Secretary of the Treasury Henry Paulson("Hank" to his friends. So let's stick with Henry).
Q. Should Congress pass into law the $700 billion Wall Street bailout -- otherwise known as The Bailout, otherwise known as the Temporary Asset Relief Plan -- proposed by Secretary of State Henry Paulson (and supported, obviously, by all of the Bushies and the Federal Reserve Chairman Ben Bernanke), in its current form?
A. No, if estimates by Daniel Bruno Sanz, and numerous other experts, predict correctly what fate will befall the value of the not-so-Almighty US dollar. (i.e.: free fall) (Huffington Post).
A. No, because it's "an enormously expensive plan that doesn’t seem to address the real problem," according to Paul Krugman, in whose view Senator Chris Dodd's counterproposal is vastly superior, and which "has a real chance" of edging out Paulson's, due to the paternalism, arrogance and pushiness of Paulson's demand for full Executive Branch control, with zero oversight (more on this in a moment). (New York Times Web site)
You want full immunity from any & all future prosecution??Say it ain't so, Henry. We thought you were different.
A. No, because, first and foremost, Paulson's proposal gives the Executive Branch FULL CONTROL over the allocation of the $700 billion, with ZERO OVERSIGHT and FULL IMMUNITY FROM OVERSIGHT AND EVEN PROSECUTION. Patriot Act, anyone? Just fucking read this sentence, for which some sneaky little fuck in the Bush Administration wins the Totalitarian Fascist of the Year Award (actually, let's just award it to Paulson; oh, and the boldface is mine):
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.Yes. That day has really come, America, where your Executive Branch is actually saying: "Just hand over to us all of the control over everything, and just trust us, we'll fix everything behind closed doors. All we need is this $700 billion! Please just sign on the dotted line immediately."
If you're not angry, America, you should be. You respond: "But, I'm too busy to pay attention to this. I've got a job and a wife and a car and mouths to feed, and...." All the more reason you should be angry, America. All the more reason you should be angry....
Here's a taste of what Yves Smith, contributing to Naked Capitalism, which is a fantastic blog for those of us who are looking for straightforward explanations of the Bush Administration's economic shenanigans, has to say about it this sneaky little provision, in a post titled "Why You Should Hate the Treasury Bailout Proposal":
This puts the Treasury's actions beyond the rule of law. This is a financial coup d'etat, with the only limitation the $700 billion balance sheet figure. The measure already gives the Treasury the authority not simply to buy dud mortgage paper but other assets as it deems fit. There is no accountability beyond a report (contents undefined) to Congress three months into the program and semiannually thereafter. The Treasury could via incompetence or venality grossly overpay for assets and advisory services, and fail to exclude consultants with conflicts of interest, and there would be no recourse. Given the truly appalling track record of this Administration in its outsourcing, this is not an idle worry.A. No, because the proposal is fundamentally dishonest, and furthermore, would not work. Smith goes on to articulate a significant (and in a couple of respects, shocking) substantive (again, the boldface is mine) problem:
But far worse is the precedent it sets. This Administration has worked hard to escape any constraints on its actions, not to pursue noble causes, but to curtail civil liberties: Guantanamo, rendition, torture, warrantless wiretaps. It has used the threat of unseen terrorists and a seemingly perpetual war on radical Muslim to justify gutting the Constitution. The Supreme Court, which has been supine on many fronts, has finally started to push back, but would it challenge a bill that sweeps aside judicial review? Informed readers are encouraged to speak up.
Nouriel Roubini does not think it passes the smell test:
`He's asking for a huge amount of power,'' said Nouriel Roubini, an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy.''
...The Treasury has been using the formula that it will buy assets at "fair market prices". As we have noted, there is simply huge amounts of cash ready to bottom fish in housing-related assets (we saw an estimate of $400 billion a couple of months ago). The issue is not lack of willing buyers; it's that the prospective sellers are not willing to accept prices that reflect the weak and deteriorating prospects for housing.....A. No. But also, Naomi Klein warns us to be equally wary of alternative far-Right proposals, particularly those of Newt Gingrich, that seek to use this moment's crisis as an opportunity to shotgun through legislation that would push agendas of privatization, reverse what few social justice safeguards we may still recognize in this country, and -- of course -- to deregulate the private sector even further, including the repeal of the Sarbanes-Oxley Act. This is serious and twisted shit. Excerpt of Klein's piece, which draws upon her convincing theory of 'disaster capitalism' (Huffington Post):
...[T]he plan makes no sense unless the Orwellian "fair market prices" means "above market prices.".....Confirmation of our view came from a reader by e-mail:
I worked at [Wall Street firm you've heard of], but now I handle financial services for [a Congressman], and I was on the conference call that Paulson, Bernanke and the House Democratic Leadership held for all the members yesterday afternoon. It's supposed to be members only, but there's no way to enforce that if it's a conference call, and you may have already heard from other staff who were listening in.So unlike the Resolution Trust Corporation, which took on dodgy assets which had fallen into the FDIC's lap due to the failure of thrifts, and the Home Owners' Loan Corporation, which was established in 1934 after the housing market had bottomed, this program is going to swing into action with the clear but not honestly disclosed intent of buying assets at above market prices when future markets and the analysts with the best track records on forecasting this decline (you can add Robert Shiller, CR at Calculated Risk, and Nouriel Roubini to the list) believe it has considerably further to fall.
Anyway, I wanted to let you know that, behind closed doors, Paulson describes the plan differently. He explicitly says that it will buy assets at above market prices (although he still claims that they are undervalued) because the holders won't sell at market prices. Anna Eshoo pressed him on how the government can compel the holders to sell, and he basically dodged the question. I think that's because he didn't want to admit that the government would just keep offering more and more.
I don't think that our leadership has been very good during this negotiation (or really, during any showdowns with this administration) at forcing the administration to own their position. If Paulson wants this plan, then he needs to sell it to the public, and if he sells a different plan to the public (the nonsense buying-at-market-price plan) then we should pass that. I'd rather see the government act as a market maker for the assets to get them transferred over to private equity firms and sovereign wealth funds and other willing holders. And if we need to recapitalize these companies, it seems like the cheapest way for the taxpayer is to go in and buy up the distressed debt and then convert that to equity.
Drill, Baby Drill! God damn, am I sick of the Grand Old Party. I mean, although I have always found his politics to be barbaric, its underlying principles deeply racist in character, in a weird way I have always found Newt Gingrich to be essentially a principled and intellectually honest man. (Keep in mind, this is in comparison to the majority of the bullshit artists of the Far Right.) Having said that, this is one of those moments in which I'd like nothing more than to punch him right smack dab in the middle of that fat, smug, pink, greasy cracker face of his.*I wrote The Shock Doctrine in the hopes that it would make us all better prepared for the next big shock. Well, that shock has certainly arrived, along with gloves-off attempts to use it to push through radical pro-corporate policies (which of course will further enrich the very players who created the market crisis in the first place...).
The best summary of how the right plans to use the economic crisis to push through their policy wish list comes from Former Republican House Speaker Newt Gingrich. On Sunday, Gingrich laid out 18 policy prescriptions for Congress to take in order to "return to a Reagan-Thatcher policy of economic growth through fundamental reforms." In the midst of this economic crisis, he is actually demanding the repeal of the Sarbanes-Oxley Act, which would lead to further deregulation of the financial industry. Gingrich is also calling for reforming the education system to allow "competition" (a.k.a. vouchers), strengthening border enforcement, cutting corporate taxes and his signature move: allowing offshore drilling.
Newt Gingrich: "What about the plantation-owners??"_______________
* What's gotten into me today?
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