: They Didn’t Pass It!

I thought this was a done deal, it just need a ceremonial vote and it was in. However, it did not go as planned…thanks to the Democrats, in part. The whole thing is just plain dumb, but Pelosi and Reid just keep opening their mouths and mess things up. We do not like this package, it is bad for us and the country as a whole, but at this point it is time that we pass it.

Clearly, given the markets reaction to the idiocy in Washington it has to go through. With the market declining, probably a 1,000 points tomorrow as well, it opens a new can of worms. Minimum capital requirements by brokerage firms. Given that most brokerages are now banks this allows them to borrow at the Fed Discount rate, 1% currently, which is a good thing in today’s market. However, brokerages must have minimum levels of capitalization in order to be in compliance.

Guess what? What was used as collateral where mortgage backed securities. Now you have a credit crisis with no readily available credit to firms that will need to increase their requirements given market volatility. Without this capitalization firms can be in trouble, this may not be a huge problem, but it is now out there. It is a sure bet that the market is going to have a very, very bad day tomorrow. This thing is far from over.

We briefly reviewed the bill today and it was not very good, in our opinion. The compensation restrictions had loopholes that you could drive a truck through. The payout of the bailout was a joke and will do little but boost market confidence at first. There is still no real protection for home owners, a little, but not much and there is no emergency bankruptcy protection for the US citizens. Given the fact that financial services firms just screwed us all wouldn’t you think that they would throw a bone to the US citizen in big financial trouble?

Emergency bankruptcy protection would allow you to go bankrupt without the means test and would allow the bankruptcy to be removed after 3 or 5 years. Giving a bailout to the crooks on Wall St. should allow our government to do something for us. Don’t get us wrong, very few people need to go bankrupt, but given the current situation bankruptcies will be on the rise so protection is needed from the government, like they actually care, but it needed to be said.

Another option is to give this money to us, the citizens, to save, spend on our mortgage or invest. This would boost the economy, create value in the martgage backed securities and we could probably leave some of the bad apples on Wall St. to rot for awhile. There will, even if this thing is passed, be major bank failures in the future, but not passing this thing was a real blow. We expect some significant failures to occur in the next 48 to 72 hours.

Of course, Congress is off for a couple of days…man they work hard…which will cause the markets to take heavy blows over the next 2 days. We are expecting that the best case scenario is a 1,000 loss over the next couple of days and a worst case scenario of a 3,000 point loss. This is speculation, but it is probably a reality. Regardless it will be a bumpy ride to say the least.

So, THANK YOU Pelosi, Reid and Frank for opening your big fat mouths. This is not a republican problem, this is not a democrat problem it is an AMERICAN problem so do what we do best….FIX IT and shut the hell up.