Bailout Passes Senate: Bring Out Your Dead

Overseas markets declined on the news. Time to sell everything in regards to a US assets. This is your exit call.

Senate passes massive $810 billion bailout
WASHINGTON -- In a historic vote, the Senate approved a massive $700 billion rescue plan for the nation's finance system Wednesday night, but only after tacking on another $110 billion in tax breaks to lure votes from both parties.

A strong bipartisan majority rallied behind the controversial Wall Street bailout package, passing it by 74-25.

Stocks drop after Senate votes in favor of bailout
HONG KONG (MarketWatch) -- Asian markets declined Thursday as investors sold off financials such as Mitsubishi UFJ Financial Group and Industrial & Commercial Bank of China after the U.S. Senate passed the financial-sector rescue package.

The Nikkei 225 Average fell 1.1% to 11,242.65 and the Topix index lost 1.7% to 1,082.72, after rising earlier in the day.

The Hang Seng Index lost 2% to 17,649.20 and the Hang Seng China Enterprises Index gave up 2.1% to 8,880.66.

Australia's S&P/ASX 200 index slipped 0.2%, South Korea's Kospi shed 0.9% and New Zealand's NZX 50 index climbed 1.1%.

"I really think what we're seeing is that any positive news is being used to reduce risk. These are long sellers trying to reduce risk," said Benjamin Collett, head of hedge-fund sales trading at Daiwa Securities SMBC in Hong Kong.
Grand Larceny on a Monumental Scale
Economist Dean Baker of the Center for Economic and Policy Research makes the point:

"The near hysterical discussion (count the times ‘Great Depression’ appears in news stories) of the bailout still largely fails to recognize the roots of the economy's current problems in the collapse of the housing bubble. Much of the discussion assumes that the problem is just bad subprime loans and that house prices will bounce back once the credit markets are working properly."

The point is critical, because what the Senate and House leaders are telling us, as are President George W. Bush, presidential candidates Barack Obama and John McCain, and Federal Reserve Chairman Ben Bernanke, is that the bailout is to get the American economy moving again. Credit, they say, is the lifeblood of the economy, and without credit no one can make a move.

But credit is the lifeblood of the economy only because people are broke. Purchasing power in the U.S. has collapsed, and it is getting worse as the recession which has now begun worsens.

People can’t get loans, not because the credit markets are stalled, but because they have no savings for down payments and can’t afford to repay what they wish to borrow. If they could repay their loans, plenty of credit would be available. But there is no money—and no savings—within the economy for it to get moving again. The only possible source is more federal borrowing to prime the pump Keynesian-style. That is what the politicians claim the bailout will do. But it won’t.

Then what is happening?

What is happening is that the Bush administration is engineering a massive raid on the Federal treasury to pay off the people within the financial industry who have been operating the housing scam because the politicians told them to do it. This is hush money.