To quote the New York Times:

"The Senate tax bill would cost more than $100 billion and extend and expand many individual and business tax breaks, including tax credits for the production and use of renewable energy sources, like solar energy and wind power. The bill would also extend the business tax credit for research and development, expand the child tax credit, protect millions of families from the alternative minimum tax, and provide tax relief to victims of recent floods, tornadoes and severe storms."

What is this? The omnibus federal budget?

Or, if you did read the article, you apparently only paid attention to the parts that were "scary".

Quote: Merrill, based in New York, also provides financing for McDonald's franchisees.

Janna Sampson, who helps manage 268,216 McDonald's shares at Oakbrook Investments in Lisle, Illinois, said Bank of America may slow lending until it determines how much it and Merrill are collectively loaning franchisees.

See, BoA bought Merrill...and Merrill also made these same financing loans to MacD's...and they sort of need to figure out between the two of them just how much they have tied up in the financing of cheap lattes.

Ya know, if I were in the financing biz, I don't know that I would be looking to finance lattes right now. When people cut back, two and three dollar coffees are going to be one of the first things to go.

Calm down. The sky is not falling. Yes, bad things might happen but right now you're not too far away from "By the time we see a mushroom cloud, it will be too late to invade Iraq!" territory.

NO BAIL OUT FOR WALL STREET!

If even a flawed bailout rescue plan buys us enough time to ward off a drastic intensification of the crisis, then I'm inclined to bless a massive market intervention...

I have doubts that the bailout plan is good enough to be called merely "flawed". There isn't a damn thing in the plan that actually tries to make sure it produces the desired result. Taxpayers pony up $700 billion (for starters), and all we get in return is hope that it might help. Anyone get get a better grade of hope at their local church, and it wouldn't cost $700 billion.

What's even worse is that nobody in Washington is talking much about how our system got broken and how to prevent a repeat of this situation. McCain is saying that right now we have to fix the problem, not the blame. If we get past this, he'll be saying that we have to put it behind us and move forward, conveniently skipping the part where we do failure analysis and implement recurrence prevention.

Worst of all is that we are committing precious resources to propping up a system that has repeatedly failed in similar manners for similar reasons. We should be trying to bury this monster, rather than trying to revive it.

This is an interesting anecdote regarding the Joe Blow effects of the credit contraction. Another anecdote I heard this morning - repeated in some cases verbatim across news outlets, which makes me wonder - is that 'companies like Apple' (APPLE?! B-but! THEY MADE MY CHERRY-RED iPOD!) might have trouble 'borrowing to meet their payrolls'.

Hm. I'm not saying neither the latte nor the payroll scenario could happen, it just seems to me that these apocalypse scenarios (to borrow Mr. Leonard's phrase) are unavoidable, unless we start printing money. And let's say we do start printing money - in the long run, how does that help? Inflation spins out of control, and we all get paid on time, but our dollar is worth less? It certainly would spread the pain around (trickle the pain down, if you will). But wait - couldn't a company ALSO raise funds by paying a higher rate on its short-term borrowings?

We've been slipping around in easy money for so long, maybe we forgot what it's like to pay/receive appropriate risk-weighted interest rates. I think it's clear that money has been TOO cheap. Apple's cashflow is in doubt. Without home equity loans & fat trader bonuses, there may well be fewer gadgets wrapped and waiting under the Christmas tree this year. The risk of Apple meeting their earnings targets, and churning their inventory, has gone up. Therefore, their cost of borrowing should go up.

I think it's clear that US consumption (and business investment, including latte machines) spiked artificially over the last few years, around the time the FFS rate was pushed to 1%. So now credit must contract. Bad news: Lattes and iPods will become luxury items. This will happen whether or not BoA's Eagle lands.

What is this? The omnibus federal budget?

That's just more lipstick for the pig. Unfortunately, it takes a LOT of lipstick to conceal a $700 billion pig.

Andrew - I appreciated your explanation in this post. But consider whether the coming depression/recession is ultimately the only way out of the hole we're in, and putting it off with half baked bailouts is only going to make the pain worse when it finally happens. Biting the bullet and taking the pain of the alcohol on the open wound now may be better than losing the whole leg a few years from now. Or to choose a different metaphor, we may be no more able to stop this financial hurricane with bailouts than Pat Robertson could stop the tropical hurricane with prayers.

I do actually support the bailout bill in some form, but it drives me crazy when Congress uses the cover of an emergency to drive through all sorts of hasty, ill-conceived, politically motivated special spending programs.

It annoyed me enough that I finally wrote my Representative. Maybe some parts of the Senate's $100 billion tax bill are worthwhile, but this is really not the time to find out.

The Senate bailout bill has tax cuts in it. Granted, part of that is fixing the Alternative Minimum Tax, but this is not tax cut time. In the future, apparently, even McDonalds lattes will have to have tax cuts included.

http://www.salon.com/wires/ap/business/2008/09/30/D93HD3M80_financial_meltdown/index.html

P.S. McDonalds lattes are good. They go great with the regular old cheap single hamburgers.