document_title: Emergency Economic Stabilization Act of 2008

question_text: a primary focus of the economic stabilization act of 2008 which became known as the

question_tokens: a primary focus of the economic stabilization act of 2008 which became known as the

text: Emergency Economic Stabilization Act of 2008

text: History[edit]

text: The legislation had its origin in early 2008, Secretary of the Treasury Henry Paulson directed two of his aides, Neel Kashkari and Phillip Swagel, to write a plan to recapitalize the U.S. financial system in case of total collapse. The plan, which was also presented to Federal Reserve Chairman Ben Bernanke, called for the U.S. government to purchase about $500 billion in distressed assets from financial institutions.[3]

text: The original proposal was submitted to the United States House of Representatives, with the purpose of purchasing bad assets, reducing uncertainty regarding the worth of the remaining assets, and restoring confidence in the credit markets. The bill was then expanded and put forth as an amendment to H.R. 3997.[4] The amendment was rejected via a vote of the House of Representatives on September 29, 2008, voting 205–228.[5]

text: Supporters of the plan argued that the market intervention called for by the plan was vital to prevent further erosion of confidence in the U.S. credit markets and that failure to act could lead to an economic depression. Opponents objected to the plan's cost and rapidity, pointing to polls that showed little support among the public for "bailing out" Wall Street investment banks,[6] claimed that better alternatives were not considered,[7] and that the Senate forced passage of the unpopular version through the opposing house by "sweetening" the bailout package.[8]

text: On October 1, 2008, the Senate debated and voted on an amendment to H.R. 1424, which substituted a newly revised version of the Emergency Economic Stabilization Act of 2008 for the language of H.R. 1424.[9][10] The Senate accepted the amendment and passed the entire amended bill, voting 74–25.[11] Additional unrelated provisions added an estimated $150 billion to the cost of the package and increased the length of the bill to 451 pages.[12][13] (See Public Law 110-343 for details on the added provisions.) The amended version of H.R. 1424 was sent to the House for consideration, and on October 3, the House voted 263–171 to enact the bill into law.[9][14][15] President George W. Bush signed the bill into law within hours of its congressional enactment, creating the $700 billion Troubled Asset Relief Program (TARP) to purchase failing bank assets.[16]

text: On October 8, the British announced their bank rescue package consisting of funding, debt guarantees and infusing capital into banks via preferred stock. This model was closely followed by the rest of Europe, as well as the U.S Government, who on the October 14 announced a $250bn (£143bn) Capital Purchase Program to buy stakes in a wide variety of banks in an effort to restore confidence in the sector. The money came from the $700bn Troubled Asset Relief Program.[17][18]

text: Over the next six months, TARP was dwarfed by other guarantees and lending limits; analysis by Bloomberg found the Federal Reserve had, by March 2009, committed $7.77 trillion to rescuing the financial system, more than half the value of everything produced in the U.S. that year.[19]

text: Economic background[edit]

text: After the freeing up of world capital markets in the 1970s and the repeal of the Glass–Steagall Act in 1999, the banking practices (mostly Greenspan inspired "self-regulation") along with monetized subprime mortgages sold as no risk investments, reached a critical stage during September 2008, characterized by severely contracted liquidity in the global credit markets[20] and insolvency threats to investment banks and other institutions. In response, the U.S. government announced a series of comprehensive steps to address the problems, following a series of "one-off" or "case-by-case" decisions to intervene or not, such as the $85 billion liquidity facility for American International Group on September 16, the federal takeover of Fannie Mae and Freddie Mac, and the bankruptcy of Lehman Brothers.

text: On Monday, October 6, the Dow Jones Industrial Average dropped more than 700 points and fell below 10,000 for the first time in four years.[21] The same day, CNN reported these worldwide stock market events:[22]

text:
Britain's FTSE 100 Index was down 7.9%
Germany's DAX down 7.1%
France's CAC 40 dropping 9%
In Russia, trading in shares was suspended after the RTS stock index fell more than 20%.
Iceland halted trading in six bank stocks while the government drafted a crisis plan.

text: Paulson proposal[edit]

text: U.S. Treasury Secretary Henry Paulson proposed a plan under which the U.S. Treasury would acquire up to $700 billion worth of mortgage-backed securities.[23] The plan was immediately backed by President George W. Bush and negotiations began with leaders in the U.S. Congress to draft appropriate legislation.

text: Consultations among Treasury Secretary Henry Paulson, Chairman of the Federal Reserve Ben Bernanke, U.S. Securities and Exchange Commission chairman Christopher Cox, congressional leaders, and President Bush, moved forward efforts to draft a proposal for a comprehensive solution to the problems created by illiquid assets. News of the coming plan resulted in some stock, bond, and currency markets stability on September 19, 2008.[25][26]

text: The proposal called for the federal government to buy up to US$700 billion of illiquid mortgage-backed securities with the intent to increase the liquidity of the secondary mortgage markets and reduce potential losses encountered by financial institutions owning the securities. The draft proposal was received favorably by investors in the stock market, but caused the U.S. dollar to fall against gold, the Euro, and petroleum. The plan was not immediately approved by Congress; debate and amendments were seen as likely before the plan was to receive legislative enactment.[27][28][29]

text: Throughout the week of September 20, 2008, there was contentious wrangling among members of Congress over the terms and scope of the bailout,[30] amplified by continued failures of institutions like Washington Mutual, and the upcoming November 4 national election.

text:
On September 21, Paulson announced that the original proposal, which would have excluded foreign banks, had been revised to include foreign financial institutions with a presence in the United States. The U.S. administration pressured other countries to set up similar bailout plans.[31]
On September 23, the plan was presented by Paulson and Bernanke to the Senate Banking Committee, who rejected it as unacceptable.[32]
On September 24, President Bush addressed the nation on prime time television, describing how serious the financial crisis could become if action was not taken promptly by Congress.[33]
Also on September 24, 2008, Republican Party nominee for President, John McCain, and Democratic Party nominee for President, Barack Obama, issued a joint statement describing their shared view that "The effort to protect the American economy must not fail."[34]

text: The plan was introduced on September 20, by Paulson. Named the Troubled Asset Relief Program,[23] but also known as the Paulson Proposal or Paulson Plan, it should not be confused with Paulson's earlier 212-page plan, the Blueprint for a Modernized Financial Regulatory Reform,[35] that was released on March 31, 2008.

text: The proposal was only three pages long, intentionally short on details to facilitate quick passage by Congress.[36]

text: Mortgage asset purchases[edit]

text: A key part of the proposal is the federal government's plan to buy up to $700 billion of illiquid mortgage-backed securities (MBS) with the intent to increase the liquidity of the secondary mortgage markets and reduce potential losses encountered by financial institutions owning the securities. The draft proposal of the plan was received favorably by investors in the stock market.[27][28]

text: This plan can be described as a risky investment, as opposed to an expense. The MBS within the scope of the purchase program have rights to the cash flows from the underlying mortgages. As such, the initial outflow of government funds to purchase the MBS would be offset by ongoing cash inflows represented by the monthly mortgage payments. Further, the government eventually may be able to sell the assets, though whether at a gain or loss will remain to be seen. While incremental borrowing to obtain the funds necessary to purchase the MBS may add to the United States public debt, the net effect will be considerably less as the incremental debt will be offset to a large extent by the MBS assets.[37][38]

text: A key challenge would be valuing the purchase price of the MBS, which is a complex exercise subject to a multitude of variables related to the housing market and the credit quality of the underlying mortgages.[39] The ability of the government to offset the purchase price (through mortgage collections over the long-run) depends on the valuation assigned to the MBS at the time of purchase. For example, Merrill Lynch wrote down the value of its MBS to approximately 22 cents on the dollar in Q2 2008.[40] Whether the government is ultimately able to resell the assets above the purchase price or will continue to merely collect the mortgage payments is an open item.

text: On February 10, 2009, the newly confirmed Secretary of the Treasury Timothy Geithner outlined his plan to use the $300 billion or so dollars remaining in the TARP funds. He mentioned that the U.S. Treasury and Federal Reserve wanted to help fund private investors to buy toxic assets from banks, but few details have yet been released.[41] There is still some scepticism about the premise that taxpayers can buy troubled assets without having to overpay. Oppenheimer & Company analyst Meridith Whitney argues that banks will not sell bad assets at fair market values because they are reluctant to take asset write downs.[42] Removing toxic assets would also reduce the volatility of banks' stock prices. Because stock is a call option on a firm's assets, this lost volatility will hurt the stock price of distressed banks. Therefore, such banks will only sell toxic assets at above market prices.[43]

text: On April 6, 2008, the State Foreclosure Prevention Working Group reported that the pace of foreclosures exceeded the capacity of homeowner rescue programs, such as the Hope Now Alliance, in the first quarter of 2008.[44]

text: Sweeping powers[edit]

text: The original plan would have granted the Secretary of the Treasury unlimited power to spend,[30] proofing his or her actions against congressional or judicial review. Section 8 of the Paulson proposal states: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."[23] This provision was not included in the final version.

text: Potential effects[edit]

text: The maximum cost of a $700 billion bailout would be $2,295 estimated cost per American (based on an estimate of 305 million Americans), or $4,635 per working American (based on an estimate of 151 million in the work force).[45] The bulk of this money would be spent to purchase mortgage backed securities, ultimately backed by American homeowners, which possibly could be sold later at a profit, by the government. Economist Michael Hudson predicts that the bailout would cause hyperinflation and dollar collapse.[46][47][48][clarification needed]

text: However, there is no persuasive evidence of prices rising and the U.S. Dollar Index has actually risen to higher levels than before the plan's announcement.[49] Indeed, during the week before and after the EESA was agreed, investment bank UBS was continually flatly rejecting that bailouts such as these were inflationary, emphasizing instead that they were anti-deflationary, not inflationary.[50][51][52]

text: The 2008 federal budget submitted by the president is $2.9 trillion, meaning a $700 billion bailout would constitute a 24% increase to $3.6 trillion, which would exceed the $3.1 trillion 2009 budget. The total government commitment and proposed commitments so far in its current and proposed bailouts is reportedly $1 trillion compared to the $14 trillion United States economy.[53]

text: Rationale for the bailout[edit]

text: Government officials[edit]

text: In his testimony before the U.S. Senate, Treasury Secretary Henry Paulson summarized the rationale for the bailout:[54]

text:
Stabilize the economy: "We must... avoid a continuing series of financial institution failures and frozen credit markets that threaten American families' financial well-being, the viability of businesses both small and large, and the very health of our economy."
Improve liquidity: "These bad loans have created a chain reaction and last week our credit markets froze – even some Main Street non-financial companies had trouble financing their normal business operations. If that situation were to persist, it would threaten all parts of our economy."
Comprehensive strategy: "We must now take further, decisive action to fundamentally and comprehensively address the root cause of this turmoil. And that root cause is the housing correction which has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy. We must address this underlying problem, and restore confidence in our financial markets and financial institutions so they can perform their mission of supporting future prosperity and growth."
Immediate and significant: "This troubled asset relief program has to be properly designed for immediate implementation and be sufficiently large to have maximum impact and restore market confidence. It must also protect the taxpayer to the maximum extent possible, and include provisions that ensure transparency and oversight while also ensuring the program can be implemented quickly and run effectively."
Broad impact: "This troubled asset purchase program on its own is the single most effective thing we can do to help homeowners, the American people and stimulate our economy."

text: In his testimony before the U.S. Senate on September 23, 2008, Fed Chairman Ben Bernanke also summarized the rationale for the bailout:[55]

text:
Investor confidence: "Among the firms under the greatest pressure were Fannie Mae and Freddie Mac, Lehman Brothers, and, more recently, American International Group (AIG). As investors lost confidence in them, these companies saw their access to liquidity and capital markets increasingly impaired and their stock prices drop sharply." He also stated: "Purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions. More generally, removing these assets from institutions' balance sheets will help to restore confidence in our financial markets and enable banks and other institutions to raise capital and to expand credit to support economic growth."
Impact on the economy and GDP: "Extraordinarily turbulent conditions in global financial markets... these conditions caused equity prices to fall sharply, the cost of short-term credit—where available—to spike upward, and liquidity to dry up in many markets. Losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds. A marked increase in the demand for safe assets—a flight to quality—sent the yield on Treasury bills down to a few hundredths of a percent. By further reducing asset values and potentially restricting the flow of credit to households and businesses, these developments pose a direct threat to economic growth."

text: Regarding the $700 billion number, Forbes.com quoted a Treasury spokeswoman: "It's not based on any particular data point. We just wanted to choose a really large number."[56]

text: Journalists[edit]

text: According to CNBC commentator Jim Cramer, large corporations, institutions, and wealthy investors were pulling their money out of bank money market funds, in favor of government-backed Treasury bills. Cramer called it "an invisible run on the banks," one that has no lines in the lobby but pushes banks to the breaking point nonetheless. As a bank's capital reserve of deposits evaporate, so too does its ability to lend and correspondingly make money. "The lack of confidence inspired by Lehman's demise, the general poor health of many banks, this is going to turn this into an intractable moment," Cramer said, "if someone in the government doesn't start pushing for more deposit insurance."[57]

text: Reaction to the initial proposal[edit]

text: Skepticism regarding the plan occurred early on in the House. Many members of Congress, including the House of Representatives, did not support the plan initially, mainly conservative free-market Republicans and liberal anti-corporate Democrats.[58] Alabama Republican Spencer Bachus has called the proposal "a gun to our head."[59]

text: Immediate market reactions[edit]

text: On September 19, 2008, when news of the bailout proposal emerged, the U.S. stock market rose by 3%. Foreign stock markets also surged, and foreign currencies corrected slightly, after having dropped earlier in the month. The value of the U.S. dollar dropped compared to other world currencies after the plan was announced.[60][61] The front end oil futures contract spiked more than $25 a barrel during the day Monday September 22, ending the day up over $16. This was a record for the biggest one-day gain.[62] However, there are other factors that caused the massive spike in oil prices. Traders who got "caught" at the end of the October contract session were forced to purchase oil in large batches to cover themselves, adding to the surge in prices.[63] Further out, oil futures contracts rose by about $5 per barrel. Mortgage rates increased following the news of the bailout plan. The 30-year fixed-rate mortgage averaged 5.78% in the week before the plan was announced; for the week ending September 25, the average rate was 6.09%,[64] still far below the average rate during the early 1990s recession, when it topped 9.0%.[65]

text: Potential conflict of interest[edit]

text: There was concern that the current plan created a conflict of interest for Paulson. Paulson was a former CEO of Goldman Sachs, which stood to benefit from the bailout. Paulson had hired Goldman executives as advisors and Paulson's former advisors had joined banks that were also to benefit from the bailout. Furthermore, the original proposal exempted Paulson from judicial oversight. Thus there was concern that former illegal activity by a financial institution or its executives might be hidden.[66][67][68]

text: The treasury staff member responsible for administering the bailout funds was Neel Kashkari, a former vice-president at Goldman Sachs.

text: In the Senate, Senator Judd Gregg (R-NH) was the leading Republican author of the TARP program while he had a multimillion-dollar investment in the Bank of America.[69][70]

text: Views from the public, politicians, financiers, economists, and journalists[edit]

text: The public[edit]

text: Protests opposing the bailout occurred in over 100 cities across the United States on Thursday September 25.[71] Grassroots group TrueMajority said its members organized over 251 events in more than 41 states.[72] The largest gathering has been in New York City, where more than 1,000 protesters gathered near the New York Stock Exchange along with labor union members organized by New York Central Labor Council.[73][74] Other grassroots groups have planned rallies to protest against the bailout,[75] while outraged citizens continue to express their opposition online through blogs and dedicated web sites.[76]

text:
In a survey conducted September 19–22 by the Pew Research Center, by a margin of 57 percent to 30 percent, Americans supported the bailout when asked "As you may know, the government is potentially investing billions to try and keep financial institutions and markets secure. Do you think this is the right thing or the wrong thing for the government to be doing?"[77]
In a survey conducted September 19–22 by Bloomberg/Los Angeles Times, by a margin of 55 percent to 31 percent, Americans opposed the bailout when asked whether "the government should use taxpayers' dollars to rescue ailing private financial firms whose collapse could have adverse effects on the economy and market, or is it not the government's responsibility to bail out private companies with taxpayers' dollars?".[78][79]
In a survey conducted September 24 by USA Today/Gallup, when asked "As you may know, the Bush administration has proposed a plan that would allow the Treasury Department to buy and re-sell up to $700 billion of distressed assets from financial companies. What would you like to see Congress do?", 56 percent of respondents wanted Congress to pass a plan different from the original Paulson proposal, 22 percent supported the Paulson proposal in its initial form, and 11 percent wanted Congress to take no action.[80]
Senator Sherrod Brown said he had been getting 2,000 e-mail messages and telephone calls a day, roughly 95 percent opposed.[81]
As of Thursday September 25, Senator Dianne Feinstein's (D-Calif.) offices had received a total of 39,180 e-mails, calls and letters on the bailout, with the overwhelming majority of constituents against it.[74]

text: Politicians[edit]

text: Supporters of the plan included presidential candidates Barack Obama and John McCain, and British Prime Minister Gordon Brown.[82][83]

text: Critics included Former Arkansas Governor Mike Huckabee, Congressman Ron Paul, Libertarian presidential candidate Bob Barr, and Senators Christopher Dodd, Richard Shelby, and Jim Bunning.[84][85][86][87][88]

text: In a Wall Street Journal opinion piece, Senator Hillary Clinton advocated addressing the rate of mortgage defaults and foreclosures that ignited this crisis, not just bailing out Wall Street firms: "If we do not take action to address the crisis facing borrowers, we'll never solve the crisis facing lenders." She proposed a new Home Owners' Loan Corporation (HOLC), similar to that used after the Depression and which was launched in 1933. The new HOLC was to administer a national program to help homeowners refinance their mortgages. She also called for a moratorium on foreclosures and freezing of rate hikes in adjustable-rate mortgages.[89]

text: Barack Obama, the Democratic presidential candidate, said that any bailout had to include plans to recover the money, protect working families and big financial institutions and be crafted to prevent such a crisis from happening again.[90]

text: Financiers[edit]

text: Former Federal Reserve Chairman Alan Greenspan supported the Paulson plan.[91]

text: Investor Warren Buffett says he could put in $10B plus $90B nonrecourse debt; that is, without having to repay beyond $10B if mortgages did not repay. (This is 10 to 1 leverage, 10 times upside with 1 times downside.) He also said that the government should pay market price, which may be below the carry value.[92] Buffett says "I would think they might insist on the directors of the institutions that participate in this program waiving all director's fees for a couple of years. They should, maybe, eliminate bonuses." Buffett says "...if someone wants to sell a hundred billion of these instruments to the Treasury, let them sell two or three billion in the market and then have the Treasury match that, ... . You don't want the Treasury to be a patsy."[93] Mr. Buffett's company owns financial companies which will benefit directly or indirectly.

text: Investor George Soros opposed the original Paulson plan: "Mr Paulson's proposal to purchase distressed mortgage-related securities poses a classic problem of asymmetric information. The securities are hard to value but the sellers know more about them than the buyer: in any auction process the Treasury would end up with the dregs. The proposal is also rife with latent conflict of interest issues. Unless the Treasury overpays for the securities, the scheme would not bring relief." – but calls Barack Obama's list of conditions for the plan "the right principles".[94]

text: Other critics included Carl Icahn[91] Jim Rogers,[95] and William Seidman. Seidman compared the bailout with action he and his team at the Resolution Trust Corporation took during the savings and loan crisis of the 1980s: "What we did, we took over the bank, nationalized it, fired the management, took out the bad assets and put a good bank back in the system."[96]

text: Economists[edit]

text:
In an open letter sent to Congress on September 24, over 100 university economists expressed "great concern for the plan proposed by Treasury Secretary Paulson". The letter, endorsed within a few days by 231 economists at American universities, has been described as "the emerging consensus from academic economists".[97] Its authors described three "fatal pitfalls" they perceived in the plan as it was initially proposed:

Its fairness. The plan is a subsidy to investors at taxpayers' expense. Investors who took risks to earn profits must also bear the losses. [...] The government can ensure a well-functioning financial industry [...] without bailing out particular investors and institutions whose choices proved unwise.
Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America's dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.[98]

Nobel Prize-winning economist Joseph Stiglitz strongly criticized the bill in an article written for The Nation.[99]
Economist, The New York Times columnist and Nobel laureate Paul Krugman recommended that, instead of purchasing the assets, equity capital could be provided to the banks directly in exchange for preferred stock. This would strengthen the financial position of the banks, encouraging them to lend. Dividends would be paid to the government on the preferred shares. This would be similar to what happened during the savings and loan crisis and with the GSE bailout. This avoids the valuation questions involved in the direct purchase of MBS.[100] This is an approach based on the 1990s Swedish banking rescue.[101]
The first half of the bailout money was primarily used to buy preferred stock in banks instead of troubled mortgage assets. This has led some economists to argue that buying preferred stock will be far less effective in getting banks to lend efficiently than buying common stock.[102][103]
A recent study shows that market's reaction to the announcement of a rescue plan is positive independently to the type of the intervention. It indicates that a timely bad plan could be better than an untimely good one.[104]

text: Journalists[edit]

text:
The Economist magazine said that although "Mr Paulson's plan is not perfect ... it is good enough" and that "Congress should pass it—and soon."[105]
"The deal proposed by Paulson is nothing short of outrageous. It includes no oversight of his own closed-door operations. It merely gives congressional blessing and funding to what he has already been doing, ad hoc." - Robert Kuttner[106]
Journalist Rosalind Resnick favors a hypothetical scenario in which "consumers and businesses would be able to borrow at the fed funds rate at 2 percent, just like the big banks do. This means that every cash-strapped homeowner would be able to refinance his mortgage and cut his payments in half, saving thousands of homes from foreclosure. Consumers could also refinance their credit card balances, auto loans and other debt at interest rates they can afford" and that this plan "would cost U.S. taxpayers absolutely nothing."[107]

text: Alternative proposals[edit]

text: Suggested alternative approaches to address the issues underlying the financial crisis include: mortgage assistance proposals try to increase the value of the asset base while limiting the disruption of foreclosure; bank recapitalization through equity investment by the government; asset liquidity approaches to engage market mechanisms for valuing troubled assets; and financial market reforms promoting transparency and conservatism to restore trust by market investors.

text: Mortgage assistance[edit]

text:
Conservative Republican Representatives had offered a mortgage insurance plan as an alternative to the bailout.[108] There had been speculation that U.S. Senator John McCain may have supported this plan[109] but this was not confirmed.
Senator Hillary Clinton has proposed a new Home Owners' Loan Corporation (HOLC), similar to that used after the Depression, which was launched in 1933. The new HOLC would administer a national program to help homeowners refinance their mortgages. She is also calling for a moratorium on foreclosures and freezing of rate hikes in adjustable rate mortgages.[89]
Jonathan Koppell, Associate Professor of Politics and Management at the Yale School of Management, recommends assisting homeowners by lowering interest rates on loans in default. The money spent would be repaid from profits when the homes eventually sell after the housing market has recovered.[110][111]

text: Bank recapitalization[edit]

text:
A ten-point plan by New York University economist Nouriel Roubini goes beyond a Home Owners' Loan Corporation to include recreating a combination of a Resolution Trust Corporation, and a Reconstruction Finance Corporation.[112] Roubini has advocated bank recapitalization (by providing cash in exchange for preferred shares) and suspending all dividend payments.[113]
Economist Paul Krugman recommended equity investments in the banks, an approach similar to what happened during the S&L crisis, the GSE bailout, and the 1990s Swedish banking rescue. This avoids the valuation questions involved in the direct purchase of MBS.[100][101]
The first half of the bailout money was primarily used to buy preferred stock in banks instead of troubled mortgage assets. This has led some economists to argue that buying preferred stock will be far less effective than buying common stock.[102][103]
Luigi Zingales, Professor of Entrepreneurship and Finance at the University of Chicago, has proposed a special chapter of the bankruptcy code to convert banks' debt to equity which would improve capital adequacy ratios and enable a return to lending.[114]
Janet Tavakoli, a financial consultant and a former adjunct professor of derivatives at the University of Chicago's Graduate School of Business, criticizes the bailout because in her view it hides problems and continues price uncertainty. She also advocates forced restructuring, with a combination of debt forgiveness and debt for equity swaps, rather than a bailout.[115][116]

text: Asset liquidity[edit]

text:
Christopher Ricciardi, former Merrill Lynch banker, wrote a letter to Treasury Secretary Henry M. Paulson Jr. proposing alternatively that the government should be backing some troubled assets to encourage private investors to purchase them — as opposed to the direct purchase of troubled assets from financial institutions.[117]
Investor Warren Buffett believes the government should pay market price for the assets rather than an artificially high hold-to-maturity price. The market price would be determined by selling a portion of the assets to private investors.[118]

text: Financial market reform[edit]

text: Dominique Strauss-Kahn, Managing Director of the International Monetary Fund, has recommended three near-term actions to assist banks: provision of liquidity, purchase of distressed assets, and recapitalization. In addition, he argues for addressing the structural issues with more prudential regulation, better accounting rules, and more transparency.[119]

text: Monetary consensus reform[edit]

text: This process consisted of nationalizing most of the private industries.[citation needed] The short-term effects were evidently costly, but the beneficiary repercussions were vastly favorable to a sustainable economic future.[citation needed]

text:
Nationalize the federal reserve.
Deregulate the corporate image of the United States.
The rest of the proposal were equated with different variables and would have been acted upon according to the circumstances.

tag: ol

text: According to Jon Daemon, the proposal was dismissed by bureaucrats and lobbyist in accordance to the private banks and federal reserve dispatchers.[113]

text: Legislative history[edit]

text: Over the weekend (September 27–28), Congress continued to develop the proposal. That next Monday, the House put the resulting effort, the Emergency Economic Stabilization Act of 2008, to a vote. It did not pass. US stock markets dropped 8 percent, the largest percentage drop since Black Monday in 1987.

text: Congressional leaders, including both presidential candidates, started working with the Bush Administration and the Treasury department on key negotiation points as they worked to finalize the plan. Key items under discussion included:[120][121]

text:
Additional foreclosure avoidance and homeowner assistance
Executive pay limits
Government equity interests in firms participating in program, to provide additional taxpayer protection
Judicial review, Congressional oversight and right to audit
Structure and authority of the entities that will manage the program

text: First House vote, September 29[edit]

text: Just after midnight Sunday, September 28, leaders of the Senate and House, along with Treasury Secretary Paulson, announced a tentative deal had been reached to permit the government purchase of up to $700 billion in mortgage backed securities to provide liquidity to the security holders, and to stabilize U.S. financial firms and markets. The bill was made final later that Monday morning.[4][122] A debate and vote was scheduled for the House for Monday, September 29, to be followed by a Senate debate on Wednesday.[123] In an early morning news conference, on Monday September 29, President George W. Bush expressed confidence that the bill would pass Congress, and that it would provide relief to the U.S. economy. A number of House Republicans remained opposed to the deal and intended to vote against it.[124][125][126]

text: That same day, the legislation for the bailout was put before the United States House of Representatives and failed 205–228, with one not voting. Democrats voted 140–95 in favor of the legislation, while Republicans voted 133–65 against it.[127][128][129] During the legislative session, at the conclusion of the vote, the presiding chair declared the measure, HR3997, to be unfinished business.[130]

text: House Speaker Nancy Pelosi said at a press conference after the vote: "The legislation has failed. The crisis has not gone away. We must continue to work in a bipartisan manner."[131] Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, appearing at a joint press conference with Senator Judd Gregg, a New Hampshire Republican, said a bailout plan could still pass Congress. Dodd said: "We don't intend to leave here without the job being done. While it may take another few days, we're confident that can happen."[127]

text: Market reaction to September 29 vote[edit]

text: Following the House vote, the Dow Jones Industrial Average dropped over 777 points in a single day, its largest single-day point drop ever.[132] The $1.2 trillion loss in market value received much media attention, although it still does not rank among the index's ten largest drops in percentage terms. The S & P lost 8.8%, its seventh worst day in percentage terms and its worst day since Black Monday in 1987. The NASDAQ composite also had its worst day since Black Monday, losing 9.1% in its third worst day ever. The TED spread, the difference between what banks charge each other for a three-month loan and what the Treasury charges, hit a 26-year high of 3.58%; a higher rate for inter bank loans than Treasury loans is a sign that banks fear that their fellow banks won't be able to pay off their debts. Meanwhile, the price of U.S. light crude oil for November delivery fell $10.52 to $96.37 a barrel, its second largest one-day drop ever, on expectations of an economic slowdown reducing oil consumption and demand.[133] The Dow Jones industrial average recovered 485 points or about 62% of the entire loss the very next day.[134]

text: Markets which had expected the bill to pass and had moved on to debating whether it would be sufficient were already skittish after news that Wachovia Bank was being bought out by Citigroup to avoid collapse. The events were compounded by news from Europe that Dutch-Belgian Fortis Bank was given a $16.4 billion lifeline to avoid collapse, failing British bank Bradford & Bingley was nationalized, and Germany extended banking and real estate giant Hypo Real Estate billions to ensure its survival.[133]

text: Later in October, after the bill had been passed, the Dow Jones Industrial Average would drop by more in percentage terms, and market volatility remained at historically high levels, as measured by the VIX.

text: Senate vote October 1[edit]

text:
On Wednesday evening, October 1, 2008, the Senate debated and voted on a revised version of the Emergency Economic Stabilization Act of 2008 (EESA 2008). The legislation was framed as an amendment to HR1424, substituting the entire bill with the newly revised text of the EESA 2008.[10] (the amendment being the text of the Emergency Economic Stabilization Act of 2008) Senate Committee on Banking, Housing and Urban Affairs (CBHUA) (October 1, 2008) ( Retrieved October 1, 2008)
See also the Senate CBHUA web page[12][135] The amendment was approved by a 74–25 vote, and the entire bill was also passed by the same margin, 74–25 (R: 34-15, D: 40-10, including Lieberman and Sanders).[136][137] Only cancer-stricken Senator Ted Kennedy did not vote. Under the legislative rule for the bill, sixty votes were required to approve the amendment and the bill.[12][134] A House leader accused the Senate of legislating "by blunt force" without public consent.[138]

text: Describing the Senate's reason for passing the bill, former Senator Evan Bayh "described a scene from 2008 where Ben Bernanke warned senators that the sky would collapse if the banks weren't rescued. 'We looked at each other,' said Bayh, 'and said, okay, what do we need.'"[139]

text: Second House vote, October 3[edit]

text: The revised HR1424 was received from the Senate by the House, and on October 3, it voted 263-171 to enact the bill into law. Democrats voted 172 to 63 in favor of the legislation, while Republicans voted 108 to 91 against it; overall, 33 Democrats and 24 Republicans who had previously voted against the bill supported it on the second vote.[9][15]

text: President Bush signed the bill into law within hours of its enactment, creating a $700 billion dollar Treasury fund to purchase failing bank assets.[140]

text: The revised plan left the $700 billion bailout intact and appended a stalled tax bill.[134] The law has three major divisions, Division A: the Emergency Economic Stabilization Act of 2008; Division B: Energy Improvement and Extension Act of 2008, and Division C: the Tax Extenders and Alternative Minimum Tax Relief Act of 2008.[9] The tax part of the law has provisions that will have a net expenditure of $100 billion over 10 years. It had been stalled due to a disagreement between Democrats that did not want to increase spending without a corresponding increase in taxes and Republicans, who were adamantly opposed to any tax increases.

text: Key items in the legislation[edit]

text: On October 3, 2008, the Emergency Economic Stabilization Act became law with the signing of Public Law 110-343, which included the act.[141] Below is a list of key items and how the legislation deals with them.

text: Interest on bank deposits held by the Federal Reserve[edit]

text: Although the original bill proposed as late as September 20 contained no such provision,[23] Section 128 of the Act allowed the Federal Reserve System (the Fed) to begin paying banks a high interest rate on their deposits held for reserve requirements. It reads:

text: The Fed announced that it would begin paying such increased interest on both reserve and excess reserve balances on October 6, 2008.[142] Banks immediately increased the amount of their money on deposit with the Fed, up from about $10 billion total at the end of August 2008, to $880 billion by the end of the second week of January 2009.[143][144] In comparison, the increase in reserve balances reached only $65 billion after September 11, 2001 before falling back to normal levels within a month. The U.S. Treasury Department explained the changes, saying:

text: The Federal Reserve will continue to take a leadership role with respect to liquidity in our markets. It is committed to using all of the tools at its disposal to provide the increased liquidity that is now required for the effective functioning of financial markets. In this regard, the authority to pay interest on reserves that was provided by EESA is essential, because it allows the Federal Reserve to expand its balance sheet as necessary to support financial stability while conducting a monetary policy that promotes the Federal Reserve's macroeconomic objectives of maximum employment and stable prices. The Federal Reserve and the Treasury Department are consulting with market participants on ways to provide additional support for term unsecured funding markets.[145]

text: Reactions to the change were mixed, with banks generally approving of their new ability to earn high interest without risk on funds that they would otherwise need to use to extend credit in order to make a profit for their shareholders, while those involved in the commercial paper markets, the primary and secondary sectors of the goods and services economy, shipping, and others depending on the liquidity of credit from banks were more skeptical of the further pressure against credit availability in the midst of the ongoing credit liquidity crisis.[146][147]

text: The day after the change was announced, on October 7, Fed Chairman Ben Bernanke expressed some confusion about it, saying, "We're not quite sure what we have to pay in order to get the market rate, which includes some credit risk, up to the target. We're going to experiment with this and try to find what the right spread is."[148] The Fed adjusted the rate on October 22, after the initial rate they set October 6 failed to keep the benchmark U.S. overnight interest rate close to their policy target,[148][149] and again on November 5 for the same reason.[150] Beginning December 18, the Fed directly established interest rates paid on required reserve balances and excess balances instead of specifying them with a formula based on the target federal funds rate.[151][152][153]

text: The government issued $400 billion of short-term debt intended to help replace the $1.8 trillion commercial paper market which was wiped out by the change,[154] (exacerbated by money market funds' sudden refusal to support commercial paper as well) but the world economy began to deflate as international shipping, dependent on commercial paper, slowed in some regions to a few percent of levels prior to the change.[155][156] The FDIC announced a new program on October 14, under which newly issued senior unsecured debt issued on or before June 30, 2009, would be fully protected in the event the issuing institution subsequently fails, or its holding company files for bankruptcy.[157] The FDIC program is expected to cover about $1.4 trillion of bank debt.[158]

text: The Congressional Budget Office estimated that payment of interest on reserve balances would cost the American taxpayers about one tenth of the present 0.25% interest rate on $800 billion in deposits:

text:
Estimated budgetary effects[159]

Year
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016

Millions of dollars
0
-192
-192
-202
-212
-221
-242
-253
-266
-293
-308

(Negative numbers represent expenditures; losses in revenue not included.)

text: Those expenditures pale in comparison to the lost tax revenues worldwide resulting from decreasing economic activity due to damage to the short-term commercial paper and associated credit markets.

text: On January 7, 2009, the Federal Open Market Committee decided that, "the size of the balance sheet and level of excess reserves would need to be reduced."[160] On January 13, Ben Bernanke said, "In principle, the interest rate the Fed pays on bank reserves should set a floor on the overnight interest rate, as banks should be unwilling to lend reserves at a rate lower than they can receive from the Fed. In practice, the federal funds rate has fallen somewhat below the interest rate on reserves in recent months, reflecting the very high volume of excess reserves, the inexperience of banks with the new regime, and other factors. However, as excess reserves decline, financial conditions normalize, and banks adapt to the new regime, we expect the interest rate paid on reserves to become an effective instrument for controlling the federal funds rate."[161] The same day, Financial Week said Mr. Bernanke admitted that a huge increase in banks' excess reserves is stifling the Fed's monetary policy moves and its efforts to revive private sector lending.[162]

text: On January 15, Chicago Fed president and Federal Open Market Committee member Charles Evans said, "once the economy recovers and financial conditions stabilize, the Fed will return to its traditional focus on the federal funds rate. It also will have to scale back the use of emergency lending programs and reduce the size of the balance sheet and level of excess reserves. 'Some of this scaling back will occur naturally as market conditions improve on account of how these programs have been designed. Still, financial market participants need to be prepared for the eventual dismantling of the facilities that have been put in place during the financial turmoil,' he said."[163]

text: At the end of January 2009, excess reserve balances at the Fed stood at $793 billion[164] but less than two weeks later on February 11, total reserve balances had fallen to $603 billion. On April 1, reserve balances had again increased to $806 billion, and late November 2009, they stood at $1.16 trillion.[165]

text: Management of the Troubled Asset Relief Program[edit]

text: The bill authorizes the Secretary of the Treasury to establish the Troubled Assets Relief Program to purchase troubled assets from financial institutions. The Office of Financial Stability is created within the Treasury Department as the agency through which the Secretary will run the program. The Secretary is required to consult with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, and the Secretary of Housing and Urban Development when running the program.[166][167]

text: Funding[edit]

text: The bill authorizes $700 billion for the program. The Treasury Secretary has immediate access to the first $250 billion. Following that, an additional $100 billion can be authorized by the President. For the last $350 billion, the President must notify Congress of the intention to grant the additional funding to the Treasury; Congress then has 15 days to pass a resolution disallowing the authority. If Congress fails to pass a resolution opposing the funding within 15 days, or if the resolution passes, but is vetoed by the President, and Congress does not have enough votes to override the veto, the Treasury will receive the final $350 billion.[168][169]

text: Government equity interests in participating firms[edit]

text: The Treasury Secretary is required to obtain a financial warrant guaranteeing the right to purchase non-voting stock or, if the company is unable to issue a warrant, senior debt from any firm participating in the program. The Secretary is allowed to make a de minimis exception to the rule, but that exception may not exceed $100 million.[170][171]

text: Executive pay limits[edit]

text: If the Treasury purchases assets directly from a company, and also receives a meaningful equity or debt position in that company, the company is not allowed to offer incentives that encourage "unnecessary and excessive risks" to its senior executives (that is, the top five executives).[172] Also, the company is prohibited from making golden parachute payments to a senior executive. Both of these prohibitions expire when the Treasury no longer holds an equity or debt position in that company. The company also is given "clawback" permission; that is, the opportunity to recover senior executive bonus or incentive pay based on earnings, gains, or other data that proves to be inaccurate.[173][174]

text: If the Treasury purchases assets via auction, and that purchase exceeds $300 million, any new employment contract for a senior officer may not include a golden parachute provision in the case of involuntary termination, bankruptcy filing, insolvency, or receivership. This prohibition only applies to future contracts; golden parachutes already in place will remain unaffected.[173][174]

text: In either scenario, no limits are placed on executive salary, and existing golden parachutes will not be altered.[175]

text: Foreclosure avoidance and homeowner assistance[edit]

text: For mortgages involved in assets purchased by the Treasury Department, the Treasury Secretary is required to (1) implement a plan that seeks to maximize assistance for homeowners, and (2) encourage the servicers of the underlying mortgages to take advantage of the HOPE for Homeowners Program of the National Housing Act or other available programs to minimize foreclosures.[170] Furthermore, the Secretary is allowed to use loan guarantees and credit enhancements to encourage loan modifications to avert foreclosure.[176] The bill does not provide a mechanism to change the terms of a mortgage without the consent of any company holding a stake in that mortgage.[177] Section 110: Assistance to Homeowners of the Emergency Economic Stabilization Act of 2008 "requires federal entities that hold mortgages and mortgage-backed securities to develop plans to minimize foreclosures".[178]

text: This $24 billion asset detoxification plan was requested by Federal Deposit Insurance Corporation Chair Sheila Bair,[179] but the Treasury did not use the provision. "The primary purpose of the bill was to protect our financial system from collapse," Secretary Henry Paulson told the House Financial Services Committee, "The rescue package was not intended to be an economic stimulus or an economic recovery package."[180]

text: Judicial review[edit]

text: The bill establishes that actions taken by the Treasury Secretary regarding this program are subject to judicial review,[170][181] reversing the request for immunity made in the original Paulson proposal.[182]

text: Oversight[edit]

text: Several oversight mechanisms are established by the bill. Contractors were also used to help manage the TARP funds.[183][184]

text: The Financial Stability Oversight Board is created to review and make recommendations regarding the Treasury's actions.[185][186] The members of the board are:

text:
Chairman of the Board of the Federal Reserve
Secretary of the Treasury
Director of the Federal Housing Finance Agency
Chairman of the Securities and Exchange Commission
Secretary of the Department of Housing and Urban Development

text: A Congressional Oversight Panel is created by the bill to review the state of the markets, current regulatory system, and the Treasury Department's management of the Troubled Asset Relief Program. The panel is required to report their findings to Congress every 30 days, counting from the first asset purchase made under the program. The panel must also submit a special report to Congress about regulatory reform on or before January 20, 2009.[185][187]

text: The panel consists of five outside experts appointed as follows:

text:
One member chosen by the Speaker of the House
One member chosen by the minority leader of the House
One member chosen by the majority leader of the Senate
One member chosen by the minority leader of the Senate
One member chosen by the Speaker of the House and the majority leader of the Senate, following consultation with the minority leaders of Congress

text: The Comptroller General (director of the Government Accountability Office) is required to monitor the performance of the program, and report findings to Congress every 60 days. The Comptroller General is also required to audit the program annually. The bill grants the Comptroller General access to all information, records, reports, data, etc. belonging to or in use by the program.[188][189]

text: The bill creates the Office of the Special Inspector General for the Troubled Asset Relief Program, appointed by the President and confirmed by the Senate. The Special Inspector General's purpose is to monitor, audit and investigate the activities of the Treasury in the administration of the program, and report findings to Congress every quarter.[188][190]

text: FDIC insurance[edit]

text: From the date of enactment of the bill (October 3, 2008) until December 31, 2009, the amount of deposit insurance provided by the FDIC is increased from $100,000 to $250,000.[185][191]

text: Budget-related provisions[edit]

text: Title II sets out guidelines for consultation and reporting between the Treasury Secretary, the Office of Management and Budget, and the Congressional Budget Office.

text: Tax provisions[edit]

text: The bill makes the following changes to tax law.

text:
Qualified financial institutions may count losses on FNMA and FHLMC preferred stock against ordinary income, rather than capital gain income.
New limitations are added on deductibility of executive compensation by corporations participating in the bailout.
The mortgage debt forgiveness provision of the Mortgage Forgiveness Debt Relief Act of 2007 is extended by three years, so that it applies to debts forgiven through the year 2012.
Extend the expiration date of the section 41 Research & Development Tax Credit from December 31, 2007, to December 31, 2009; also, increase the Alternative Simplified Credit percentage from 12% to 14%.

text: Administration of the law[edit]

text: CAMELS ratings are being used by the United States government to help it decide which banks to provide special help for and which to not as part of its capitalization program authorized by the Emergency Economic Stabilization Act of 2008.[192]

text: The New York Times states: "The criteria being used to choose who gets money appears to be setting the stage for consolidation in the industry by favoring those most likely to survive" because the criteria appears to favor the financially best off banks and banks too big to let fail. Some lawmakers are upset that the capitalization program will end up culling banks in their districts.[192]

text: Known aspects of the capitalization program "suggest that the government may be loosely defining what constitutes healthy institutions. [... Banks] that have been profitable over the last year are the most likely to receive capital. Banks that have lost money over the last year, however, must pass additional tests. [...] They are also asking if a bank has enough capital and reserves to withstand severe losses to its construction loan portfolio, nonperforming loans and other troubled assets."[192] Some banks received capital with the understanding the banks would try to find a merger partner. To receive capital under the program banks are also "required to provide a specific business plan for the next two or three years and explain how they plan to deploy the capital."[192]

text: Effects on national debt[edit]

text: The United States annual budget deficit for fiscal year 2009 surpassed $1 trillion. The original Paulson proposal would lift the United States federal debt ceiling by $700 billion, to $11.3 trillion from the current $10.6 trillion.[193]

text: Other information[edit]

text: A review of investor presentations and conference calls by executives of some two dozen US-based banks by The New York Times found that "few [banks] cited lending as a priority. An overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future." [194]


document_title: Theosis (Eastern Christian theology)

question_text: phases of theosis in the eastern orthodox church

root

text: Theosis (Eastern Christian theology)

text: Divinization[edit]

text: Athanasius of Alexandria wrote, "He was incarnate that we might be made god" (Αὐτὸς γὰρ ἐνηνθρώπησεν, ἵνα ἡμεῖς θεοποιηθῶμεν).[4] His statement is an apt description of the doctrine. What would otherwise seem absurd—that fallen, sinful man may become holy as God is holy—has been made possible through Jesus Christ, who is God incarnate. Naturally, the crucial Christian assertion, that God is One, sets an absolute limit on the meaning of theosis: as it is not possible for any created being to become God ontologically, or even a necessary part of God (of the three existences of God called hypostases), so a created being cannot become Jesus Christ, the Holy Spirit nor the Father of the Trinity.[5]

tag: p

text: Most specifically creatures, i.e. created beings, cannot become God in His transcendent essence, or ousia, hyper-being (see apophaticism). Such a concept would be the henosis, or absorption and fusion into God of Greek pagan philosophy. However, every being and reality itself is considered as composed of the immanent energy, or energeia, of God. As energy is the actuality of God, i.e. his immanence, from God's being, it is also the energeia or activity of God. Thus the doctrine avoids pantheism while partially accepting Neoplatonism's terms and general concepts, but not its substance (see Plotinus).[5]

text: Maximus the Confessor wrote:

text: A sure warrant for looking forward with hope to deification of human nature is provided by the Incarnation of God, which makes man God to the same degree as God Himself became man ... . Let us become the image of the one whole God, bearing nothing earthly in ourselves, so that we may consort with God and become gods, receiving from God our existence as gods. For it is clear that He Who became man without sin (cf. Heb. 4:15) will divinize human nature without changing it into the Divine Nature, and will raise it up for His Own sake to the same degree as He lowered Himself for man's sake. This is what St[.] Paul teaches mystically when he says, '[]that in the ages to come he might display the overflowing richness of His grace' (Eph. 2:7)[6]

text: Theoria[edit]

text: Through theoria (illumination with or direct experience of the Triune God), human beings come to know and experience what it means to be fully human, i.e., the created image of God; through their communion with Jesus Christ, God shares himself with the human race, in order to conform them to all that He is in knowledge, righteousness, and holiness. As God became human, in all ways except sin, he will also make humans "God", i.e., "holy" or "saintly", in all ways except his Divine Essence, which is uncaused and uncreated. Irenaeus explained this doctrine in the work Against Heresies, Book 5, Preface: "the Word of God, our Lord Jesus Christ, Who did, through His transcendent love, become what we are, that He might bring us to be even what He is Himself."

text: As a patristic and historical teaching[edit]

text: For many Church Fathers, theosis goes beyond simply restoring people to their state before the fall of Adam and Eve, teaching that because Christ united the human and divine natures in Jesus' person, it is now possible for someone to experience closer fellowship with God than Adam and Eve initially experienced in the Garden of Eden, and that people can become more like God than Adam and Eve were at that time. Some Eastern Christian theologians go so far as to say that Jesus would have become incarnate for this reason alone, even if Adam and Eve had never sinned.[7]

text: All of humanity is fully restored to the full potential of humanity because the Son of God took to himself a human nature to be born of a woman, and takes to himself also the sufferings due to sin (yet is not himself sinful, and is God unchanged in being). In Christ the two natures of God and human are not two persons but one; thus a union is effected in Christ between all of humanity in principle and God. So the holy God and sinful humanity are reconciled in principle in the one sinless man, Jesus Christ. (See Jesus' prayer as recorded in John 17.)[8]

text: This reconciliation is made actual through the struggle to conform to the image of Christ. Without the struggle, the praxis, there is no real faith; faith leads to action, without which it is dead. One must unite will, thought, and action to God's will, his thoughts, and his actions. A person must fashion his life to be a mirror, a true likeness of God. More than that, since God and humanity are more than a similarity in Christ but rather a true union, Christians' lives are more than mere imitation and are rather a union with the life of God himself: so that the one who is working out salvation is united with God working within the penitent both to will and to do that which pleases God.

text: Stages[edit]

text: Theosis has three stages: first, the purgative way, purification, or katharsis; second, illumination, the illuminative way, the vision of God, or theoria; and third, sainthood, the unitive way, or theosis. Thus the term "theosis" describes the whole process and its objective. By means of purification a person comes to theoria and then to theosis. Theosis is the participation of the person in the life of God. According to this doctrine, the holy life of God, given in Jesus Christ to the believer through the Holy Spirit, is expressed through the three stages of theosis, beginning in the struggles of this life, increasing in the experience of knowledge of God, and consummated in the resurrection of the believer, when the victory of God over fear, sin, and death, accomplished in the crucifixion and resurrection of Jesus Christ, is made manifest in the believer forever.[9]

text: "Like minded" as a form of unity[edit]

text: Yet through faith we can attain phronema, an understanding of the faith of the church. A common analogy for theosis, given by the Greek fathers, is that of a metal which is put into the fire. The metal obtains all the properties of the fire (heat, light), while its essence remains that of a metal.[10] Using the head-body analogy from Paul the Apostle, every man in whom Christ lives partakes of the glory of Christ. As John Chrysostom observes, "where the head is, there is the body also. There is no interval to separate between the Head and the body; for were there a separation, then were it no longer a body, then were it no longer a head."[11]

text: Ascetic practice[edit]

text: The journey toward theosis includes many forms of praxis, the most obvious being monasticism and clergy. Of the monastic tradition, the practice of hesychasm is most important as a way to establish a direct relationship with God. Living in the community of the church and partaking regularly of the sacraments, especially the Eucharist, is taken for granted. Also important is cultivating "prayer of the heart", and prayer that never ceases, as Paul exhorts the Thessalonians (1 and 2). This unceasing prayer of the heart is a dominant theme in the writings of the Fathers, especially in those collected in the Philokalia. It is considered that no one can reach theosis without an impeccable Christian living, crowned by faithful, warm, and, ultimately, silent, continuous Prayer of the Heart.[12]

text: The "doer" in deification is the Holy Spirit, with whom the human being joins his will to receive this transforming grace by praxis and prayer, and as Gregory Palamas teaches, the Christian mystics are deified as they become filled with the Light of Tabor of the Holy Spirit in the degree that they make themselves open to it by asceticism (divinization being not a one-sided act of God, but a loving cooperation between God and the advanced Christian, which Palamas considers a synergy).[13]

text: This synergeia or co-operation between God and Man does not lead to mankind being absorbed into the God as was taught in earlier pagan forms of deification like henosis. Rather it expresses unity, in the complementary nature between the created and the creator. Acquisition of the Holy Spirit is key as the acquisition of the spirit leads to self-realization.[14]

text: Western attitudes[edit]

text: Western attitudes towards theosis have traditionally been negative. In his article, Bloor highlights various Western theologians who have contributed to what he calls a "stigma" towards theosis.[15] Yet, recent theological discourse has seen a reversal of this, with Bloor drawing upon Western theologians from an array of traditions, whom, he claims, embrace theosis/deification.[15]

text: The practice of ascetic prayer, called Hesychasm in the Eastern Orthodox Church and Eastern Catholic Churches, "is centered on the enlightenment or deification (... or theosis, in Greek) of man".[16]

text: Hesychasm is directed to a goal that is not limited to natural life alone and goes beyond this to deification (theosis).[17]

text: In the past, Roman Catholic theologians generally expressed a negative view of Hesychasm. The doctrine of Gregory Palamas won almost no following in the West,[18] and the distrustful attitude of Barlaam in its regard prevailed among Western theologians, surviving into the early 20th century, as shown in Adrian Fortescue's article on hesychasm in the 1910 Catholic Encyclopedia.[19] Fortescue translated the Greek words ἥσυχος and ἡσυχαστής as "quiet" and "quietist".[20]

text: In the same period, Edward Pace's article on quietism indicated that, while in the strictest sense quietism is a 17th-century doctrine proposed by Miguel de Molinos, the term is also used more broadly to cover both Indian religions and what Edward Pace called "the vagaries of Hesychasm", thus betraying the same prejudices as Fortescue with regard to hesychasm;[21] and, again in the same period, Siméon Vailhé described some aspects of the teaching of Palamas as "monstrous errors", "heresies" and "a resurrection of polytheism", and called the hesychast method for arriving at perfect contemplation "no more than a crude form of auto-suggestion".[22]

text: Different concepts of "natural contemplation" existed in the East and in the medieval West.[a][23]

text: The twentieth century saw a remarkable change in the attitude of Roman Catholic theologians to Palamas, a "rehabilitation" of him that has led to increasing parts of the Western Church considering him a saint, even if uncanonized.[24] Some Western scholars maintain that there is no conflict between Palamas's teaching and Roman Catholic thought.[25] According to G. Philips, the essence–energies distinction is "a typical example of a perfectly admissible theological pluralism" that is compatible with the Roman Catholic magisterium.[25] Jeffrey D. Finch claims that "the future of East–West rapprochement appears to be overcoming the modern polemics of neo-scholasticism and neo-Palamism".[26] Some Western theologians have incorporated the theology of Palamas into their own thinking.[27]

text: Pope John Paul II said Catholics should be familiar with "the venerable and ancient tradition of the Eastern Churches", so as to be nourished by it. Among the treasures of that tradition he mentioned in particular:

text: the teaching of the Cappadocian Fathers on divinization (which) passed into the tradition of all the Eastern Churches and is part of their common heritage. This can be summarized in the thought already expressed by Saint Irenaeus at the end of the second century: God passed into man so that man might pass over to God. This theology of divinization remains one of the achievements particularly dear to Eastern Christian thought.[28]


document_title: Royal Edinburgh Military Tattoo

question_text: when was the first edinburgh military tattoo held

text: Royal Edinburgh Military Tattoo

text: History and etymology[edit]

text: Etymology[edit]

text: The term "tattoo" derives from a 17th-century Dutch phrase doe den tap toe ("turn off the tap") a signal to tavern owners each night, played by a regiment's Corps of Drums, to turn off the taps of their ale kegs so that the soldiers would retire to their billeted lodgings at a reasonable hour. With the establishment of modern barracks and full military bands later in the 18th century, the term "tattoo" was used to describe the last duty call of the day, as well as a ceremonial form of evening entertainment performed by military musicians.[1]

text: Origins[edit]

text: The first public military tattoo in Edinburgh was entitled "Something About a Soldier" and took place at the Ross Bandstand, Princes Street Gardens, in 1949. The first official Edinburgh Military Tattoo was held in 1950 with eight items in the programme. It drew some 6,000 spectators seated in simple bench and scaffold structures around the north, south, and east sides of the Edinburgh Castle esplanade. In 1952, the capacity of the stands was increased to accommodate a nightly audience of 7,700, allowing 160,000 to watch the multiple live performances.

text: Seating expansion[edit]

text: Since the 1970s on average, just over 217,000 people see the Tattoo live on the esplanade of Edinburgh Castle each year, and it has sold out in advance for the last decade. 30% of the audience are from Scotland and 35% from the rest of the United Kingdom. The remaining 35% of the audience consists of 70,000 visitors from overseas.

text: The temporary grandstands on the castle esplanade, used between 1975 and 2010, had a capacity of 8,600.[2] New £16 million spectator stands and corporate hospitality boxes came into use in 2011. The new temporary stands reduced the time taken to erect and dismantle them from the original two months to one month, allowing the esplanade to host events at other times of the year.[3]

text: Performances[edit]

text: The Tattoo performance takes place every weekday evening and twice on Saturdays throughout August and has never been cancelled due to inclement weather. The second Saturday night performance includes a fireworks display, although each performance uses pyrotechnics and since 2005 has also incorporated a son et lumière element projected on to the facade of the Castle.

text: Since 2004, the Edinburgh Military Tattoo has also held free abridged performances at the Ross Bandstand in Princes Street Gardens, entitled "Taste of the Tattoo",[4] and as of 2008 also in George Square in Glasgow.[5] The Edinburgh Military Tattoo has also toured overseas, visiting New Zealand in 2000 as part of the Tattoo's 50th anniversary celebrations. It visited Australia in 2005 and returned to the Sydney Football Stadium in February 2010 as part of the Tattoo's 60th anniversary celebrations.[6] It has been announced that the Royal Edinburgh Military Tattoo will be heading to Melbourne[7] and Wellington, New Zealand in February 2016, the first time in 16 years since it was last held there.[8]

text: As of 2014[update] the Princess Royal is the patron of the event, with the main corporate sponsor being the Royal Bank of Scotland.

text: In 2010 the event became the Royal Edinburgh Military Tattoo after HM Queen Elizabeth awarded the Royal title in celebration of its six decades of existence.

text: International exposure[edit]

text: The Tattoo is televised in 30 countries and a further 100 million people see the event on television worldwide.[citation needed] In Britain the BBC broadcasts the event annually, with commentary in 2009 and 2010 provided by BBC Radio Scotland presenter Iain Anderson. Bill Paterson has provided commentary since 2011; before 2009, Tom Fleming commentated, not missing a year between 1966 and 2008. In Australia the Australian Broadcasting Corporation (ABC) traditionally telecasts the Tattoo on the evening of New Year's Eve, although in a break with tradition, the 2006 Tattoo was broadcast a day earlier on 30 December, the 2007 Tattoo was broadcast even earlier on Christmas Eve, and the 2009 Tattoo was broadcast two days after New Year's Eve on 2 January 2010. These changes were made so the ABC could expand its news coverage of local New Year celebrations.

text: The Tattoo is run for charitable causes and over the years has given over £5 million to military and civilian charities and organisations, such as the Army Benevolent Fund. However, the greater benefit has been that, by independent count, it generates £88 million in revenue for Edinburgh's economy annually.

text: The official magazine of the Edinburgh Military Tattoo, Salute, is distributed free to sponsors, Friends of the Tattoo, and visiting performers.

text: Performers[edit]

text: International military regiments and even African tribes have performed at the Tattoo over the years. The first regiment from outside the UK to take part was the Band of the Royal Netherlands Grenadiers in 1952. So far, over 30 countries from nearly all continents have been represented at the Tattoo. Popular visiting performers include the Swiss Top Secret Drum Corps, who performed at the 2003, 2006, 2009, 2012 and 2015 Tattoos and were the first non-military drum corps to participate. The Band and Drill team of His Majesty The King's Guard of the Norwegian Army has also performed at the Tattoo on eight previous occasions since 1961, adopting Nils Olav, a penguin at Edinburgh Zoo, as their regimental mascot in 1972. In recent years, performances have included cultural dances and items from different countries.

text: Each year has a 'lead' service from the British Armed Forces, alternating between the Royal Navy and Royal Marines, the British Army and the Royal Air Force. Although each year also celebrates or commemorates a particular organisation, anniversary, theme or event. The highlight of every Tattoo however continues to be the massed pipes and drums, provided by regiments of the British Army and visiting civilian and military pipes and drums from around the world, although primarily from Commonwealth nations with Scottish connections. Since 2014, a house pipe band was introduced to allow individual pipers and drummers from not only Scotland but across many parts of the world to play in the Tattoo. They're known as the Pipers' Trail which joins in with the massed pipes and drums each year and are the first pipe band with no military connections to play in the Tattoo. An Each evening traditionally concludes with the massed pipes and drums marching on to join the massed military bands. This is then followed by a rendition of the National Anthem and Auld Lang Syne. There is then a flag-lowering ceremony (see Beating Retreat), with the bugles either sounding the Last Post, or the "Sunset" bugle call of the Royal Marines, and ends with a floodlit lone piper playing a Lament from high on the ramparts of the Half Moon Battery. The performers then march off the esplanade and down the Royal Mile to three separate pieces of music:

text:
The non-musical performers leave the esplanade to the tune of Scotland the Brave
The massed bands march off to the tune of No awa' tae bide awa'
The massed pipes and drums march off to The Black Bear

tag: ul

text: The 2005 Tattoo saw one of the largest gathering of pipes and drums in the event's history, with 13 bands on parade, including the pipes and drums of all six regular infantry regiments of the Scottish Division. This was the last time all six appeared at the Tattoo prior to the formation of the Royal Regiment of Scotland:

text:
The Royal Scots (The Royal Regiment)
The Royal Highland Fusiliers (Princess Margaret's Own Glasgow and Ayrshire Regiment)
The King's Own Scottish Borderers
The Black Watch (Royal Highland Regiment)
The Highlanders (Seaforth, Gordons and Camerons)
The Argyll and Sutherland Highlanders (Princess Louise's)

text: In addition, there were also the pipes and drums of the Scots Guards, Irish Guards, Royal Gurkha Rifles, Scottish Officers Training Corps, South African Irish Regiment, the Rats of Tobruk, the City of Wellington pipe band and The Scots College Pipes and Drums band, being one of the only school bands to participate. The largest ever gathering of massed pipes and drums was for the 50th anniversary tattoo in 2000 when there were 15 bands on parade, including 7 of the eight Scottish regiments. Throughout the period of the Tattoo, the performers are accommodated at the city's Redford Cavalry Barracks, with the parade square used for rehearsals.

text: Producers[edit]

text: Producers of the Edinburgh Tattoo have included:

text:
Lt Col George Malcolm of Poltalloch – Produced a pageant on the Castle Esplanade in 1947 entitled "The King's Men" and produced the first Edinburgh Tattoo in 1950.
Captain Forbes Taylor – Produced the 1952 Tattoo. As a professional film director, Captain Forbes Taylor provided the experience upon which the format for subsequent Tattoos were set and included the first overseas performers.
Brigadier Alistair MacLean of Pennycross – Director of the Tattoo from 1950, he took over as the Producer in 1953.
Lt Col Duncan Carter-Campbell of Possil – Served with the Cameronians (Scottish Rifles) and took over in 1960.
Brigadier Jack Sanderson – Former Scots Guards officer, he took over in 1968.
Lt Col Leslie Dow – Served with the Cameronians (Scottish Rifles) and became producer in 1976.
Major Michael Parker – Producer of the Royal Tournament (1974–99), the Berlin Tattoo as well as the VE & VJ Day commemorations in 1995. Producer of the Tattoo from 1992–4
Brigadier Melville Jameson – Served with the Royal Scots Dragoon Guards and former commander of the Highland Brigade. Producer of the Tattoo from 1994–2006.
Major-General Euan Loudon – Served with the Royal Highland Fusiliers and former GOC 2nd Division and Governor of Edinburgh Castle. Took over the producer's post in 2007.
Brigadier David Allfrey MBE – Served with The Royal Scots Dragoon Guards. Current producer after taking over from Maj-Gen Louden in 2011


document_title: Overtaking

question_text: which is the inside lane on a road

question_tokens: which is the inside lane on a road

text: Overtaking

text: Rules of overtaking[edit]

text: In English speaking countries[edit]

text: This section does not cite any sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. (October 2017) (Learn how and when to remove this template message)

tag: table

text: On a single carriageway/undivided carriageway road, the lane used for overtaking is often the same lane that is used by oncoming traffic, and it is often only advisable to overtake on long straightaways with plenty of visibility. In some jurisdictions, the "overtaking zone" is indicated by a single broken centerline (yellow or white in most countries) if overtaking is allowed in either direction, or paired with a single solid line beside it to indicate there is no overtaking from the solid side. In the UK, the format of the centerline is not used to regulate overtaking, only to indicate whether crossing of the line is prohibited or permitted.

text: In the Republic of Ireland, many national primary roads were upgraded in the 1990s and 2000s to wide two lane road (two lane road with space for three lanes, in addition to hard shoulders) to allow more space for overtaking (a very common manoeuvre in a country that had little dual carriageway until the early 2000s). However, due to the deceptive perception of safety given by such roads, future upgrade projects are likely to be 2+1 road where traffic volume suits (a successful pilot installation was used on the N20 near Mallow, County Cork). This form of road is of similar profile to wide two lane, but includes a central crash barrier, and has three lanes, with an overtaking lane on one side or the other, alternating every 2 km. It has been used in Denmark and Sweden since the 1990s.

text: On a dual carriageway/divided carriageway highway/motorway or arterial road, any lane can be an overtaking lane though in many places (including Germany) undertaking (overtaking on the side furthest from the road centre line) is prohibited.  Lanes are normally separated by broken lines (usually white) but may be a single solid white to indicate lane-changing is allowed but discouraged.  Double lines indicate that lane-changing (for example to overtake) is prohibited, such as in tunnels or sometimes for HOV lanes and HOT lanes.

text: Overtaking in an HOV or HOT lane is usually illegal for cars that do not meet the HOV/HOT criteria, except when directed by the police.

text: A few places also use the one-broken/one-solid marking at slip roads/entrance ramps, to indicate to highway drivers that the new lane merges and does not continue, so they do not attempt to overtake in a lane that ends shortly.  This is also used at other points where lanes merge.

text: Vienna Convention on Road Traffic[edit]

text: In countries bounded by Vienna Convention on Road Traffic[1], article 11 stand that:

text:
"Drivers overtaking shall do so on the side opposite to that appropriate to the direction of traffic."
Driver should check some points, including:  no  following driver overtake, no ahead driver warned his intention to overtake, lane clear far enough ahead,   availability  to resume.
overtaking on two-way carriageways might be forbidden according to  the nearness of the  crest of a hill  or the  longitudinal road markings
the wide distance should be good
Overtaking is usually forbidden in crossing
Overtaking is usually forbidden where a pedestrian crossing is marked on the carriageway
The one who is overtaken should  refrain from accelerating.

text: In fact each nation might have introduced some variations to this bases.

text: Overtaking on the inside[edit]

text: Overtaking on the inside or undertaking[2][3][4] refers to the practice of overtaking a slower vehicle on a road using the lane that is kerb side of the vehicle being passed; that is to say, a lane to the left of the vehicle in countries where driving is on the left, or a lane to the right of the vehicle in countries where driving is on the right. The practice of passing on the inside, therefore, usually only occurs on a motorway or other road where there is more than one lane in the same direction or when the width of the roads makes this possible (although there may be exceptions in the cases of contraflow bus lanes).

text: Many countries consider overtaking on the inside dangerous and therefore designate it a driving offence, however most countries make the distinction between involuntary undertaking (passing centre side vehicles in heavy traffic) as opposed to the deliberate attempt to pass a slower moving vehicle for one's own benefit.

text: Legal status by country[edit]

text:
Australia and New Zealand –  Undertaking is legal on multi-lane roads, or where a car is indicating to turn right.[3]
Canada –  Varies by province.
Denmark –  Undertaking is specifically prohibited, unless passing a vehicle clearly turning left or riding a bicycle or small moped.[5] However, drivers may pass other vehicles to the right in certain circumstances; these include heavy traffic where the speed is determined by the next vehicle and vehicles in reserved lanes.[6]
Finland –  Undertaking is specifically prohibited, except for inner-city traffic and vehicle waiting to turn left or on the motorway if the vehicles in the lane to the left are queueing and slow moving.
France –  Undertaking is specifically prohibited, except for vehicle waiting to turn left or if the vehicles in the lane to the left are queueing and slow moving.
Germany –  Undertaking is specifically prohibited, exceptions exist for inner-city traffic and overtaking trams and vehicles waiting to turn left.
Hungary –  Undertaking is prohibited outside built-up areas. Inside built-up areas, passing on the right is permitted, but only if there are road markings. The undertaking manoeuvre in built-up areas are referred as "driving in parallel traffic" instead of "passing on the right" as it is used outside built-up areas.
Ireland –  Undertaking permitted in three prescribed cases: 1) You want to go straight ahead when the driver in front of you has moved out and signalled that they intend to turn right. 2) You have signalled that you intend to turn left, 3)  Traffic in both lanes is moving slowly but traffic in the left-hand lane is moving more quickly than the right-hand lane – for example, in slow moving stop/start traffic conditions.
Netherlands –  Undertaking is specifically prohibited, exceptions include vehicles waiting to turn left, traffic congestion and on roundabouts.
Poland –  Undertaking is legal on 4-lane roads in built-up areas, 6-lane roads outside built-up areas and on one-way roads with marked lanes (this definition includes motorways). (article 24 of Law on Road Traffic) However, similar to the UK it is considered a dangerous practice and is discouraged.
Spain –  Undertaking is specifically prohibited, except for inner-city traffic, passing a vehicle clearly turning left or in congested conditions.
United Kingdom –  The Highway Code discourages undertaking on motorways with some exceptions (rule 268): "Do not overtake on the left or move to a lane on your left to overtake". Undertaking is permitted in congested conditions when frequent lane changing is not recommended.[7] On other roads, the Code advises drivers "should only overtake on the left if the vehicle in front is signalling to turn right" (rule 163).[8] Rule 163 uses advisory wording and "will not, in itself, cause a person to be prosecuted", but may be used in evidence to establishing liability in any court proceedings.[9] On all roads, undertaking is permitted if the vehicles in the lane to the right are queueing and slow moving.[citation needed] Undertaking in an aggressive or reckless manner could be considered Careless Driving or more seriously Dangerous Driving, both of which are legally enforceable offences.[dubious  – discuss][citation needed]
United States –  Undertaking is typically allowed on multi-lane roadways or to pass left-turning vehicles.[10][11][12][13][14]  State laws can vary as to the situations that permit undertaking.

text: Overtaking road signs[edit]

text:
Andorra (no overtaking)

Andorra (no overtaking by trucks)

Argentina (no overtaking)

Argentina (end of overtaking prohibition)

Australia

Belarus (no overtaking and speed limit)

Canada (no overtaking)

Canada (overtaking permitted)

Chile (no overtaking)

Chile (end of overtaking prohibition)

China

Colombia

Finland (no overtaking)

Finland (no overtaking by trucks)

Finland (end of overtaking prohibition)

Finland (end of trucks' overtaking prohibition)

Greece (no overtaking)

Greece (no overtaking by trucks)

Ireland

Japan

Nepal

Peru

Puerto Rico

Singapore

South Korea

Sweden (no overtaking)

Sweden (no overtaking by trucks)

Taiwan

United Kingdom

United States

United States

Uruguay

text: Overtaking in racing[edit]

text: In racing, the rules allow overtaking from either side. Generally, the sides are classified as inside and outside overtaking, depending on the position of the overtaking car at the next curve since start of overtaking. The defending car usually blocks inside overtaking, because outside overtaking is riskier than inside overtaking.