The Reason the Bailout Didn’t Pass the House

Perhaps you have read the full manuscript of the $700,000,000,000 bailout bill that failed today in the House of Representatives. More likely you haven’t. It will probably bore you, but since it would be the largest bill of its kind ever in American History, you should read it. You can find it here.

I took a couple of hours and read it last night. Immediately I had some serious reservations about it. I wonder if the members of the House who voted against it shared my concerns.

Other than for reasons of Partisan Politics, here is why I believe it was voted down:

1. There were no provisions that required banks and other financial institutions to loan out the money they receive for their bad debts to the average consumer. In all likelihood, they would use the  money on the Secondary markets and hope that the effect trickles down to the average person. Because there is no requirement that the money be used to help the average borrower, this is a flawed document.

2. The money could be used to bail out foreign banks as well as American ones. The reason for this should be obvious if you have followed the travails of our National Debt. When a country is in debt, it must sell some kind of debt instrument to those who have money to lend. For the last decade, the people lending America money have often come from other countries. If we allowed banks in other countries to begin to go under, they might be tempted to sell their Treasury Bills, thereby driving down their value. This would mean that we would have more trouble borrowing to create more debt. That is why the foreign banks are also mentioned in the document.

3. The Oversight Committee, which will be the Watchdog for all of this money being spent, will be chaired by the Secretary of the Treasury. Since he is the one who will also be spending the money, it seems to be a watchdog without many teeth.

4. As I said in my last article, there is no guarantee this will help the markets. At the same time, there is no guarantee that allowing banks to fail is harmful to the economy in the long-term. In Japan in 1999, there were 34 banks in existence when their bank failure started. By 2008, there are four very strong banks in Japan and they are much better regulated. There are a number of economists who say that bailing out the corporate giants right now might postpone their inevitable collapses and make those failures even more devastating in the future. For this reason, many members of Congress are hesitating taking a move that may not have any more effect than the President’s Rebate checks had in May.

12 Errors of Fact in the President’s Speech

The President decided Congress needed help implementing his Bailout plan for the economy. So he spoke to the American public on Wednesday night, hoping that we would be sufficiently frightened or angry enough to convince our members of congress that they needed to jump on the bailout bandwagon without even reading the three-page outline of how to distribute 700 Billion dollars.

Understand once again that I have no horse in this election race. I can’t vote because I’m not a citizen. But I do listen to speeches carefully to weigh what is rhetoric and what is fact.

There are four types of “errors of fact”.

1. Errors of Data: The data presented is not accurate
   
2. Errors of Exaggeration: The data presented is exaggerated
   
3. Errors of Assumption: The assumption is wrong, therefore the conclusion is wrong
   
4. Errors of Omission: What is not said is critical to the facts, therefore the facts are wrong.
   

I listened with my skeptic ears and heard many things I had to look up; I had to see if what I was hearing was true. I heard a fear-filled speech. This speech suggested that there was a “panic of mass destruction” waiting to destroy our economy. So I downloaded the entire speech and looked it over very carefully. I found at least twelve errors of fact in his presentation.

Here are the 12 errors: (taken from the actual transcript)

1. “Credit markets have frozen, and families and businesses have found it harder to borrow money.” The word “frozen” suggests that no one can borrow money at this time. This is patently untrue. It is the secondary lending market (i.e. those who are borrowing money to invest it in leveraged investments) that has dried up. Home sales are up in California from last year. The Federal Government is borrowing money like it is printing it in the basement (oh wait…it is).
   
2. “We boosted confidence in money market mutual funds and acted to prevent major investors from intentionally driving down stocks for their own personal gain.” The government hasn’t done anything yet.

Quietness

Every movement needs a “poster child”. For those not aware of the concept, a “poster child” is someone who fits as a perfect example of a bad example. For instance, the poster child for bad parenting is Brittney Spears. Or the poster child for bad moviemaking would be “Heaven’s Gate” (watch it sometime…I dare you to stay awake for the whole four hours). The poster child for fiscal irresponsibility is this current Congress.

But I have a new movement to proclaim. The “Quietness” Movement. This is a movement I want to start where every person seeks some moment of quiet in each day. I believe it would transform society in a week. The poster child for this movement would be Mark Broder. He was picked up two years ago for driving on a Minneapolis freeway while he was practicing his violin. He was steering with his knees and had placed the car on cruise control. Amazingly, he was not able to manipulate his knees quickly enough to miss

Standing Up to the “Experts”

Here is reason number 72 why I love my wife. She was forced to take another Math course on the journey to securing her advanced nursing degree. She likes math courses about as much as being licked on the mouth by a dog, so she had a certain amount of momentary depression. But as she usually does, she sucked it up and bit into the curriculum with gusto.

On one exam (taken online), she noticed that two of the questions had at least two possible answers, depending on how you interpreted the question. In both cases, she interpreted the question differently than the examiner anticipated, which means she got the “wrong” answers. Even with that, she got a high grade on the test (no big surprise if you know her), but she couldn’t leave it alone. For over a week, she went back and forth challenging the Professor to look at the test from her point of view. I knew it was a hopeless cause. Even if she was right, he was never going to admit it.

Riding the Fine Line

Honestly, I am afraid of judgments. A poorly aimed judgment can bring us all sorts of grief.

From my personal annals, the following story will suffice to show the dangers of judgments. I hope it is instructive or at least cautionary (in the sense that a car accident or a crack addict is cautionary). When I was 8, my dad came home and confessed to my mom that he had blown an entire paycheck at the racetrack. My mother had apoplectic fits for days in a row. This was not the first time dad had gambled away the family’s food money (and rent money and going to the zoo money). But it was the first time that I really formed a major opinion of how I felt about it all.

Years later, I would recall exactly what I said in my heart about him: “When I grow up, I will never hurt my kids like that. I won’t be a jerk