The $700 Billion dollar bailout plan you've heard about in the last few days is a dangerous, horrible idea. Treasury Secretary Paulson says it's necessary to prevent a major liquidity crisis in the world financial market, but it's a lie. This plan is simply a parting gift from the Bush Administration to the financial industry, and a brazen attempt to saddle a possible Obama administration with a crushing debt that will prevent them from making any progress on the issues that matter most to Americans. I heard just the other day someone contending that Obama wanted $670 Billion in new spending. They didn't bother to mention that most of it is revenue-neutral, and won't cost the taxpayers a dime. This plan, on the other hand will cost every single American Citizen over $2000.
We are told that this "Emergency" plan is a reaction to the fluctuations on Wall Street last week. If so, why has the Bush Administration been planning it for months? WH Deputy Press Secretary Tony Fratto:
"Fratto said it would be “unthinkable” for Congress not to pass legislation this week, asserting the result would be a “very, very serious situation” for the U.S. economy. “It shouldn’t take much analysis to remember what happened last week, which was a very serious freeze-up in our credit markets,” Fratto said. “Our financial markets right now do not need uncertainty, they need increased certainty as to how this rescue plan is going to go forward — and that they can be sure that there is a plan to go forward — and that will begin the correction in our financial markets.” Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough. "
Source: http://www.rollcall.com/ne
If the White House and Treasury saw this coming, why didn't they act earlier, or at least consult Congress as they were drafting a piece of legislation that represents the largest transfer of public funds into the private sector in history? Don't you think the people that represent you and I should have been allowed to help shape this plan? Why was it written in secret? I remember another Bush pet project that was cooked up in secret for years before being hastily announced and forced through Congress without meaningful oversight; we're still In Iraq, still presumably looking for those "Weapons of Mass Destruction." Our brave servicemen and women are still dying.
I'll tell you why this was a secret; it's because Congress never would have agreed to it. Among other things, it renders the office of the Treasury Secretary above the law. Decisions made by the TS would from now on be legally untouchable, and immune to legislative review. I don't know about you, but I want any decisions made about my tax dollars to be subject to scrutiny from Congress, the Supreme Court, and whoever else we've appointed or elected to oversee this stuff. That's why we elect them in the first place, right?
Another example of the foolishness in this bill? Lawmakers from both sides of the aisle have asked that companies receiving assistance from you and I must limit their Executive's salaries to the amount of the highest-paid government employee. That would be $400,000 a year, that's what we pay the President. The corporations are pushing, with support from Bush, to keep salary caps out of the bill. I don't think it's right to expect taxpayers to foot the bill for Financial CEOs' extravagant lifestyles, especially when their "leadership" has put their companies in the position of needing a taxpayer handout. If they're on my dime, 400k is plenty. It's about 10 times the average salary in America. I refuse to cry for them because they have to sell a couple houses. I can barely afford gas.
The Bill also opposes something called "warrants," which are effectively stock options that would be owned by the federal government on the Mortgage-Backed Securities that you and I are about to purchase. There are two problems here; one is that the plan calls for taxpayers to purchase all this bad debt at ABOVE market price, for some reason, and the other is that at whatever price, we would not be profiting from those assets if and when they increase in value. To simplify:
You are being asked to loan a company money to buy a stock that's only worth $2. But they want you to pay $5, since they feel like it's worth more than the market dictates it's worth, and they need the capital. Then, after you pay $5 for the stock, if it eventually goes up in value to $10, they will be keeping all the money. And you've lost $5, they've earned $8. Good for them, Bad for you.
The bottom line is this: This is probably not a crisis. If it is, I'm sorry to say, $700 billion is not going to solve it. IF we are about to enter a period of severe financial depression, this plan only serves to give one last gift to the rich before it all comes crashing down, it WILL NOT FIX THE PROBLEM. The problem is regulation, and the reckless attitude that allowed Wall Street to gamble away your home's value and your 401k. And giving these idiots more money to play with is not going to help.
There are indications that the market is already self-correcting. Warren Buffet announced today he was buying $5B worth of Goldman-Sachs premium stock, and possibly more in common stock. Now, this may have been a reaction to the news that Goldman stands to benefit massively from the bailout, but the point is this: Some people gambled and lost. There are companies out there that are still strong, and they are absorbing the weak ones. A lot of people made bad decisions, and this is the beginning of the reckoning for them. I'm not interested in propping them up. These failures are either the beginning of a massive liquidity crisis, or they're not. Nothing we do is going to prevent it from happening, the market is what it is. If you think that $700B is a lot of money, google "credit default swaps." There's about $65 TRILLION dollars worth of heavily leveraged, crazily unpredictable debt floating around out there that could bring down the world financial system eventually. But it probably won't, because the market is ruthless, but not dumb. Companies that are strong will survive, and those that are weak will die. It's natural selection, maybe that's why Bush doesn't believe in it.
Call your Congressperson. Tell her that you oppose this gift to people who were incompetent and stupid at their chosen profession. Tell her that you demand oversight, not another blatant power grab by the Bush Administration. Here's the number:
http://clerk.house.gov/mem
It is time to admit that Conservative Fiscal Policy, Reganomics, and "Trickle-Down" are all failed ideas. We have, for the better part of the last 30 years, been ruled by these ridiculous notions, and the events of the last 8 years have proven them to be false. The rallying cry against Liberal financial policy has always been that it is "Socialism" in disguise. That Democrats are "Communists" who want to take all the money and ruin the country by handing it out to the poor, or something. Who are the "Socialists" now, Mr. Bush? You have, in the last 8 weeks, taken over the largest Mortgage Company in the Country. The largest Insurance Company in the World. You are preparing to assume ownership of most of the Financial Sector as well. We, the taxpayers, now own these companies. But I'll tell you why it's not Socialism. Socialism implies public ownership of industry, with public distribution of profit. Your current policy is public ownership of industry with distribution of profit going to a select few in the private sector. There a word for that type of Government, too Mr. Bush. It's called Fascism.
There is a solution. But we have to wake up. The economy is broken because of Republican-backed deregulation that allowed it to get that way. Democrats have consistently opposed the laws that got us into this mess. We are at the end of the failed experiment with GOP fiscal policy. We must act now to elect the people that know how to fix it. I'm tired of being led by those that only know how to give more and more of our money to the rich.
Volunteer. Call your local Democratic party and ask how you can help. Florida People can find the number here:
http://www.fladems.com/con
If not there, visit the campaign website, sign up, and get moving.
http://www.barackobama.com
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