Stop the Mother of All Bailouts and Think!
I don’t oppose a massive bailout to our financial industry. We really are on the brink of total economic collapse and failing to act will dry up credit markets, bringing the economy to a halt.
But that doesn’t mean we should rush willy-nilly into a bailout package just because Secretary Paulson says so. Calling every demand for consumer protection or borrower protection a “poison pill” does NOT instill confidence that the Administration’s plan is on the level. A poison pill describes an attempt to sabotage a well-negotiated package from passage. Demanding that this bailout take into account some of the real-world consequences of the financial crisis, provide limits to Paulson’s authority to dispense with troubled assets, or insist on more transparency regarding the pricing mechanism for purchasing bad assets (not to mention concerns over foreign banks falling into this plan and the refusal to hold anybody on Wall Street accountable for this mess) is NOT a “poison pill.”
It’s called Due Diligence.
Note that we’ve been here before politically. In 2002 we HAD to pass law authorizing force against Iraq because Saddam Hussein could hand his WMDs off to Al Qaeda at any given moment. Failure to act NOW could mean catastrophe. Or so we were told.
In 2001, after 9/11, lawmakers insisted that we needed a complete overhaul of counter-terrorism policy and so passed a deeply-flawed PATRIOT Act with virtually no debate.
The Bush Administration does not deserve the benefit of the doubt here. Henry Paulson may be a wonderful Secretary of the Treasury, and he may have the best interests of all of us at heart. But we cannot simply take him at his word.
Let’s have a vigorous debate on this plan this week. Let’s hear from voices of opposition in both parties – and there are many. Let’s hear the Administration defend keeping this plan as is. And then let’s hold a vote at the end of the week or next week. The Fed has already provided enough liquidity to global credit markets that the economy will survive the week.
Let’s get this right. Otherwise, we will saddle the next Administration with a gigantic debt obligation and little chance to address other matters. Even worse, this plan might not even work. The government might not be able to move these bad assets at “premium prices.” And what about the moral hazard here? Wall Street is given a blank check to do this again.
Stop and think!
[UPDATE]
Speaker Nancy Pelosi opposes the Paulson plan as is. She calls it a blank check with no protections for homeowners or borrowers.
Knowing that many conservative Republicans have opposed this too, hopefully we will have a serious debate on the plan over the next few days.
4 Responses to “Stop the Mother of All Bailouts and Think!”
OK Superdestroyer and DLC, a Republican administration has just killed off the free market in finance. It has made null and void the statement “Government isn't the solution to the problem, government is the problem.” Please tell us why they should have a blank check. Look, I am actually OK with keeping this focused on the banks, I have some real mixed feelings on relief for people who bought homes that they knew they couldn't afford and then mailed in their keys. However, I am not OK with the idea of the people responsible for this mess walking away with billions while taxpayers are on the hook. You want a bailout? Transparency and no rewards for screwing up. It's been awhile since I had Econ 101 but as I recall, those were the things that make markets self-regulate.
I say kill this awful plan. However, at the very least, let's slow it down. I've been blogging all weekend. I've never seen such agreement between liberals and libertarians, for example. If blogging does any good, given what I've been reading on this site, Kos, Huffington, Reason, Cato, and my own little blog, we might be able to slow this train down. It would be nice to see some democracy in action to counter this power grab by people who have earned our distrust.
Agreed. We have one shot to save our very country. If we don't shore up the middle class and working poor F-I-R-S-T we will have no consumers to make any immoral wallstreet tycoon rich anymore.
The working stiff provides the base for THE ENTIRE ECONOMY. You let them drown even further in debt and you'll slit your own throats fatcats..
The solution is to turn that entire package of financial relief into one that assits mortgage payments and shores up housing values, frees up monthly income for consuming and stimulates the economy on these two vital issues. Banks would regain their assets as housing prices stabilize from retained ownership. And the wealth would percolate from the bottom upwards.
True, the tycoons would have to sweat it out for awhile, maybe have to shop at Costco for awhile to get by like the rest of us do..but our economy will return much more quickly if we do this.
Solution
1. Trickle UP economics
2. Legislation barring outsourcing of american jobs (you know, so those “terrible risk” lendees can actually provide society with their income in the form of mortgage payments and payroll taxes! It's not like they don't want to for crying out loud..)
3. Retention of US wealth by rapid cessation of money bleeding out to purchase foreign oil.
4. Withdraw from Iraq and begin the painstaking process of rebuilding our world reputation out of the toilet it's in now.
5. Stimulate new jobs by investing MASSIVELY and QUICKLY in alternative energy for passenger cars and light industry, retaining the use of fossil fuels for plastics, diesel for heavier machines and trucks and ag use. Become world leaders in manufacture of alternative-fueled passenger cars.
6. Focus on producing food, the new gold to sell on world markets, until our industry recovers itself to augment.
7. Health care universal in exchange for lowering the minimum wage. This will stimulate business, which will no longer have to pay as much, and the worker will return home with a net gain in monthly revenue retention since premiums will no longer be an issue.
*****
In short, give the workers a roof over their head and good health without worry and see how damned patriotic and productive we'll be. Whip a dead horse even harder with that godforsaken Wallstreet Bailout plan and you'll be up to your eyebrows with the stench of economic death..
One other thing to be concerned about is the Global Poverty Act, written by Obama that stipulates that the American taxpayer will be footing the bill for a $845 billion dollar give-away to other countries. Sound familiar…?