See if this sounds familiar:
There is a gathering threat to the safety of the United States. We must take immediate action. Congress must quickly grant the President and the Secretary what they want and also give them full and unfettered authority to execute the plan.
Welcome to Economic Shock and Awe (or as some have dubbed it, according to Paul Krugman, "the Authorization for Use of Financial Force").
Even the amount of taxpayer money being bandied about -- $1 trillion -- is similar. Think you got your money's worth for the Iraq war? Congratulations -- you're about to buy another pricey debacle.
We've seen how negligent the Bush administration is with our money -- flushing billions on wasteful, mismanaged Iraq reconstruction and Katrina recovery projects.
Now the same folks who brought us those no-bid, profit-guaranteed, crony-friendly, war-and-disaster-profiteering boondoggles want us to hand them control of a $700 billion Wall Street slush fund -- with no strings attached. How dumb -- or frightened -- do they think we are?
This is, as Matt Yglesias calls it, "a crisis point for American liberalism." The battle lines are already clear: Paulson and Bush and the Republican Party want a license to reward the worst actors in the financial industry and do nothing for American families suffering the consequences.
Remember a few years ago when lawmaker after lawmaker -- mostly Democrats, but a few Republicans -- said of Iraq, "If I'd known then what I know now, I'd have voted differently."
Well, this time at least some lawmakers -- mostly Democrats, but a few Republicans -- are not being so easily bamboozled. Congressional Democrats, led by Chris Dodd in the Senate and Barney Frank in the House, have put forth proposals doing away with the Paulson's demand for unprecedented authoritarian power and adding a requirement that the government do more to help troubled borrowers refinance their mortgages.
The Treasury appears willing to bend on those elements but sticking points remain, including efforts to limit the pay of executives and Dodd's proposal that taxpayers get a share of the profits if the bad debt being bought rises in value.
Let's hope Democratic resolve holds up against the inevitable charges by the Bush administration that demands for oversight, limits on executive compensation, profit sharing for taxpayers, and aid for struggling homeowners will lead to an economic Armageddon.
There is no question that the need to address this crisis is urgent and that the issues involved are complex. But urgency and complexity cannot be allowed to become excuses for lawmakers, the media, and the public to throw up their hands and allow themselves to be bull-rushed into disastrous public policy.
Over the past 30 years, Americans have been bombarded with sermons evangelizing for the free market religion of the Right, and the supposed correlation between unregulated markets and progress. In the process, the American people have been demoted from citizens to consumers, and sold a bill of goods (rather than a Bill of Rights) about how the almighty market was the essential foundation of democracy.
In the course of selling us on buying, the market-worshippers shredded the modern social contract, the hard-fought consensus that had emerged since the New Deal, which ordered our political priorities, and expressed both our communal concern for the most vulnerable members of society and our disapproval of huge inequalities. We were now supposed to believe that all could be left up to the soulless, self-correcting calculus of supply and demand. Government involvement was an anachronism, regulatory oversight an impediment.
The last few weeks have demolished that notion. In the battle over the proper role of government, the forces of the Right, the high priests of the church of the Free Market -- including Bush, Paulson, and the Masters of Wall Street -- have suffered a monumental defeat. So why are we allowing them to dictate the terms of their surrender?
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The American Rich are the same people who ran businesses that polluted, for as long as it was legal to do so, and in many cases longer. They have shipped our jobs oversees for a tax break, and blocked politically sensitive web addresses for Chinese surfers. They've sold our privacy to spammers, profited from denying us healthcare, and "privatized" our government into incompetence.
We know: The American Rich own the Executive Branch. These are liars, con men, and pirates. I'm not saying anything you don't all know.
So why do we have to put up with these people -- elected or not -- who play us for fools every day, and reflexively con us every chance they get? We should have impeached these criminals long ago, and I'm not so sure it's too late now.
If you think I'm recommending something, maybe I am.
Of course, there are other factors contributing to this mess. The majority of US households are earning less when adjusted for inflation. The percentage and proportion of lower income households is growing. The US consumers love to live beyond their means on credit extended by foreign countries. If there is political will to correct these factors some of this economic mess will be mitigated.
Regarding foreign debt to the US govt. there seems to be no hope. Real bad times for the US ahead... US assets will be owned by China, UAE, Saudi Arabia. Al Qaida has acheived its objective of destroying the USA, all through the faults of its own people - living beyond their means on credit without anything saved for a rainy day - Just like the Grasshopper and the Ant.
With these complex and highly leveraged instruments, each time housing prices fall 1%, the instruments cause a loss of 30% to the holder. And with the housing bubble having deflated only half the way in upto now, there is still the other half of deflation and decline in housing prices left to go. It is very unlikely housing will turn around before 10 years. In this scenario all such instruments will result in a loss of 600% to the buyers, whether government or private.
So lawmakers better think twice before using taxpayer monies to bailout this crisis or even to insure it. Let the institutions fail, let the market crash and correct itself. Credit for small businesses need not dry up. For internal funding of new credit within the US, fund the remaining responsible banks/credit unions which did not expose themselves to risky investments and loans directly through the fed/treasury/taxpayer money. If there is need to stablise the mortgages for owners who can afford to pay them at a lower rate and cannot afford them currently because their variable rate suddenly shot upto 10% refinance them directly though the fed at a reasonable rate eg. 6% fixed. For other bad mortgages, let the lenders go belly up and own the real estate directly at at least 50% dicount from the current values, given that they are likely to still fall quite a bit.
Now the whole bailout scenario stinks. Both the democratic and the house republican plans. I am glad that the bill didn't pass today.
How about all those over-payed CEO's being forced to re-invest last year's salary back into their now-failing institutions? Why should the burden fall to American taxpayers when ceo's who make millions each year get off free and easy? Americans are being asked to take on a huge financial burden "for the good of all Americans", so why not expect the same of the fat-cats who are living large thanks to out-of-this-world salaries? I say if you are the ceo of a bank and you made over 5 million dollars last year, you can afford to relinquish any amount above that. It wouldn't completely cover the $700 billion needed, but it would be a nice chunk. Once that happens, I'm sure many more Americans would feel better about coming up with the difference.
Obviously, that won't ever happen. As is typical, the burden of saving our system lies on the backs of everyday, hard-working Americans who bust their butts day in and day out just to afford basic necessities. It's gonna be a bitter pill, but John Q. Public is gonna have to swallow it because no body else is going to.
The Insiders cashed out ;ast fall and nursed the companys along for 12 months so they could not face charges of Insider Trading.
See the limitations of the law are 1 year.,
`However, ... , there is a Plan B. ... a three-step solution, which begins with bankruptcy reorganization, rather than hyperinflationary bailout. First, pass my Homeowners and Bank Protection Act (HBPA).
``Second, Congress, in coordination with the Fed, must establish a two-tiered credit system. The Fed must immediately increase short-term rates to 4 percent, to send a clear signal that the U.S. government is behind a strong dollar. At the same time, Congress, using its Constitutional authority, must issue trillions of dollars in low-interest credit for earmarked infrastructure projects, in the vital interest of the nation....These kinds of projects should be financed through capital budgeting, authorized by Congress at 1-2 percent interest.''
``And at the same time, the United States, Russia, China and India must take the lead in convening a treaty conference to establish a new international financial system, based on fixed exchange rates, along the conceptual lines of what Franklin Roosevelt did in 1944 with the original Bretton Woods System. We can and must put the bankrupt current international financial system through bankruptcy reorganization, and launch, on a global scale, what I have proposed with the domestic capital investment in massive infrastructure.''
I understand LaRouche is considered far out, but this may be a good time to consider the message independently of the messenger. Thoughts?
Our current disaster was DECADES in the making and was built on the absurd notion that you can build a prosperous economy on a MOUNTAIN of debt. This corrupt Ponzi scheme was conducted with the collusion of the Fed, the Treasury, Congress, the financial institutions, and the economically illiterate people who promoted it and participated in it. There were such HUGE piles of nice sweaty money that everyone got a cut.
This mountain of debt was built on the back of the American Consumer and we are TAPPED OUT.
The banks that just jacked our credit card interest rates to 30% needs more juice and we have been squeezed dry. Nobody will loan the banks any money. No sane institution or investor will buy their toxic garbage assets for more than 5 cents on the dollar and the underlying value of the assets is still in freefall.
Now the "bankers" are going to CONFISCATE YOUR FUTURE EARNINGS using the force of law via TAXES.
You are being fitted for the yoke of economic SLAVERY to Corporate Fascists.
Remember,when GW said: "The most "efficient" form of government was a dictatorship"?
Instead of jockying to point the finger away from your Political Party of choice, you should be wondering if the stench of corruption blowing on the wind out of Washington is the rotting corpse of Democracy.
Would anyone in the sports & entertainment industry feel that government intervention is required with their salaries? Athletes or actors making multi-millions of dollars, pushing up the cost of movie or sports tickets out of the reach of the average family. Should the government regulate the salary of Alex Rodriguez because the Yankees failed to win? Or should the government regulate the salary of Ben Affleck because his movies fail to generate income?
Market forces are the bedrock of capitalism in a free society. This the surest way to stiffle innovation and entrepreneurship.
http://mises.org/story/2963
http://www.youtube.com/TheMouthPeace
Then check the facts for yourself.
This is my opinion based on what I have been reading for years. I am no economist but it seems obvious to pull money from places where it is earning poorly and put it into investments that are skyrocketing like RE. It was the leveraging games that really is the tangled mess.