29 September 2008

Rasputin on the bailout

(a) AUTHORITY.—The authority of the Secretary topurchase troubled assets under this Act shall be limited
as follows:

(1) Effective upon the date of enactment of this Act, such authority shall be limited to $250,000,000,000 outstanding at any one time.

(2) If at any time, the President submits to the Congress a written certification that the Secretary is exercising the authority under this paragraph, effective upon such submission, such authority shall be limited to $350,000,000,000 outstanding at any one time.

(3) If at any time after obligations of amounts described in paragraphs (1) and (2) have been made,the President transmits to the Congress a written report detailing the plan of the Secretary to exercise the authority under this paragraph, unless there is enacted, within 15 calendar days of such submission, a joint resolution described in subsection (c), effective upon the expiration of such 15-day period, such authority shall be limited to $700,000,000,000 outstanding at any one time.

(b) AGGREGATION OF PURCHASE PRICES.—The amount of troubled assets purchased by the Secretary outstanding at any one time shall be determined for purposes of the dollar amount limitations under subsection (a) by aggregating the purchase prices of all troubled assets held.

(1) IN GENERAL.—Notwithstanding any other provision of this section, the Secretary may not exercise any authority to make purchases under this Act with regard to any amount in excess of $300,000,000,000 previously obligated, as described in this section if, within 10 calendar days after the date on which Congress receives a report of the Secretary described in subsection (a)(3), Congress enacts a joint resolution disapproving the plan of the Secretary with respect to such additional amount."

(Ras Summary): We're saved...I think. for a few weeks to months anyway, if this bill is passed in anywhere near its current form.

That is if my little Rasputin brain is interpreting this section correctly--and believe me, these guys did their very best to disguise what they are REALLY authorizing here--then it appears that the "Rolling Pool" to launder dead assets which Hank was demanding in his original proposal last week was in fact granted by Congress.

However, it seems that the "Rolling Pool" to launder the dead assets from the failed financial institutions will start out at a measly:

$250 billion

...then increments up to:

$350 billion

...if the President asks Congress nicely.

AND THEN, if the President asks nicely, but this time says "Pretty please?", Congress will allow the "Rolling Pool" to grow to:

$700 billion

...outstanding at any one time.

This, my friends, if I am interpreting the language correctly and Congress passes it as written in the draft, IS the "Infinite Fiat" blank check that Hank demanded--albeit initially doled out in smaller increments.

However, it apparently can quickly grow to the $700 billion OUTSTANDING AT ANY ONE TIME which truly allows it to launder literally the TRILLIONS of fiatscos of dead "assets" from failed financial institutions over time, jsut as I have been telling everyone needs to be done in order to even attempt to stave off "Great Depression II".

And you can bet that the FIRST entity who will be lined up with its hand out will be the Federal Reserve, which DESPERATELY wants to unload the $500 billion or so in (undisclosed) toxic trash accepted from failed (And also undisclosed) Wall Street gamblers.

(Ras Conclusion): This bill, if passed in anywhere near its present form tells me that Congress realizes that the financial system has collapsed.

Furthermore, it clearly shows that the Federal Reserve will now be "made whole".

However, what it DOESN'T tell me is: Who is gonna step up and buy the trillions of fiatscos worth of Treasuries that are gonna have to be issued in order to fund this little laundering scheme over time?:

1. Will the FCBs swallow another trillion or so of U.S. Treasuries? At low interest rates? To keep the export scam running and their workers employed?

2. Will the Fed, now having been "made whole" and gotten rid of all dead, toxic trash, turn around and buy another trillion or so of U.S. Treasuries because now the U.S. taxpayer will be on the hook to pay the Fed back?

3. OR, will taxes be raised to pay outright for the bailout?

4. Or, some combination of all three above?

It's simply too early to tell how this plays out, but one thing is perfectly clear:

Congress blinked.

Because obviously the message was communicated to them that had they NOT authorized "Infinite Fiat", then we would proceed directly to "Great Depression II".


See, we really ARE scroomed.

And Congress just admitted it.

Now, if this bill passes, we might even have a few more months before "Great Depression II" begins.

Enjoy the precious remaining time, my fellow bears.
(P.S. If any more legal/scholarly types than the stupid, ill-educated Rasputin would be so kind as to offer their interpretation of this provision of the bill, I personally would be very appreciative--even if they completely refuted my own assesment of what this language actually says. Ras.)

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