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""Hundreds of billions of dollars are going to bail out FOREIGN INVESTORS. They know it, they demanded it, and the bill has been carefully written to make sure that can happen." - Brad Sherman , D-California"

Paulson and Bush have threatened to veto the bill if this provision is removed.

Call your representatives!

So we are going to be taxed WITH INTEREST to bail out foreign banks and wealthly investors!

Also underlying assets securing the mortgages and derivatives involved do not even have to be in the United States.

Here is the definition of a "troubled asset" from the bill:

"(9) TROUBLED ASSETS.—The term ‘‘troubled assets’’ means— (A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability;

and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress."

Notice that conspicuously missing from the definition is the requirement that the asset's underlying thing (that is, the property that was mortgaged, etc) lies within the United States.  Also note that Treasury must tell Congress if they add "new types" of debt, but that Congress has no right of review or censure.

Thanks to Karl Denninger and others for pointing this out.

Originally posted to Luvvinit on Wed Oct 01, 2008 at 04:53 AM PDT.

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Comment Preferences

  •  I add that Bloomberg TV yesterday consisted of (4+ / 0-)
    Recommended by:
    Cassandra77, goinsouth, kurt, Losty

    mostly foreign central bankers and investors whining for this bailout.

  •  This is probably quite important (0+ / 0-)

    since foreigners are key in propping up our massive debt . . . we for sure don't want China to lose faith in us!!

    •  China lose faith? (1+ / 0-)
      Recommended by:

      Best way to do that is torpedo the value of all the dollars they hold.

      Paulson-Pelosi will do exactly that.

      When it looked like it would pass last week, the dollar dropped $.04 in a day--an incredible plunge.

      On Monday, it was back up $.025.

      Send 'em a message:
      Withdraw $700 from the bank

      by goinsouth on Wed Oct 01, 2008 at 05:20:17 AM PDT

      [ Parent ]

  •  Well, if I'm a German banker (1+ / 0-)
    Recommended by:

    and I bought large amounts of S&P rated AAA paper and I can't even sell it for 20 cents on the dollar and the U.S. system can't do anything about it, I would seriously consider never investing in the United State again, assuming I manage to survive the massive hit to my balance sheet.  And if there was a bailout on these assets that somehow magically excluded foreign banks, I'd be furious and probably simply never invest in the United States again.

    It's a global liquidity crisis, not just an American one.  And the U.S. is the source of the problem.

    Should we perhaps give preferential treatment to American institutions?  Should we be more aggressive about pursuing equity warrants with foreign banks?  Perhaps.

    But leave UBS and Deutsche Bank in the lurch and America will become a worldwide pariah.

    Yes, Santa Claus, there is a Virginia. And it's going Democratic.

    by Anarchofascist on Wed Oct 01, 2008 at 05:04:22 AM PDT

    •  Bailout won't solve that. (0+ / 0-)

      It will exacerbate it.

      Trust has already been lost.  Continuing on the same path will do nothing to restore it.  This bill is the opposite of transparency.  Hank's pals benefit.  Nobody else because there are no standards.

      Send 'em a message:
      Withdraw $700 from the bank

      by goinsouth on Wed Oct 01, 2008 at 05:22:10 AM PDT

      [ Parent ]

  •  US is NOT source of all the solvency problems. (1+ / 0-)
    Recommended by:

    Ireland nationalized its top 4 banks.  UK, Spain, Club Med countries, Oceania, large Asian cities, Dubai, etc all had property bubbles MUCH MUCH larger than the US.  Up to 10x income.  Here we topped at 5.5x.

    Get your facts straight.

    •  The whole world seems headed to a Japanese-style (1+ / 0-)
      Recommended by:

      recession (if, we're lucky).

      Recall the crash of the Nikkei followed a burst of the Tokyo land bubble.  And, that their domestic assets valuation malaise has lasted more than a decade-and-a-half, despite negative real interest rates.  Monetary policy and fiscal stimulus policies just have not worked.

      Or, it could be much worse.  The only sector of the Japanese economy that's performed well has been big-ticket durables, such as autos, the export  market for which will be significantly smaller should there be a global recession (depression).  Imagine this on a world-wide scale. Not a pretty picture.

      That leaves two options - world oil war or a global technological and infrastructure reconstruction program to free us from the tentacles of carbon fuels.  I vote for the latter.

      •  "Or, it could be much worse." (1+ / 0-)
        Recommended by:

        Not could. Is, and will be.

        Japan, starting from the bursting of their real estate bubble in 1989 and remaining so to 2003, in contrast to the United States, was not simultaneously engaged in two major wars and countless other small conflicts and threats around the globe. Their military expenses until 2003 were minimal, although they are now increasing at a moderate pace due to threats from North Korea and China and involvement in the "Global War on Terror".

  •  Of course it will (0+ / 0-)

    Who do you think has been buying the T bills for the last decade? If they stop, we are bankrupt and making Nikes may be the only jobs available for our workers.

    •  If only here were Nike plants in the US. (0+ / 0-)

      I see no reason why America can't manufacure it's own photocells, plug-in hybrids, light-rail and wind generators.

      Invest 2-3 trillion over the next 4 years.  That would create millions of jobs, provided the manufacturing is done here.

  •  A lot of "foreign investors" are (1+ / 0-)
    Recommended by:

    pension-funds or similar....

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