As I’ve said numerous times before, voters aren’t stupid. They know who piloted our economic collapse last year and it’s going to be extremely hard for Republicans to convince them otherwise.

Still, it is kind of telling that Republicans blame Obama more for the economy than Bush, even though it’s by a very small 6 point margin. I mean, come on folks…we’re 10 months in and you REALLY believe that Obama is the reason why we’re still only treading water?

Also note how the number of Republicans is skewing the total to be 7 points more than what Independents think. Because that number is really what you should be looking at since they’ll determine whether or not Republicans make serious gains in 2010. And since the economy is bound to be the #1 issue at that time, this doesn’t bode well for the GOP.

Still, I predict that if the economy doesn’t get better by this time next year Obama and Bush will be even. At least among Indies. Because at that point it’ll be about 20 months in and, fair or not, Obama will own it.

But what do you think? When will Obama own the economy in swing voters’ minds?

True, it might go right back down tomorrow, but I have to say that this is a nice little psychological boost.

But it’s not just psychological.

Look at the 52 week spread in that picture…at this time last year we were down to 6,469. That’s a pretty significant jump in just one year’s time. Not only that, we were hovering around 8,000 in July and gained 1,600+ points since then (a 20% increase).

I don’t know about you but my 401(k) is looking a lot fatter these days.

So between this and the news about the recession…can we get some agreement that things are starting to look up?

More as it develops…

Yep. That’s right. A group of economic forecasters are projecting that we’ll see growth in the next quarter, so the recession is technically over. And hey, we can all be thankful for that.

However, the pain will linger for years to come.

The problem is that all of the lagging indicators of true economic health (rising employment, wages, spending, etc.) probably won’t start turning around until sometime next year…and even then it’s going to take a while for things to get back to normal.

Here’s more from BizJournal:

The association is expecting the nation’s inflation-adjusted Gross Domestic Product will grow at a rate of roughly 3 percent in the second half of this year. That’s after a sharp 6.4 percent contraction in the first quarter and a 0.7 percent drop in the second quarter.

The association also said the three-year downturn in the housing market appears close to coming to an end, with growth expected next year.

While the unemployment rate is forecast to rise to 10 percent in the first quarter, it is expected to slip to 9.5 percent by the end of 2010.

“The good news is that this deep and long recession appears to be over and, with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation,” Lynn Reaser, the association’s president-elect, said in a release.

And to the point about lagging indicators…here’s a sobering fact about unemployment…

Fewer than 8 percent of the panelists expect lost jobs will be regained before 2012.

If Obama doesn’t actually create a job in the positive direction, that could become a political hot potato for the 2012 election. And, realistically, jobs and spending will probably be the two issues on the GOP’s dart board anyway.

More as it develops…

Why?

The reason is clear to me: we stepped in, took action and did something instead of just allowing the markets determine our fate.

WSJ explains…

The U.S. economy is beginning to show signs of improvement, with many economists asserting the worst is past and data pointing to stronger-than-expected growth. On Tuesday, data showed manufacturing grew in August for the first time in more than a year. “There’s a method to the madness. We’re getting out of this,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight.

Much of the stimulus spending is just beginning to trickle through the economy, with spending expected to peak sometime later this year or in early 2010. The government has funneled about $60 billion of the $288 billion in promised tax cuts to U.S. households, while about $84 billion of the $499 billion in spending has been paid. About $200 billion has been promised to certain projects, such as infrastructure and energy projects.

Economists say the money out the door — combined with the expectation of additional funds flowing soon — is fueling growth above where it would have been without any government action.

And yes, we can project whether doing nothing would have been better…

Many forecasters say stimulus spending is adding two to three percentage points to economic growth in the second and third quarters, when measured at an annual rate. The impact in the second quarter, calculated by analyzing how the extra funds flowing into the economy boost consumption, investment and spending, helped slow the rate of decline and will lay the groundwork for positive growth in the third quarter — something that seemed almost implausible just a few months ago. Some economists say the 1% contraction in the second quarter would have been far worse, possibly as much as 3.2%, if not for the stimulus.

For the third quarter, economists at Goldman Sachs & Co. predict the U.S. economy will grow by 3.3%. “Without that extra stimulus, we would be somewhere around zero,” said Jan Hatzius, chief U.S. economist for Goldman.

Yes, I know this is like fingernails across the chalkboard to several of you, but sometimes it’s entirely appropriate for the government to step in, prevent calamity and then leave. And now we see some positive steps that we’re moving forward again. Perhaps not a V-shaped recovery, but I definitely don’t think we’re going to see a “Lost Decade” as they did in Japan.

Hell, we’re actually making money from the TARP program and being repaid A LOT faster than we first thought. Also, there’s a chance we could make money from Freddie and Fannie. Obviously this wasn’t the intention when we stepped in, but a welcome surprise for taxpayers nonetheless.

More as it develops…

We’ve been hearing about cellulosic ethanol for several years now, generally with the caveat that were at least a few years, and a few scientific breakthroughs, away from it coming to market and helping wean us from foreign oil. Unlike corn, which breaks down into the sugars necessary to be processed into ethanol relatively easily, cellulose is a hardy material that takes time and energy to break down. Its upside is that there happens to be more cellulose present than any other organic molecule on the planet. This is why millions upon millions of dollars has been poured into cellulosic ethanol research, genetically modifying naturally occurring enzymes to break it down faster and looking for ways to bring the price per gallon down closer to the price of gasoline.

Unlike corn, which takes land out of food production, is inefficient as far as how much energy it takes to produce and is a high maintenance crop, finding raw material for a cellulosic plant is easy. Wood chips from sawmills, the kudzu scourge spreading through the hot and humid Southeast, agricultural waste and even up to 80 percent of what ends up in our landfills could be used to make cellulosic ethanol.  Thankfully, the millions of dollars in research and development have begun to bear fruit.

A gas station near Ottawa is the first in the world to begin selling a cellulosic blend, called CE-10, to the public. Iogen, the company behind the demonstration plant that produced the fuel, plans to build its first full scale cellulosic ethanol plant in Saskatchewan. It has reached an agreement with the local government and Royal Dutch Shell to convert an old Mill site to their purposes, with the government even agreeing to purchase any green energy produced at the site. The running demonstration plant only has the capacity to produce about 3 million liters of ethanol each year, using wheat straw agricultural waste, while the new plant will be able to pump out about 75 million liters. It will make use of a more diverse feed stock, including agricultural waste from other crops, grasses native to nearby areas and even wood chips from area mills.

The march of progress continues, with a number of large companies making big investments into these technologies. Last year GM purchased a large share of Coskata, a big player in the emerging cellulosic ethanol industry, who claims to have developed a process that simplefies the complex and costly process of breaking down cellulose and brings the cost of production down to being competitive with gasoline. There are as many as two dozen companies with plans to build plants similar to Iogen’s, but the economic downturn is effecting their ability to finance these projects. Coskata is hoping to get some stimulus money, in the form of loan guarantees, to help finance its plant, with an estimated production of 50-100 million gallons a year.

As President Obama often says, if we intend to be a leader in the green energy industry of tomorrow, we need to move boldly in that direction today. Now is not the time to let companies who wish to lead us in there falter because of financing problems. Some are talking about a new stimulus bill, which most people reasonably see as a terrible idea, that would focus on these kinds of projects and job creation. The first should have done so, and I have little confidence that a new one would make it through congress without being similarly unfocused and pork laden.

We don’t get too many of these chances, where we can kill three birds with one stone. Job creation, independence from foreign oil and environmental progress can all be had with some smart funding priorities. Lets hope the administration recognizes this in time.

He’s repeating a lot of what he said earlier in the year, but I still think selling idea of passing health care reform as essential to our long term economic strength is a tough pill to swallow for Independents.

What’s more, if this editorial would have dropped a few weeks ago it would have held a lot more weight because it wouldn’t be seen as a response to criticism. But now it feels defensive, and that’s not where Obama wants to be in this fight.

From Wash Post:

Nearly six months ago, my administration took office amid the most severe economic downturn since the Great Depression. At the time, we were losing, on average, 700,000 jobs a month. And many feared that our financial system was on the verge of collapse.

The swift and aggressive action we took in those first few months has helped pull our financial system and our economy back from the brink. We took steps to restart lending to families and businesses, stabilize our major financial institutions, and help homeowners stay in their homes and pay their mortgages. We also passed the most sweeping economic recovery plan in our nation’s history.

The American Recovery and Reinvestment Act was not expected to restore the economy to full health on its own but to provide the boost necessary to stop the free fall. So far, it has done that. It was, from the start, a two-year program, and it will steadily save and create jobs as it ramps up over this summer and fall. We must let it work the way it’s supposed to, with the understanding that in any recession, unemployment tends to recover more slowly than other measures of economic activity.

As to his overarching point of rebuilding the economy on more solid footing, he’s right. We’ve built an unsustainable path and it nearly took us down last year. And let’s be clear, it wasn’t just the banks. Soaring health care costs was a big part of why the car companies failed and why numerous big businesses will continue to fail in the coming years if something isn’t done about it. We all know that’s true, but some prefer to kick the can down the road.

Still, do I think he’s taking on too much too soon? Yes. It’s overwhelming and seems too rushed to be reasonable. And my guess is this is why he’s seeing Independent support continue to slip.

More as it develops…

Last night, at a major Republican fundraiser, GOP leaders had some of their harshest words yet for President Obama and his agenda.

Newt Gingrich said the president’s stimulus plan has already failed. And:

Senate Minority Leader Mitch McConnell of Kentucky said Obama has a “radical agenda.” Republicans have “watched them take over banks, insurance companies, auto companies,” he said, “and now they want to take over your health care.”

“We’re going to need some wins next November to slow down their agenda,” said McConnell. House Minority Leader John Boehner of Ohio said Democrats are using their control of Congress “to bury our children and the middle class under a mountain of debt.”

While I never think defeatism is a great political strategy, I’m not sure the Republicans have a another political option but to hope the economy fails to rebound before 2010. The party is too weak in Congress to push through any alternate agenda to the president’s and supporting Obama’s economic plan does nothing to differentiate the party from its opposition.

Unfortunately for Gingrich et. al., there’s a bit of a gap between claiming something has failed and that something actually failing. I’m quite worried about the mountain of debt we’re creating and the precedent we’re setting with the government’s part-ownership of GM, but it’s far too early for me to believe Obama’s measures won’t give the economy a boost. If you want to call it a failure of principle, that’s one thing. But it’s quite premature to say the raw result is failure.

$87 billion of the $787 billion has already been spent in the past 3.5 months, and the monthly unemployment claims were cut in half last month (when compared to the previous 6 months) and the stimulus isn’t working?

This is in response to Republican lawmakers, specifically Sarah Palin, continuing to push the memes that the stimulus isn’t working and we’re headed towards socialism…the latter of which was “graphically” embarrassed recently.

Listen, I know that this is all positioning for 2010, but do they really think it’s wise to place their bets on this horse? I get that the Obama administration opened themselves up for criticism recently because they estimated that unemployment would top off at 8%, but signs are pointing to a recovery within the year. Because imagine if the monthly unemployment numbers come in at 250,000 next month. And then 150,000 after that. And then 100,000.

What if by the end of the year we’re seeing job growth? What then?

Would they consider the stimulus a failure?

Regardless of economic philosophy, I just think they’re betting it all on red and that could easily turn up a losing hand if they’re not careful.

Many economists believe the jobless rate will hit 10 percent by the end of this year. Some think it could rise as high as 10.7 percent by the second quarter of next year before it starts to make a slow descent. The post-World War II high was 10.8 percent at the end of 1982.

The Fed says unemployment will remain elevated into 2011 given the expectation of tepid recovery. Economists say the job market may not get back to normal — meaning a 5 percent unemployment rate — until 2013. Economic recoveries after financial crises tend to be slower, economists say.

But many economists also think we could start seeing growth again by as soon as the third quarter of this year. The question is, given the turmoil in the auto industry and continued ups-and-downs on Wall Street, will the economy grow quickly or will it be a creeping sort of growth, fueled more by the fact that we’ve hit rock bottom than by any returning strength?

We’ll have to wait and see. And hope for the best.

This is Danielle Ivory, reporting from the American News Project and Alternet.

Back in February, in the House Financial Service Committee, when asked a question about the value of Citigroup’s assets, CEO Vikram Pandit provided a less-than-clear response: “It’s an extraordinarily difficult question.”

Click the video below to WATCH the exchange between Rep. Louis Gutierrez (D-IL) and Vikram Pandit.

Rob Weissman, director of the corporate watchdog group, Essential Action, and author of a new report called Sold Out: How Wall Street and Washington Betrayed America, said that, in addition to what Pandit said, there’s an additional factor that could fog the test results: off-the-book assets.

“If you don’t include the off-balance sheet assets in the stress test, then it’s not a legitimate stress test,” Weissman said. “It’s pretty plain that the off-balance-sheet operations are a central part of the story of why we don’t know what the banks own.” The Treasury Department declined to comment on whether they would take off-book-assets into account when running the stress tests.

Weissman says that recipients of bailout money, like Citigroup, Bank of America and JP Morgan, have been engaging in “fanciful accounting” of what they owe and what they own by relocating of their less-than-healthy assets off the books, in shadow corporations. Rep. Brad Sherman has described the process as, “apples on one balance sheet and oranges on another.”

According to RGE Monitor, off-balance-sheet operations have skyrocketed over the last 15 years. From 1992 to 2007, on-balance-sheet assets grew by 200 percent, while off-balance-sheet assets grew by 1,518 percent. In 2007, it was estimated that there was 15.9 times more money parked in off-balance-sheet operations than in on-the-book operations. Not all off-book assets are toxic. Some financial institutions might park assets off their books if they are planning, for instance, to sell them. However, in rough economic times, off-balance sheet accounting allows banks to veil their losses from investors, regulators, and even insiders.

“This turns out to be a really important benefit [for a bank] if it happens to be insolvent,” Weissman added. “And many believe that if you total Citigroup’s assets and liabilities, it is insolvent.”

As of July, Citigroup appeared to have the most off-book assets — an estimated $1.1 trillion. But they aren’t alone. As of July 2008, JP Morgan Chase & Co. had more than $400 billion off their books. Bank of America had $48.2 billion off the books before it bought Merrill Lynch. “If you start adding up all the potential exposures, it’s a huge number,” Sam Golden, former ombudsman for the U.S. Office of the Comptroller of the Currency, told Bloomberg. “The banks will say that it was disclosed. Investors are saying, ‘Yeah, but it was cryptic.’”

Disclosure rules for off-balance sheet operations are notably less strict than those for assets on the books. Neri Bukspan, chief accountant for Standard & Poor’s told Bloomberg, “A lot of information tends to disappear.”

The use of the off-balance-sheet assets was a core part of the Enron scandal, where they were able to wrap debt inside of debt, using obscure corporations, so no one could track what they owed and what they owned. After the Sarbanes-Oxley Act of 2002 was set in place, there were efforts to address the problems with off-book assets. But after heavy lobbying by two main trade groups, the Securities Industry and Financial Markets Association and the American Securitization Forum, banks were given special exemptions.

In September of 2008 as the financial crisis was coming into full view, the Senate Baking, Housing, and Urban Affairs Committee held a hearing, discussing off-balance sheet operations. Senator Jack Reed recalled Enron: “This phenomenon of moving assets off the balance sheets is eerily familiar. We recall back in the days of Enron that its schemes to manufacture false profits included special purpose entities that conducted transactions off-balance sheet. The goal was to avoid financial reporting. While no one is necessarily suggesting scandals of the Enron kind, we cannot fail to admit the irony. We are dealing with a similar problem yet again, only six years later.”

George P. Miller, Executive Director of the American Securitization Forum, said that moving assets off-book back on to the books would cause dangerous swelling of balance sheets. He added, “There are many other steps that the industry can and should undertake to promote broader and better transparency about risk exposures in these vehicles, whether they are on or off-balance sheet.”

But Donald Young, former member of the Financial Accounting Standards Board countered, “We just had an investment bank [Lehman Brothers] go bankrupt with a fair value balance sheet that showed it had plenty of assets and liabilities. And it almost seems like financial reporting is out of control and not trusted and not believed in. And I think what we do here has got to establish transparency. If the transparency is such that we’re going to bring out some bad news that wasn’t there before, that’s a risk. But I think the benefits of reestablishing confidence in the markets will overwhelm that.”

The Financial Accounting Standards Board (FASB) are revising the rules so some off-book assets will have to be reported on the books. However, the changes won’t be effective until January 2010 at the earliest. In March at a House Financial Services Subcommittee hearing, Rep. Sherman complained about this lag. He told the chairman of the FASB, Bob Herz, “If you guys can’t act quickly and logically, perhaps the regulatory accountants need to act and depart from what is a somewhat illogical and certainly slow process that you’ve got.”

In the meantime, in a recent letter to his employees, Pandit has said Citigroup is having its best quarter since 2007 and the bank had conducted its own internal stress tests with positive results. But Weissman says something doesn’t add up. “Either they’ve done a lot of due diligence in a short amount of time that they hadn’t done before, or the stories are incompatible.”

Crossposted at Alternet.

Some are positioning this as a bit of good economic news, and it is…but a bit of perspective is needed.

Not everybody is suffering right now, and if folks can buy homes at a 20 to 30% discount with historically low interest rates, why wouldn’t they? There are a lot of bargains out there right now, and just because people are going bargain shopping doesn’t mean the economy is picking back up. However, it may mean that the economy is at least bottoming out.

NY Times…

The National Association of Realtors said Monday that sales of existing homes increased 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January. It was the largest sales jump since July 2003. [...]

February’s median sales price was up slightly from January, which recorded the lowest median price since September 2002. Prices are down about 28 percent from their peak in July 2006.

In contrast with the housing boom, when buyers took out ever-riskier loans and maxed out their home equity lines, “homebuyers are not over stretching” said Lawrence Yun, the Realtors’ chief economist. “They want to stay within their budget.”

By summertime, sales are expected to get a lift from a $8,000 tax credit for new home buyers included in the economic stimulus package signed by President Obama last month.

Anybody else out there thinking about buying a house right now? What kinds of deals are you seeing?

Do tell.

Let’s face one very stark fact right now…there are no ideal solutions here. At least this current plan from Geithner allows us to recover at least some of the money, but the banks can’t eat this. So taxpayers are going to have to foot this bill. Sorry, but that’s how this has to go down.

However, Geithner’s plan assumes that these toxic assets aren’t as toxic as many would have you believe. We hear similar things last year about these mortgage backed securities, but nobody was willing to pony up any cash for assets that you knew were going to keep dropping because of the political situation.

Long story short, there’s a potential for some upside from this plan, and that’s not something that’s being reported these days.

More detail from his editorial in WSJ:

The Public-Private Investment Program will purchase real-estate related loans from banks and securities from the broader markets. Banks will have the ability to sell pools of loans to dedicated funds, and investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government.

The funds established under this program will have three essential design features. First, they will use government resources in the form of capital from the Treasury, and financing from the FDIC and Federal Reserve, to mobilize capital from private investors. Second, the Public-Private Investment Program will ensure that private-sector participants share the risks alongside the taxpayer, and that the taxpayer shares in the profits from these investments. These funds will be open to investors of all types, such as pension funds, so that a broad range of Americans can participate.

Third, private-sector purchasers will establish the value of the loans and securities purchased under the program, which will protect the government from overpaying for these assets.

The new Public-Private Investment Program will initially provide financing for $500 billion with the potential to expand up to $1 trillion over time, which is a substantial share of real-estate related assets originated before the recession that are now clogging our financial system. Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury.

This program to address legacy loans and securities is part of an overall strategy to resolve the crisis as quickly and effectively as possible at least cost to the taxpayer. The Public-Private Investment Program is better for the taxpayer than having the government alone directly purchase the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.

Angry? You should be. But if you’re blaming Obama and Geithner for coming up with the best “worst” way out of this, then get a grip. There are NO good solutions at this point and maybe we’ll have to nationalize at some point, but that is an unendingly complex situation and I honestly think it’s one of those situations you have to save for a last resort.

Long story short, this won’t happen again (hopefully) because we’ll have new regulations that will reign in the financial sector, but to get out of this current hole the taxpayers are going to have to bear the burden in one way or another. Yes, it’s not fair, but blame the folks who were calling for deregulation, not the current administration.

The full fact sheet is here.

I know I’ve been saving a lot more of my money. Not that I overspent in the first place, but I’ve been cutting back a lot on expenses where I can.

But our economy is based on the idea that people spend, spend, spend. And that could be coming to an end.

Grant McCracken explains how this could play out…

The standing expectation is that consumers who scale down will scale back up when prosperity and credit return. But it is possible that the new, more modest, positively Amsterdamian, consumption pattern will prove sticky. This is what happened in Japan in the 1990s. Consumers gave up free spending ways and never came back. As Tabuchi put in in the New York Times, “free-spending consumers [turned] into misers, making them a dead weight on Japan’s economy.”

Here’s the thing…the fact that we collectively spent much more than we saved was a VERY bad thing. Having Americans be so far in debt simply doesn’t work and if we all turn into misers, well, is that really the worst thing in the world? Because that’s most likely what will be happening all across the world too as people try to find value instead of buying anything they damn well please.

Still, it’s scary because those are exactly the conditions that can cause a deflationary spiral and record unemployment. Because if people don’t buy, then businesses don’t have to hire more workers and that brings about double digit unemployment which could easily lead to a new Depression.

Will you scale back up when the economy returns? Or are you forever changed?

No more placeholders.

The site has finally launched and it has some good content, Including links to pretty much anything they have created about the bill and a place to share your story.

There’s also a map that details how many jobs in each state will be created or saved in the next 2 years. Missouri will apparently see 69,000 jobs created or saved, while California will see 396,000.

My guess is that you’ll start to see a lot more detail added to these numbers in the coming weeks as money starts heading out the doors. And given that this is the first time something like this has happened, I know Obama will probably see a popularity bump because of the transparency of the site.

Take a look and share your thoughts.

Why is bipartisanship dead? And why is Obama so non-bipartisan.

Of course I kid. It’s all about the stimulus bill passage. Axelrod obviously touts the job creation in the bill, and I think it’s pretty clear at this point that 2012 will be all about this bill.

Check it out…

What did you think? How many jobs will the stimulus plan create? 4 million or only 2.2M as cited by Moody’s Mark Zandi?

But hey, before you go plowing into me, here’s Stephen Pearlstein breaking it down on Hardball…

Pearlstein didn’t get a chance to address the relief for homeowners in the proposal before Matthews cut him off, so let’s look at each one of the four points…

- A new program, jointly run by the Treasury and the Federal Reserve, with financing from private investors, to buy up hard-to-sell assets that have bogged down banks and financial institutions for the past year. The program, often described as a “bad bank,” is expected to spend $250 billion to $500 billion.

- Direct capital injections into banks, which would come out of the remaining $350 billion in the Treasury’s rescue program.

- A vast expansion of lending program that the Treasury and Federal Reserve had already announced, which is aimed at financing consumer loans. The two agencies had originally announced their intention to finance as much as $200 billion in loans for student loans, car loans and credit card debt. Instead the program will be expanded to as much as $1 trillion.

- A separate $50 billion initiative to enable millions of homeowners facing imminent foreclosure to renegotiate the terms of their mortgages is to be announced next week.

So the plan is designed to address many of the problems that exist currently, not just the toxic assets.

And sure, Wall Street apparently didn’t like it, but as Pearlstein said, they wouldn’t be happy with any plan that didn’t involve the federal government loading up trucks full of money and driving them down there. Yes, unfortunately there’s still a surprising amount of hubris in the financial sector right now. As if this is any surprise?

And to that point, I hope you realize that gauging “Wall Street’s reaction” to Geithner’s plan is the height of cluelessness (yes, I’m talking to you Matt Drudge) given that, well…you know…Wall Street nearly caused a complete worldwide financial meltdown.

But many ask, “Why not nationalize?”

Well, besides the glaringly obvious political problems that would represent, it’s just unrealistic. As Obama pointed out yesterday in an interview with Terry Moran, you can’t nationalize thousands of banks. This isn’t Sweden and while many economists argue that this is the only way things will get better, there are other ways and Geithner’s plan represents a multi-pronged approach that deals with many problems at the same time, not just one.

And, by the way, Republicans should be heavily in favor of this bill because it doesn’t seek to insert the government into anything more than what’s needed. However, crazy prediction here, I’m not anticipating that they’ll be agreeable to any plan the administration comes up with.

But hey, read the plan for yourself. And when you do, take note of this passage…

The core of the new monitoring requirement is to require recipients of exceptional assistance or capital buffer assistance to show how every dollar of capital they receive is enabling them to preserve or generate new lending compared to what would have been possible without government capital assistance.

Intended Use of Government Funds: All recipients of assistance must submit a plan for how they intend to use that capital to preserve and strengthen their lending capacity. This plan will be submitted during the application process, and the Treasury Department will make these reports public upon completion of the capital investment in the firm.

The Impact on Lending Requirement: Firms must detail in monthly reports submitted to the Treasury Department their lending broken out by category, showing how many new loans they provided to businesses and consumers and how many asset-backed and mortgage-backed securities they purchased, accompanied by a description of the lending environment in the communities and markets they serve. This report will also include a comparison to their most rigorous estimate of what their lending would have been in the absence of government support. For public companies, similar reports will be filed on an 8K simultaneous with the filing of their 10-Q or 10-K reports. Additionally, the Treasury Department will – in collaboration with banking agencies – publish and regularly update key metrics showing the impact of the Financial Stability Plan on credit markets. These reports will be put on the Treasury FinancialStability.gov website so that they can be subject to scrutiny by outside and independent experts.

Taxpayers’ Right to Know: All information disclosed or reported to Treasury by recipients of capital assistance will be posted on FinancialStability.gov because taxpayers have the right to know whether these programs are succeeding in creating and preserving lending and financial stability.

Long story short, this plan is all about helping normal people get the money they need, not the Wall Street crowd. Because now they’ll actually have to be held accountable for a while until they can get back on their feet.

More as it develops…

The vote was 61-37, and the procedural vote yesterday made this margin all but certain.

But this doesn’t mean it’s all sewn up. There’s still some debate to be had.

Politico digs into the specifics…

—Both House and Senate bills provide close to $87 billion in increased federal aid to help states meet their healthcare bills under Medicaid. But the House bill is much more tilted in favor of larger urban states, which have experienced the greatest increase in unemployment, while the Senate bill takes a more across-the-board approach that helps rural states.

—The Senate bill is more tilted toward tax breaks, including a $15,000 homebuyers’ tax credit that has proven more costly than first advertised and seems sure to face challenges in the negotiations. Senators also used their bill to address the perennial problem of protecting middle and upper middle income families from the alternative minimum tax –an issue that House fiscal conservatives argue should be dealt with separately.

—State and local aid is a major part of both bills, but the final round of cuts imposed by Republican moderates fell heavily on these accounts, including a $40 billion cut from the a state fiscal stabilization initiate favored by Obama.

–The school construction issue remains a ticklish one since it was a cut that both Collins and Specter insisted upon in the negotiations. At the White House Monday, Obama defended the proposal, saying it would generate construction jobs and be a long term commitment to education important to the economy, In fact, the New Deal saw like-minded investments in local schools. But Collins and Specter argued that in today’s environment, it represents a new federal role in public schools and ought to be debated outside of the stimulus debate.

My thought is that the current bill will simply not change much because the cuts that happened were necessary to move this legislation forward. If the states need more money in the future, I’m sure that’ll be something the administration will address, but for now the important part is getting some forward movement.

More as it develops…