From the proposed $700 billion mortgage bailout:
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.
From the NYT:
The two men [Treasury Secretary Paulson and Fed Chairman Bernanke] have been working early and working late, tracking Asian markets and fielding calls from their European counterparts, then reconnecting with each other by phone eight or nine times a day, talking so often that they speak in shorthand. Mr. Paulson has powered through the long days with a steady infusion of Diet Coke. Asked twice to testify by the Senate last week, he begged off.
“He told me he had like four hours of sleep,” said Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the Banking Committee. But there were limits to Mr. Dodd’s sympathy. “The public wants to know what’s going on,” he said he replied.
Mr. Bernanke (his drink: Diet Dr Pepper) has made a point of leaving the office by midnight to get at least some rest, but friends say the toll on him is clear as well.
My published articles are archived at iSteve.com -- Steve Sailer
Posts
48 comments:
I don't have an iota of sympathy for their college freshman all nighters.
This is the problem with central planning. Who could possibly think that two sleep deprived men, no matter how smart, will make better decisions than millions of self-interested ones. It doesn't make a lick of sense.
Being a constitutionalist is so much easier as a politician: Just look for an excuse to vote against something and you're done. When Ron Paul decides where to vote on something, if it contains unnecessary spending, he votes no. This makes his life simple. No working long hours crafting legislation, no working long hours reading legislation, never voting for legislation he hasn't read. When will these political hack learn: doing something is hard work. Not doing something is easy. The problem is the people who like working hard get to these high positions where they are totally unsuited for just sitting on their hands and doing nothing.
I blame this on politicians not being allowed to have demanding, time consuming mistresses. What is the point of being worth $700 million if you don't spend it.
There is a crisis, go to Tigerhawk.blogspot.com to see some bankers and so on go over what was happening -- pretty much all commercial debt could not simply be sold.
That is a crisis, a massive amount of ill-liquidity. You can't run a financial system if buyers won't buy commercial paper.
Conceivably, this could have shut down leveraged GM, Ford, Chrysler, and other major industrial employers. So it had to be fixed.
The big crisis was the loss of confidence in the private sector that any commercial debts were good -- so that had to be addressed.
Meanwhile most of the regs were paper-pushing Sarbanes-Oxley instead of well, making sure debt went only so far (margins).
Since the Dow went back up again, and markets are breathing a sigh of relief, I think it's worth it long run to avoid another big crash.
Long-term, I am very uncomfortable with giving Paulson or anyone else McCain or Obama would appoint that much power. But we better address the liquidity crisis so valid/good debts can be bought and sold.
When the economy is set to seize up like an old pinto with an oil leak, it's not the right time to be an ideological hard case and spend the next decade at the side of the road.
To belabor the metaphor: After the crises is averted, it's time to figure out why there's no oil, and, indeed, why we're driving a pinto. But right now we need to make sure the engine keeps running.
The root of the problem here is Congress is absolutely, completely, totally, and in all other ways corrupt. They've seen this coming for years, but didn't do anything as a result of bribes and GSE strong-arm tactics. That's why they all ran for the shadows like roaches when the news broke.
Isn’t the good news coming out of this that we won’t have a war with Iran after all? I mean, how can we possibly afford a war with Iran at this point, with another trillion or so dollars going to bail out the insane real estate bubble?
"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."
Presumably when someone sues, the law courts then decide whether to go along with this, or to declare this provision Unconstitutional etc.
automobile repos are way up as well, so maybe the fed will go into the used SUV business as well, while they're at it.
it would be so much easier to just go ahead and announce that from now on, the dollar was backed by ICBMs. if you don't want to buy into the t-bill protection racket, well, it'd be a shame if a horrible "accident" happened in your country's capital.
A lot of important work gets done on short sleep. I am always bemused by the labor leaders during a strike who are ordering coffee and pizza for their long days while negotiating for shorter working hours.
>>>>The root of the problem here is Congress is absolutely, completely, totally, and in all other ways corrupt. They've seen this coming for years, but didn't do anything as a result of bribes and GSE strong-arm tactics. That's why they all ran for the shadows like roaches when the news broke.
I'll click to second this.
We are often hectored by some politician announcing "the worst economy in ____ years" which is code for the few productive individuals left in our economy to do even more and take even bigger risks, thus helping nurture the current crisis.
Dr. Pepper? Diet Coke? I want them chain smoking, on amphetamines, and downing pots of coffee! Seriously, as a college student I only get four hours of sleep during the week. Surely they must feel more pressed to save the economy than I do to study?
testing99,
Markets clear.
I repeat, markets clear.
Commercial paper will move when asset valuations are down to realistic levels. This latest attempt to deny economic reality will require yet another bailout later.
--Senor Doug
Are we supposed to feel sorry for these professional incompetents? Poor dears.
"Anonymous said...
Not doing something is easy. The problem is the people who like working hard get to these high positions where they are totally unsuited for just sitting on their hands and doing nothing.
I blame this on politicians not being allowed to have demanding, time consuming mistresses. What is the point of being worth $700 million if you don't spend it."
I agree. What our government needs is more Warren G. Hardings. Men who will step up to their duty, and when called upon by their country, do nothing except play gin rummy.
"KlaosOldanburg said...
It would be so much easier to just go ahead and announce that from now on, the dollar was backed by ICBMs. if you don't want to buy into the t-bill protection racket, well, it'd be a shame if a horrible "accident" happened in your country's capital."
That was funny. And well put.
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.
Yeah, right.
This is a huge bluff. The banks could easily unload this property on the market, but they are dragging their feet in hopes of just such a bailout.
I am regularly making offers on bank owned property and waiting for for foreclosed property to come on the market.
It is not that the banks can't get this property off their books, it is that they would rather sell it at above market prices to the government, not to people who are willing to pay a fair market price like myself.
The whole urgency thing is right out of the Iraq playbook.
"We can't do a careful analysis of this situation! A bomb could go off on NYC any minute!"
Yeah, right!
I suspect Congress (lead by Christopher Dodd and Barney Frank) will be happy to forego any futher public airing of the corruption they wrought.
After the crises is averted, it's time to figure out why there's no oil, and, indeed, why we're driving a pinto. But right now we need to make sure the engine keeps running.
Yes, because it's always wiser and cheaper to run a car without any oil in it.
What are the IQ's of those guys? Any guesses?
I am not a fan of Naomi Klein (at all), but if you flip the ideological poles of her recent book around you might have something.
What if it's not Shock Capitalism, but Shock Socialism? Every time there's some major calamity, it always becomes a reason to increase the power of government.
Great Depression (New Deal)
1973 Oil Crisis (price controls)
9/11 (Homeland Security, etc.)
Subprime (700 billion dollar bailout)
That is a very partial list. Probably every government agency or big project can owe its funding to some disaster or the other. Not to say that all of them are unnecessary, but it's interesting to see that the growth of socialism requires calamities.
What happens when Social Security and Medicare collapse? What happens if/when the murmurs for Aztlan and reparations become screams and riots?
Sec. 13. The Secretary of the Treasury shall hereafter be referred to as "Il Duce".
You people are falling for the oldest trick in sales, the high pressure pitch. You absolutely must buy NOW, or the sky will literally fall!
So the federal government wants to buy all the bad debt? Are you kidding? Let the banks fall who got overleveraged on bad debt, and the good banks will gobble up a bunch of cheap assets. This is called the business cycle.
Do you really think all the credit on the planet will suddenly disappear? Use some common sense here. If a business really can't run without constant credit injections, it is a sick animal animal and needs to die.
Is that what we are really afraid of finding out, that all of our corporations are sick animals? Let them die, feeding all those cheap assets for the next business cycle.
Do you really think you can paper-money-spend your way to prosperity? Instead of a short and quick economic dip and turnaround, we are rushing to sign on for a long-term stagflation with government expansion to boot?
Let's use our brains here, please! Apparently, it is already too late.
KLAUSOLDANBURG
wrote:
"it would be so much easier to just go ahead and announce that from now on, the dollar was backed by ICBMs."
My friend those ICBM's we have, making us "Jupiter" to the rest of the earth, plus whatever anti-missile defense system we do have in place, are what unfortunately allow us to do so much that is both WRONG FOR US and WRONG FOR THE WORLD.
We are like a bully walking around a schoolyard with two armed thugs against weaponless-kids. We strongarm everybody, including our friends. We would not be outsourcing our economic future if it wasn't for those ICBM's and the belief that we will always have the biggest and best guns I assure you. Those ICBM's are why this nation really doesnt fear such massive debts or foreign ownership of its companies. WHO can come and take our natural resources away? Nobody when you really get down to it.
The root of the problem here is Congress is absolutely, completely, totally, and in all other ways corrupt. They've seen this coming for years, but didn't do anything as a result of bribes and GSE strong-arm tactics.
Wrong, wrong, wrong. Some Congressmen have wanted to do something about this for years, but the majority did not. That's why nothing got done. Congress is PARTIALLY corrupt.
Barney and Chuck are on TV telling us all how capitalism failed and now we need more regulation.
It was the markets that discovered this mortgage debt was worth less than thought. There was no regulatory organization that audited Wall Street and proclaimed the problem. The market, reality, discovered the excesses. the market was correcting and rapidly (five investment banks in the targets for destruction in about two weeks) when now the Government is working to frustrate the operations of the market. The govt is trying to stop or severly delay the clearing up of this mess.
Chief Seattle said...
I don't have an iota of sympathy for their college freshman all nighters.
This is the problem with central planning. Who could possibly think that two sleep deprived men, no matter how smart, will make better decisions than millions of self-interested ones. It doesn't make a lick of sense.
No, but it must be good for their egos to be such superjocks who can go for weeks without sleeping or sneezing. While a crazy old crip like myself who works 4 hours a day and sleeps 12 hours comes up with top-quality software products.
@ simon
Presumably when someone sues, the law courts then decide whether to go along with this, or to declare this provision Unconstitutional etc.
Actually, that provision IS constitutional, except maybe with regard to the Supreme Court. All administrative agencies, and all federal courts other than the Supreme Court, are created by Congress and Congress sets their jurisdiction.
The Supreme Court's jurisdiction is pretty well set by Article III.
anonymous wrote:
We are like a bully walking around a schoolyard with two armed thugs against weaponless-kids. We strongarm everybody, including our friends. We would not be outsourcing our economic future if it wasn't for those ICBM's and the belief that we will always have the biggest and best guns I assure you. Those ICBM's are why this nation really doesnt fear such massive debts or foreign ownership of its companies.
I was, somewhat cynically, suggesting that our stated policy match our behavior. Not to endorse The Gambino Doctrine.
Actually, that provision IS constitutional, except maybe with regard to the Supreme Court.
In other words, it's Constitutional, except for the fact that it's not?
Try selling that to a court.
Ever notice that our country was in better shape back when our decision makers drank coffee in the morning and bourbon at night?
It took four years for the stock market colllapse of 1929 to transform itself -- through a commercial banking system that was then ineffectively regulated and uninsured, whose accounts were imperfectly known and whose reserves were subject to no practical control -- into unemployment of 30%.
And we are all supposed to die if we do not fix investment banks and hedge funds in one week?
Diet Coke and diet Dr. Pepper, pfft. Haven't these tenderbellies ever heard of Cuban coffee?
Wrong, wrong, wrong. Some Congressmen have wanted to do something about this for years, but the majority did not. That's why nothing got done. Congress is PARTIALLY corrupt.
Oh, well excuuuuuuuuuse me. They've only managed to corrupt enough of Congress to get laws they want and stop the laws they don't want. I'll sleep easier tonight!
@ ben tillman
Let me try to be more clear (sorry it's not also concise).
(a) Federal cases start in federal district court. If a suit is filed regarding the government's actions under this law in federal district court, the judge WILL dismiss the case because he lacks jurisdiction, under the terms of the law as written.
(b) The plaintiff will appeal, and the Court of Appeals will uphold the dismissal, because they will agree that the district court lacked jurisdiction.
(c)The plaintiff will then appeal to the Supreme Court.
(d) IF (and only if) the Supremes choose to take the case, they will uphold the dismissal, because they will agree with both lower courts that the district court lacked jurisdiction. Even if they find that they themselves would have had jurisdiction, they are quite unlikely to take the case unless the plaintiff refiles it. (And, finding that they "would have had" is kind of an "advisory opinion" which the Court really doesn't like to issue.)
(e) The plaintiff will have the option of filing directly with the Supreme Court, the only court which may possibly have jurisdiction (because, as I explained before, Congress sets the entire scope of jurisdiction for district and appellate courts). If he does so, the Supreme Court will have to decide whether the law unconstitutionally restricts the Supreme Court's jurisdiction. If the law is found unconstitutional, I think it likely that the Supremes will not throw the whole thing out, but will hold that the restriction applies to all subordinate courts--those over which Congress has full power.
I admit, I may be wrong on that last part, but I don't think I'm wrong on the first several...
Anon -- of course we will have war with Iran. It will just be on their terms, after we lose NYC. Or perhaps Pakistan. Both are unstable, tribal messes where whoever can attack/nuke the US can put their rivals up against the Wall and seize power. See Khomeni, Hostage Crisis, 1979.
Nobody is afraid of us and they're all getting nukes.
The idea of letting the markets work was tried in the 19th Century. It caused crisis after crisis. Hoover did that too, and it did not work. Got us FDR.
People, oddly, are not willing to be the collateral damage for letting markets work things out. They don't want to suddenly be out of work, in a crisis with oil going from say, about $50 a barrel to $100 or so now, in the space of a few years. Cheap oil helped lubricate the economy, and put extra dollars in people's pockets.
"testing99 said...
People, oddly, are not willing to be the collateral damage for letting markets work things out."
And I quite sympathise with people for feeling that. The thing is this: a lot of people suspect that this bailout is not for our benefit, but for the benefit of all those MOTUs (Masters of the Universe) who drove their institutions into the ground, and paid themselves huge bonuses while doing it. We don't like being played for suckers. I don't know who the CEOs of Bear Stearns or Lehman Brothers are, but if they spend the rest of their days delivering pizzas for a living it will be a matter of indifference to me.
I do not trust elected officials like Dodd or Frank, or unelected ones like Paulson and Bernanke (who by the way used to be chairman of Goldman-Sachs) to have such power.
I heard Barney Frank on the news talking about the bailout and expressing his concern for the taxpayer. Yeah, right. When has he ever viewed the taxpayer as anything other than a sheep to be sheared.
testing99:
"Nobody is afraid of us and they're all getting nukes."
At this point we (foreign nations) are all afraid of you (USA), trust me. Even your friends. Even your friends with nukes.
testing:
you are delusional. if Iran or Pakistan get all nukey, they'll hit Israel. they don't even have the capabilities to hit NYC.
People don't want the pain of correcting financial systems. Perople don't want to be put suddenly out of work, or even slowly out of work. People don't want to grow old or get sick or die. But when Washington sells snake oil and says its policies are all gain and dispense with the pain, look out. They are not even making a good case with reason and evidence that their intervention will yield less pain then allowing some investment banks to go bankrupt. They take the power and the money you turn over in fear and use it for their self interest.
it would be interesting to see how the ivy league endowments have weathered the markets recently.
a quick google search turned up an article in the NYT about harvard losing ~7% after the '87 bust.
What's not to like? Paulson has fuehrer-like powers to nationalize private debt and make citizens and their descendants pay through their nose.
It's so outrageous and in your face that it beggars description.
http://market-ticker.denninger.net/archives/587-The-Mother-Of-All-Frauds.html
Steve Setzer --
The provision is unconstitutional on its face. Whether the courts will want to re-write to make it constitutional by giving the Supreme Court original jurisdiction is a separate question, but either (a) the lower courts will declare the provision void and ignore it, or (b) the plaintiff will proceed in the Supreme Court as a trial court.
The idea of letting the markets work was tried in the 19th Century. It caused crisis after crisis. Hoover did that too, and it did not work. Got us FDR.
And the idea of central planning was tried in post-WWII Britain and the Soviet Union. How'd that work out?
The crises you are referring to consisted of corrupt, state-chartered banks allowing multiple claims to the same funds. So the corrupt system was cartelized and has proceeded to spawn a boom-bust cycle that will end when we start burning dollars for tinder.
Good luck getting the troops to march on Teheran at that point, tovarich.
--Senor Doug
martin -
It was Paulson, not Bernanke, who was a CEO at Goldman-Sachs.
http://www.salon.com/tech/htww/2008/01/17/marcy_kaptur_strikes_again/
testing:
you are delusional. if Iran or Pakistan get all nukey, they'll hit Israel. they don't even have the capabilities to hit NYC.
On the contrary, T99 ought to start worrying about "undocumented workers" smuggling an atomic bomb into NYC or one of the other big American cities, where I assume T99 and kinsfolk reside.
"The corrector said...
martin -
It was Paulson, not Bernanke, who was a CEO at Goldman-Sachs."
Yes, you are indeed correct. Thanks.
The provision is unconstitutional on its face. Whether the courts will want to re-write to make it constitutional by giving the Supreme Court original jurisdiction is a separate question
Actually, doesn't the Constitution give Congress the power to decide which laws are within the court's jurisdiction and which are not?
I am regularly making offers on bank owned property and waiting for for foreclosed property to come on the market.
There are actually people out there proposing the government buy up and demolish "excess housing." That'll go over well with the public.
Post a Comment