Senator Clinton is on CNBC right now, she just met with the Fed. She's wanting to resurrect or bring about a new version of the Home Owners Loan Corporation (HOLC). The fact that all existing mortgages could not be renegotiated to make them more affordable makes her uncomfortable in regards to support for the Paulson plan. She wants that in the plan or at least an accompanying legislation passed at the same time.
When asked about Representative Barney Frank's statement about executive compensation. She also came in favor of curbing CEO's of financial companies' bonuses and pay. So long as we're providing tax dollars, she says, then they can't get their old rewards.
" We shouldn't be running a long-term bail out program."
The front month crude oil contract that ends trading this week is up over 10% today. Why, was there some big event? Did terrorist blow up a pipe line or something? Nope, what you got here is a classic short squeeze. The November contract is trading at $109, while this one in question is at $116. You see, a lot of these traders were riding the recent downtrend in oil. In fact, so many were figuring that oil would continue to go down, that open interest (that is all the trades that are still open and have yet to be closed) increased even on Friday! But then, all of a sudden, the November contract wasn't moving downward as much. The traders smelled something odd and soon realized all their compatriots were still short this morning on the week of expiration. So what you have is one group of traders taking advantage of another group of traders.
So is this really a ticket for them to do business as usual? I'm reading on the Wall Street Journal this morning that Goldman Sachs and Morgan Stanley will be converted into regular banking holding companies. So now they are to be like Citibank and Wachovia and Washington Mutual?
For sure, this will pair them down a lot. The days of 40-1 leverage are over for them. The boys and girls at the trading desks at Goldman might be hitting that aged whiskey a little more tonight. No more being capitalist cowboys for them.
It's almost 3am here in Chicago, and the S&P futures are down 9 points, while the Dow is down almost 60, not to mention the NASDAQ 100 being down almost 10. Now perhaps this is simply profit-taking from those two monster rallies last week. But from what I'm hearing, this plan by Paulson isn't a sure fire pass. There seems to be some resistance forming, and I think The Street smells a fight coming.
We are now hearing the United States has a dire emergency and if Congress doesn't act immediately we will face some sort of Economic Armageddon the world has never seen before, which of course they cannot describe.
Rep. John Boehner:
The Most serious crisis the World Has Ever Dealt With
(Wasn't that the Black Plague or maybe WWII?)
Here is Senator Chris Dodd saying Hank Paulson should be given the authority, absolute:
All discussion about the proposed taxpayer-funded bailout of Wall Street banks is centered around the idea of, If we don't bail them out, they will fail.
It seems no one is asking a much more important question of, "Will this bailout do any good?" Or to take this one step further, "Will this bailout do more harm than good?"
We badly need to consider what history teaches us before we repeat the same mistakes all over again.
Lessons From Hoover
People like to look back on FDR's New Deal as a success story of government intervention. These people ignore two important facts: a) that Hoover repeatedly tried to save the Wall Street banks in the preceding years and failed, and b) by the time FDR became president almost every bank in America had already failed. There was almost nothing left to save.
In the last 24 hours, there has been an explosive outpouring of analysis of and revulsion for the Wall Street Bailout plan, from economics professors to financial traders to laypeople. And the verdict is in: Paulson's plan can only "succeed" if the taxpayer overpays for cr***y securities, and then sells them at a discount to Wall Street. Paulson alone gets to decide which Wall Street players win and lose; but it is a certainty that the taxpayer must lose, perhaps $1,000,000,000,000 (that's TRILLION).
I have prepared a round-up of the econo-blogosphere opinion below. The detailed analysis by "Naked Capitalism" is particularly compelling. Mish and Lee Adler (one a Ron Paul acolyte, the other an old fashioned progressive) both encourage a Senate Filibuster. Finally, Stirling Newberry says today and tomorrow will truly show Barack Obama's character.
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