The Bush Administration’s proposed $700 billion Wall Street Bail Out proposal is a collosal mistake for the US economy and the American people no matter what restrictions and limitations Congress is able to impose on a power-hungry Treasury Secretary Henry Paulson.
This “rescue plan” forces taxpayers to reward destructive and negligent business practices and does not address the ruptures in the foundation of the US financial system: deregulation of banks and financial firms, the overturn of the Glass-Steagal Act and a pronounced crony corporate business model which espouses a lack of transparency, limited share-holder input, misleading sales tactics and irresponsible lending.
If Congress actually cared “protecting the taxpayer” then lawmakers would attack the root of the current problem: declining home values and criminal mortgage rates.
Why not use $700 billion dollars to help homeowners keep their homes by purchasing foreclosed homes and offering affordable and reasonable mortgages? It could be a program similar to the Federal Student Loan program which gives millions of Americans the opportunity to pursue a higher education at affordable rates. It doesn’t take a MBA or PHD in economics to figure this out.
A healthy Main Street leads to a healthy Wall Street, but not necessarily the other way around.
Stop the Socialist Spendathon
Try pro-market, pro-growth solutions instead.
By Deroy Murdock
It is beyond irritating to watch President Bush, Treasury Secretary Henry Paulson, and Federal Reserve Chairman Ben Bernanke gift-wrap their $700-billion early Christmas present for financially irresponsible bankers and the overleveraged borrowers who love them. These “three wise men” consider theirs the only method to stop the turmoil roiling trading desks from Gotham to Tokyo.
“Action by the Congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy,” Bernanke told the Senate Banking Committee Tuesday.
But this mother of all government interventions is unlike a long, cold hypodermic needle in the belly: an inescapable misery, but preferable to death by rabies. There actually are desirable alternatives to building socialism and saddling every American man, woman, and child with another $2,300 in unjustified federal spending.
One option is to instruct the geniuses from Fannie Mae to Wall Street to deal with it. They made this mess; they should mop it up. Cut back, sell assets, develop fresh services, or get new jobs. Absent a federal bailout, Lehman Brothers sold parts of itself to Barclay’s Bank. Facing Uncle Sam’s cold shoulder, Merrill Lynch ran into the loving arms of Bank of America. Merrill’s customers will survive, and its employees will work for B of A or seek their fortunes elsewhere.
It may take time and tightened belts, but padlocking Washington’s bailout window will offer a generation of “masters of the universe” lessons that America’s Mr. Rogers-in-Chief cannot teach: Keep your winnings, but own your losses. If you fall on your face, especially after dancing drunk on the roof, Uncle Sam may empathize, but he no longer will rush in to swaddle you in silk sheets and place your bruised head on pillows stuffed with crisp $100 bills.
Other options exist, of course — and while they lack the bracing appeal of this sort of financial Darwinism, they remain far more attractive than our current policy of “survival of the fattest.”
Rep. Jeb Hensarling (R., Texas) chairs the Republican Study Committee, the congressional caucus of idea-driven, free-market stalwarts. These practicing Reaganites seem appalled to watch their GOP president morph before their eyes from GWB to LBJ to FDR. At a Capitol Hill press conference at high noon on Tuesday, Hensarling and a dozen RSC members expressed deep misgivings about Bush’s $700-billion baby. Preferring to drown it in the bathwater, Hensarling and his band of true believers rejected Bush’s collectivism and offered their own proposals for escaping this rubble — and returning America to a path of robust growth:
Give the capital-gains tax a two-year vacation. “Suspending capital gains taxes would bring as much as a trillion dollars of capital sitting on the sidelines back into the market,” Hensarling predicts. Also, as the Tax Foundation proposes, cutting America’s 35-percent corporate tax — the industrialized world’s second highest, after Japan’s — would boost U.S. global competitiveness. Since equity prices partially reflect long-term after-tax profits, lowering corporate levies should buoy stock markets.
Denationalize, then privatize Fannie and Freddie. “These troubled financial Frankensteins — created in a government laboratory — are not creatures of the free enterprise system,” Hensarling said. “We must ultimately take their monopoly powers away and return them to the marketplace.” Why not array Fannie’s and Freddie’s loans according to mortgage holders’ surnames? They then could be divided alphabetically into 26 units and auctioned off.
Waive “mark-to-market” accounting. As the Competitive Enterprise Institute’s John Berlau argues, when distressed mortgage-backed securities sell at bargain-basement prices, unhelpful new bookkeeping regulations require that similar instruments elsewhere — including viable loans — be valued at equally low prices. This needlessly stains balance sheets.
Strengthen the dollar. Bernanke should boost U.S. currency, not pose as America’s uber-stock broker. A strong dollar lowers inflation, cheapens oil, and soothes world markets.
Bush’s bailout bonanza began with $29 billion for Bear Sterns. Then came the taxpayer-financed purchase of an 80-percent stake in AIG. And while the public and press gaped open-mouthed at the $700 billion request to rescue the financial-services sector, Washington quietly passed $25 billion to the auto industry. Doubtless, credit-card companies now await their slab of bacon. This cavalcade of giveaways and takeovers monumentally betrays the Republican Party’s most sacred tenets.
Even worse, Bush’s hyper-statism offers nothing imaginative. It takes brains to generate interesting ideas like Hensarling & Co.’s. It takes mere muscle to nationalize companies and toss handfuls of cash into the air. Just ask Eva Peron.
— New York commentator Deroy Murdock is a columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution.
Sarah Palin’s speech at the Republican National Convention tonight highlighted the Alaska Governor’s complete incomprehension of the crisis our country is in.
Our economy is tanking. Our environment and transportation sector are held hostage by Big Oil. Our monopolies on innovation, technology and hope are crumbling. Our military is spread so thin that we have no way to check Iranian and Russian aggression, let alone catch Osama bin Laden. Our poverty and unemployment rates are increasing. Our middle class is evaporating. Our housing market is worse than it was during the Great Depression. Americans are homeless, jobless and penniless.
Did Palin mention ANY of this tonight? NO!
Palin offered nothing of substance except that parents of special needs kids would have an advocate in the White House in her.
Palin stuck to her already tiresome narrative of PTA meglomaniac.
And let’s call it like it is: Palin did not oppose the “bridge to nowhere” until she realized that Alaskans weren’t interested.
Palin has an abominable economic background, as the governor of the only state bordering two foreign countries, she has never engaged her neighbors in trade or sought to build economic partnerships — she’s never even visited her neighbors Canada and Russia.
And Palin has fought hard to make sure that Alaska doesn’t tap into its human resources and only exploits its natural resources even as pools of melted Artic water wash over her boots.
And just one more thing on this note — Palin has served as the governor of less than 700,000 people all of whom rely on Washington handouts to survive for less than two years. Barack Obama has represented at least 3.5 million Americans who live in the second most important city economy in the US and the fourth most important city economy in the world: Chicago — for six years at the state level and two on the national. And Obama doesn’t have to beg Washington for anything because his constituents do it themselves.
Palin as a Vice Presidential candidate is a joke. But it’s the Republican party who will end up having the last laugh if they’re able to pull the wool over voters eyes and move this circus into the White House.
Republicans — the party of Abraham Lincoln — should be mortified that McCain picked Palin to be his running mate. Mortified and ashamed. Deeply and incredibly ashamed.
Financial blowhards are tar-and-feathering the Rockefellers for suggesting that ExxonMobil start thinking outside the box. The founding family (of ExxonMobil’s predecessor Standard Oil) wants the oil behemoth to increase its accountability to shareholders, streamline corporate governance, be more transparent and most importantly: cast its focus on the future — a greener future.
Wall Streeters lose themselves when looking at ExxonMobil’s numbers. The company makes more money than the GDP of 2/3’s of the world’s economies. And these corporate lapdogs are lashing out at the Rockefellers for daring to suggest that ExxonMobil change course in any way. They’re thinking: “The company is raking in the cash - why change anything?”
But Wall Street is blinded by the dollar sign, naturally.
The Rockefellers are not.
The oil-rich family is thinking about ExxonMobil’s future returns, not current. Because they understand that this is the key to real and lasting wealth.
Oil is 20th Century. And we are living in the 21st.
The Rockefellers want ExxonMobil, along with streamlining its operations, to start investing in green technology. We should be celebrating this visionary leadership. The Rockefellers see all too clearly that oil is a losing game. The times may be fat now, but wait till the oil dries up, or simply becomes too expensive to harvest and refine for your average consumer to purchase as we have become accostomed.
Right-wing corporate lobbyists have called the Rockefellers out-of-touch veggie-heads for suggesting an investment in green tech. This accusation is laughable.
Here, Wall Street is blinded by the word “green”, foolishly equating the word with money-pit.
Again, the Rockefellers are not so blinded.
They understand that future is in green technology. So, the family is wondering why ExxonMobil shouldn’t position itself to lead the way. It seems like a no-brainer.
At the end of the day, green tech and green energy is going to march us into the 22nd Century - not oil. And the Rockefellers are thinking to themselves: “We might as well make a buck.”
Everyone should be waking up to Thomas Friedman’s column in the New York Times today. He puts it plain and clear why McCain-Clinton’s ponzi-scheme “gas tax break” is a ruinous plan for an already nose-diving “energy policy”.
“If you are going to use tax policy to shape energy strategy then you want to raise taxes on the things you want to discourage — gasoline consumption and gas-guzzling cars — and you want to lower taxes on the things you want to encourage — new, renewable energy technologies. We are doing just the opposite.” - Thomas Friedman
Americans should be outraged by their elected officials squabbling over energy policy in Washington. Has the oil industry paid everyone off??? Otherwise Congress’ actions and inaction simply make no sense at all.
The National Review’s Deroy Murdock laid out a comprehensive plan to get the economy back on track today. Hopefully somebody in Washington is reading his column. Preferably someone at the White House, the Treasury Department and/or the Federal Reserve. But don’t hold your breath while Bush is in office.
Among other things, Murdock argues for incentives to stimulate the economy rather than hand-outs, baby-sitting and outright pandering. He is right on the money, arguing that incentives will foster invention and innovation and self-reliance rather than a knee-jerk open hand to Washington when the going gets rough.
The US is a nation built on invention, innovation and definitely self-reliance. And that is what our economy needs right now.
We do, however, need to keep a safety net for those who fall. Not a French or Dutch-style safety net, but a safety net all the same.
Realistic fears of health costs, lack of health insurance and the looming threat of losing one’s home are all things that stifle invention, innovation and self-reliance. Because these real aspects of American life are debilitating to a great many of us. When you don’t believe your government, your country, gives a damn about your life and isn’t looking out for your welfare, then you psychologically start to erode your own sense of self and ambition. And this is the prevailing mood of the country.
A safety net of universal health care is necessary. And it is a long time coming. Universal health care, working hand-in-hand with tax incentives, would foster confidence, creativity, ambition and would lead to innovation and invention. Not to mention: self-reliance.
Think about how much money we throw away on health insurance, health costs and doctor/hospital visits each year. Think about how the fear of these costs keeps us frozen in our tracks! The money we spend on health care alone could spur a new wave of innovation and invention - if only we didn’t have to worry about health costs.
One can dream …
Unfortunately, Murdock backs McCain - believing that McCain is good for his word and will veto any bill laden with pork. Plu-eeze. If McCain gets in the White House, he isn’t going to “recall” saying any such thing.
But, that is besides the point. On fixing the economy, Deroy Murdock needs to be heard.
Wall Street’s army of old-white-guys-in-suits seems to be living in a different world than the rest of us. If you watch financial news or read financial newspapers, those hedge fund kingpins and stock speculators are trying to get the message out that the bad days are over and that the good days are right around the corner. They’re trying to tell us that recession fears are a bunch of hog-wash.
The irony is that they are spinning this bull at the same time Warren Buffett, arguably the most successful investor of all time, is saying the exact opposite. Buffett believes that not only are we already in a recession, but we should expect things to get worse.
“… My general feeling is that the recession will be longer and deeper than most people think,” says Buffett.
Maybe Buffett is so level headed and insightful because he doesn’t allow himself to be blinded by his billions and instead lives a humble life devoted to his family in Omaha, NE.
But, it doesn’t take an MBA to see the direction our economy has turned. Gas and food prices are rising and resources are becoming more scarce, the value of our homes is declining, friends and family are losing their homes and jobs and defaulting on debts, incomes are stagnating and inflation is raging: the situation ain’t good.
So, why the common sense-defying, Buffett-denying, sunny forecast from Wall Street?
They may indeed be too blinded by their billions to see what is happening on the street.
But, more likely they are so panicked by the numbers they’re seeing that they are rushing to plug the dike the best way they know how: drumming up business. Who can blame them? They believe the best way to stave off this recession is to buy-buy-buy. But, they know it’s a bear market.
So next time you see a Wall Street insider on television telling you the forecast calls for sunshine, look outside and see the storm clouds gathering. The forecast calls for rain.
What could Hillary Clinton be thinking? Aligning herself with John McCain around some pie-in-the-sky
ponzi scheme their calling a “gas tax break”? Honestly.
We are at such a critical juncture, the moment so pivotal, with concern to our economy, our environment and our way-of-life: this is not the time to be coaxing Americans to the gas station.
This is a time for visionary leadership. This is a time for revolutionary ideas and innovation! We have to come up with alternative sources of energy and transportation. We cannot remain dependent and addicted to oil and gas.
Clinton is proving that she is nothing more than another oil industry lap dog with this backwards move.
A former senior Federal Reserve official, Vincent Reinhart, told The Wall Street Journal that the Fed’s bailout of Bear Stearns is the:
This shouldn’t be shocking. Anyone with a sense of history can predict how this failure of policy is going to produce disastrous results. It was a slap in the face to free markets and takes bad lenders off the hook.
The bankruptcy of Bear Stearns would have been a great lesson for Wall Street. But eventually the Fed’s band-aide will fall off. Unfortunately, the wound is going to be worse.
As some got super-duper-to-the-extreme-max richy-rich this week by hedging bets on our collective demise, thousands of cogs expect to be laid off next week thanks to Citigroup, Merrill Lynch & Co and Wachovia bungling.
Expect the trickle over and down effect in the coming months. You better make appointments with your dentist, doctor, psychiatrist and all other necessary practitioners while you still have coverage.
