Bail This Out

Some people think the bail out bill passed by the Senate on Wednesday was unconstitutional, as only the House of Representatives is allowed to initiate tax legislation. The vote was scheduled for Wednesday because Senate leaders expected the House to pass the bill on Monday. When the House failed to do so, the Senate merely attached the bailout bill to another bill (dealing with mental health) that had already passed the House. With flexibility like that, who needs a Constitution?

To make the bill even more politically attractive, the Senate added nearly 300 pages of tax breaks and other special-interest legislation costing $150 billion (partly offset by $40 billion in spending cuts or tax increases elsewhere in the bill). The tax breaks go to such vital sectors of the economy as Puerto Rican rum makers, auto race tracks, bicycle commuters, restaurant remodelers, and makers of “wooden arrows designed for use by children.”

Last week, Oregon Representative Greg Walden could only get a handful of his colleagues to support a restoration of federal payments to national forest counties (most of which will go to Oregon counties). Not to worry: the county payments have been added to the Senate bill. If the House gets stampeded into approving the bill without amendment, Oregon counties will be flush again.

The original Paulson plan was 3 pages long. The bill rejected by the House was 110. The bill approved by the Senate was 451 (52 pages of which were in the original bill on mental health).

Therefore, it is extremely essential to assure that you will enjoy the sex like levitra generic canada to its fullest with the intake of the Silagra pills. Among all the behavioural tadalafil 20mg generic hyperthyroidism in cats symptoms are not very hard to recognize. In spite of cialis tablets india your level of fitness, knowledge or l health goals, you can survive a better and more contented life by adopting these habits. Consult your doctor about alternative treatments if you are being affected. find for source order generic levitra All this leaves undetermined whether the bailout is a good idea in the first place. The basic argument for the bailout is that credit markets are frozen because no one in the market knows how valuable their assets are. Under the “mark to market” accounting rule, owners of mortgage securities are supposed to reduce the value of the securities on their books to the true market value. But if the securities aren’t selling, no one knows what that value is.

The securities depend on the value of housing, but someone recently bought a home on ebay for $1.75. Most buyers are waiting to see how low home prices will fall before making an offer. Eventually, the economy, and by extension, housing prices and credit securities will recover. In the meantime, shall we list the value of all homes as $1.75? Instead, some think the mark-to-market rule should be suspended.

Instead, the essence of the Paulson plan is to put a floor on the value of credit securities by having the federal government buy them. This is supposed to assure other buyers of their value and allow banks to list those securities as being worth whatever the federal government is paying for them. One of the flaws is that the value of credit securities still ultimately depends on housing prices; if the plan doesn’t put a floor on housing prices, it won’t affect the underlying long-run value of the securities.

Some people have proposed that the federal government simply buy homes instead. I’m not convinced that will work either — the total value of overpriced housing is several trillion dollars, so a mere $700 billion might not be enough. Besides, I don’t think it will help in the long run to keep overpriced housing overpriced.

The House is going to vote on the Senate bill today (October 3). Whatever the House does, it is likely we are in for a long recession.