Differences between Senate bill and House bill, the cliffsnotes:
- FDIC covered deposit insurance from $100,000 to $250,000 temporarily
- To cover the loss resulting, FDIC will borrow from treasury
- Renewable energy tax breaks to individuals among other breaks, like R&D credit for business,
deducting state and local taxes on federal tax returns
- Alternative Minimum Tax suspension increased for 1 more year, AMT prevented
the wealthy from not paying taxes, the one where form 6251 should
be filled out if income is >$75,000
I made fun, but someone I work with wants to see the entire excise tax on wooden arrows repealed (he participates in the SCA). From an article on bloomberg:
"The arrows provision seeks to reverse an anomaly in a 2004 law that created the 39 cent excise tax on the weapons. Intended the levy more expensive arrows, the tax also applies to arrows used by Boy Scouts and other youth organizations that cost about 30 cents a piece. Ten manufacturers in nine U.S. states stand to benefit from the change, according to a description of the legislation from Wyden's office. "
I'm sure the Boy Scouts and their wooden arrows are an important issue, but what in the seven-and-a-half-names-for-God does this have to do with bailing out the mortgage industry?
They should just have a reverse Christmas: build a giant Christmas tree and have each of the lawmakers come up and write down what they would like to see under it. Wooden arrows, AMT, raising the FDIC limit (which is actually relevant)
Issues like fixing AMT are huge and have broad support. The only differences are whether to raise taxes or not. Guess what? No need to make that choice now, we'll just stick in a few billion to cover the difference for a while and still NOT fix the AMT, thereby managing to look like we've solved something while borrowing still more money than we can easily pay back.
> they should just have a reverse Christmas: build a giant Christmas tree and have each of the lawmakers come up and write down what they would like to see under it.
when you want to make something really nasty a lot more palatable to joe sixpack or to a politician looking for earmarks
The ugly things being:
1) the financial transactions are still in essence a secret; the public still doesn't have access to what price an asset was bought and sold for. Gee I wonder if the government can keep itself honest?
2) the bailout is still unlimited; the main difference is that now we pay in installments of 100 - 250 billion
3) there is still no mechanism for which the public can get a good ROI on the money we're handing out; according to the bill, it's for the next president to decide
4) there isn't really any reform / bug fixes for the system; it's just a quick and nasty hack for keeping things running in the (flawed) way they were before tanking; which can actually make things a lot worse
Nobody thinks this will actually fix anything. People (us representatives?) hope it will slow the decent to chaos, or in hacker terms, it's a patch to buy 3 three months time to figure out what the hell to do.
As near as i can tell, there are two schools of thought. 1. try to slow the rate of decline. 2. bite the bullet and get the bad times over with quick.
If you look at how people actually voted, only senators up for reelection in tight races (based on fivethrityeight.com) and bullet biters voted no. Senators are not stupid. 75 of them think this is the best way to maintain the status quo - their specialty.
So, the bill is fucked up. however there's a good chance what they're passing is better than doing nothing - if your goal is to maintain the status quo. That buys time to do something more sophisticated.
"That buys time to do something more sophisticated."
to me it's more like doing something to help completely kill our democratic republic and replace it with oligarchy... the sad part is based on the voting, it may have already happened
I sent in a message to my Senator asking for a provision to fund my startup http://shellshadow.com.
I have scanned the final bill, but don't see ShellShadow mentioned anywhere!!! Don't they understand that people will lose their jobs if my startup becomes illiquid?
Edit: I rescanned the bill looking for language like "funds in support of collaborative server support technologies", still nothing!!! Does anyone have the phone number for the lobbyist that works for the Boy Scouts? I could use some advice.
Seriously, I realize I'm being another "not Hacker News" commenter, but it's getting to the point where I really don't want to come here anymore. Around the new year, I was excited about Ron Paul and frequented the politics subreddit in order to get every snippet of news I could. It wasn't long, though, before all of the "world is going to hell" topics just got to be depressing, no matter how true some of them might have been.
It's now getting to the point where coming here is depressing as well, what with all the topics about this financial crisis. I realize that it's an important event that affects all of us, but there are very few things we have control of in this matter. Like it or not, Congress is going to do whatever they want regardless of how much we debate the issue.
So can we please move on and focus on the things we have some control over, like our startups and other programming projects? Is anyone doing any fun and interesting these days? :-)
I don't mean this as a personal criticism (and I agree with the sentiment), but I think the best way to help with this is probably to submit interesting things and crowd out the political news.
(Of course, nobody else seemed very interested in the links I submitted yesterday about the implementation of the Lua VM or JIT compiler, but it was worth a try.)
Well, I was gloriously uncertain about whether the last bill was a good idea or not, and I'm happy to say that I have no clue whether this one is better or worse.
Sometimes it's really nice to not have strong opinions on difficult subjects.
"Gloriously uncertain" describes how I feel about economics in general, never mind the crazy finance economics around this whole mess, but what I do know is that the specific provisions against oversight in the first bill screamed rank corruption to me. I usually take rank corruption to be a clue pointing in the "bad" direction... does any body know if the new one has provisions like that in it?
Course, I do suspect I would be happier if I were neutral about it all like you though! Terrible shame I get worked up over things... me though? I'd like the chance to vote for this guy:
http://www.sinfest.net/archive_page.php?comicID=2948
"11. If someone is pushing conclusions and not identifying the potential weak points in his or her arguments, be suspicious. Also beware of anyone pretending to offer you simple answers."
"15. The crisis is complex and has many causes; there won't be a simple or quick solution."
As much as people seem to think otherwise, we're not giving a free $700B to the financial industry. We're loaning money that needs to be re-payed. Why do we need to loan money? Because credit has shored up and many a company's credit rating has dropped, which makes it very difficult to get credit.
This is all caused by a set of bad bets placed on mortgages. The large majority of these businesses are very sound, and there is still a huge amount of underlying value there. You can be quick to point fingers at the wall st trader types for placing bad bets, but everybody was complicit in this, even (surprise surprise) the government, by lowering mortgage requirements.
Certain companies just can't go out of business. AIG, for example. AIG is connected to almost every company in the US -- they provide all forms of insurance. If AIG went out of business, all of that insurance would be worthless, and almost every company in the US's credit rating would plummet, thereby rendering their corporate paper (bonds) worthless. There are a lot of reasons for depending on operational debt through bonds, even in the most financially sound companies.
We could let other companies fail, but as they do, the market conditions significantly worsen. As that happens,
- Retirement accounts will be worthless, making retirement difficult or impossible for many Americans
- You won't be able to get a mortgage to buy a new house
- Student loans won't be available, making it much more difficult to attend college
- A very significant amount of jobs will be lost as big corporations go out of business, and small businesses are unable to meet their operational expenses (payroll)
Ultimately, that means a very, very rough ride for the average American (on main street, although I hate that term). If you're not going to be affected by this (you're working at a funded startup, or you're a tenured professor, for example), it's very easy to take the "let the market sort itself out approach". But the average American will be hit hard, if no action is taken.
In that sense, nobody wants to give money to the people who caused the problem. And we're not -- there are provisions (however imperfect) in the bills that restrict executive compensation for participating companies. Ultimately, it's also helpful to remember that this is a loan, and that it's not a net $700B expense. In fact, when the economy stabilizes and credit ratings return to normal, the equity position that the government has received in AIG (80%) and participating companies should be very valuable -- these are sound business, with one black spot (mortgage backed securities).
EDIT:
A couple other points of clarification:
- As a matter of fact, the rich pay the majority of taxes (top 1% earners constitute 40% of total income tax, while top 10% earners constitute 70% of total income tax) -- if anything, it's the rich paying for the bailout.
> Certain companies just can't go out of business. AIG, for example. AIG is connected to almost every company in the US -- they provide all forms of insurance. If AIG went out of business, all of that insurance would be worthless,
And they'd stop paying AIG for this now worthless insurance. They'd take this money and buy insurance from a different insurer.
These other insurers even will end up hiring many of the AIG folks.
> and almost every company in the US's credit rating would plummet
Wrong. Their credit rating doesn't depend on who they get their insurance from.
How come there is no money for health care or getting renewable energy done, but there is a ton of money for this all the sudden?
If I was a conspiracy theorist, I would say it's almost like they are setting the stage so that once Obama won, he can't have any money to do universal health care and renewable power. They should pay for this by repelling all of George Bushes tax cuts to the wealthiest 10,000 people in america.
Privatize the wealth but make the public pay the bill when the bets don't pay off? Fuck this shit. The rich that benefited from the deregulation that led to the mess should pay. There should be riots in the streets.
And idiot americans are going to be glued to their TV's, with their brains working the same way they work watching the Brady bunch, while Joe Biden tries not to look smarter then Sarah Palin and thus appear an asshole to the Voting on American Idol part of Americans Brains, while John McCains people play the game of trying to get enough idiots to vote against their economic interests on the basis of identity politics.
sigh how i wish what I'm about to say was common knowledge.
the rich didn't benefit from deregulation, they benefit from regulation as the current bail out plan is just the latest in a long series of capitulations to the established pecking order at the expense of a truly free market (free competition). The established players don't like capitalism, because capitalism allows for large shifts in wealth.
Regulation isn't inherently good or evil. There are good and bad regulations. Hopefully we could get less BAD regulation and more GOOD regulation. Not holding my breath.
Also, what is good for one group may be bad for another, and vice versa. Good luck figuring that one out.
