You can pretty much write what he’ll say in your sleep: Doing nothing is not an option. The costs of inaction outweigh the costs of action. Homeownership must be “preserved.” “Stability” must be achieved. Americans are suffering. We need bipartisanship in this volatile time.
Translation: More special-interest goodies for the next bailout bill!
The AP wire reports:
Top congressional and White House officials, stunned when the House rejected a massive rescue plan for the nation’s economy, scrambled to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets.
“Doing nothing is not an option,” House Majority Leader Steny Hoyer, D-Md., said after seeing the $700 billion emergency package for the nation’s financial systems fail 228-205 on Monday.
With the House not scheduled to meet again until Thursday, congressional leaders and Bush administration officials promptly sought to assess what types of changes could win over enough votes to guarantee success. President Bush planned to make a statement on the rescue plan at 8:45 a.m. EDT Tuesday.
Now, compare how the Agence French Press is spinning the defeat of the bailout — cherry-picking the most dire reactions under the Chicken Little headline, “Financial carnage leaves Americans fearing the worst” — with these two items:
The NFIB’s chief economist, William C. Dunkelberg, said in an exclusive interview this week that the organization’s monthly survey of economic conditions has yet to detect anything that would indicate severe credit stress among its members. Only 2 percent of those polled said credit was their No. 1 problem in its August survey. Credit was mentioned as a problem by 10 percent of those surveyed, which is up from about 3 percent in 2002. But the change is normal. “Is credit tighter? Yes,” Dunkelberg says. “But it’s always tighter at the end of the quarter.”
In comparison, during the 1981-82 recession, 23 percent of small business owners said credit was their No. 1 problem. Even during the stock market crash of 1987, which saw the Dow Jones Industrial Average plunge 22 percent in one day, credit was never a major issue for small companies, he said. “We looked at our data, and the economy kept going until 1991. It is true that AIG stock is down and bank stocks in people’s portfolios may be down, but looking at the fundamentals of the economy, it’s not even as bad as 2001,” he says.
“Bank of America may not be making car loans because it’s short on capital, but I can’t imagine why it would be difficult to get a car loan, unless the borrower is not a good credit risk,” says the NFIB economist. “If you are looking to borrow 100 percent of the retail value of the car, no, but car loans are available.”
According to the NFIB’s survey, the No. 1 issue among small business owners is inflation. Of those surveyed, 18 percent said rising prices, from surcharges and higher fuel prices to rising utility bills and higher materials costs, is their biggest worry. “It’s coming in the back door,” says Dunkelberg.
But not all small business groups share that view. The National Small Business Association (NSBA) says 55 percent of the small business owners it polled in February had been affected by the credit crisis. That number increased to 67 percent in August. The three biggest concerns, however, were general economic uncertainty, rising energy costs, and the rising cost of health care.
Small-firm demand for loans has also significantly decreased in the past three months. About 15 percent of large domestic banks, on net, experienced weaker demand from small firms; however, 5 percent of these banks, on balance, reported increased demand from large and middle-market firms, the NSBA noted, citing Federal Reserve data.
But Dunkelberg says that may be more a reflection of the slowing economy rather than a credit crunch.
Item Number Two: No credit freeze on Kern’s Main Street
Bakersfield residents — qualified ones — can still get home, car and business loans, local lenders say, despite Wall Street’s throes.
“We are open for lending in Kern County,” said Neil Marshall, chief financial officer at Kern Federal Credit Union.
As with other credit unions, home and car loans are a staple for Kern Federal, a $270 million-asset institution that opened in 1949.
San Joaquin Bank, meanwhile, a business bank headquartered in Bakersfield, is also making loans and maintaining lines of credit.
“We’re accommodating all of the credit requests of our customers,” said Bart Hill, chief executive officer of the $878 million-asset bank.
Applicants must be qualified, they say, and plenty of people do get turned down.
“Marginal borrowers just aren’t going to make it,” said Beth Cheatwood, branch manager of Medallion Mortgage, an affiliate of Bakersfield-based mortgage bank Golden Empire Mortgage Inc..
Medallion Mortgage is “still getting applicants like crazy,” Cheatwood said, as local home prices decline.
Bailout fails. World goes on.
More food for thought from a correspondent of Andy McCarthy’s as the mad scramble for a do-something alternative continues today:
… as for alternatives:
– how about reinforcing FDIC to give people confidence in their savings? Maybe more support for money markets?
– How about cutting corporate taxes or cap gains taxes?
– How about buying up (or financing the purchase of) the AAA securities that currently are having trouble moving but are not “toxic,” in order to increase liquidity and help with possible insolvency for healthier institutions rather than the old line investment banks?
– How about doing something about the silliness of the $62 Trillion Credit Default Swap market (e.g. the margin requirements, etc…)?
– How about immediately changing mark-to-market rules?
– And – heaven forbid – how about belt-tightening in Washington? Don’t hold your breath – but imagine what a signal that would send – a freeze in discretionary spending, a moratorium on earmarks and a real plan to educate America about entitlements and talk about the need to get our fiscal house in order.
It is very concerning how much the Washington Republican / Conservative establishment is jumping in line behind this bill because, we are told, we “must do something.” Since when is that EVER a good thing in Washington?