We’ve seen this movie before. Different setting, more fantasy than reality (as this one appears to be). But the principle applies. Catastrophe looms. The president proposes an expensive plan with little or no oversight, essentially saying “trust me.” He insists, as do his advisers that Congress needs to act immediately. Now! Approve the plan as written; there is no time to debate, to discuss, to modify, to amend. Trust us. We know what we are doing. And if you don’t do it, and do it now, you’re not acting in the best interests of the people.
Roll back the tape to 2002. We could be talking about Iraq. Fast forward a few years, and this time the movie's about Iran. Or wiretapping and FISA. But it's not 2002 or 2007. It's 2008 and we’ve seen this movie, called "The Great Bailout of 2008." Once again, the sky is falling (and it well might be – this time).
But, as I said, we’ve seen this movie before, and pardon my cynicism if I have a bit of a “fool me once shame on you; fool me twice (er…three times) shame on me" vibe going. This is where Iraq--and the lying, deceit and treachery of the Bush presidency leading up to it--suffers some blowback, and in an unexpected way. Had the administration not been revealed as having lied, finagled, fudged and over-hyped Iraq; had they not questioned the patriotism of anyone who dared disagree or desire better oversight, Bush might have found a Congress more willing to “trust” him.
But the administration has used its “chicken little” approach too often and too misleadingly for much of anyone to trust the president with $700 billion. Threats of doom on Wall Street may be real, but given the track record of the Bush Administration, how can we dare trust it? How can we afford to trust it? How do we know that this isn’t only the beginning? How do we trust the Administration that brought us Iraq, Katrina, the botching of Afghanistan to do this right and without sufficient oversight? The simple answer is: we can’t.
Article comments
— go to most recent comments1 - handyguy
Skepticism is usually healthy, Barbara. But I believe these guys [Bernanke and Paulson] are genuinely frightened, and I doubt they scare easily. [Bush seems an insignificant sideliner; sad and strange and disconcerting.]
After listening to the Washington Post's Steven Pearlstein and CNBC's Jim Cramer tonight on the Chris Matthews Hardball show, I am convinced: [1] If this rescue is not done, genuinely dire consequences are all but inevitable; [2] it has been caricatured as a $700 billion handout [or 'blank check'] to greedy bankers.
The Treasury will get a substantial portion, and maybe even all, the money back as it sells the securities. But if they don't buy the securities, the financial system will seize up, possibly fatally.
Absolutely, the Dems should cram as much transparency and oversight and help for the poor and the middle class as they can into the bill. But they can't torpedo it or delay it very long or we may very well have a collapse and a Depression.
2 - Boffle
I completely agree with you on this, Barbara.
I heard on NPR that one of the strategies put into place quickly was for the government to insure money market funds to restore confidence. The head of a banking association heard this and realized that if the government suddenly insured two trillion dollars worth of investments, people would pull their money out of bank savings and put them into money market funds, potentially causing the banks to fail or at least to be unable to offer loans because of lack of funds onhand. This was supposed to have gone into effect Monday, but the banking head I mentioned went to the appropriate officials with his concern over the weekend and it was decided instead to insure only existing money market funds. Disaster barely averted.
Now, you can get the details of this one occurrence easily, but it does confirm that skepticism is highly warranted where this administration is concerned. Trust Bush's administration to get us out of a crisis? Not without severest oversight and well-thought out bipartisan participation. Acting too fast could really make this thing way worse overnight.
3 - Dave Nalle
Indeed, why trust the President and the party who tried to stop this debacle both in 2003 and 2005, only to have the proposals killed in committee because of democrat opposition..
Let's instead put our confidence in the party which created the problem, made it worse in 1968 by privatizing Fannie Mae and Freddie Mac. Made it even worse in the Carter and Clinton administrations by forcing lenders to loan to unqualified applicants, and which has blocked all efforts at reform prior to this because their leaders (Dodd, Obama, Clinton, Frank) have taken hundreds of thousands of dollars in campaign contributions from Fannie Mae's lobbyists, and who now want to saddle any bailout with massive additional pork and pandering.
Maybe it's time to say enough and get over your Bush Derangement Syndrome and see what's really going on in the world.
Dave
4 - Cannonshop
A little more gasoline for the topic...
Fuel, in this case a group of "Civil Rights" activists defending loan practices that prey on the vulnerable,
and
Match
The CRA, or "Community Reinvestment Act" passed in 1977, this law basically mandates that banks must give mortgages to people who don't have credit. It may not be the intention, but that was (and is)the outcome. The CRA is still current law, can anyone tell me...who was in charge of congress, and who was the President when this law was passed?
5 - Lisa Solod Warren
Dave, you really really can't be serious about blaming the Dems for the mess, can you? I mean, seriously?
6 - Lisa Solod Warren
Dave Nalle: you might want to read this
7 - Barbara Barnett
I have no doubt that Bernacke and Paulson are frightened (and Bush as well). My point is that had BushCo not used the same exact strategy for bulldozing past debate and discussion for Iraq and a whole host of other things, they might have more credibility. The fact that Congress does not (again) want to have egg on its face is understandable. I've also heard theories floated that the Republicans (who do not support this anymore than the democrats) are willing to do nothing, leaving the democrats appear that they are the ones in bed with bush, and McCain--defiant against bailout will smell like the maverick he's not.
8 - Joanne Huspek
This mess transcends party lines. Both sides have enjoyed a bonus from their dealings with Fannie/Freddie and all of the Wall Street gang.
Cannonshop's links are right on. This mismanagement has been going on for 30 years (or more) unchecked.
9 - Lee Richards
Dave, pathetically, just can't accept or admit that a runaway unregulated free market(courtesy of the Bush administration's policies and deficits)has led us to meltdown and nationalization.
It's a tired old political ploy to blame every problem you create, ignore, or fail to solve on somebody else. "What's going on in the world"(see #3)is the sad spectacle of those who always put party and ideolgy above principle and the common good.
10 - Lisa Solod Warren
Lee, Yup. Yup. Yup.
11 - Clavos
There should not BE a bailout.
Period.
Protect the little people (greedy and/or dumbasses though they are), then indict, try, and if convicted, imprison in REAL prisons for REAL terms, the greedy bastards who played the little people.
Let the Lehmans and AIGs fail. If they're bailed out, there will be no lesson to the greedy fucks, and inevitably, we'll be faced with the same situation all over again in twenty or thirty years.
12 - Don Jarrett
“I believe these guys [Bernanke and Paulson] are genuinely frightened, and I doubt they scare easily.”
I believe these guys [Bernanke and Paulson] are genuinely stupid, and I doubt they learn easily.
They should have read the book, “The Great Crash 1929” by John Kenneth Galbraith. They would have recognized the housing bubble before it burst.
During the 1920’s, shares of companies that held some stocks and bonds were sold for several times the assets' market value. The 1920’s and current conditions are similar, particularly the trend at the time toward mergers and consolidations--not to mention all the supposedly informed people who imagined themselves to be financial geniuses.
Now supposedly informed people [Bernanke and Paulson] are trying to pick our pockets again.
Bailing out the big guys didn’t work leading up to 1929 and it won’t work now.
13 - Don Jarrett
Henry Paulson has a personal fortune of $500 million. If he wants us to bet that if we give him $700 billion, his plan will work, he should be willing to bet his $500 million on the gamble.
14 - Marlowe
Dave... When are you going to realize this IS NOT a "Party" issue. True, the Reps are far more brazen in their crimes than the Dems - but BOTH are responsible for this because BOTH are sucking at the tit of CORPORATE AMERICA.
Really, are you SO naive to think that either party is "truly" concerned with establishing a fair and equitable economy? What the HELL would be in it for them?
Wake up bro. Stop following along behind the right wing radio talking holes...
Marlowe
15 - Les Slater
"Dave, you really really can't be serious about blaming the Dems for the mess, can you?"
From an Amy Goodman interview on September 22:
"ROBERT SCHEER: Yeah, well, the point is, when Bush and McCain and Paulson, who was head of Goldman Sachs before he was head of the Treasury, say they don’t know how this happened, they designed this system. We had a regulatory regime in place ever since the Great Depression to prevent this kind of meltdown, and that said that stockbrokers, insurance companies, banks, investment banks, commercial banks, could not merge. And in 1999, they passed legislation, the Gramm-Leach-Bliley Act. Gramm is the guy who McCain supported for president in ’96. He was co-chair of his campaign until he complained about the whiners out there, meaning the public. And that legislation is what caused this. It allowed the swaps and everything else.
"And then, in 2000, hours before the Christmas break, Gramm introduced legislation. I’m holding it in my hand. This smoking gun is available on the internet; you can read it. And what it said is that the swaps is defined in the Financial Service Modernization Act, meaning that instead of going into a bank and somebody said, “OK, we’ll give you a loan, and we expect you to pay it over thirty years. We know your house has the equity. We know you have the means to pay it”"that was the traditional way"instead, they allowed these mergers, and as a result, they could buy insurance on it, they could do these swaps, they could do what they call hybrid instruments. And it is legislation that was never discussed, was"never had hearings or anything, says that all of this stuff is exempted from all previous regulation. The SEC cannot regulate it, the Commodity Futures Board cannot regulate it.
"So they gave these institutions, of which Goldman Sachs was critical"so was Citigroup, where Robert Rubin, who was Clinton’s Treasury secretary, he had also come from Goldman Sachs. And, by the way, even though this is Republican-led, there were plenty of Democrats, in fact, a majority of Democrats, who voted for this. And Robert Rubin, who unfortunately is advising Barack Obama"I don’t know how this guy can wake up and"you know, and not be embarrassed and how he can appear on television"and Lawrence Summers, these are the two guys in the Clinton administration who teamed up with Phil Gramm to pass that atrocious legislation."
16 - handyguy
Lots of irrelevant partisan sniping in this thread. Well, it is an election year.
But opposing this plan because it 'rewards bad behavior' or because it's 'unfair' is very shortsighted. Fair won't mean much if our credit cards stop working and unemployment doubles.
PS I'm a Democrat and an enthusiastic Obama supporter. The fact that mainstream Republican conservatives [Paulson, Bernanke, John Boehner] are supporting this mind-bogglingly big-government-oriented plan makes it more convincing to me.
And I recommend looking up the Pearlstein-Cramer interview on last night's Hardball [titled "The Economic Clock Is Ticking" on the video list]. Both these very smart guys were very persuasive on the point: this is beyond serious - we really could be talking utter meltdown and deep recession/depression.
They apparently succeed in changing Chris Matthews's mind during the clip. They did mine as well. Easy to slip into populism about TARP, but none of us really wants Wall St to burn if they take the rest of us down with them, do we?
17 - Les Slater
"Lots of irrelevant partisan sniping in this thread."
And some signs of panic.
18 - Barbara Barnett
handyguy--
there's always a lot of partisan sniping in the comments section of my politics articles. And, of course, not only mine :)
19 - Don Jarrett
When was the last time Paulson and Bernacke told us something that turned out to be true?
20 - bliffle
If Paulson and Bernanke are so smart that they know what will happen if we don't back the Big Bailout (and, what will happen if we DO!), then why weren't they smart enough to see this coming a year ago, or 3 months ago?
I mean, with them being so smart and being able to divine the future, and all.
21 - Cannonshop
#20 (Just a guess about the 'why', mind...)
A Lot of people saw this coming years ago, for some reason the guys in charge didn't, including guys like Greenspan, Bernanke, and Paulson, along with Dodd, Pelosi, Clinton, Bush(and Bush-both of 'em), Raines, etc. etc.
It's a little, I think, about seeing it coming and a LOT about "Oh, but it won't hit while I'm in charge, so it's not a problem."
IOW, Bliffle, (and I'm only speculating), it's derived from the same kind of thinking that only concerns itself with the Quarterly Returns, while ignoring the Long Term costs-a diseased sort of thinking that's been popular in the Executive Suites for at Least forty years.
It's kind of like...say, the difference between your landlord replacing a leaking sewer pipe for $1500, or just tossing a patch on every few months at a price of $200. If he's looking to sell out in six months, he'll toss the patch on and look for a sucker-because the patch will hold long enough for him to escape culpability.
Same thing here-they've been patching the leak instead of fixing the pipe, and the Bailout this time, just like last time, is just a patch until they can safely away from the final failure.
22 - Cannonshop
Anyone claiming this was solely caused by Republicans, I invite you to Rebut the linked analysis.
23 - Les Slater
Cannonshop,
They are looking at this long term and acting accordingly. See my #25 in ‘In Defense of Capitalism’. There are no solutions for the capitalists short of dramatically re-dividing the world resources and markets (AKA world war) and smashing the economic and democratic gains of the working class.
It was during the Clinton administration that the ruling class made its most dramatic turn toward escalating attacks on living standards and democratic rights. Bush has only built on them.
They have seen this crisis coming and have been preparing the groundwork to limit our ability to resist.
We still have power to resist and we will. It does not help to be paralyzed by fear or threats.
Les
24 - Cannonshop
Les, I don't buy into "class War" crap. This isn't about "classes", it's about individual actions, and unintended consequences compounded by individual greed.
25 - Les Slater
“Les, I don't buy into "class War" crap.”
I don’t expect you to. I use such terms as ‘class’ for clarity. Many see ‘bankers’, ‘politicians’, etc as the culprits here. They see the common folk as the ‘victims’ that are being asked to pay. I can buy that. Does anybody trust any banker to solve the problem? I say take it out of the hands of the bankers. That’s simple and a lot of folk could support that.
I just don’t buy your, ‘Oh, but it won't hit while I'm in charge, so it's not a problem’, explanation. The same players have been involved in different roles for decades.