Definition Of Economic Insanity: Handing Paulson A Blank Check For Bailouts
By Nicole Belle Friday Sep 19, 2008 9:00pmInsanity: doing the same thing over and over again and expecting different results.
Albert Einstein
Like John, economics are just not my forte. I took it at University, got decent (though not great) grades and found the whole subject stultifyingly boring. Part of my disinterest had to be due to the fact that I took my economics classes in the 80s (the "greed is good" era) by a bunch of Chicago School-types who carried dog-eared copies of Rand with them everywhere they went. Their whole economic outlook struck me as so fundamentally selfish and unfair that I had a hard time believing that anyone who wasn't a multi-millionaire or CEO would buy into it. Truly, one only needs travel to from countries with huge income disparities to ones with socialized democracies with market restrictions to see that the exalted "Free Market" and trickle-down policies have never, EVER worked anywhere but in theory.
But despite my tendency to glaze over at the discussion of economic issues, I do have a great deal of common sense. And right now, that sense is tingling all over that this country is just staving off market collapse for another few months with the talk of bailouts. Not that I'm opposed to bailouts in general; I recognize that the alternative would be disastrous. But to hand Henry Paulson -- the man who either didn't see or didn't care to deal with this financial crisis (which we predicted more than a year ago) ahead of time --a blank check and demand no accounting, no transparency, nothing... is literally economic insanity--doing the same thing that got us in trouble the first time and hoping for a different result. Don't believe me? Paulson said today that taking away CEOs' "golden parachutes" as part of the bailout process was a "poison pill." How's that for fixing the economy?
Paul Krugman says "No deal." And Dean Baker at TPM lists what should be the Progressive conditions for a bailout:
1) Combating asset bubbles must be one of the Fed's key responsibilities.
2) The government should impose a modest financial transactions tax, comparable to the one in the United Kingdom. This can both restrain excessive trading and raise more than $100 billion a year in revenue.
3) Regulatory agencies should require that potentially tradable assets (e.g. credit default swaps) actually be traded on exchanges.
4) There should be strict limits on leverage for all regulated financial institutions.
5) Fannie and Freddie should remain fully public institutions, returning them to a status comparable to Fannie's prior to its privatization in 1968.
6) The Fed should be restructured so that all the key decision makers (e.g. the open market committee) are appointed by democratically elected officials. Its responsibility is to manage the economy in the interest of the general public, not the financial sector.
Hear that, Nancy and Harry? No more caving...no more blank checks. Anything less is insane.
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Just let the damn businesses fail and go into a depression already!
Putting it off's gonna make the Big One worse!
And Frist!
As Naomi Klein said, "this just delays the inevitable collapse".....and puts the pain on the taxpayers. Where is all this money coming from? You just can't keep borrowing and borrowing and borrowing to bail out everything and everyone. Somebody has got to pay and pay a lot. Higher taxes, higher interest rates, or both are inevitable.
Don't hold your breath.
Wanna bet we won't see a Nancy and Harry cave on this? I'll bet you $700 billion we will.
It's not insanity or even stupidity. It's malicious ideology.
They'll bail out the corporate crooks, stick us with the bill, and leave the door open for those crooks to create the same crisis again. They *want* to break the system.
When it breaks they'll jump up and announce that we need to get rid of Social Security, Welfare, and just about every other government expenditure that does anything other than enrich campaign donors or fuel the military.
Cat Atomic @ 4:
At the rate the federal government is throwing money at everything and anything, there isn't going to be a military. Americans won't have the money for it.
I just sent the following letter to my congressional delegation, the congressional leadership, and the committees with oversight. I urge everyone to send their own.
We need to flood their offices so they are more afraid of us than of Wall Street or the preznit.
This is just a ploy to delay the crash. George and his cabal thought they could ride this out until the next Prez gets in. But Karma can be a bitch. Welfare for corporations is against everything true conservatives believe in. The fact that many Repugs have an R next to their name, doesn't mean they are true Republicans, they are the neo-cons, religious nut-balls who hijacked the party.
Read the text of the latest bill proposal. It is extremely scary, a very large step in the direction of classical Fascism. The secy of the Treasury becomes a financial dictator, answerable to nobody and with the power to appoint private companies as "financial agents of the government" whatever the hell that implies. His actions may not be reviewed by any court of law and are not constrained by any laws regarding public contracts.
Sound familiar?
http://money.cnn.com/2008/09/20/news/economy/treasury_proposal/index.htm...
The price for this public-funded bailout should be regulation of the industry, and a lot of it. Take it or leave it.
A couple of posters at D-Kos got the text of the Act and have pointed out that it is a power grab by the executive branch that grants them unlimited power and puts them beyond review by congress, the courts, and puts them beyond the law!
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This is unspeakable! Paulson is demanding that he be given this massive power and in Section 8. this is what it says:
It also appears to raise the debt celing
IF I read that correctly (and I "think" I did), Paulson wants permission to run the U.S. mortgage industry AND he demands exemption from criminal prosecution for whatever he does while holding all that power.
---------------------------------
Shock Doctrine verbage....
Notice the broad reading of the Secretary's power: so long as s/he claims to be acting puruant to this statute, there is no limit nor review of their authority.
It appears that entering into crony-capitalist, no-bid contracts a la Iraq and New Orleans, are part of the authority.
______
Upon very quick review, the US Secretary Treasury is being given plenary power to do whatever the hell s/he pleases, and stick the taxpayer with the bill.
And if democrats in Congress balk, it's their fault for bringing down the financial system.
Text of Wall Street Bailout Act
http://www.dailykos.com/story/2008/9/20/132020/495/381/604752
this is just a rerun of the 2002 iraq war vote....
so the con goes-- "the risk of doing nothing is unimaginable, we face immient destruction, we need to act immediately, no time to consider..."
if democrats fall for this yet again, i'll vote for donald duck or ralph nader...
this is truly absurd.....
we face imminent destruction-- who says? george bush? he used that line once and it was pure bullshit.
so pelosi will believe him now because she lost half a million in her stock portfolio last week?
They are ramming this through like the PATRIOT ACT: fast.
Nancy and Harry, report to the Oval Office IMMEDIATELY! Oh and bring Stenny and the donuts.
Well, we're screwed. How much will this cost every American? How many thousands of dollars? Bush really F**ked up the country didn't he? Thank you Religous Right! Your narrow views and ignorance gave us the worst President in history.
trevor-es @ 11:
fool me once, shame on me...fool me twice.....we don't get fooled again...
i think somewhere somehow the democrats will refuse this crazy bailout, remembering the iraq war vote...
otherwise, this really mucks things up for november
Read "The Shock Doctrine" by Naomi Klein
We will see the last vestiges of The New Deal destroyed by these neoconsevatives.
That was, has been and is the plan. To drown government (that which benefits the people) in a bathtub.
The "shock" was the bailout. The "shock" was the Iraq War. The "shock" was 9/11.
Whatever they can do to cause the massive drain on the economy, or the massive attack on our civil rights has been in the works since before Reagan.
Whatever they can do to remove all regulations for the rich and control the rest of us with a police state is their goal.
The PNAC crowd has been a big part of these plans. Look at the membership:
http://en.wikipedia.org/wiki/Project_for_the_New_American_Century#Projec...
These are the enemies of our country, our Constitution.
These are the traitors in our midst.
P.D. @ 13:
they can stop this, the dems will stop this....
there will be no meltdown of the western world, just as there were no weapons of mass destruction....
maybe they'll need to insure moneymarkets, and take some other steps, but buying up a trillion in bad paper?
democrats must and will refuse...
I posted an idea (mostly venting) under the Palin debate topic suggesting that we NOT rely on Congress directly, but take the case to the American people through newspaper ads, blogs, etc. The fact is that Paulson, et al wants our money under unacceptable terms. We probably can't stop Congress from handing it over, but maybe we can make enough noise to enforce some "conditions" prior to the bailout. Seriously, this has got to stop. It's our obligation as citizens in a presumed democracy to not let this blatant redistribution of wealth to the already wealthy continue. We are mostly likely screwed no matter what and while Paulson's plan eases the distress to his friends on Wall Street and pacifies Congress temporarily, it is most likely only prolonging the inevitable for the rest of us. Why should we support this without more evidence that it's not just throwing good (borrowed) money after bad? And why in the world would we support another financial plan that specifically rejects any regulation?
There is a better way out of this and it wouldn't cost the tax payer one thin dime. The Federal Reserve has already blown through half of its 800 Billion reserves in baling out others such as Indy Mac. Paulson wants 700 billion + which will be just jacks for openers. Rather than creating 700 Billion out of thin air to keep this corrupt system afloat on the backs of the tax payer, Congress which is in charge of weights and measures currently states that all of our countries physical gold holdings ( real money ) are only worth $42.50 per ounce. Why, when the rest of the world says that gold is worth $900 per ounce?
Get the price of our gold in line with the rest of the world and buy out the Federal Reserve and cut off the heads of this hydra that has been sucking this country dry for nearly 100 years. I find it quite odd that Mr. Cox of the S.E.C. can call a halt to short selling banks, but when it comes to real money, it is manipulated beyond belief when the real price of gold should be well past $2,000 per ounce with an economy that is currently running an inflation rate of 13%.
If we don’t take a stand now, our children and their great grand children will be slaves to the banking masters. Our Constitution never called for a central bank, but a US Treasury with coin in gold and silver. Getting rid of the Fed would be a major step in the right direction. Even Greenspan agreed that the statists hated gold as a monetary unit because they couldn’t expand the economy fast enough to suit them. So Nixon closed the gold window in 1971 and doomed us to the fate we face todat because gold acts as a relief valve and prevents the continuous printing of more and more worthless money. The problem today is that politicians have become parasites sucking on the teets of the bankers for without them, it is the people who end up controlling their lives and not government, and that’s the way it should be.
If they give Paulson umlimtied powers that even a court cannot review or rule on ( as per Glenn Grennwald at KOS has stated ) every politician that votes in favor of this abomination should be voted the hell out of office and at the least be tar and feathered before walking out of the halls of Congress.
ConcernedCanuck @ 5:
That's a nice dream but American's first love is their military. I am totally anti-war and would love their war money to run out, as well as the pipe dream of manifest destiny and white man's burden. Thanks for your concern though, it's a sentiment I agree with. ;)
Pongo @ 17:
call your representatives, your senators....
i really think there's a chance that congress will refuse to go along....
i've got to hand it to republicans, seems they've figured out a way to get scum like mccain into the white house.....
if democrats hand bush whatever he wants, yet again, mccain will have a real shot of winning in november....
So these CEO's won't go along with the bailout unless they get their multi-million dollar golden parachutes? If they don't get them, they'll let their companies collapse and drag the entire economy down with them? Are they the D.B. Coopers of finance? He was a jijackers, for all you young uns. That's what the Dems need to call these people, hijackers, terrorists of Wall Street.
I'm reading it now and my thoughts are these:
Section 8 must go. Non-reviewable? No way, no how.
Lets add a few addition provisions
1. Restore Habeus Corpus
2. End Domestic Spying
3. End the Iraq War. We simply cannot afford this war at $10 billion dollars a month
4. No CEO or Executive of these companies will ever make a dime off of this. In fact
5. George Bush and his entire administration must resign from office in Disgrace immediately. They have proven their incompetence BEYOND any reasonable doubt. The administration must also forfeit ALL their assets and pensions
6. Nancy Pelosi, Harry Reid and Charles Schummer must also resign. You had a chance to impeach members of the Bush Administration for the crimes they have committed and each of you chose to enable him by refusing to impeach Bush, Cheney et. all. Thus each of you have done Irreputable harm to this country by your inaction.
We were able to read The Patriot Act on-line via congessional records. Has anyone found the actual text of what was sent to congress for this bailout thing? If so, please post the location.
Excellent!
http://www.tsx.com/en/images/highRes/Oct12-2007.jpg
Krugman says this:
He just wants them to explain. I want a quid pro quo. They want a bunch of money, give us a platter full of executive's heads. OR some equivalence for the money. Not a bunch of worthless assets. Give us a fair share of the company plus the worthless assets.
The TPM conditions fall way short, only feelgood.
Here is Nader from this article which starts with his forecast in June of 2000 of what we have today.
From the same article but recent pronouncements. Here, his first condition makes any bailout a quid pro quo. The others largely speak for themselves.
MadMac @ 23:
What we have here is the people "solving" the problem
are the very same people who created it!
And, once again, Congress is just sitting on their asses
and letting them do it.
Duh!!
Anyone who expects this is going to make anything
any better is just plain crazy.
ConcernedCanuck @ 5:
Can you spell Blackwater? A private army paid for by our tax dollars costing 10 times the cost of our military today. A private army answering to no law and no one person but the president who is only a puppet of the neocons.
During the last 5 years as CEO of Lehman Bros., Richard S. Fuld"s total take was $354 Million.
John A. Thain, the chairman of Merrill Lynch, who has been on the job just nine months, pocketed a $15 Million signing bonus. While his predecessor, F. Stanley O"Neal, retired with a package worth $161 Million. Merrill Lynch recorded an $8 BILLION loss in a single quarter.
Bear Stearns Chairman James Cayne was able to pocket $60 Million by selling his shares AFTER the collapse.
Richard F. Syron and Daniel H. Mudd, the former heads of Freddie Mac and Fannie Mae (respectively) are fighting to get their separation packages for a total of $24 Million combined, on TOP of what each earned last year as they rode the bucking steer into the ground.
Please, if you ever required a reason to write to your Congressman or Senator, this is the moment you have been waiting for. Even right wing blogs are against this mass bailout of the crooks on Wall Street. If you can spend a good amount of your time on various blogs, take the time to save what little future we may have left before big brother consumes us all.
Jamie @ 24:
Jamie, look at this link ("a blank check" above)
http://www.nytimes.com/2008/09/21/business/21draftcnd.html?_r=1&ref=busi...
Anyone want to take a gentleman/gentlewoman's bet that Harry, Nancy and the rest of the Pussycrats cave?
L.A. Confidential @ 25:
These are just some of the guys your bailing out.
Jo @ 15:
Hell, I've been writing that here on C&L for almost 2 years and mostly no one paid any attention. Conspiracy theory, and all that. People are wont to see what's right before their eyes.
There's nothing about what's occurring in our politics, our foreign affairs or our economy that hasn't been planned and slowly brought to fruition over the past few decades.
These are evil people - the neo-cons, Cheney & George HW Bush in particular- evil!
DAVOS/SWITZERLAND, 24JAN08 - Richard S. Fuld Jr, Chairman and Chief Executive Officer, Lehman Brothers, USA, captured during the session 'Myths and Realities of Sovereign Wealth Funds' at the Annual Meeting 2008 of the World Economic Forum in Davos, Switzerland, January 24, 2008.
http://farm3.static.flickr.com/2190/2215686485_d6c8222fcd.jpg?v=0
Nicole Belle @ 32:
Hey, thanks. Passing it around...
L.A. Confidential @ 36:
Richard S. Fuld Jr, Chairman and Chief Executive Officer, Lehman Brothers
Total Compensation
$71.90 mil
5-Year Compensation Total
$354.03 mil
Rasputin @ 9:
Rasputin, this is history repeating itself. The creation of the Federal Reserve was the stealth shock doctrine of its day. We are repeating the same kind of act, if this goes through. The Fed only cane about because it wasn't subjected to the light of day through vigorous public debate. Our problem is how to get this in the public eye? Olbermann would probably be a good start.
Amitola @ 35:
over the years, there were two people in the media who predicted this scenario (not countiing klein)
bernie ward and thom hartman....klein was a bit of a late comer
and yes, all the bailout will do is postpone the inevitable....a worldwide depression
but that is what the wingnuts are countiing on....that the depression will occur during the dems watch...and they will blame it on reregulation of the markets
more planned chaos...
[...]
Rep. Jim Cooper (Tenn.), a senior Democrat on the House Budget Committee, as well as a former investment banker, stressed that the moves by the federal government to prop up the financial markets are positive and necessary. Still, the investments ["INVESTMENTS"???] — just because of the sheer dollar amounts involved — could freeze Congress’s ability to spend money on a host of things well into next year and beyond, he added.
“This cripples the domestic policy priorities of the next president, whoever it is, because it soaks up so much cash,” said Cooper, a senior Democrat on the House Budget Committee and a former investment banker.
"How To Make Sure The Dems Don't Actually Have A Chance To Implement Universal Health Care" ... "Or Anything Else That Matters To The People"...
Senator Bernie Sanders Responds to the Bail out Act....
http://www.sanders.senate.gov/news/record.cfm?id=303313
Jamie @ 24:
http://calculatedrisk.blogspot.com/2008/09/bailout-proposal.html
CONgress will fix it.
L.A. Confidential @ 38:
If I ever run into any of these pond scum, they better hope I'm in a very good mood that day.
The complete (though ever-changing) elite consensus over the financial collapse
Amitola @ 35:
Mike Malloy has quite accurately called them the BUSH CRIME FAMILY.
I doubt 1% of Americans know the role Prescott Bush & George Herbert Walker played in bringing Hitler to power, and using the German nation not only to wage war and commit genocide but mostly to extract enormous profits.
Or the role Samuel Prescott Bush played in the First World War, again trading other people's blood and treasure for his own profit.
I haven't been the least bit surprised by anything the Bush administration has done.
Billy @ 43:
Fellow peasants... it is time to get out the pitch forks and torches! Or at least pick up the god damn phone and call your congressional reps and scream like hell!
Paul @ 39:
Fellow peasants... it is time to get out the pitch forks and torches! Or at least pick up the god damn phone and call your congressional reps and scream like hell!
Oil jumps above $104 a barrel on US bailout plan
ohio progressive @ 14:
Where is Paul Wellstone when we need him????!!
We all know this plan is ludicrous and outrageous to the American people, not to mention taking away power and oversight from congress and giving it to the Dumbshit in Chief.
Which is why you can expect the Dem congress to capitulate.
I see Cheney's scaly hand in this. Wanna bet if it goes thru as suggested Haliburton & KBR are given huge amounts of money?
P.D. @ 13:
And there's more where that came from.
Those bible thumping NASCAR morons are solidly behind McStupid now! They apparently will NEVER learn. I wish we could let the South secede again. They could become the National Republicans of Jebus-land. Within five years (and without the Northern and Western state welfare checks rolling in to pay for their trailors), those stupid bastards would be eating dog turds out of Wal Mart trash dumpsters and living in cardboard boxes - while Bush and the aristocracy became tax free trillionaires!
Meanwhile, the rest of the country would prosper under the republican free progressive government we would have. Those idiots would be begging us to take them back, and ditch the republicans like toxic waste. Those people are soooooo stupid, they infuriate me!
I'll never understand why so many ordinary citizens would champion any wealth distribution theory with a name like TRICKLE DOWN. Just examine what the name itself implies. 1% of the people live at the top of the hill and have all the water, and whatever spare drops happen to miss their mouths literally trickle down the hill for the rest of us to fight over.
TRICKLE DOWN should be an insulting term for Repuclican economics, but no its the one they chose themselves! Shame on the public for not noticing a massive slap in the face... right in front of their very faces!
Bill Maher had a quote during the RNC that really summed it all up, "the american people get the leaders they deserve; and right now we don't deserve very good leaders."
spero @ 55:
I always figured 'trickle down' was just a metaphore for 'piss on the lot of you.'
just when you thought the audacity had to run out ....
NoGWBpolicyleftinplace @ 54:
Wal*Mart would never throw out perfectly good dog turds, get real.
Out of curoisity, went to right blogastan. Crickets!
Except Michell Malkin. Very pissed of about the collapse of fiscal conservative ideology. Disgusted at Bush.
Off for a shower.
I was hoping to do a little day trading if I retire, so I'm not interested in a tax on stock transactions. That is not what harmed the markets.
What happened is that mortgages were given to borrowers that shouldn't have been given the mortgages, whereupon the mortgages were bundled into collateralize debt obligations, graded AAA by the ratings companies, and then sold to investors. The enabling aspect that made the whole venture profitable was the rating of the mortgage backed securities as AAA by the rating companies. Now, if these securities had been correctly rated as junk, not fit to put on a roll of toilet paper, then the whole mess never would have occurred. I think that a crime may have occurred in the rating of these mortgage backed securities. But, certainly, day trading had nothing to do with bogus mortgages being magically bundled into AAA securities. Collusion between security issuers and the ratings agency is where to start looking.
There is another aspect to all of this that will aggravate this matter which was the abandonment of balanced budgets and the run up of the deficits by the Bush administration in order to give tax breaks to the rich and finance limited world hegemony, starting with the war in Iraq. I think we're over extended already. Now, the plan is to expand the national debt by $1.25 T or so. I think at some point, the borrowing is going to go by the wayside, and the government will start printing money banana republic style. Now, they guaranteed the money markets? The only way that they can honer all these new guarantees is to print money, and that will result in banana republic style inflation. Social Security trust funds are held in fixed interest securities, so inflation will sap that program.
I think the answer is to reinstate regulation to the point where the financial system was last functioning correctly. That means, for example, reinstating the post depression regs on limiting banks getting involved in investment trading. We need to criminalize some of the lending practices that induced people into unsuitable home loans. But, the bottom line is, it's a mess, and we're not going to get out of it without a lot of suffering.
We're going to have to make choices here. Are we going to continue to spend half of what is spent on this planet on military spending? Do we continue to subscribe to the Republican's wet dream of "inherited dynasties" by eliminating the estate tax on wealthy estates, and eliminating taxes on unearned income so that these dynasties can be self-perpetuating? Do we still encourage the off-shoring of jobs, and the elimination of American manufacturing? This wall street fiasco is only one aspect of a litany of policies that are destroying the American economy and the middle class.
"Definition Of Economic Insanity: Handing Paulson A Blank Check For Bailouts"
NO TRUER WORDS WERE EVER SPOKEN. WONDER IF THERE IS ANY TRUTH TO THE WANTA FUNDS, AND IF THERE IS, WONDER WHERE THE MONEY IS. MORE THAN ENOUGH TO TAKE THE COUNTRY OUT OF THIS DEBT.
MountainMan23 @ 47:
Nor have I and, unfortunately, I'm afraid the really bad stuff is just beginning. Whoever gets "installed" as our next President will not be able to control the financial cabal that has created this mess - and we will slowly slide into oblivion.
My daily prayer to the sky genie is that Dick Cheney, GHW Bush, GW Bush, Rumsfeld, Rove, Wolfowitz, Jeb Bush, Lieberman, Kristol, Fieth, Perle, Gingrich, Limbaugh, and all of the other neo-cons and affiliates too numerous to mention, will be dragged off to Gitmo and waterboarded, for just a few miutes every hour on the hour, for the rest of their stinkin' lives.
“The Great Depression of the thirties ne