House Republicans take page out of Hoover's 1930s play book with spending freeze plan

Joseph Lazzaro — Mon, 09 Mar 2009 13:10:00 EST

Readers of this space know that the emphasis is placed on the economic, on commerce, and business trends, with a general avoidance of goings-on inside the beltway.

However, the financial crisis (which spawned federal bank bail-out legislation) and the nation's pronounced recession (which requires fiscal stimulus to end), has meant that things occurring in Washington once again have great relevance for investors.

And one current D.C. development must be evaluated: the House Republican leadership's decision to seek a federal spending freeze for the fiscal 2010 federal budget, The AP reported.

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Bailout plan disagreement: Republicans' tactic called 'reckless, bizarre'

Joseph Lazzaro — Fri, 26 Sep 2008 09:47:00 EST

Filed under: Forecasts, Bad News, Politics, Presidential Elections, Recession, Financial Crisis

Selected House Republicans said they had never agreed to a bailout deal, despite only hours earlier Bush Administration officials announcing an agreement on "fundamentals."

That segment of House Republicans, many from the party's conservative wing, say they oppose assisting Wall Street firms, which they believe made wrong business choices that led to the crisis. As an alternative, House Republicans offered a plan under which companies would buy insurance from the government, and that includes proposed tax cuts and a relaxation of government regulations.

Currency trader Andrew Resnick said the House Republicans' plan was deficient from a number of standpoints.

"Is this the way a responsible coalition behaves? You say nothing all day, then in the dead of night present a questionable plan via back-channels? Frankly, it's reckless and bizarre," Resnick said. "The House Republicans are playing with fire. Here we are trying to prevent a financial crisis from turning into a catastrophe and one political camp wants to play partisan politics. It's the height or depth of public irresponsibility."

Resnick said credit markets, already stressed by a series of financial institution and bank failures, as well as forced margin calls, could degenerate further.

"I'll tell you right now this whole [expletive] system could come crashing down if banks continue to hoard funds and a series of cascading sales starts to occur," Resnick said. "The House Republican plan also isn't credible. Few expect it to provide the liquidity necessary to keep the financial system functioning, and their tax cut proposal is just nuts. They want to increase the federal budget deficit more? With the dollar weak and after eight years of deficits?" Resnick added that he was presently flat, or had no open currency trading positions.

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