Tag Archives: wall street

Who’da thunk it? WaPo pins crisis on Democrats

An editorial in Monday’s Washington Post sets the record straight — at long, long, long, long, long, long last — on who bears the lion’s share of the blame for the current economic collapse. (Link via Captain Ed.)

Now that the worst is over and people have settled on the Bush Administration and John McCain as the blameworthy ones, the WaPo has jumped in to save the day with their brilliant revelation (which the hobos of the blogosphere have been screaming at the top of our virtual lungs for weeks now) that everybody’s got it precisely backwards.

They’ve finally clued in to the fact that the culprit was the deliberate loosening of lending standards by Democrats so that poor people (read: people to whom no sensible lender would ever think of issuing a mortgage) would be able to take out a home loan, regardless of ability to pay the thing back.  Not only that, but Bush and McCain in particular pushed more than once to exercise tighter oversight over this lax new policy’s primary vehicles, Fannie Mae and Freddie Mac.  These efforts at better regulation were stiffarmed at every turn by Banking Committee Democrats in the House such as Barney Frank and Maxine Waters, and those in the Senate such as Christopher Dodd and — the horror! — Barack Obama.  Dodd and Obama each took more campaign money from Fannie and Freddie lobbyists than all 98 of their Senate colleagues, which is an achievement for Obama, who has been in the Senate less than four years.

In Hot Air’s “Quote of the Day,” Allahpundit cites Orson Scott Card (described in an Editor’s Note as “a Democrat and a newspaper columnist, and in this opinion piece he takes on both while lamenting the current state of journalism”):

If you [in the journalistic trade] want to redeem your honor, you will swallow hard and make a list of all the stories you would print if it were McCain who had been getting money from Fannie Mae, McCain whose campaign had consulted with its discredited former CEO, McCain who had voted against tightening its lending practices.

Then you will print them, even though every one of those true stories will point the finger of blame at the reckless Democratic Party, which put our nation’s prosperity at risk so they could feel good about helping the poor, and lay a fair share of the blame at Obama’s door.

Read the whole opinion piece, because it’s a scorcher.

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Crap Sandwich Update: Fries with that?

The crap sandwich has gone down the hatch.  After Senate approval, the House bought the bailout bill 263-171. Unsurprisingly, my congressman voted to open wide.  President Bush reportedly has just signed the bill.

Party’s over.

UPDATE: Wall Street celebrates with a selloff.  Dow falls 157 points.  Well, that wasn’t supposed to happen, was it?

UPDATE II: Instapundit links to a summary video from the NRCC, who must be clawing at this vote like a lifeline from heaven (I’m relieved to see somebody with election-related clout has woken up and decided to run with this…John McCain, call your office):

Actually, I’m fairly impressed with how Rep. Artur Davis (D-AL) appears to have come clean (and fairly glad that the NRCC gave him credit for it, even if only to show the contrast to his colleagues).

UPDATE III:  Allahpundit’s got ahold of the ad, and his thirst for blood is rising.

Well, THAT wasn’t supposed to happen, was it?

After the much-ballyhooed thumbs-up given to Crap Sandwich 2.0 by the Senate last night, Wall Street appears not so enthused.

The Dow Jones average greeted Harry Reid’s “middle class tax relief” spin with a drop of 348 points today, along with a NASDAQ loss of 92 points.  Democratic Rep. Jim McDermott of Washington State has sent a shock wave through the House by announcing his intention to attach an enormous and hideously expensive economic stimulus bill to the new bailout bill, angering House Republicans (and not just a few Blue Dog Democrats) who already think the bailout is too pricey and intrusive.  (Heaven forfend the Senate should be the only body permitted to inflate the spending in this bill to cosmic proportions.)

Are the Republicans being set up again?  House Democrats appear bent on throwing bill after unsupportable bill at them, daring them to vote them down.  My suggestion?  Call their bluff every time.  I’d much rather Congress fail to act and come under further pressure, than have them pass a bad law that will relieve pressure on them for a good one.

Bailout goes down in flames

The House is voting on the bailout bill (HR 3997) from last weekend, and looks ready to vote it down.  With all but one vote in, over a third of Democrats and two-thirds of Republicans are voting “nay,”  for a final tally of 207 in favor, 226 against (and 1 Republican “not voting” yet…wonder who that is?).  The Democrats are keeping the vote open, and there is some arm-twisting still going on (I’ve seen two votes switch back over into the “yea” column), but it’s taking a while and they may just decide they can’t overcome that gap.

Pundits are saying re-election fears may have put the bailout opponents over the top.  Democrats had hoped for a threshhold of 100 Republicans voting in favor (and were reasonably sure they had it after the deal was struck), and they wound up with a measly 66.  Now we know why Boehner, Blunt, and the rest of the House GOP negotiators were so wary of openly endorsing the final deal.  They knew that their caucus (and likely a good number of Democrats as well) was getting a huge amount of negative mail and phone calls from constituents telling them they were toast if they voting for this monster, and added to the House GOP core that was dead-set against a “socialistic” bailout in principle from the beginning, that sounded the death-knell for the bill.

The Dow, as I write, is down by a margin pushing 600 points in heavy trading.  The traders that kept their powder dry last Friday in the hopes that a bailout would be forthcoming this week are now scrambling to ditch their financial stocks.  Captain Ed has more.

UPDATE: Cavuto on FNC is saying the defeat of the bailout may turn out to be a good thing.  Painful, yes, but a net positive.  A lot of dead weight so far has been shed by the banking industry and larger financial industry.  It hurts to drop all that dead weight at the same time after years of mismanagement and shifty accounting keeping it on, but dropping it is not a bad thing in the end.  Plus, word is a bunch of experts who “know the nature of these troubled assets better than all of us combined” believed the $700 billion in this bill wouldn’t have been nearly enough (possibly as much as twice that would have been needed to shore things up).

UPDATE II: Dow is back “up” to around 475 in the red.  A couple of “yea” votes saw the writing on the wall and switched, so the voting has closed with the tally at 205 in favor, 228 against. (Wonder who the not-voting member was?  Will post the roll call when it’s posted.)

UPDATE III: White House reps are coming to the podium to say they’re “very disappointed.”  Bush’s legacy was fragile enough going in, but the general consensus up to now has been generally that history would be kinder than the news.  This could kill that consensus dead.  Over on the Hill, Adam Putnam, House GOP conference chair, Minority Leader John Boehner, and key negotiator Eric Cantor are blaming the Speaker for taking a nasty partisan tone on the House floor before the vote (Cantor has the text of her speech, here in my hand); Minority Whip Roy Blunt, the head vote-counter for the GOP, is saying that probably cost her about a dozen GOP votes in favor.  All are stressing that 94 Democrats voted “nay.”  Dow back down to 540 below.

UPDATE IV: Here’s the roll call.  The holdout, who appears to have stayed a non-voter, is Rep. Jerry Weller (R-IL).  Dunno what his problem was.  Word is the Dems weren’t expecting more than 40 defections; getting more than twice that must have hurt.  My rep voted “yea.”  Still looking for the text of Pelosi’s speech.

UPDATE V: Still don’t have the text, but here’s the video:

OK, yeah, that would p*** me off too.  Was she really trying to get this passed?  She must have known that keeping House Republicans on board was key; did she think this would do that?  And why’d she feel like she had to say, “Democrats believe in a free market,” as though that weren’t understood in a free-market economy?  Memo to the Speaker:  if you have to point out to us that you’re not a party of socialists, that’s not a good sign.  (Incidentally, is it me, or doesn’t she sound like Dr. Evil whenever she says “seven… hundred… billion… dollars” like that?)  Quite a few commentators are baffled as to why she called the vote in the first place when she must have known the votes weren’t there; it would have been smarter to keep twisting arms until she had, at the very least, more Democrats behind her.

UPDATE VI: The Democratic leadership has held their press conference, predictably blaming the other side.  They’re mad at the GOP for not being able to scrape together another 12 votes (Rep. Barney Frank is pouring on the snark in that respect).  I’m a little mystified that no reporter is asking how they themselves, the party that ostensibly didn’t have grave reservations about the bailout, managed to lose fully a third of their own.  The Dow is down well over 700 points; NASDAQ is down about 180; S&P down about 100.  Over 1.3 billion shares have been sold off so far on Wall Street; fewer than 17 million bought.

UPDATE VII: Dow closes on a 777-point loss on frantically heavy trading.  While percentage-wise not even in the top ten biggest drops ever, it does take the number-one spot in terms of absolute one-day point drops in history.

Setback

Oh, dear.

A grand financial summit at the White House just concluded.  Participants included President Bush, presidential candidates John McCain and Barack Obama, and members of the respective party leaderships from both houses of Congress.

It did not go well. (Link via Hot Air; see update.)

Blame is flying, with everyone alleging that the other guy never intended to negotiate in any semblance of good faith.  If this is the shape negotiations are in come 9:30 tomorrow morning, look for the market to take a nosedive.

Deal Update: Agreement in principle?

Sen. Chris Dodd (D-CT), last seen just yesterday thundering in Banking Committee hearings that there was no way Congress would come to terms with the White House and Cabinet on a bailout plan for Wall Street (“What they have sent to us, this is not acceptable!”), just executed an impressive about-face.

Sen. Dodd just announced that Democrats and Republicans in Congress had reached an “agreement in principle” on a bill to pass in the House and Senate and send to the President to sign.  Rep. Barney Frank (D-MA) commented that “there really isn’t much of a deadlock to break.”

What a difference a day makes.  Hot Air has more.

My own input below the break.

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Changing market rules in mid-game…UPDATE: The larger question

One of my favorite free-market economists, CNBC’s Larry Kudlow, writes that it was a “terrible idea” for SEC Chairman Chris Cox to ban short selling in an effort to keep the stock market from sinking even lower.

Short selling, or trading stocks in such a manner that you are effectively betting that the share price will decline, provides a balance to traders who (all too often) put too much faith in corporations’ own friendly reporters and media releases.  In Kudlow’s words, short sellers “keep the market honest,” preventing stock prices from inflating past their realistic worth.

In a broader sense, even a relative economic dilettante like myself knows that banning short selling, even for a little while, is an improper government intrusion onto the market and a general betrayal of free-market principles.  Once, back when Chairman Cox was Congressman Cox, he was a staunch defender of those principles, a solid Friedmanite.  It’s becoming apparent why John McCain was thundering for Cox’s ouster yesterday.

Click the link above and read Kudlow’s post, including his assessment of what Cox should have done.  An UPDATE addressing a bigger question not addressed above follows below the break.

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