Sen Shelby took a piss on the White House lawn after meeting with President Bush today. As he left the West Wing, Shelby spoke to the media holding up what he said were letters from the country’s top economists saying the Paulson Plan is not the best solution to resolving the crisis. He went on to urge viewers not to believe an agreement has been made on the bailout.
I presume the letter he was holding was this one , which I referenced in my post yesterday.
That’s probably the most irresponsible thing I’ve seen a politician do throughout this whole course of events, and I’m ashamed it was a Republican that had to do it. This isn’t just a case of a politician getting too big for his britches and going off the cuff, only to make himself look ridiculous. These comments can have drastic effects on what happens in the markets tomorrow and beyond.
With that said, this actually tells me that an agreement is inevitable, otherwise, the impact of his comments could be overwhelming when the markets open tomorrow. This little exercise could very well be a test to see what would happen (in after hours trading) if the markets gets wind that a bailout might not happen by the end of the week.
Rest assure, the result isn’t good, seeing that futures fell in after hours trading, ever since Shelby’s little move.
Later in the evening, CNBC reported that based on what they’re hearing from Members of Congress and other Hill insiders, Paulson’s bailout plan may not happen before the end of the week. House Finance Committee Chairman Barney Frank allegedly said it could even be another week until a deal gets done, while House Speaker Nancy Pelosi reportedly stated she is open to considering the Republicans’ alternative plan. The only response I have is what is going on?
The Wall Street Journal reported earlier that the GOP’s alternative plan is causing second consideration by some policymakers. But, what is this alternative plan? That’s simple, it’s a plan that offers a political solution for those who don’t want to have a vote in favor of a financial system bailout on their record.
You see, the focus on Wall Street and at the Federal Reserve has been on making sure the US (and global for that matter) financial system does not suffer wide-scale systemic threats. On Capital Hill, however, policymakers are more concerned about their next election and whether or not they’ll have to say that they voted for the financial bailout package (think John Kerry saying he voted for the War before voting against it in 2004).
So, it appears like tomorrow will be spent with House Members discussing this proposed alternative plan, so politicians can save face, while the markets will no doubt start the downward fall.
Just keep talking, Congress … I purchased a bucket of puts today, so at least something positive could come out of politicians’ ineptitude.
NOTE: This post was originally published earlier today in two separate posts on my blog at www.marktomarket.typepad.com.