As did many others, who have convinced themselves that the unknown of doing nothing is more damaging than what they did.
That being said, this 452 page abomination needs to be sent to the Capitol Hill shredder by the House.
It is obvious that the Senate has no backbone, and hasn’t for a very long time.

* Temporary Increase In Coal Excise Tax: Funding of Black Lung
Disability Trust Fund
* Tax Credit for Carbon Dioxide Sequestration
* New Qualified Plug-in Electric Drive Motor Vehicles
* Exclusion From Heavy Truck Tax for Idling Reduction Units and
Advanced Insulation
* Transportation Fringe Benefit to Bicycle Commuters
* Extension of the Economic Development Credit for American Samoa
* Extension of Mine Rescue Team Training Credit
* Seven Year Cost Recovery Period For Motorsports Racing Track Facility
* Tax Incentives for Investment in the District of Columbia
* Permanent Authority for Undercover Operations

It also repeals a 39-cent excise tax on wooden arrows designed for children.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aKd0vyGN8L2k

McCain voted for this.

IT”S CONGRESS!!!!

FLUSH THE TOILET!

There is ample obvious evidence that congress did not do the job we hired them to do! FIRE THEM TODAY!

I dare any of you to go tell your boss tomorrow to go suck an egg!

Congress did not get the message two years ago when so many got turned over, and they still do not get it!

Vote no for ANY incumbent over two terms! Oh and especially if they voted to hand over a trillion dollars with little oversight! The Dems could not pat themselves on the back enough over their, “victory” and spouted all the changes they were going to make in 100 days. To date 700 days later they have accomplished NOTHING EITHER!

Sans that, load up on ammunition of the accurate kind. Cuz change might become more forceful than this society is used to.

This is an overly-simplistic and in some ways inaccurate example that doesn’t really fit any reality I recognize and glosses over many issues that are highly relevant.

First of all, “no ready buyers” doesn’t mean they mark a bond to 0 per se. That’s just not how it works. Typically bonds are marked using some combination of models, quotes & bids for similar bonds, perhaps by benchmarking them to an index (ABX), etc. So the mere fact that such-and-such bond has “no ready buyers” doesn’t mean it gets immediately marked to 0, like, at all.

Second, it’s unlikely CalPERS (or anyone else) owns any bonds marked fully at 0 unless that bond is clearly going to take a full writedown. If a bond is marked at 0 it’s actually not a problem in the context of what Paulson is supposedly trying to fix, because something marked at 0 takes up no balance sheet!

Third, just because a bond is backed by “$5 million in real estate” doesn’t mean it has any such “inherent value”. This depends on the nature of the bond: where is it in the sequential-pay structure? How much credit support does it have? A bond backed by $5 million in real estate could easily have very little value, i.e. if there are 5 bonds ahead of it in the pay structure that are each due to receive $1 million. Also, there’s no such thing as “$5 million in real estate” per se, because like anything else, the value of real estate can change. What is worth $5 million today could be worth $3 million when the bond is due to be paid. Furthermore, when the mortgage defaults and the collateral needs to be seized & sold to pay off bondholders, it is rare to recover the full value of the bond. Typical quoted recovery rates are something like 60%. So let’s say what was originally $5 million in collateral is foreclosed and sold and $3 million is recovered. If losses are allocated in such a way that a bond is subordinate to other bonds due to receive at least $3 million, guess what? That bond gets squat.

So to try to clean up & salvage your example a bit, we have to imagine that CalPERS owns a $5 million bond that was originally AAA but is, say, a last-cash-flow senior, 07-1 vintage and is currently marked at, say, 60, because the bid has dried up & if losses reach the seniors, this bond will be hit (losses aren’t allocated pro rata in this deal). So they have taken $2 million loss already.

Then we come to the part where Treasury buys it, supposedly to help CalPERS according to your story (? I thought it was to help banks?) and we hit a snag because it’s still not clear what prices Treasury intends to pay. If Treasury really does conduct a reverse-mortgage, then most likely they’ll buy this bond or a similar one from someone for less than 60, because after all, a reverse-auction is supposed to find the best (=lowest) price out there. So if anything, the Treasury plan and auction causes Cal-PERS to take a further writedown on their bond. Unless they themselves are the sellers, in which case they probably had to bid under the market, i.e. under the current mark, in order to win the auction. So again, they take a loss vs. their current mark of $2.5mm.

But perhaps they’re happy with that because it’s cash in hand instead of a $2.5mm bond maturing in, say, 5.5 years. But wait, supposedly (according to Mr. Paulson and various commentators who echo him) all these bonds have ‘hold-to-maturity’ values that are higher than their current marks. If we believe this then CalPERS could just hold onto the bond (it is, after all, a retirement fund!) and make far more than the Treasury auction price.

So how does that help CalPERS again? Treasury ripping their face off helps CalPERS? And so this is why we should support the bailout proposal? So Treasury can steal money from the pocket of our retirement funds?

But maybe I’m wrong. In fact I can think of at least two ways that my counterexplanation above could be wrong:

1. Maybe Paulson has been lying to us and will not really find prices via reverse auction like he says. Maybe he’ll intentionally overpay, one way or another. Who knows? The “plan” is so vague that it’s not clear to me how prices will be chosen, and he *does* babble about somehow paying the hold-to-maturity price from time to time, which it’s unclear how he’d achieve via auction. (Do auctions find the best price or don’t they?)

2. Maybe Paulson is wrong that the ‘hold-to-maturity’ price for most of these bonds is somehow far higher than the current ‘fire-sale’ mark in the first place. In fact, looking at various bonds, I don’t really see much evidence that bonds are somehow being marked ‘too low’ (as most commentators tend to assume). When a bond’s collateral is crap then a low mark is accurate, not ‘fire-sale’. Many of these bonds are simply crap.

In either case, then yes one can imagine CalPERS being happy unloading their bond to Treasury for intentionally-too-much cash. On the other hand, if that’s the case, then all the people going around saying this plan will make money for Treasury, are full of it.

You can’t simultaneously underpay for bonds (via auction, so as to reap the hold-to-maturity value) and overpay for bonds (we’ll give banks the hold-to-maturity price! This will help balance sheet!). Yet from what I’ve heard this is the story Paulson has been selling, and many commentators have fallen right in line and echoed the same paradox.

And then they tell me I’m an idiot for not supporting the bailout, and that I “just don’t get it”. Ah, irony.

Has anyone anywhere come up with an actual probability that no bailout will lead to a depression or really bad recession?
What are the odds?
What computer models did they use?
Are their models somehow better at predicting the future than, say, climate change models?

This is the very same Calpers who dictates social policy to the boards of the various companies in whom the invest, or consider investing. These demands eat into the profits of these firms, and yet Calpers is supposed to maximize ROI. Now that the social engineering of FM & FM has come back to bite them (I’m assuming they’ve invested), they can just choke on their own hubris and malfeasance.