October 3rd / 5th, 2008
"Bailout of Mass Destruction"
Politicians and high-ranking government officials like to keep us in line by
reminding us that they know more than we do. We heard it three years ago
from congressmen who told us to trust George Bush’s judgement on weapons of
mass destruction because “he has all of the facts, and we don’t.” And a few
days ago we heard it all over again, except this time it was about the
so-called financial crisis on Wall Street. We were all expected to just go along
with the $700 billion dollar bailout, and not ask any questions. After
all, the heads of the Treasury, Federal Reserve, and the SEC are the smartest
men in the room. Otherwise, why would our knowledgeable President have
appointed them?
Sorry, but to quote Yogi Berra, this is déjà vu all over again.
Just as with the fictional WMDs in Iraq, we are now told to trust the
intelligence collected and reported on regarding the need for an emergency bailout.
We are supposed to believe Bush, who believes Henry Paulson, Ben Bernake and
Chris Cox when they told him that the cow pies were about to hit the fan,
and that a massive infusion of taxpayer money into the coffers of Wall Street
was needed immediately.
To stay with the Iraq analogy, the bailout plan as proposed originally
would have been an invasion into our money with no exit strategy in sight.
After 18 terrorists from Saudi Arabia attacked the United States on 9/11, Bush
countered by attacking Iraq who had nothing to do with the crimes. With the
Emergency Economic Stabilization Act (EESA), Bush ordered a similarly
misguided action.
As BB&T’s John Allison reminded us, not all banks have been behaving badly,
and those who have don’t deserve to be bailed out by taxpayers.
But instead of putting these corporate whores in jail, Bush and company
wanted to keep them afloat and hope that they change their stripes.
Many naïve congressmen jumped on the Bush bandwagon, assuring us that the
bailout was prudent. What a joke.
First of all, there was a provision in the EESA that if monies weren’t
recouped after five years, then those who accepted the funds will have to repay
them. Are you kidding me? Those guys would declare bankruptcy and head for
the Caymans long before the five years were up if they even started to smell
trouble.
Second, we were told that there would be a curb on exorbitant CEO salaries.
Not true. If you read the fine print of the bailout plan it would not have
prevented any company who receives government help from paying CEOs millions
of dollars. It simply stated that any compensation exceeding $500,000
cannot be deducted by the corporation. And so, the same robber barons who
caused this mess can take taxpayer money and still manage to get richer and richer
with everything from bonuses to deferred stock options.
Third, we were told to rest easy because the bailout will be administered
by Paulson and an independent oversight committee. But that committee would
be led by Ben Bernake and Chris Cox. And so, Moe, Larry, and Curly who
allowed this mess to happen in the first place, would have been in charge of
making sure that our money is spent wisely.
At first, I held out hope that a few Congressmen were going to derail this
idiotic plan, but within a few days, most of them seemed to cave in the same
as they did on the invasion of Iraq. Why? Because the election is one month
away, and neither party wanted to risk taking the blame for a bad situation
getting worse on their watch. Fortunately, a majority of Congressmen
(including Virginia Foxx) stood up to Bush and killed the EESA.
But, I am still disturbed by those lockstep Congressmen who tried to pass
the bailout as first proposed. They suffer with short-term memory loss.
They should have learned not to trust the Bush administration after 9/11. They
should have asked Paulson why he is going to pay more than market value for
toxic securities, and how he arrived at the $700 billion. If nothing else,
they should have called the President’s hand on this bailout plan by throwing
his own words in his face.
- Dec 4, 2007: “We shouldn’t bail out lenders. We shouldn’t be using
taxpayer money to bail out lenders.”
- Jan 7, 2008: “The economy rests in the hands of the American people, not in
the hands of government.”
- March 17, 2008: “Our financial institutions are strong and our capital
markets are functioning efficiently and effectively.”
- July 15, 2008: “I have confidence in the long-term foundation of our economy.”
- Sept 24, 2008: “The market is not functioning properly.”
Just as with Iraq, Bush has no idea what he’s doing, but now, he’s willing
to risk money that we don’t have on a plan that runs counter to everything
he believes and against every principal of a free market economy.
And if you’re looking for irony and hypocrisy at its best, then just
consider this.
Most congressmen and senators are opposed to universal healthcare for all
Americans. They say it would be the first step toward socialism. But any sort
of bailout plan where government takes control of our financial
institutions is, by definition socialistic.
Ralph Nader described it as, “Socialism in Washington bailing out capitalism
on Wall Street.” He also warned that this would spell the “Corporate
destruction of capitalism”. Lisa Schiffren of the National review recently
concurred, saying that Karl Marx had once issued the same warning as Nader.
Other nations who take control of their banks and investment companies also
offer free healthcare and free college education. And so I don’t mind
bailing out Wall Street, but where are the perks for us regular folk? Because of
the money being expended on any bailout plan, we’ll still be paying high
premiums for health insurance (if we can afford it at all) and we’ll still have
to mortgage our homes to send our kids to college.
If Congress really wanted to do the right thing, they should have enacted
reforms against corporate greed and bad loan making, and instructed Paulson to
spend the $700 billion by issuing a check for $12,000 to every household in
America.
The EESA was an overkill, knee-jerk reaction to a problem that has been
brewing for two years, born out of incompetent oversight by federal agencies
charged with keeping a reign on lending institutions and securities pirates.
The group of people who caused the problem, like the bailout plan itself, is frought
with political incest. Nancy Pelosi and her liberal buddies once again rolled
over for Bush, while John McCain’s solution was to immediately fire Cox as
head of the SEC. But it was McCain the Maverick who joined 99 other senators
in confirming Cox. So it should have come as no surprise that most of
Congress was willing to let Cox, who failed to see the iceberg coming, be put in
charge of seeing that an inadequate number of life boats are distributed.
The original EESA was wrong on so many levels, including that American
taxpayers would have been victimized twice. Once when the lenders screwed us and
the speculators knew it, and again as we began to pay for the screwing.
And a bailout in any form also gives Congress and the next President
political cover for why we can’t afford universal healthcare or to invest in
alternate sources of energy.
Appropriately, all of this drama comes just in time for the Halloween
season, and that’s too bad. I was really looking forward to treats this year, but
with a bailout still looming, I’m afraid we might get tricked in the worst
way.
|
