In Today's Performance, The Role Of Colin Powell Will Be Played By Henry Paulson

It is clear to every single American that we have to do something, something big, something dramatic -- as Henry Paulson said this is a big problem and we have to have a big solution. Shaken Congressional leaders faced the Sunday talk shows, grave, grave, grave because this is a clear and present danger.

President Bush even chimed in about the fierce urgency of now.

"It is a big package because it was a big problem," Bush said. "The risk of doing nothing far outweighed the risk of the package."

The vote is scheduled for any day now. The danger is real. The threat is imminent, we can't debate or talk about it VOTE NOW CONGRESS because we can't wait, there's not a moment to spare.

Is this ringing a bell to anyone? Does this sound like September 2002 when in the lead-up to the Iraq War vote, we were being sold the imminent threat of Iraq, we had Colin Powell out there every day talking about the danger, we even were told, give us the authority in this bill, and we will go to war as a last resort, trust us.

Then, like now, there was no place to question the war, or the need to act immediately, urgently.

Then, like now, the only patriotic and reasonable thing was vote for the war and get on with saving the world. Is it just too ironic that both disasters have a price tag of $700 billion and perhaps this coming salvation is nothing more than the second coming of the Iraq War.

Clearly, Henry Paulson believes this threat is imminent - so did Donald Rumsfeld.

"No terrorist state poses a greater or more immediate threat to the security of our people than the Regime of Saddam Hussein and Iraq."

--Secretary of Defense Donald Rumsfeld to the Senate Armed Services Committee, Sept. 19,
2002

But it wasn't true back then was it? Remember how they mocked people who asked questions then, now we have:

In a briefing to lawmakers Friday, Paulson and Federal Reserve Chairman Ben Bernanke painted a grave picture of an economy on the edge of a major recession and telling them that action was urgent and imperative.

But what is the fundamental problem with the economy? A housing bubble and credit card bubble and auto loan bubble all of which was created by firms who didn't follow basic business practices and stupid consumers.

How big and how bad is the bubble.

Well according to the Case Shiller Index, consider this:

From 1890 to 1990, ONE HUNDRED YEARS, the real value of the average house, in 1990 dollars increased exactly 10% -- namely it outperformed inflation by 10% over 100 years.

In approximately 2002, we should have hit the peak of this real estate cycle at around 125 on the linked chart here. But what happened?

We skyrocketed all the way to 200 -- creating the largest bubble in the history of our country.

This is what this looks like. You'll notice the nice pattern in the 70s and 80s, up and down, normal real estate cycles and then bubble, and trouble.

Housing prices will return to their norm and if we believe that there is danger in the economy in this perfectly normal process playing out then yes, we should act.

But the danger will not be solved nor will the bubble be burst more gently by you and me buying $700,000,000,000 in bad debt from the people who created the bubble.

Buying the bad debt so that the companies start making mortgages again will make the bubble live on, until well, at least next year, and maybe that's the goal.

The question we need to ask ourselves is simple:

Who should pay the price for the bursting of the housing market bubble? The people whose greed and incompetence created the bubble or you and me? Clearly, the answer is the people who created it. But instead, we are going to bail them out at our expense.

It is as insane as attacking a half-pint dictator with a bad moustache on the other side of the world.

But we have to do something - perhaps we do.

However, and now I must recommend a terrific diary at Daily Kos from a blogger who went through the bill as it is proposed:

here is my favorite highlight:

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.

No review, no laws, just $700 billion in handouts. No way.

As we watch this unfold this week, let's see if the Democratic leadership can save the country, our future and most importantly for them, the party.

As with Saddam Hussein, the question should not be what do we do -- and we have potentially already lost the narrative on this, but it should be -- do we need to do anything at all?

We need to back up the discussion to the problem, the housing and credit bubble, and determine how best to let the air out of the bubble. Look at the chart carefully, houses are still valued at 50% more than they were eight years ago but they won't be for long. That's the issue.

The same dynamic is playing out with credit card debt, boat and car debt, the issue is that we have spent too much and saved too little.

The issue, frankly, is not relief for consumers who have negative equity on their mortgages, they should get hit as hard as the banks should, they were financially irresponsible as well. It is not the the role of government in a capitalistic society to make homeowners whole any more than it is to make greedy bankers whole.

In 2002, it was the link between 9/11 and Saddam among other lies that sold the American people the war and chased Democrats looking for their tails. Already we are seeing signs that Democrats are on paper willing to stand up to this bailout.

When George Bush screams immediate action is needed, the only prudent thing to do is think, listen, learn and most importantly, wait.

"If this were a dictatorship, it would be a heck of a lot easier; just so long as I'm the dictator." -- George W. Bush, Washington D.C. December 18, 2000

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Comments

[enomaj]

"In today's performance, the role of Colin Powell will be played by Henry Paulson"

That's cold, money. -Mars Blackmon

[joshuahmcdonald]

In addition to the shared urgency of purpose in electing Barack Obama as President we must elect a 60-40 Democratic Senate majority.

As our financial institutions crumble around us, the Bush Administration, managed by the most extreme adherents of Market Fundamentalism since Hoover, has proposed a bailout amounting to nearly $1 Trillion in institutionalized Socialism. Having destroyed the foundation of our economy this Administration is now intent on billing the American taxpayer.

The irony is that over the last 2 Senate sessions the minority Republicans have set records in the number of partisan filibusters blocking much needed legislation...including financial regulation which may have mitigated our current economic crisis. Over 130 filibusters in 2 years!

A 60-40 majority in the Senate allows the Democrats to legally quash obstructionist filibusters and get our representatives back to work solving the extremely serious problems currently facing our nation.

I urge you to add your voice and your financial contributions to the following Senate campaigns where strong Democrats are facing vulnerable Republicans:
- Alaska: Mark Begich http://www.begich.comm)
- Colorado: Mark Udall http://www.markudall.comm)
- Idaho: Larry LaRocco http://www.laroccoforsenate.comm)
- Louisiana: Mary Landrieu http://www.marylandrieu.comm)
- Minnesota: Al Franken http://www.alfranken.comm)
- Mississippi: Ronnie Musgrove http://musgroveforsenate.nett)
- Nebraska: Scott Kleeb http://www.scottkleeb.comm)
- New Hampshire: Jeanne Shaheen http://www.jeanneshaheen.orgg)
- New Mexico: Tom Udall http://www.tomudall.comm)
- North Carolina: Kay Hagan http://www.kayhagan.comm)
- Oregon: Jeff Merkley http://www.jeffmerkley.comm)

[jhNY]

"The issue, frankly, is not relief for consumers who have negative equity on their mortgages, they should get hit as hard as the banks should, they were financially irresponsible as well. It is not the the role of government in a capitalistic society to make homeowners whole any more than it is to make greedy bankers whole"

And this is why your ideas about this will not be followed by nearly anybody, and certainly won't be the prevailing sentiment in Congress among members of either party. There are more votes to be had by pandering to so-called victims of this con game, at least in speeches, than would be gained by your brand of capitalistic "tough love."

The emergency measure will pass, largely unaltered, and we will be screwed. Sorry, but that's how it's going to go down, although I certainly believe it's worth a half-hour of everybody's time to make their unhappiness about this terrible bill known to their Congressional representatives, although what difference it will make to President Paulson, I cannot say.

[robeson]

We can't wait for the mushroom cloud. Sign it now Congress.

[hoos30]

I was all for the bailout last week because I could see how real the danger was, but after Krugman's article ("Cash for Trash") this morning and now this one, I am reaching for the emergency brake.

We'd be out of our minds to hand Paulson and Bush this kind of power. There are other, better ideas out there; we can explore them within a week.

Pelosi and Reid SNAP OUT OF IT!! Putting lipstick on this pig is not going to help. We need another solution!

[LeftRight]

You know, I would LIKE to believe that my govt leaders are looking out for the best for all of us. I would LIKE to believe that when they say something they are actually telling me the truth (allowing for National Security secrets being kept secret, of course). But NOTHING that the booooosh administration has EVER done has given me ANY confidence that he will do the right thing! The man has come out and claimed that there were WMDs in Iraq. The man has come out and claimed that Iraq was on the verge of attacking us. The man has come out and claimed that the $4 TRILLION he's added to the national debt are not important. The man has now come out and claimed that we need to spend $700 billion to "save" the financial industry.

I'm sorry, but there are too many lies out there in the past for me to trust him now. I'm urging my members of Congress to IGNORE this bill. I don't think that they will, but I will ensure that they are not re-elected if they fail me now!

[charon]

Excellent post. People need to be aware of the sleight-of-hand bushco is trying to pull here, and stop it. These criminals should be convicted of fraud for trying to make this pile of cow patties a law.

[plebeianswillrevolt]

Hit the brakes, somebody! Please ... ... ...