Sep
21

One Man’s Trash Could Cost the Rest of Us a Fortune

By

Following up on Uptown Ruler’s post, this is what I’ve come up with after a weekend’s worth of reading about the financial mess and the $700 billion bailout proposed by the Bush administration:

1. The proposed plan is one part Shock Doctrine:

What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse?

One part Patriot Act:

Sec. 8. Review.

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.

And zero parts Savings and Loan Bailout:

…Paulson and the Federal Reserve are trying to replay the bailout approach used in the 1980s for the savings and loan crisis, but this situation is utterly different. The failed S&Ls held real assets–property, houses, shopping centers–that could be readily resold by the Resolution Trust Corporation at bargain prices. This crisis involves ethereal financial instruments of unknowable value…

2. Wall Street is already relying on congressional Republicans to game the system:

Titans of the financial industry are battling to influence the government’s financial rescue plan, a package that will create new winners and losers in the sector.

Democrats in Congress want a rescue package that benefits homeowners at risk for foreclosure, not just Wall Street. Securities houses don’t want executive salary limits for banks that participate in the rescue.

House Republican staffers met with roughly 15 lobbyists Friday afternoon, whose message to lawmakers was clear: Don’t load the legislation up with provisions not directly related to the crisis, or regulatory measures the industry has long opposed.

A deal killer for the group: a proposal that would grant bankruptcy judges new powers to lower the principal, interest rate or both on a mortgage as part of a bankruptcy proceeding.

3. Democrats are facing the final test of their resolve versus the Bush administration, and some in the Democratic caucus fear that their side could very well blow it again, as described by a Democratic congressperson in this hypothetical scenario:

Here’s the industry’s play: progressives will approach Nancy with ideas for reform, and she’ll agree to push for their proposals, and she’ll really mean it. Then industry lobbyists will go to Dennis Moore, Melissa Bean and a few other Democrats, and tell them how dire the consequences of the proposals would be, and that the members who understand how the economy works need to step up to stop Nancy and the crazy liberals from doing something rash.

4. The two names I’ve bolded in the quote above belong to a group of congresspeople who, ironically, pride themselves on this:

The Coalition has been particularly active on fiscal issues, relentlessly pursuing a balanced budget and then protecting that achievement from politically popular “raids” on the budget.

5. Our own representative, Heath Shuler, belongs to this group, too:

Heath is a proud member of the fiscally responsible Blue Dog Caucus. As one of the largest and most influential caucuses in Congress, the Blue Dogs reinstituted Pay-As-You-Go budgeting in the 110th Congress, which forces Congress to manage its budget just like families and small businesses. He has also worked to bring long-awaited accountability and transparency to the budget and earmarking process.

So will Shuler back up Senator Obama and insist — at the very least — that any bailout adhere to the seven principles Obama has outlined, especially number six?

The American people need to know that we feel as great a sense of urgency about the emergency on Main Street as we do the emergency on Wall Street. That is why I call on Senator McCain, President Bush, Republicans and Democrats to join me in supporting an emergency economic plan for working families.

Well? Will you, Rep. Shuler? Because that’s the only thing I couldn’t figure out from what I read this weekend.


Categories : Economy

Comments

  1. Doug Gibson says:

    My take? Well, to paraphrase Patrick Henry, if this is class war, then let us make the most of it.

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  2. Gordon Smith says:

    Thanks, Doug. If anyone wants to let Congressman Shuler know how you’d like him to proceed, you could call him up at (828) 252-1651 or email him here.

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  3. Tim Peck says:

    Late Edition with Wolf Blitzer
    CNN | September 21, 2008
    http://www.youtube.com/watch?v=WbSRJRxV_WU
    Guest: Ron Paul

    “You don’t need a 401k to be injured by the destruction of the dollar!”

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  4. Arratik says:

    Then industry lobbyists will go to Dennis Moore, Melissa Bean and a few other Democrats, and tell them how dire the consequences of the proposals would be, and that the members who understand how the economy works need to step up to stop Nancy and the crazy liberals from doing something rash.

    That Dennis Moore you mentioned wasn’t the same one who was galloping through the sward with his horse Concorde, stealing from the rich giving to the poor, was he?

    Mr. Moore… Dennis Moore… Extra-or…..dinary

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  5. Clarence Young says:

    If we had a free market, we could just sit back and let it correct itself.

    We have a quagmire of rules and regulations. We have the most erudite politicians, pundits and bloggers who know just what to do and who to blame. With our individual 1% understanding of the economy, we must relate our judgments to our legislators and insist that they follow our course of direction.

    I am amused.

    What is the worst that could happen? Well, we could all be reduced to total poverty–the socialist dream come true. Finally, we would all be equal again.

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  6. Gordon Smith says:

    If we had a free market, millions of people would suddenly be thrown into abject poverty. This is an inextricable part of the “correction” you speak of.

    It’s not the “socialists” leading the charge to bail out these corporations who failed to practice good business, it’s the conservatives. The small government folks.

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  7. Doug Gibson says:

    Clarence,

    Just out of curiosity, what do you propose we do about poisoned food? Investment scams? Shoddy, defective, and dangerous consumer products? Cartels and monopolies? The invisible hand can correct for all of these things in the long run, but as Keynes put it, “in the long run, we’re all dead.” Market corrections take too long, and the potential damage on the human scale can be too great, to dispense with regulation altogether.

    Arratik,

    Thanks for that. I had forgotten that song, and every time I think of it, I crack up. “He steals from the poor, and he gives to the rich! Stupid b–!” What a classic.

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  8. Clarence Young says:

    On nearly all issues, we should govern ourselves. If we fear the food of big corporations, then we grow our own or buy from our neighbors whom we trust.

    On investments once burned twice learned. We invest more wisely knowing that there is risk and choosing carefully.

    We learn how to survive without cartels. No one has a monopoly on anything and likely cannot. No one group or organization can own it all and if their customers are impoverished, then they have no market.

    I could go on and on. If we had created a culture of self-reliance instead of reliance on government, we would not be in the shape we are in right now.

    You might be surprised to know that I do agree that government is a reasonable place to regulate the things we share in common such as air and water.

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  9. Arratik says:

    Thanks for that. I had forgotten that song, and every time I think of it, I crack up. “He steals from the poor, and he gives to the rich! Stupid b–!” What a classic.

    That got stuck in my head today. For a few hours, all I heard was “Dennis Moore, Dennis Moore, hum dum dum da dee…”

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  10. eemilla says:

    Congressman Shuler may just check his voicemail as frequently as he updates his blog; both mailboxes are full and cannot accept new messages. Hopefully, enough constituents called him last night to fill them both up. Neither Shuler nor the Blue Dogs have updated their sites regarding their position on the bailout. I guess I will just cross my fingers and hope that the Democrats will actually stand up strong against the blank check proposed by the executive.

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  11. Doug Gibson says:

    As far as the Blue Dogs go, one hopeful sign is that Blue Dog Mike McIntyre, who is probably North Carolina’s most conservative Democratic congressman, was part of a meeting Monday of a group calling itself the “Skeptics Caucus.”

    Their talking points so far:

    1. PAYGO still applies. “Find the money for this bailout, Sec’y Paulson.”

    2. Democrats must not get rolled a la the PATRIOT Act.

    3. Bipartisan (but Democrat-controlled) three-member board to oversee how the Treasury spends the money.

    4. Fast track for regulatory reform.

    5. Limits on executive compensation.

    6. Five-year obligation to invest proceeds in the United States.

    7. Homeowner protection/bankruptcy reform.

    8. Economic stimulus.

    We’ll keep you posted on any further developments.

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