Lawmakers debate pizza vs. Thai

[koganbot]

My second-favorite sentence in the NY Times story on the bailout agreement:

After the overnight drafting efforts on both sides of Capitol Hill — with pizza on the House side, and Thai food in the Senate — Democratic officials said they had completed a unified draft of a bill.

My first-favorite sentence (key ingredient in bold):

They also said that there would be limits on pay packages for executives whose firms seek assistance from the government and a mechanism for the government to be given an equity stake in some firms so that taxpayers have a chance to profit if the companies prosper in the months and years ahead.

Fingers crossed that this works. Waiting for Krugman to tell me what to think, but he hasn't posted yet: but I get the impression that the public conversation about the proposal actually made the likely legislation much better. The executive-pay-package limits are a minor issue - though the limits help to reduce "moral hazard," supposedly. Major is that the public sector gets some authority rather than just providing the moolah. Questions: Is the oversight really devised to be strong and effective and to help create [buzzword alert] transparency? How will the equity stake be determined? (Oh yeah, and what's an equity stake? Can you put it on pizza?)

Comments

[skyecaptain.livejournal.com]

Of course McCain wanted Vietnamese and for about an hour fucked everything up -- luckily they just didn't have the votes.

[skyecaptain.livejournal.com]

(And McCain hasn't even eaten Vietnamese food OR Thai food since March of 2003! He has indigestion problems and likely would have brought his own food anyway.)

[koganbot]

(Don't think McCain was part of the House or Senate conferences, though I don't know. The photo op with Bush and McCain and Obama was later in the day.)

[skyecaptain.livejournal.com]

He was actually in New York avoiding the David Letterman show last night, only arrived in D.C. this morning after the Clinton Global Initiative talk. I need to fire both my fact-checkers and joke-writers.

[koganbot]

AP reporting that lots of Republicans say reports of a deal are premature.

[koganbot]

the public conversation about the proposal actually made the likely legislation much better

Unless it destroys the plan altogether. Now the NY Times is saying that the deal has stalled.

[skyecaptain.livejournal.com]

Sigh: "Washington Mutual, the giant lender that came to symbolize the excesses of the mortgage boom, was seized by federal regulators on Thursday night in the largest bank failure in American history.

Regulators simultaneously brokered an emergency sale of virtually all of Washington Mutual to JPMorgan Chase. The remainder of WaMu, the nation’s largest savings and loan, will be operated by the government. Shareholders and some bondholders will be wiped out. WaMu deposits are guaranteed by the Federal Deposit Insurance Corporation up to the $100,000 limit for each account. WaMu customers are unlikely to be affected."

[koganbot]

Do you suppose the timing was meant to have an influence on recalcitrant Republicans?

[skyecaptain.livejournal.com]

No idea, but it's truly bizarre that the Bush admin and the House and Senate Democrats are now being positioned as buddies while the Republicans -- including John McCain, one of whose major talking points this whole election cycle has been "taking on his own party," and who, according to some reports anyway, is here aligning himself with Republicans who don't identify him as "one of them" by any means -- pretend to be mavericky by suggesting a plan that, from the very little detail I've heard about it, doesn't make any sense at all ("less regulation, more corporate tax breaks"), and was basically a ploy to ruin negotiations at this stage. (The "plan" also looked barely to be one type-written page, from what Barney Frank waved in front of reporters last night.)

[dubdobdee.livejournal.com]

although "transparency" is no doubt being used as a buzzword, it's a fairly good metaphor for what was/is needed. acc.standard market theory* -- viz trades and exchanges where all could see and informedly debate the value of what was being exchanged; ie exactly NOT the situation with a lot of the recent "financial instruments", where not knowing the value layered within was an intentional part of the deal

*which is that the market discovers AND determines the real (ie monetary) value of goods, services, stocks, bonds, in the course of trading them in bulk -- what had happened here was that the market had determined a trading value while affecting to refuse to discover what was contained within

viz whether the fat roll of bank notes was $100 all the way through, or a single $100 wrapped round a wad of newspaper; as long as no one looked inside, everyone could pretend all the rolls were proper money through and through, and a market operated happily on this principle -- the rollsd effectively STOOD for this notional maximal amount, acted as a kind of money themselves**, and were exchanged accordingly -- until the point where {"i promise to pay the bearer" became an issue)

**because, in contrast to the days when an unclipped gold coin was worth the amount of gold contained in the coin, money in the age of the paper note no longer has to be worth IN ITSELF what is claims to be

fundamentally the bailout is STILL stalled over whether it's to be treated largely as a liquidity problem (can the non-transparent murk be kickstarted, trust switched back on, and the remaining unexamined rolls treated as reliabler scrip whatever their content) or largely a solvency problem (should we unroll all the rolls and determine who actually CAN pay; which is to say, wind up all the banks that can't)? the second -- which is the free market capitalist solution -- has the potential to bankrupt america, and bring world markets to a halt; the first is (everyone involved knows) a massive deliberate confidence game, which rewards the dishonesty and incompetence of the wealthy and powerful (= "moral hazard") and simply kicks the problem down the road a bit, trusting that "something will come up" to present as the final guarantor of ability-to-pay (given that gold, silver, oil, developable land, all no longer exist in large enough quantities to provide reliable back-up when the run on the bank restarts...)

[koganbot]

Well, the equity provisions treat this as a solvency problem, right? But of course we don't know what the equity provisions say (and I might not understand them if we did), though Paulson agreed to them eventually. Whereas the rebelling Republicans want to scrap the framework altogether and do something along the lines of guaranteeing mortgages, but no reporter at the NY Times has explained just what that proposal actually is, yet.

[dubdobdee.livejournal.com]

an interesting issue on "transparency" actually is "transparent to who" -- ie if the ordinary citizen (viz you) is saying "I might not understand them" then they really AREN'T transparent

yes, basically the original paulson plan simply looked at it as a "liquidity issue", the revised "equity provisions" revision gestures towards "solvency issue" -- though it doesn't do much about it beyond gesturing -- while the current arguments about what to do with mortgages (insure them; rewrite them) do move towards addressing them (by shifting large scads of money towards the poor -- tho they differ sharply how far towards the poor)

(in other words, the populist approach, right or left, injects the the bailout money at a point where it can "cascade up" through the whole economy) (the right version tends to inject it at middleclass level; the left versionat the lowest house-owner level)

[koganbot]

Well, doing all three at once might not be a bad idea, and today's New York Times editorial says that the key missing ingredient so far is for the gov't to allowing bankruptcy relief for individuals on their mortgages (which goes against that terrible bankruptcy bill of a few years ago); but the Republican phrase "guaranteeing mortgages" doesn't seem to do that. You'd have to rewrite the mortgages, I'd think.

(Here's Krugman's Friday column, though events were overtaking it even as he was writing.)