Hey Man, It's not my job...

Buckle up. Friday should be a heck of a day.

To pass or not to pass that is the question
It is unclear whether the House will pass this bill from the Senate. A group of twenty-some 'no voting' Republicans is 'Mad as Hell' at all the pork attached to this bill and wants to cap the payout to the treasury at $250 bln with stipulation that the rest will be subject to a vote as needed. As the bill stands the money is allocated unless a vote rescinds the allocation. ANd then they want all that pork trimmed off, too. Good luck.

My pork is your bread and butter
Obviously all is not well in Congress-land as stupid legislative tricks are in swing.


Next the kids vote- really? If so who needs grown-ups?
While some jokingly refer to the Senate as the 'grown-ups voting', those grown-ups attached some real pork to the bill that the they did pass- money for a producer of arrows? Are you kidding me? What grow-ups are these?

Some in the House want to look into stripping this language out. It's getting messy already.

The BIG news is the BIG news not the manufactured news
The BIG NEWS on Friday, House bill or not, is the employment report. The House bill if voted down can be recast yet again. The government can go to "Plan D.' 'Plan A' was the Treasury Secretary's non starter 'Plan B' was rejected by the House. 'Plan C' is coming out of the Senate now. Whatever! The financial sector issues can be addressed as this has become a charade of Congress' own making.

As good as it gets, until it gets worse, of course
The employment report is real. The number could be revised. But the situation is whatever it is. Congress cannot just vote on it again if they don't like it. And signs are that things seem to be slipping. What's more is that the economic data we await and that other recent reports have embodied, are all basically from a period that precedes the credit problems, problems that have become more intense. I refer to the sharp fall in the ISM, the drop in auto sales, two straight monthly drops in retail sales, the drop in industrial output and so on.... So whatever we get from these reports it seem HIGHLY LIKELY THAT NEXT MONTH WILL BE WORSE.

So far so good except for the results
The cut off period for non-farm payroll jobs is the 'pay period' including the 12th. Lehman's problems were later in the month. The spike in jobless claims come from hurricanes that post- date this jobs survey. The jobs report and these past weak reports (except jobless claims) are relatively clean reads on the economy despite the proximity to these distortions. And so far the other 'clean' readings have been weak, very weak.

Suck it up boys and girls...
The upshot is that we can survive some more 'stupid pet tricks' from the House. But why suffer so? The dirty little secret is that a weaker economy --> weaker housing --> weaker prices --> weaker securities that are backed by house values (CDOs etc) --> more write downs for banks --> more financial chaos. So why dally in trying to deal with this? Things are not going to 'get better on 'their own' unless you wait a very long time. And if the banks aren't fixed first, things will get a lot worse before you can even think of them getting better.

Time bomb or time in a bottle?
C0ngress does not have time in a bottle. Once this vote is cast it will take some time to get these auctions going that the Fed so desperately wants to conduct. These have not been done before so it will take time to set them up. Don't expect the interbank market to unfreeze instantly even if the House bill passes untouched by revision. There is still a lot to do. The bill as it stands adds pork to something that already was not very kosher. It still may NOT pass in one wave of the voting wand. But if it does there is still a long road ahead and no assurances that EVEN AFTER bank balance sheets are wiped squeaky clean - if that can be done- banks will jump back into the markets with two-fisted lending. More like they will be like the guy with the hangover the morning after. Fit again but with legacy problem that will make him temper his own behavior.

Prepares for that.