ProgressiveDem: Stench of Bailout Plan and Immediate Aftermath Smells Even Worse Now
Stench of Bailout Plan and Immediate Aftermath Smells Even Worse Now
Congress' Paulson based bailout plan stunk when House and Senate leaders were all smiling and congratulating themselves and its highly malodorous fumes are even worse now.
They ignored the most effective suggestions for immediately correcting the criminal Bush regime's helping its Wall Street cronies to cause this financial implosion and instead opted to betray the American people. .
I wrote a posting a couple of weeks ago that stated: "A bailout plan has supposedly been reached, but like progressive economists, I'd like to see the details. Right now, the tentative plan stinks.
"I have written a number of postings about the bailout. Just go to search and type in bailout, you should see titles and contents and 2 weeks of "bailout" postings.
"Among the many postings I've written about the bailout, are included progressive economists' suggestions for bailout and restructuring. The following should be added to those: From Brad DeLong: "Time Not for a Bailout, But For Nationalization":
"...There are three options:
Do nothing.
Bailout (a la Paulson)
Nationalization (a la Sweden 1992)
"Do nothing was last tried in 1929-1932. The result was called the Great Depression. Let's not do that again. Let's decide between bailout and nationalization.
"Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem.
"And Joseph Stiglitz who writes at The Nation: "The administration attempts to assure us that they will protect the American people by insisting on buying the mortgages at the lowest price at auction. Evidently, Paulson didn't learn the lessons of the information asymmetry that played such a large role in getting us into this mess. The banks will pass on their lousiest mortgages.
"Unfortunately, the Democratic leadership has fallen into the Republicans trap, hook, line and sinker, arrogantly and deliberately ignoring progressive economists' warnings and suggestions, including the Swedish model.
"The Democratic leadership is also ignoring its colleagues, Senators Dick Durbin and Bernie Sanders, the former saying the tax giveaways for the wealthy should be repealed and the $12 billion a month Iraq occupation should end and the latter proposing a 10% tax surcharge on the wealthy, all of them benefitting from the greed and fraud on Wall Street, to pay for this bailout instead of regular hardworking taxpayers."
Ben Bernanke is an integral part of the crooked Bush cabal the helped their financial and investment institutions' cronies cause this crisis with the same previously failed Repubilcan deregulatory and self-regulatory policies.
Now, Julian Delasantellis at Asia Times writes: "A well-worn bit of wisdom from rural America advises one that it is pointless to "close the barn door after the cows have escaped". By participating in yesterday's global round of short-term interest rate cuts, US Federal Reserve chairman Ben Bernanke cannot be said to have been guilty of this offense. Instead, what he has done is to close the barn door after the cows have escaped, been captured down the road by cattle rustlers, then sold, slaughtered and ground up into dog food chunks.
"What is that solution? Amazingly enough, and now almost 30 years after Margaret Thatcher commenced the capitalist revolution by selling off Britain's proudest heritage of socialism, its state-owned industries, talk is returning to the prospect of a partial, or nearly complete, nationalization of the financial system - the so called "Swedish solution".
"Two weeks ago, University of California at Berkeley economics Professor Brad DeLong laid out this possible solution to the crisis.
Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem ... Congress grants the Federal Reserve Board the power to take any financial firm whatsoever with liabilities and capital of more than $25 billion that is not well capitalized into conservatorship ... requires the Federal Reserve Board to liquidate any financial firm in its conservatorship when it judges that the firm is insolvent.
"Now it is revealed that the Paulson bailout plan passed last Friday has in its small print provisions giving the US Treasury Secretary the right to do just that, to "take" equity positions or warrants in the stock of financial companies.
"And where can you hear sympathy for this Commie pinko Berkeley subversion? Believe it or not, it's on the editorial pages of the Wall Street Journal.
"The Wall Street Journal advocating increased government intervention? What's next, pork sandwich recipes in the Jerusalem Post?
"George Santayana once said that a fanatic is someone who redoubles his efforts as he loses sight of his goals, and, as George W Bush proved when initiating the Iraq surge, no animal on earth is as fanatical as a politician looking for alternatives to having to admit he was wrong.
"For many American senior citizens who had hoped to be able to live out their golden years gently drawing down their hard-earned stock wealth, these days they're doing both, feeling the heat and seeing the light. The heat is from the sizzling griddle at their new part-time job at a Florida McDonald's, and the light is what they see flicking off when the next basket of French fries in boiling oil is ready to be served."
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