same m.o., where it was in the works for a long time then was rolled out following a crisis. How did that turn out?
My comments on sections where I have questions follows. To make sense of this you may want to open another window and view the bill in PDF or online. Some sites where you can view or download are publicmarkup.org, a division of the Sunlight Project, and nowpublic.com. The publicmarkup site is esp. nice as it provides for section-by-section blogging.
Almost by definition, any bubble is due to speculation. Here we unquestionably had a housing bubble. Folks can differ as to why; I would argue that one big factor is that the economy was being artificially propped up by the real estate/housing sector and too-easy credit for years. Much of the speculation was by individuals, as housing stock started to be treated like corporate stock.
However, cumulative individual condo-flipping, alone, wouldn't have led us to this point. more below the fold
(The story for this week is going to be the bailout. Thanks madame defarge for this timely and thought provoking post. - promoted by ebgill)
On September 24th, Steven Ramirez, a professor of law at Loyola University Chicago, gave a very interesting presentation called "The Subprime Debacle & Subprime Bailouts: Subprime Enforcement, Subprime Accountability, & Subprime Responsibility."
Prof. Ramirez kindly wrote down his thoughts & sent me a copy. Follow me below the fold to read what he has to say about the mess and his proposed solutions to resolving it. After you read this, you'll know more than McCain.
If you agree with his solution, please pass this information on to others and contact your senators/representatives.
Unlike an assault on the environment, choice, or a sovereign foreign country, where we'd all know who to call, and be bombarded with reams of Urgent Action e-mails, readily apparent organized resistance to something like the $700 billion bailout proposal is murkier. There's no well-heeled netroots battalion of mortgage foreclosure victims, about-to-be-laid-off lower-echelon Wall Streeters, or for that matter Future Taxpayers (many of whom aren't yet old enough to vote). The Left tends not to be organized around issues of finance; in fact, coziness with the folks who brought us this debacle tends to be a bipartisan effort. So, in one respect, the backlash against the proposal ought to be seen as the most instantaneous uprising of ordinary taxpayers we've seen in maybe our lifetime.
But there are groups working on these issues, and coalitions are forming, and they are urging action.
