Why must this deal be done by Friday?

[riderinthestorm]

Does anyone know why it is so imperative this deal is done this week? I hear it loud and clearly that "credit markets will freeze", and the "market will destabilize" etc. if this deal isn't done but that hasn't happened so far this week, and surely if the situation is as dire as "they" are saying, why haven't we already crashed?

Yes, we're limping along. Yes, there's definitely some financial pain occurring out there. Yes, we are clearly suffering a recession and it's going to get worse before it gets better.

But why Friday? What's concerning me is this particular deadline, and the rushed process to meet this artificial deadline. Why? What's lurking out there that has the bigwigs so freaked out (including powerful Dems who should know better than to fall for shyte).

None of the major financial playas want any more disastrous occurrences, so everyone has pulled back and are acting prudently, cautiously, which has no doubt averted any potential catastrophes this week.

Well good. So why won't/can't that situation continue for how long? Until the crisis has passed perhaps? That seems as good a gamble as $700 billion.

I'm suspicious frankly. This whole situation feels like someone's personal wealth is at stake and it's not mine. It's people who are a lot bigger than me and they're only looking out for themselves. While the debacle last week was manipulated as a greedy grab by the bigwigs a la Chicago School economics, the bail out now appears as further seizure of even more.

Does anyone have a "bigger picture" as to why this deal with Paulson MUST happen immediately, instead of adopting a wait and see attitude (other than plain old greed on a monstrous scale)?

[Danieljay]

1. my humble opinion: Rush it through before the American people can see whats in it.. just like Iraq

and the patriot act.

Bastards.

[Postman]

5. Exactly. Shock Doctrine. Naomi Klein.

[AllieB]

22. Exactly.

Did you see her on Democracy Now yesterday?

Naomi Klein: “Now Is the Time to Resist Wall Street’s Shock Doctrine”
http://www.democracynow.org/2008/9/24/naomi_klein_now_is_the_time

[shanti]

25. she was great

on bill maher last friday!

[riderinthestorm]

26. She was definitely on my mind when I wrote this OP. Her book is brilliant

and soooo timely in light of our current crisis.

[SammyWinstonJack]

27. Oh yeah. Just like that. Oh and just like george's tax cuts for the Rich and Greedy. He rushed

that too.

[redqueen]

2. It's a scam...

and like all scams, they want to hurry and close the deal before people can start changing their minds.

It's obvious it's a lie that it MUST be done by Friday, because earlier this week, they offered a smaller amount as a starter, with more to come following debate... and they flat-out refused. So yeah... it's no emergency.

The fact that they were working on this bill months ago shows it's no emergency that MUST be done by tomorrow.

[shraby]

3. Because Congress is supposed to adjourn

for the year. If they can get the package done and passed, they can go home to campaign for the election.

[gordianot]

4. I am begining to think it is a planned political stunt to benefit John McCain.

[my2sense]

6. strange how this is all happening at the same time

they are preparing to deploy an active military unit inside the country.

http://www.armytimes.com/news/2008/09/army_homeland_090708w/

[Greyhound]

7. BOHICA America. n/t

[riderinthestorm]

9. Okay, I'm stumped. BOHICA is what? nt

[jmowreader]

13. BOHICA = Bend Over, Here It Comes Again

[Romulox]

8. Phony crisis which doesn't leave time for rational thought. nt

[ikojo]

10. i'm no economist but I suspect it has something to do with

the end of the third quarter and the beginning of the fiscal year for the US government.

The cynic in me says they want to get something done so that credit can be loosened for the Christmas buying frenzy.

[On the Road]

11. They are Clearly Trying to Rush it Through

and it's probably better to wait a week or two.

There are, however, risks to waiting. The Merril/Lehman/AIG actions happened very quickly, in a matter of hours, and took everyone by suprise. If a string of failures is kicked off while politicians are debating the correct course of action, it will be a very perverse outcome.

I am glad Democrats (and conservative Republicans) have contested the plan and forced changes. I hope an acceptable version can be wrapped up soon and that it works.

[riderinthestorm]

16. Why can't we wait until there are failures then, and just assign the money at that time?

And in the amount that is required for that particular failure? Why must we approve $700B upfront, and in the manner that Paulson is demanding?

There's so much opportunity for further greed and skimming by the major players in this deal that it's breathtaking. And I don't trust any of these people at. all.

[On the Road]

23. It is Indeed a Matter of Trust

I have been trying to look at the proposal on its own merits rather than just assume it's all a scam. I understand why it's being proposed this way, but it may not be the fairest, the cheapest, or even the most successful option.

To your question, there are two reasons to intervene now rather than wait:

- It can be more expensive to take over a failed company that to shore it up by taking toxic assets of its books.

- As we saw with Lehman, failures can happen within hours and quickly spread to other companies. The speed at which these happen means that government action may not be in time, even if the agencies are vigilant around the clock.

- The financial system runs on confidence. As long as these toxic assets are sitting on balance sheets, the investment world is sitting on pins and needles waiting for signs of failure. That makes actual failures and actual panic much more likely. Restoring confidence is one of the major goals.

Maybe waiting for failures would be cheaper in the long run. I am not enough of an expert to know which plan is best at reducing risk and taxpayer cost. I just hope Congress makes the right decisions, Treasury is open to modifications, and everyone puts national interest above politics.

[riderinthestorm]

24. I believe I understand why it's being proposed this way too

To benefit the richest members of our society (and by extension BFEE, Carlyle Group and other international consortiums and major money handlers). I'm dead cert they aren't putting national interest above politics - they're only thinking of their own portfolio.

That's the way it looks from this little person's perspective imho. And this pell-mell rush is only intensifying my suspicions that they are trying to ram this through precisely so the scam CAN get done.

From what I'm reading there are other, fairer proposals out there - or at least proposals that don't sink this enormous sum into (what appears to be) a black hole instantaneously. As each day goes on isn't there some degree of confidence gained that the worst of the crisis has been averted? Why isn't that perspective being touted? Wouldn't a bunch of players saying that (like Warren Buffett has done, followed up by actual $5B in cash) make some impact on "confidence" in the market? Pitch it as patriotic to invest in Wall Street by the biggest names out there (and give back some of their illicit gains). Yes, deeply unlikely but at least it wouldn't cost anything to try.

[Aloha Spirit]

12. I just read that the Chinese Govt has ordered their domestic banks to stop lending to US banks....

This could be part of the market seizing up that Bernanke is worried about.
http://www.reuters.com/article/marketsNews/idUSPEK16693720080925

Chinese regulators have told domestic banks to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis, the South China Morning Post reported on Thursday.

The Hong Kong newspaper cited unidentified industry sources as saying the instruction from the China Banking Regulatory Commission (CBRC) applied to interbank lending of all currencies to U.S. banks but not to banks from other countries.

"The decree appears to be Beijing's first attempt to erect defences against the deepening U.S. financial meltdown after the mainland's major lenders reported billions of U.S. dollars in exposure to the credit crisis," the SCMP said.

A spokesman for the CBRC had no immediate comment. (Reporting by Alan Wheatley and Langi Chiang; editing by Ken Wills)

[grasswire]

19. someone said last night that was debunked

it's here on DU somewhere

[Aloha Spirit]

20. hmm, yr right, it looks like China denied the story. we shall see... thanks.

[Greyhound]

21. The report is real and it was on Reuters, since then the Chinese

Government has issued a denial.

Of course, they would never lie.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3510354&mesg_id=3510354

[Virginia Dare]

30. The Chinese have been running Wall Street for a while..

this was probably a threat to Congress, give them the money, or we'll break your kneecaps.

[Marr]

14. Because any longer and public disapproval will be a little too obvious.

They want to scare everyone and pull one last big heist of tax money before they leave office. Very much like a tinpot dictatorship looting the country on it's way out.

If this thing lingers more than a few days, the public will have time to see what a fraud it is and the demands for sensible regulations will limits the crooks' ability to walk off with the money.

[screembloodymurder]

15. It's polical extorsion.

There's a gun at your head!

[Eric J in MN]

17. Con men rush their marks.

Conservative officials are con men.

[rucky]

18. So the legislators won't read the thing before they vote. n/t

[AngryOldDem]

28. Because whatever the markets want, the markets get.

Just finished watching the Dodd presser, and it sounds like it's a frigging done deal.

Paulsen gets the check, Wall Street rises from the ashes, and we're all fucked. Again.

[uppityperson]

29. It doesn't. The only thing I can see is that it might make some investors feel better

But I can't see that as a good enough reason to ram it through asap. They need to be careful, not speedy.