UPDATE: Eyesonthestreet reminds me that Robert Reich also had a scathing review of the anticipated bailout bill on Thursday.
UPDATE 2: Stirling Newberry is back! after a 2 year absence from DK, he has just posted his own diary. (warning, it's very long). Stirling will definitely make you think, and he may just be the most erudite diarist on this blog.
UPDATE 3: Prof. Krugman has just updated his material. He is even more skeptical of this bailout, saying it doesn't even address some of the major issues and may well not work. (Thanks to the commenter who brought this to my attention).
UPDATE 4: Calculated Risk reads the Treasury's "fact sheet" and discovers that FOREIGN INVESTMENT BANKS are eligible for the bailout!* And 2008-vintage securities (what, were those people absolutely nutz!) are included.
*I wonder if China and the petrosheikhdoms, our big creditors, insisted. If so, this is the second time in 2 weeks they have insisted on guaranteed payment by their US taxpayer serfs.
UPDATE 5: Economic blog Housing Wire says that even market participants are growing uneasy about the implications of the vast power grab of Paulson's plan:
While market participants conveyed to HW just how close much of the nation’s debt markets came to collapse last week, many were increasingly uncomfortable with the Treasury’s response after having time to consider it. Others were downright apocalyptic in their assessment of the bailout proposal.
"Buying bad assets from solvent institutions is a really bad idea. I think they need to wait for them to go bankrupt," said one equity fund manager, who asked not to be named. "They had a liquidity crisis on their hands, but that was not the way to fix it."
UPDATE 6: A few folks have asked for a sample letter. Here is a link to a comment from yesterday's "Action Alert" diary with a sample letter.
UPDATE 7: Barack Obama's remarks today:
As of now, the Bush Administration has only offered a concept with a staggering price tag, not a plan. Even if the U.S. Treasury recovers some or most of its investment over time, this initial outlay of up to $700 billion is sobering. And in return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform.
First, there must be no blank check when American taxpayers are on the hook for this much money.
Second, taxpayers shouldn't be spending a dime to reward CEOs on Wall Street.
Third, taxpayers should be protected and should be able to recoup this investment.
Fourth, this plan has to help homeowners stay in their homes.
Fifth, this is a global crisis, and the United States must insist that other nations join us in helping secure the financial markets.
Sixth, we need to start putting in place the rules of the road I've been calling for for years to prevent this from ever happening again.
And finally, this plan can't just be a plan for Wall Street, it has to be a plan for Main Street
Let's cross our fingers and hope that this means there will be pushback against passing without amendment or restriction Paulson's bill.
UPDATE 8: William Greider of The Nation joins the chorus:
Financial-market wise guys, who had been seized with fear, are suddenly drunk with hope. They are rallying explosively because they think they have successfully stampeded Washington into accepting the Wall Street Journal solution to the crisis: dump it all on the taxpayers. That is the meaning of the massive bailout Treasury Secretary Henry Paulson has shopped around Congress. It would relieve the major banks and investment firms of their mountainous rotten assets and make the public swallow their losses--many hundreds of billions, maybe much more. What's not to like if you are a financial titan threatened with extinction?
If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called "responsible opinion....
The people should make themselves heard in Washington, even if only to share their outrage.
UPDATE 9: Dean Baker asks the obvious question about Paulson's insistence that exactly his bill
must be passed NOW!:
Paulson Missed the Bubble and Understated the Financial Crisis at Every Point
Treasury Secretary Henry Paulson is telling Congress that if it doesn't give him a $700 billion blank check the financial system is going to collapse. It would be reasonable for reporters discussing this request to present some background on the track record of the person asking for this enormous blank check....
At every point along the way, Secretary Paulson has failed to see the extent of the crisis resulting from the collapse of the housing bubble. This raises serious questions about his judgment. Reporters should be discussing Paulson't track record in the context of this bailout proposal.
UPDATE 10: The Automatic Earth also weighs in, railing against the unlimited crony capitalism in the bill.
UPDATE 11: Folks, you better be sitting down for this one.... At the Corner at NRO (no I won't link), Newt Gingrich -- yes, I am absolutely serious, that Newt Gingrich, comes out in opposition to this massive transfer of authority to the Secretary of the Treasury and calls for Congressional hearings into the bill.
UPDATE 12: Major investment blogger site Seeking Alpha opposes the bill and asks all his readers and all other financial bloggers to write Congress and stop the bill.
UPRATE 13: Even William Kristol opposes this bill:
A huge speculative housing bubble has collapsed. We’re going to have a recession.... The challenge is to contain the damage to a "normal" recession — and to prevent a devastating series of bank runs, a collapse of the credit markets and a full-bore depression.
Everyone seems to agree on the need for a big and comprehensive plan,...But is the administration’s proposal the right way to do this?.... There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.
And I’ve been shocked by the number of (mostly conservative) experts I’ve spoken with who aren’t at all confident that the Bush administration has even the basics right — or who think that the plan, though it looks simple on paper, will prove to be a nightmare in practice.
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