Sunday, September 28, 2008

Rep. McCotter: House Republicans will vote No on the Bailout

The bailout is not a done deal folks. This was recorded today. Please watch this video:

My Take:

The media is trying to spin this as a done deal. I have heard that the House Republicans are working on another proposal that is based on the 160 economists that think the Paulson plan does not work and is a disaster.

This bailout is being shoved down are throats folks. Giving Paulson $800 billion to use at his leisure will do nothing to stabilize the markets.

If anything, I believe it will create more fear in the markets. Every financial institution will be scared to death if Paulson has this much authority and money. What if he forces weaker banks to sell their bad loans? What if he decides to pull a series of "Washington Mutuals" and forces weaker banks to sell their companies for pennies on the dollar.

JP Morgan bought Washington Mutual for $1 billion folks! He had previously offered a much larger sum when he approached WAMU several weeks ago with an offer. JP's Jamie Dimon has long been coveting WAMU's large deposit base because they have little exposure out west.

Why has the Fed anointed banks like JP Morgan as the "chosen ones" and then proceeded to hand over companies like Bear Stearns and WAMU for almost nothing? Why were Goldman Sachs and Morgan Stanley allowed to survive instead of Lehman Bros and Merrill Lynch?

Every investment bank was over leveraged with too many bad loans. Goldman and Morgan Stanley were going to go down too. Look at their plummeting stock prices after Lehman and Merrill were destroyed. Everyone on the street knew the investment banks were toast because they were all over levered.

When did the Treasury get the authority to decide who lives and who dies in our financial system?

We will be creating a monster if Paulson gets this $800 billion dollars! Who knows what Paulson will do if he receives this much money and power.

What if he turns into King Kong and starts gobbling down the weaker banks by forcing them to mark to market? Or even worse, what if Paulson does the exact opposite and takes care of his banking buddies by grossly overpaying for bad loans and taking them off their balance sheets.

The taxpayer gets stuck with the losses if Paulson overpays.

This will only create more uncertainty in the stock market. One man will basically be in charge of setting a price for all of these bad assets. We don't know what these securities are worth! What if no one wants to buy them at the prices Paulson thinks he can get? We get screwed if this happens!

How is giving one man this much power and money capitalistic? It Sounds more like socialism to me. This is equivelant to hiring dictator to run our financial system.

If you think there is fear in the markets now, you ain't seen nothing yet. Lets hope the House Republicans hold their ground and save our country from this financial catastrophe known as the bailout.

The market is tanking because there is no confidence in the system. No one knows what banks are worth due to a lack of transparency, and the banks don't want to lend to one another as a result.

In addition, the constant intervention into the markets by the government like preventing shorting has only exacerbated this lack of confidence in the system.

Government intervention kills confidence, and this bailout is the mother of all interventions!!!

Please make a call to Congress and say NO to the bailout.


Jeff said...

Republicans caved big time!


Futures are basically flat after the mother of all bailouts. Dollar is down.

If the market doesn't bounce tomorrow its going to be interesting.

The fallout has already started. Faber says the government will need $5 trillion.

We let the cat out of the bag. Lets see what happens

Jeff said...

Australia Markets have already reversed course saying the bailout is not enough not enough:

"MELBOURNE, Sept 29 (Reuters) - Australian shares reversed
early gains on Monday to ease 0.6 percent as banks pulled back on
a view the U.S. government's planned $700 billion fund to buy bad
debt would not ease the global credit crunch much.
Banks were also pressured as the financial crisis spread in
Europe, with Belgian-Dutch group Fortis and British
mortgage lender Bradford & Bingley facing nationalisation,
and German lender Hypo Real Estate arranging a last
minute deal to secure credit."