financial crisis

Author and former New York Times reporter David Cay Johnston, whose warning to journalists about taking bailout hype at face value we cited earlier, has published a postscript on the House vote yesterday over at the New Republic’s The Plank blog. His verdict:
Whether you favor the $700 billion bailout or not, the House vote today [...]

Writing in the opinion section of the Guardian (UK), Nobel-winning economist Joseph Stiglitz says what a growing number of economists are saying: The Wall Street bailout plan that House leaders are working to retool and resurrect provides no meaningful prospect of the public’s getting its money back, and won’t fix the problem in financial markets. [...]

The electoral projections site FiveThirtyEight.com offers the most interesting analysis we’ve seen of the bailout bill’s defeat. The defectors on both sides of the aisle tended to be facing tough re-election races back home:
Among 38 incumbent congressmen in races rated as “toss-up” or “lean” by Swing State Project, just 8 voted for the bailout as [...]

If you’re someone who doesn’t typically follow the Dow as closely as recently events have demanded, here’s a pair of handy links to Yahoo Finance’s daily Dow ticker: standard version, interactive version. Or just click on the image below, a snapshot taken about half an hour before the day’s close of trading.

NY Times story.
House roll call.
Minnesota breakout:
Tim Walz (D/CD 1): No
John Kline (R/CD 2): Yes
Jim Ramstad (R/CD 3): No
Betty McCollum (D/CD 4): Yes
Keith Ellison (D/CD 5): Yes
Michele Bachmann (R/CD 6): No
Collin Peterson (D/CD 7): No
Jim Oberstar (R/CD 8): Yes

“[T]he battle between progressives and conservatives is not about a policy of government intervention as opposed to free market policies. Rather, it is a battle between those who want to use the government to benefit the middle and bottom of the income distribution and those who want to use the power of government to redistribute [...]

The full text of the Emergency Economic Stabilization Act of 2008 has been posted–in a format that allows section-by-section commenting–by the invaluable Publicmarkup.org.

Poring over news accounts of the deal struck last night by congressional leaders, the only thing that seems clear is that the widely touted protections against taxpayers getting stuck with the ultimate tab are scant and vague. The pitch on behalf of the deal still emphasizes the potential resale of all the bad paper after the market recovers, but as you’ll see in the analysis pieces highlighted below, it’s unlikely that the sorts of assets the Treasury Department will be buying are ever going to be worth anything. The terms of this deal punt the question of recovering bailout funds from the financial sector five years down the road: “[I]f the Treasury program to purchase and resell troubled mortgage-backed securities has lost money after five years, the president must submit a plan to Congress to recover those losses from the financial industry. Presumably that plan would involve new fees or taxes, perhaps on securities transactions” (NYT).

Likewise, the broad call to provide help to foreclosure-stricken homeowners as part of the package has fallen by the wayside. In place of programs or provisions to rework the terms of onerous mortgages, “[the bailout legislation] calls on the Treasury, as an owner of mortgage securities, to ‘encourage the servicers of the underlying mortgages’ to minimize foreclosures” (WSJ). As guarantees go, that’s roughly the equivalent of promising to pray for a good outcome.

From AP’s Jennifer Loven, word that there’s a tentative Capitol Hill deal on the $700 billion Wall Street bailout. The terms are entirely sketchy, but it sounds like no agreement has been reached on helping distressed mortgage holders, only their bankers’ bankers:
The tentative accord would give the Bush administration just a fraction of the $700 [...]

Purely as a question of self-interest, John McCain’s exit-the-stage gambit makes sense. With cries of impending doom filling the air, he had nothing to gain by sticking around to discuss a subject he ill understands, all the while being pelted with quotations of the Hoover-like things he’s already said and done during his long tenure as a cheerleader of financial deregulation. On Monday of last week, McCain proclaimed the economy “fundamentally strong” even as Wall Street’s latest and gaudiest blowup was unfolding. Since then he’s faced erosion in the polls day after day.