"Economic Stimulus Plan" or "Economic Rescue Plan"?
So it seems the Senate finally came to terms on a bill for some free money. The republicans which warned the democrats not to try and exceed the hefty $140 Billion Dollar price tag laid out by the house quickly compromised on a new $161 Billion Dollar plan which really shows what a fiscal conservative ought to look like! Too funny. The Yahoo Finance wrap up story had a great slip of the pen in the beginning paragraph as well:
Senate Passes Stimulus Plan
Thursday February 7, 5:25 pm ET By Andrew Taylor and Julie Hirschfeld Davis, Associated Press Writers
Senate Approves Economic Aid Plan With Rebates for Older People, Disabled Veterans
WASHINGTON (AP) -- The Senate passed an economic rescue plan Thursday that would speed $600 to $1,200 in rebates to most taxpayers and $300 checks to low-income people, including disabled veterans and the elderly.
The Senate plan would rush rebates -- $600 for individuals, $1,200 for couples -- to most taxpayers and cut business taxes in hopes of reviving the economy. Individuals making up to $75,000 a year and couples earning up to $150,000 would get rebates.
People who paid no income taxes but earned at least $3,000 -- including through Social Security or veterans' disability benefits -- would get a $300 rebate.
Democrats decided on Thursday against insisting on their package. Instead, they agreed to speed the bipartisan measure, costing about $167 billion, to Bush.
"It's our responsibility to pass the strongest bill that we can, and so I think it's tremendous what we'll be able to accomplish," said Majority Leader Harry Reid, D-Nev. "We had to finish this quickly."
So the free cash will be in the mail soon. Check out the sweet deal for the folks making $3000, a $300 dollar check, 10% of their earnings, even though they paid no taxes. It seems living in the USA pays a 10% dividend this year! Not too bad.
I love Mr. Reid's comment "I think it's tremendous what we'll be able to accomplish". The congress gave out money! What an amazing thing to be able to do. Next up for this truly special collection of Senator's will be learning to wipe their own bums! That might take a while though, so do not expect miracles.
The blatant disregard for the US currency and the fiscal health of the country on display by this give away is sick. The problem is that the foreign buyers of our debt do not seem to care one iota. If there will not be any consequence for this kind of thing, why not send out $10,000? Why not $100,000? This ties into the main theme of the night below.
Time to Spit, or get Off the Pot
On Calculated Risk there was an opinion piece from the New York Times referenced that really got me feeling like we may finally be coming to a head with all this debt stuff. You can read the profound piece of craven puke here:
I will use some snippets with commentary to highlight the key notes:
Give the Banks Some Credit
By HOWARD P. MILSTEIN
Published: February 6, 2008
"The losses that have been incurred as a result of the excesses in subprime mortgage lending will take years to work their way through the worldwide financial system, as dozens of banks act to replenish their lost capital by issuing more common stock in the public markets and trading other equity securities to sovereign wealth funds. Until the banks rebuild their capital, they will not have the wherewithal to lend money and support economic growth. If banks of all sizes could regain their capital immediately and easily, it would be a tremendous benefit to the American economy."
The title of the piece already implied trouble. Mr. Milstein starts off with the one of the most silly ideas out there, the mortgage problem is contained to subprime lending. But I would let that slide by itself. At the end of this paragraph we get his unifying theorem on fixing the situation, and it is straight out of fantasy land: If the banks that lent out all this money that can never, ever be paid back just GET ALL OF IT BACK IMMEDIATELY, there will be no more problems. NO CHIT! What a genius. This guy makes a MENSA card member look like some kind of circus clown. Mr. Milstein should be drafted by NASA to work out the long term colonization of Mars with his IQ. Lets try to move on:
"The federal government could make this happen by entering into an arrangement with American banks that hold subprime mortgages, in which homeowners typically pay a low interest rate for two or three years then face much higher payments. Here’s how it would work: The government would guarantee the principal of the mortgages for 15 years. And in exchange the banks would agree to leave their “teaser” interest rates on those loans in effect for the entire 15 years.
This would instantly give the lending banks new capital. As these mortgages would be guaranteed by the Treasury, they would suddenly be assessed, on bank balance sheets, at their original value — and a significant amount of the banks’ lost capital would be restored. Plus, the banks would receive, from most of the homeowners with subprime mortgages, up to 15 years of teaser-rate payments.
By solving the bank capital crisis immediately, this strategy would ensure that fewer families would lose their homes, that fewer neighborhoods would deteriorate because of abandoned housing and that, as a consequence, there would be less downward pressure on local real estate prices and property tax revenues."
It's so easy! All we need is the US government to gurantee home prices and loan repayments for 15 years. That would free up all kinds of capital for the banks. Wonderful, just brilliant. Leave aside for a moment why in the world anyone would ever take out a mortgae that wasn't a pegged teaser rate sort while everyone else had one. Focus instead on the easily floated, and accepted by Mr. Milstein at least, idea that the US Treasury could buy all this stuff. Also consider the hazards facing the banks when the corrupt government that we have gets its hands on basically ALL OF THE PRIVATE BANK CAPITAL. Milstein sums up:
"I propose this idea not because it would benefit our bank — we own none of this troubled debt and, in recent years, have had insignificant losses from real estate lending — but only out of concern for the health of the global financial system. This plan is a way to use our nation’s strength, and not current tax dollars, to keep people in their homes and give banks the ability to resume lending. It requires only that we believe in the future of the American economy and the value of American homes 15 years from now. I do, and this is a belief our government should share.
Howard P. Milstein is the chairman and chief executive of New York Private Bank and Trust, which owns a significant share of stock in The New York Times Company.
First off, if you have assets at New York Private Bank and Trust this fool has the great idea to give ALL OF YOUR MONEY to the government for safe keeping. Stop laughing. Of course his bank has ZERO exposure to any of this, so he is a concerened observer. We really get the idea I want to focus on with his line " to use our nation’s strength, and not current tax dollars". In this I think Mr. Milstein really has a grand idea.
For the US to operate, it must sell off monster amounts of debt around the world with the promise to pay it back. The Stimulus (rescue?) Plan and this kind of massive Treasury purchase of worthless assets is a blatant dare to play the "Too Big To Fail" card. In this, I believe we have reached a Spit or get Off the Pot Moment for two segments of people.
- Foreign Buyers of US Debt - Look guys, I know the USA has been great and all of that. I know you think over time you are going to see some of your money back. But just for a moment take a look at the numbers. Can't get a handle around them? How much is this mortgage fiasco going to cost? If the US is going to bailout the banks over this, you know they are going to try something else, maybe even bigger! Where do you draw the line at too much debt? $ 5 quadrillion dollars? More? Less? I recommend you start to figure on a number because all these types of bailout plans will not be one time deals. Spit or get off the pot foreign debt buyers; either you want to at least act like there is a reality or not. Your choice.
- US Taxpayer - I know, you are tired of hearing that you get it in the neck. This time you need to pay attention. A plan like this takes your money away and entrusts it to the US Treasury to manage. It rewards the same fools that got rich loaning out money that was never coming back and fools that gamed the system to buy things they could never afford. It is Spit or get off the pot time; either throw out of office ANY OFFICIAL (republican, democrat, independant, your cousin) that supports this action or get comfortable with a society run by the government on all levels of your life. Decide.
I wanted to present this in a better way, but I am about out of time. If you are enraged and angry about this kind of junk idea, link my post around the web. Try to get people talking. I think the real inflection point is coming, and it may get decided without as much as 20% of the public even aware that it happened.
Have a good night.