Dear Senators Murray and Cantwell, and Representatives Inslee, Smith, McDermott, Baird, Larsen, Dicks (and yes, Reichert and McMorris)…
Please don’t vote for this Wall Street bailout. Not this bailout. Not now. Not with this administration.
Please… please… be skeptical. Read James K. Galbraith. Read Stirling Newberry. But whatever you do, don’t get bullied or rushed into sinking $700 billion of taxpayer money into a bailout that won’t do anything to fix the fundamental problems at the heart of this financial crisis. For that matter, don’t accept as a matter of fact that this is a financial crisis… at least, not the kind that requires you to cast a vote this week or risk a second Great Depression.
Ask questions. Be prudent. Ask even more questions. Authorize, say, $150 billion if you really feel the need to do something now, to prop things up through the end of the Bush administration. But don’t just vote yes on this bill because you’re afraid of voting no. There is too much at stake, and it is not at all clear that this bailout plan will do anything but delay the inevitable, all the while lining the pockets of the already super-rich.
The problem, in the end, is that Americans simply consume more than we produce, and not a dime of the $700 billion the White House is requesting will do anything to address this core economic flaw. We either have to produce more or consume less, or preferably, some combination of the two. Austerity may not be a politically popular thing to talk about out loud… so don’t. But you need to start talking about it privately amongst yourselves, and have this stark reality inform your vote.
So please… please… take your time. Remember the Patriot Act. Remember the Iraq War Authorization. And don’t let yourselves be rolled by the Bush administration one more time.
UPDATE:
Call your Representative and Senators, 800-473-6711, and tell them to take their time and just say “no.”
UPDATE, UPDATE:
On HuffPo, Dean Baker warns us not to be scared by “phony stories” about a second Great Depression:
There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments…
[T]he worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion.
And if Baker, an noted economist and economics write, “cannot identify a single good reason to do the bailout,” he sees plenty of reasons not:
Finally, the bailout absolutely can make things worse. We are going to be in a serious recession because of the collapse of the housing bubble. We will need effective stimulus measures to boost the economy and keep the recession from getting worse.
However, the $700 billion outlay on the bailout is likely to be used as an argument against effective stimulus. We have already seen voices like the Washington Post and the Wall Street funded Peterson Foundation arguing that the government will have to make serious cutbacks because of the bailout.
While their argument is wrong, these are powerful voices in national debates. If the bailout proves to be an obstacle to effective stimulus in future months and years, then the bailout could lead to exactly the sort of prolonged economic downturn that its proponents claim it is intended to prevent.
In short, the bailout rewards some of the richest people in the country for their incompetence. It provides little obvious economic benefit and could lead to long-term harm. That looks like a pretty bad deal.
And more from Stirling Newberry, who warns that nothing less than “the fate of the Union” is at state:
We must say no. And we must tell the people who work for us. This bill is not nothing else than the meaning of America itself. We have a choice of two Americas, one where enabling acts are rammed through under the cover of darkness and obscurity, with and in the shadow of fear, the other where there is, yet, some slim hope for our Democracy. The waves of the people’s revolution must overwhelm the dike and dams of privilege on this day, or there will be no tomorrow.
Goldy’s stance puts governing above politics?
Personally I am torn.
The stampede this time has a lot to do with the bulls and bears .. the big animals on Wall Street … who do have the ability to shut the economy down. I have no reason to think these beasts have anyone’s interest at heart except their own. I think they are telling us .. do this or suffer. What choice do we have?
There is another player here that everyone seems to leave unmentioned … the sovereign banks. While the bulls and the bears control the US capital market, China’s capital is controlled by the bureaucrats of its national bank, that is by the communist party.
When we hear about the fear of China using its dollar weapon, that fear is not of the actions of hundreds of wealthy Chinese investors, it is a fear that the politbureau will decide that it is in China’s interest for the US economy to muddle along, tank or prosper.
The election makes things even more complex. Neither Obama or Mccain is free to make unpopular decisions or even tell us the full truth until November fifth. The consequences are unimaginable if either one were to play the China card.
Until Nov. 4, we may have little choice but to go along with the bail-out.
In the meantime, if God listens to atheists, I pray Obama wins.
The Bush administration failed to see any “problem” as long as homeonwers were being foreclosed upon due to “exploding mortgages”.
But the increasing number of mortgages falling into forclosure created a suprlus inventory of empty houses, it drove down property values causing even more mortgages to explode due to homeowners being unable to sell or refinance because they were now underwater (their mortgages exceeded their property value). This created a spiraling affect of more foreclosures, followed by further depreciation, followed by yet more foreclosures.
Once the number of such debts reached a critical mass, wall street firms which had gambled upon the (formerly highly profitable) loans began to fail. THEN the Bush administration takes notice. And only THEN, does the Bush administration see a crisis which needs immediate correction.
This was predicted a full nine months ago by Horsey:
Horsey Cartoon 14Dec2007
The current bailout package does nothing to solve the underlying mortgage crisis, it only places the government into the position of the Wall Street firms, freeing them to do the same risky practices all over again. They, not the American People, are the real beneficiaries of this bailout. The co-beneficiary is the legacy of George Bush and the Republican Party, who are barely managing to avoid ending Bush’s eight-year term with a poorer stock market performance than any President since Herbert Hoover.
Goldy, you give permission to our congresspersons to vote for a $150 Billion bailout for now; but isn’t the bill being considered limited to an initial allowance of $250 Billion? What’s the difference?
Anyway, I don’t think half-assing it is an option. Like the Bush Admin’s Iraq War policy, going in with too little commitment ended up being worse than either a full measure or doing nothing at all. Up against a $12 Trillion domestic mortgage market, even $700 Billion may not be an adequate amount.
Either the “buy-in” is the greatest act of heroism by government since the New Deal, or it is the greatest blunder since Hoover. There is no in between.
Only a fucking masochist would read a pompous, verbose, bloviating, pontificating ass like Stirling Newberry.
My blog days are far more productive and enlightening since I added Stirling Newberry and Seattle Jew to my “ignore at all costs” list.
The bailout will cost 40 times more than Phase 2 light rail, and you don’t even get an underground bomb shelter out of it.
Auburn @3,
The difference between $250 billion and $150 billion is $100 billion. That’s still a lot of money, last time I checked. And besides, the bill in its current form requires a Congress to reject authorization for the remaining $450 billion, thus requiring the two-thirds necessary to override a presidential veto of the rejection. Bush could allocate and dispense the whole damn thing before he leaves office.
Again, all I’m asking for is caution. There is no reason why this bill has to be passed today. Congress should stay in session longer if that’s what it takes, campaigning be damned.
Bailout or no, the credit meltdown is a game changer. Now that the credit binge is over, American workers will have to live on their paychecks instead of easy credit, and may finally notice that real wages have steadily fallen since 1970. And they will not be happy.
. . . we interrupt this call for fiscal prudence for a message from our sponsors . . .
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. . . Thank you, and now we return you to Goldy’s message of fiscal prudence and sanity . . ..
In the case of Sound Transit, you get a transit system, not a bundle of paper. Also you have folks working on the transit system making good money–and spending that money in WA. In the case of the banker bailout you have the top 1% getting more money and using that money to keep buying worthless paper. The country would be better off if they used this money to build a light rail system in every large or medium sized city that didn’t already have one.
@9 For $700 billion, you could build enough light rail to commute from Bellevue to Manhattan.
Well, I was going to write Norm Dicks a note saying vote no, but all the Internets tubes seem to be full.
Senator Stevens warned us about this, maybe we should have listened…
Roger @ 10 – PLEASE GOD NO! DON’T WE ALREADY HAVE ENOUGH NEW YORKERS HERE NOW???
:)
I managed to get though to Norm Dicks after all.
Just out of curiosity, I wonder how much money you could raise if you took back all the raises, bonuses, and profits from stock options from the Wall Street executives who would profit from the bailout? I’m not talking about this year, I’m thinking about going back the last five years, and then forward for another five.
Sure, it wouldn’t amount to $700 Billion, but that’s part of the problem – these guys were willing to gamble billions of dollars of money (first their firms, then the taxpayer’s money) in order to make millions personally.
Rossi is such a big fan of the minimum wage. And the “Party of Personal Responsibility” (the Republicans) are so committed to bankruptcy reform which denies everyone a fresh start but requires them to undergo at least five years of endentured servitude to make sure the Wall Street profits get repaid from individual consumers. So let’s take their Republican plans, an apply it to the Wall Street Bankers! Seize all their assets, and then put them to work at minimum wage until they pay off the $700 billion debt to the taxpayers. And just to be consistent with what they think is fair for the rest of us, let’s apply a 27.9% “default interest rate” to that debt, and include late-payment and overlimite fees every month!
Continuation of # 14: Hey, I’m really beginning to like that idea!!!!! It’s a Republican Party, let’s apply a Republican Solution to it!!!!!
@4 Ivan
i am honored to receive such attention from you.
I wonder, however, what part of SJ offends you so. Is it the science? Do you object to my efforts to paint creationism as blasphemy? Or is it my criticism of radical religions .. including radical right wing Christians under the same burkha as the Wahabi and Taliban? Or is it my concern that in a tw party system, having even one part in the hands of a radical movement is dangerous?
Just want to know so I can do better by you.
You can’t trust those who brought this mess upon on to fix it.
http://hotair.com/archives/200.....c-in-2004/
@7 Roger Rabbit
I think you have the meme and the theme that I would like to see Obama start taking NOW.
SJ recommended Talking Points:
Six years ago President Bush called the nation to respond to a vile attack with courage but without sacrifice. He was correct about the courage but tragically wrong about the sacrifice.
We, all Americans, rich and poor need to pull together to avoid the worst consequences of the last period.
We CANNOT wage war usind=g dollar borrowed from China.
We CANNOT export our jobs and then congratulate ourselves on the bargains we get at Walmart.
We CANNOT have dropout rates of 50% in high school while fewer than 25% of those who do enter college choose the hard majors of science and engineering.
We CANNOT have only those who choose to wear our natins military uniform, be the only ones to sacrifice their well being for the rest of us.
We MUST reform the tax system so that we all bear our fair share of the burden.
We MUST diminish the role of credit on our society and increase the role of savings.
We MUST remove the huge burden of an inefficient health care system from the backs of Americas employers while assuring that Americans, all Americans have access to health care.
We must do all we can to encourage academic success including real scholarships for the most able students and incentives for all student to serve their country as part of their education.
And what will McCain ask from us all in return ..
Drill, drill, drill and burn, burn, burn?
Okay, at Washington State’s minimum wage of $8.05 p/hour, it would take just shy of 87 billion hours to pay back 700 billion dollars. But adding 27.9% interest to the debt means that the debt increases over 16 billion dollars every month, adding over 2 billion hours of work per month required just to stay even.
Of course, it’s impossible for Wall Street bankers and investment company executives to make enough money to pay back such a debt. For one thing, they are just too lazy and shiftless to keep a minimum wage job without quitting or being fired. Secondly, there are just too few of them which benefited from the huge profits generated by the sub-prime loan system to be able to pay it back (which is kind of the point).
But their answer is that they shouldn’t have to pay it back. Instead, those already earning minimum wage, or a little better, should bear the cost. After all, after so many years of Republican rule, there are so many of them!!!!!
So if every man, woman, and child in the U.S., regardless of circumstance, is divided an equal proportion of the debt, it comes out to $2,295 per person. At Washington’s minimum wage that’s a bit over seven weeks of work per person to pay off their individual debt, with yet another week of work to pay off the interest accumulating on the debt. Let’s round it off at eight weeks per person.
Of course, not everyone has a job, so someone else has to work to pay it for them. Let’s forget the retired, disabled, elderly for a moment. Instead, let’s just look at an average family of four people (husband, wife, two kids). Somebody in that family has to work 32 ADDITIONAL WEEKS to pay off that’ familie’s hsare of the debt – almost two-thirds of a year!!!!! And that’s ON TOP of the current taxes, plus living expenese, etc.
So assuming you have a family of four making minimum wage (which Rossi insists isn’t supposed to be a “living wage”, but instead is only and “entry wage”), then you have the man and the wife both working full-time jobs trying to make ends meet, but also working two part-time jobs just to protect the Wall Street executives from the consequences of the mess they and the Bush Administration made of the nation’s financial systems.
But to them, that’s fair.
@12 Not to worry, I’m gonna vote against light rail (again), and $700B for light rail isn’t a high priority for the people who run this country anyway. They’d rather spend it on war.
@18 The credit part is taking care of itself. As for the rest, the biggest and most important piece is reforming health care. We don’t need any more evidence that our health care system is fundamentally broken and drastic change is needed; we’ve seen other systems work in other countries; it’s time for action.
As for falling wages and the unfair disparity between the heavy taxation of wages and the light taxation of those who derive their income from asset ownership, my personal solution was to quit working and start owning. The disincentives against working are now so great in our society that I won’t lift a paw! I’m a capitalist bunny now!
It looks like someone added an extra zero in the amount executives of firms getting bailed out can take as salary.
Hey Norm Dicks,
Well I’m sorry to say it, but it looks like I overspent on Lattes and Cheeseburgers last month and I’ll need a couple of G’s to get the books to balance. Any chance you could help me out?
‘ALL I WANT IS CAUTION’
Honey, the barn is burning.
Th English nationalized a big bank today.
Another even bigger bank was proped up the Luxembourg, Belgium and Netherlands.
Honey, you are really silly some times. The fes are acting well right now, merging banks that have assets so the feds (public purse) is not involved. But, at some point the mess must be reckoned with.
Goldy, you sound like dour out of touch Ralph Naaaddeerrr.
From Daily Kos.
It’s interesting that no one – not even economists – can say for sure what would happen if we wait. Is the whole economy a house of cards and no one could get credit for anything? Would it force people to live within their means (you should hear Suze Orman on Oprah light into people who live way beyond their means and then ask her for advice)?
To me, I just am not sure that this isn’t a bailout to Wall Street. Where is the accountability and/or punishment in all this for THEM bringing us to the brink?
Are we risking a recession or a depression?
If we make the wrong choice, do we bring the entire nation to its knees or just Wall Street?
Roger, I hope you sold your Oil Stocks, the price of Oil today fell below $100, and not a well was drilled, polar bear killed, or Russian shot while drilling in the antartic.
Yee Haw!
I’ll go start my riding lawnmower and just set it on autopilot chasing down all those pesky little wabbits with their solar panels over their holes.
And put a seeing eye on it for the King County assessor. I hear they are 90 million in the red again!
I won’t let no assessor chase my wabbits outa their holes! That’s my job!
Note that if a bailout plan is approved, then the stock of the companies affected will rocket upwards, allowing the executives holding stock options to profit handsomely, regardless of any limits on their salaries.
But it looks like this package is a doomed deal. News this morning is that it failed in the House, with House Republicans voting against it in greater numbers than House Democrats. So this subject will probably be continued on the newer thread.
Yes Republicans listened to Barney Fag, Little Chucky Schumer, Melvin Watt, Chris Dodd.
Big mistake…
The candidate of change, the shining proponent of a “new way” in national politics, says that you aren’t allowed to bring a sign to his rally. So much for the right of free political speech. To add insult to injury, this rally was held at the publicly funded University of Mary Washington in Fredericksburg, Virginia. So, now the government is lending the weight of its authority to squelch free speech. So, where is the hew and cry about this unAmerican activity? Did the media even note this heavy-handed policy?
But, it is all true nonetheless. The rally was held and weak-spined school officials bent over and meekly accepted the rules derived from the fascistic penchant of the Obama campaign with its anti-first amendment proclivities. Some few small voices questioned this oppression of American rights, but for the most part no one seems to have noticed that Virginians had their Constitutional rights quashed that day. Shockingly, some even thought it was a good idea.
The Obama campaign, falling back on the oldest dodge in the book, claimed that campaign signs were not allowed because of “security concerns.” Who can doubt, though, that it was instead because of “camera concerns”? The Obama campaign was far more interested in photo ops clear of McCain signs or other unwanted reminders that there are other opinions out there among the unwashed masses than that of sycophancy for The One.
On one hand, I see the logic in a campaign making sure that it controls the atmosphere of a campaign stop. It’s only good sense. And if this control were to be exerted on private property with the full acceptance and participation of the property owners, well who can deny that? But it wasn’t. This rally happened on public land.
Now, let us harken back to the “reason” that Sarah Palin was refused the podium at the anti-Iran rally last week, shall we? She was denied because of the so-called “equal time” rule, remember? This is a shadowy “rule” that seems to state that no politician may speak in public unless his opponent also appears to speak.
So, one wonders: did the University of Mary Washington invite the McCain campaign to the rally with Obama? And if not, why not? After all, this is a publicly funded institution. Are we to accept that such a place would violate that sacrosanct “equal time” rule? Are we to believe that a place funded by our money not only didn’t invite the opposing candidate, but used its publicly derived authority to squelch free speech by disallowing signs?
I suppose we’ll have to believe such a thing, after all.
Of course, the media doesn’t mind. Who can deny that such heavy-handed campaign policies smoothes the waters for their messiah. I can only chuckle at this. I mean, Obama is the first messiah that needs average men to smooth the waters for him instead of being all powerful enough to smooth them himself. How shallow must be the water he walks upon?
Warner Todd Houston Blog.