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.
Call your Representative and Senators, 800-473-6711, and tell them to take their time and just say “no.”
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.