The Wall Street Bailout: Obama Needs To Lead

I am still tied up and can't take the time to discuss the issues here, but I wanted to state what I think the most important question of the coming days for me is - will Barack Obama lead the Democrats in a fight against the 700 billion dollar blank check the Bush Administration is asking for to bail out Wall Street?

This is a 3 AM moment. The time to lead is now. We will find out a lot about Barack Obama in the coming days. We already know what John McCain is, an incompetent ideologue. Let's hope that Obama proves himself a leader.

By Big Tent Democrat, speaking for me only

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    He's not really leading IMHO (5.00 / 1) (#1)
    by robrecht on Sun Sep 21, 2008 at 08:39:51 AM EST
    At least not yet.  Seems like he's just trying to position himself to take advantage of the debate vis-a-vis McCain.

    It's friggin' incredible what Bush is proposing.  $700 Billion blank check.  But they've set it up as if you don't get on board this weekend you're responsible for the next Depression.  Amazing how they try to blame their incompetence on others.  Friggin' amazing.  Even more amazing how many in congress fall into their trap.  Fool me once ...

    You can't just Say No to the Plan, You have (5.00 / 4) (#2)
    by WS on Sun Sep 21, 2008 at 08:47:18 AM EST
    to offer a different plan.  He should push for his own proposal but the Senate Repubs are going to be the thorn on our side when they side with the President and then people will blame "partisanship" for this mess.  

    Of course (5.00 / 1) (#14)
    by robrecht on Sun Sep 21, 2008 at 09:35:34 AM EST
    But he hasn't really done that yet, has he?  He needs more information, needs to study it, etc ...  That's why I say he has not really taken a leadership role yet.

    If Hillary (5.00 / 3) (#18)
    by WS on Sun Sep 21, 2008 at 09:48:39 AM EST
    had been the nominee, she'd be out there pushing her HOLC idea. She has gravitas on the economy and Obama doesn't have that yet.  He's still getting his sea legs and doesn't want to push for anything that is risky especially when McCain is out there, clueless as always, ready to spout empty platitude after empty platitude.

    Maybe he should accept this but target specific portions of it like oversight, nixing CEO compensation packages, and rewriting bankruptcy laws.    


    Ironically (5.00 / 1) (#25)
    by robrecht on Sun Sep 21, 2008 at 09:59:48 AM EST
    Hillary can lead more from the Senate than Obama can as a candidate.  I supported her, and I'd also like to think she would lead more as the candidate, but that just hypothetical at this point.  The problem with the narrative as the administration has set it up, however, is if they don't just get on board right away, they'll be blamed with whatever happens to the Dow next week.  The Dems don't have a game changer vs fear of economic collapse.  It's the same as Bush's phony war, but applied to the economy.  They will get backed into it and go along.  If they didn't stand up to Bush-Cheney then, they won't do it now.

    Unfortunately, the MCM tend to ignore Hillary now. (5.00 / 2) (#77)
    by jawbone on Sun Sep 21, 2008 at 11:21:06 AM EST
    Where is the coverage of her plan? Even mention of it?

    NPR this morning had segment on the Paulson Fix, mentioned alternatives, but not HOLC or Hillary.

    Amazing, huh? You'd think reporters on something this serious would be interviewing her after the speech on HOLC. But, they have their characters for their Narrative (even when they don't know exactly what the Village Narrative is going to be, they tend to stick to what others in the cohort have said and with what the Big Name characters say. Hillary's out of the play right now, so no attention. It's not like Congress has a lot of respect from the public right now, hey?) and the stick with them.  Tunnel vision.


    Some day (5.00 / 1) (#79)
    by robrecht on Sun Sep 21, 2008 at 11:24:25 AM EST
    Congress may realize the best way to be heard is through their votes.  Hardly anyone but us here watch CSPAN.

    A committee or counsel group? (none / 0) (#123)
    by BrassTacks on Sun Sep 21, 2008 at 08:21:19 PM EST
    Didn't he say something about getting a group together to study the issue?

    Washington Post (none / 0) (#5)
    by Politalkix on Sun Sep 21, 2008 at 08:53:26 AM EST
    covers the reaction from McCain-Palin and Obama-Biden campaigns.

    Good Point (none / 0) (#35)
    by supertroopers on Sun Sep 21, 2008 at 10:20:27 AM EST
    Too bad their isn't time to come up with another plan.

    Dems have had at least 2 years (5.00 / 5) (#44)
    by ruffian on Sun Sep 21, 2008 at 10:30:19 AM EST
    This is not an overnight crisis.  If the only plan they had was just like the Republican plan, why do we have two parties at all?

    Hillary's is already out there--adapt , adopt-- (5.00 / 2) (#49)
    by jawbone on Sun Sep 21, 2008 at 10:39:17 AM EST
    Resist blank check to BushCo and Paulson and Wall Street.

    And if HOLC is pronounced Hulk, it will stick in (5.00 / 1) (#53)
    by jawbone on Sun Sep 21, 2008 at 10:47:31 AM EST
    people's minds. There's a ready-made image of a super-human figure taking on Wall Street, the Fat Cats, and the sluggish politicians.

    Get the idea, with a catchy name, out there.

    Right now, however, it is simply being ignored. Listening to a program on Paulson Fix--no mention of Hillary or HOLC.  

    But they are mentioning that with Paulson's Fix in place, there will be no money whatsoever for healthcare, R&D to deal with global warming, or, gasp, tax cuts.

    All together, we're over a $Trillion in fix monies...so far.

    BTW, "the fix is in" does come to mind by calling this plan Paulson's Fix--a nice negative image.

    Is there time? Set your alarm to get on the phone as soon as you can for the offices opening in DC tomorrow morning.


    I couldn't wait. (5.00 / 1) (#104)
    by snstara on Sun Sep 21, 2008 at 02:07:08 PM EST
    I read the pieces here with the links Jeralyn had, then factored in what I saw on Bill Moyers Friday  with the Krugman analysis.  Based on all that, I sent messages to Schumer and Dodd this morning.  

    And you're so right re: 'the fix is in'!  This 'Paulson fix' is a bad, bad, bad idea. You may have something there with the 'HOLC', though! ;)


    Wouldn't (5.00 / 2) (#6)
    by frankly0 on Sun Sep 21, 2008 at 09:00:09 AM EST
    a plan far more likely to work require a Federal takeover of Freddie and Frannie, and perhaps other financial institutions? That is certainly how I read, say, Krugman's commentary on the issue?

    How likely are such moves for Obama?

    Given his own far more extensive funding and other connections to Freddie and Frannie than McCain's, isn't that nearly inconceivable?

    And given that any Federal takeover of financial institutions would be branded as "socialism" by the Republicans, isn't that nearly inconceivable for Obama as well?

    I expect to see little more than much very loud posturing from the man.

    Just to add a bit (5.00 / 1) (#8)
    by frankly0 on Sun Sep 21, 2008 at 09:09:35 AM EST
    the example I always see quoted as a most apt comparison to what we might and should do is Sweden, which nationalized large segments of the financial industry to get out of a similar bind.

    But consider the political implications of following a move made by Sweden, of all countries. In the eyes of most Americans Sweden=Socialism (and it's not an unreasonable equation).

    How well do you think that comparison is going to hold up politically for Obama? Does anybody really imagine he might ever allow himself to be tagged with that connection?


    Nationalize (none / 0) (#31)
    by supertroopers on Sun Sep 21, 2008 at 10:16:44 AM EST
    Health Care is next. Get used to it.

    But Sweden didn't lose (none / 0) (#102)
    by MichaelGale on Sun Sep 21, 2008 at 01:28:16 PM EST
    much as they could sell off all the assets.  Who wants Merrill, Morgan and WaMu?  Who even wants bloated AIG?

    Well....maybe the Chinese or those guys from Dubyai. Or maybe Soros, Buffett and Gates an make a bid on the country>


    The govenment (none / 0) (#30)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:15:09 AM EST
    already took over Freddie and Fannie.



    Somehow I missed or forgot that (5.00 / 1) (#39)
    by frankly0 on Sun Sep 21, 2008 at 10:23:04 AM EST
    that had already taken place.

    But Krugman's larger point remains:

    Here's the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

    I hardly see Obama engaging in anything like this, given the need for taking a bold and risky political step.


    What Krugman doesn't tell you is (5.00 / 1) (#52)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:47:11 AM EST
    that his reference to what was done in the past would cost way more than the 700 billion that is being talked about now.

    also the circumstances of why those past financial institutions got in trouble were far more different that what we face today. Back then you had specific institutions that got in trouble for problems specific to them. Today we have a problem that via the bad securities that are out there not only affects the financial companies but also affects homeowners and every average Joe with an IRA or 401K, plus it has literally frozen the ability to borrow in non-real estate markets.

    This situation is far to complex to be discussed by laymen as ourselves. Again I suggest that people go online and watch MTP from this morning to get a better handle of the complexity and magnitude of all this.


    MTP was quite good... (5.00 / 2) (#69)
    by santarita on Sun Sep 21, 2008 at 11:07:53 AM EST
    The other shows (to the extent that I could watch them and watch MTP) were approaching this from the political perspective.   For me because MTP focussed on the financial aspect, it was moe interesting.  

    Focussing on the political unfortunately leads to sound bites and slogans rather than understanding.  


    Nope, no more of (5.00 / 2) (#86)
    by Jjc2008 on Sun Sep 21, 2008 at 11:54:38 AM EST
    "let the experts handle it."  The experts are crooks and are protecting each others' butts.  The citizens need to wake up and make demands.  Throw the cooks in jail and rescind the golden parachutes.  Get some laws on the books making sure CEO's and their cronies cannot write excessive, ridiculously outrageous financial benefits for themselves and their cronies while outsourcing jobs to countries where sweatshops are the norm.

    I just listened to some RNC jerk on the tube saying how raising taxes will hurt the job market while keeping taxes low would "create jobs." THIS is another spin on Reagan's "trickle down." We were stupid then and I hope the heaven we have learned something.
     The experts then said this would create jobs, make America stronger.  What it was and is remains the same: robbing from the poor to give to the rich.  
    The same people proposing low salaries for public work(ers) like police, firefighters, teachers.....all live in gated communities.  They want more, more, more for their insatiable greed.

    These so called experts like Paulson wants a free reign to take our money, save the asses of his friends on Wall Street, and with IMMUNITY.  We are freaking nuts if we let this happen.   It's like all the jerks on Wall Street played craps in Vegas with our money, LOST IT, and want us to pay up, cover their losses and then some and ask NO QUESTIONS.  Would any sane person give these people free reign?  


    Sad truth (5.00 / 6) (#7)
    by Stellaaa on Sun Sep 21, 2008 at 09:08:05 AM EST
    Political donations are the highest from the people in the finance industry to both parties.  I heard Jason Furman on the radio on Wedensday, did not know who he was advising, turned out it was Obama, his policies did not sound very sound.  He did not want to have a plan, he wanted to keep the hit and miss approach.  

    Hillary's HOLC proposal is what will work.  These guys included commercial properties in this plan, this was not something that was on the table.  

    No Federal contracting rules and no oversight.  A disaster.  

    On the MCM* it's: Who is this Hillary and HOLC of (none / 0) (#13)
    by jawbone on Sun Sep 21, 2008 at 09:33:32 AM EST
    which you speak?" NPR this morning on options? Nary a word or initial of HOLC brought up.

    I have not heard any mention of Hillary's proposal, made prior to Paulson's, on any MCM broadcast. The NYTimes, WaPo, WSJ are saying what about her plan?

    Roubini seems to recommend the HOLC as the best option.

    If we pronounce the acronym as "hulk," will it get some traction in the MCM? Send the HOLC (hulk) to the rescue?

    Need something to get through the thick skulls and poor hearing of the MCMers.

    *MCM--Mainstream Corporate Media, where now, more than ever, the Corporate part calls the shots.


    Maybe Bill Clinton could cut through (none / 0) (#112)
    by hairspray on Sun Sep 21, 2008 at 02:39:36 PM EST
    the media fog.  I'll bet that would work.  Maybe he could say "Hillary and I believe the HOLC solution is the best for the country and here is why!"

    The proposed legislation (5.00 / 1) (#9)
    by Coral on Sun Sep 21, 2008 at 09:12:51 AM EST
    is startlingly sweeping. $700 billion with no oversight -- by anyone. That's written into the plan.

    No relief for homeowners facing foreclosure, but huge relief for the managers of these institutions who are walking away with millions.

    The Shock Doctrine indeed.

    Others have said elsewhere -- money for education, college loans, health care, housing for Katrina victims, social security -- all way too expensive for Republicans (and many Democrats); trillions for Iraq & for unregulated Wall Street titans -- no problem, because, gosh, it's a crisis.

    Obama has been doing well on the economy lately. Hope he steps up to the plate, especially on the "no oversight, no review" language for Paulson.

    It's $700B at any one time--per Calcuated Risk (5.00 / 2) (#58)
    by jawbone on Sun Sep 21, 2008 at 10:55:34 AM EST
    Link in Comment #55.

    The plan only limits the Treasury to "$700,000,000,000 outstanding at any one time", so the total purchases can exceed $700 billion. In fact, every time the Treasury sells some securities, they will probably plow the net proceeds back into more troubled assets until the entire $700 billion is gone.

    It's Basically a Revolving Line with a cap of (5.00 / 1) (#73)
    by santarita on Sun Sep 21, 2008 at 11:13:39 AM EST
    $700 b.  As the principal gets repaid it can be relent.

    If Not Now, When? (5.00 / 3) (#10)
    by MTSINAIMAMA on Sun Sep 21, 2008 at 09:15:11 AM EST
    I'm with BTD on this one. The plan as presented should be DOA. Obama and Democrat Congressional leaders need to offer a counterplan. Otherwise, a pox on all their houses.

    Me too, and I was happy to see BTD on this side (5.00 / 2) (#20)
    by ruffian on Sun Sep 21, 2008 at 09:51:49 AM EST
    I am totally against this plan, for every reason, economic and political.

    Obama cannot set himself up as an alternative to Republican economic policies and solutions if he goes along with their plan.  Period.


    "Democratic" Congressional leaders (5.00 / 1) (#28)
    by sallywally on Sun Sep 21, 2008 at 10:03:48 AM EST
    not "Democrat," an ungrammatical word when used as an adjective, invented by Republicans to make the Dem party sound harsher and to take the "democratic" implication away from that party.

    It might seem a nit-picky thing, but I think it's important and always make sure to use the "Democratic" form in the adjective to be (1) grammatically accurate (I'm an editor and writer) and (2) to stand against the Repub construction of the word.

    Besides, the Dem party IS the democratic party!


    The Dem Party USED to be... (5.00 / 2) (#45)
    by Shainzona on Sun Sep 21, 2008 at 10:33:25 AM EST
    the democratic (small D) party.

    You can't lead when you're not a leader. (4.33 / 6) (#16)
    by Shainzona on Sun Sep 21, 2008 at 09:39:41 AM EST
    Obama.  Congressional Dems.  It's not part of their fabric.  Sorry.

    Clinton lead the other day in her speech (4.50 / 6) (#38)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:22:43 AM EST
    Obama does not have the capacity, the knowledge or the experience to lead on this issue. Even the front page on this blog recognized that it was Clinton leading and suggested that Obama follow here lead. Now they are saying Obama should lead? There is a contradiction there.

    As for this overall bailout, as I said in an earlier thread yesterday, there is a lot of knee jerk reaction here regarding this situation when most people are not equipped to understand the seriousness and magnitude or all of this. I suggest that people watch MTP online today so they can see what Paulson and Bloomberg said about this.


    Not really a contradiction--Obama could take her (5.00 / 4) (#64)
    by jawbone on Sun Sep 21, 2008 at 11:04:43 AM EST
    HOLC (pronouce it like Hulk, to make it catchy and memorable) and run with it. He had no problems glomming onto her plans and ideas during the primary. He can say she's running point for him in the Senate, or something like that.

    But I don't he think he feels secure in discussing these issues without prepared text and answers. So, he'll remain quiet, listen to his advisers, they'll come up with something he can talk about and he'll support the Paulson Fix.


    Yep...no leader in Obama! (none / 0) (#108)
    by alexei on Sun Sep 21, 2008 at 02:28:51 PM EST
    The Paulson fix is what he will back and the Dem enablers will follow suit in Congress.

    HOLC and Paulson are not comparable (none / 0) (#121)
    by gyrfalcon on Sun Sep 21, 2008 at 04:35:21 PM EST
    Paulson's plan is a tourniquet to keep the financial system from bleeding out, which it's about to do in days.  HOLC is like the antibiotics to keep the damaged limb from getting infected.  I don't know enough to know whether implementing Paulson will make HOLC irrelevant or impossible, but even Hillary isn't suggesting HOLC as an alternative to Paulson.

    The alternative to Paulson would appear to be Krugman's idea about an infusion of capital into the struggling financial institutions, but that would, as far as I can tell, be a direct bail-out of bad actors and reward the damn fat cats and executives directly and do nothing about the toxic paper crap that's the immediate cause of the crisis, which would still stay in the system and still have no clear value.

    Paulson's idea is to remove the toxic crap altogether from the system and let the financial institutions that accumulated it find their own balance in the market on the basis of their real assets and balance sheets.  The ones with otherwise solid assets and balance sheets will survive.  The sucky ones that banked everything on this steaming pile of paper crap will fail, as they should.


    I think the best thing that can be... (none / 0) (#124)
    by EL seattle on Mon Sep 22, 2008 at 12:16:47 AM EST
    ... added to the submitted "rescue/bailout" is public transparency.  If the taxpayers can easily find out who buys what on behalf of the gov't, and what those assets are sold for when the time is right, we can track things for ourselves and keep the system more honest.  (I hope.)

    I agree with you (none / 0) (#125)
    by gyrfalcon on Tue Sep 23, 2008 at 12:52:45 PM EST
    I don't think Paulson disagrees, either, if that can be achieved without bogging down the whole operation, which will need to be able to move very swiftly in response to developing market and financial conditions.

    The plan has already passed. (none / 0) (#32)
    by supertroopers on Sun Sep 21, 2008 at 10:17:37 AM EST
    Deals are done. BO-McCain have no influence on this move.

    No, they are working on it this week (5.00 / 1) (#36)
    by ruffian on Sun Sep 21, 2008 at 10:20:32 AM EST
    It is not a deal yet.

    No, the plan is a proposal (5.00 / 2) (#97)
    by Cream City on Sun Sep 21, 2008 at 12:53:22 PM EST
    that has yet to go to Congress.  Stop saying that we can do nothing about this.  Remember, a lot of Congressional members are up for re-election.  We can remind them that Congress sure could use some new leaders, and this is an opportunity to be one.

    But above all, it is for Obama to lead on this.  Just as with FISA -- sadly -- most Dems will do what he wants at this point.  So remind them, too, that a lot of us can leave lots of our ballots blank.


    Prediction (5.00 / 10) (#11)
    by Lou Grinzo on Sun Sep 21, 2008 at 09:26:17 AM EST
    This will be FISA, The Sequel.

    (By which I mean: He'll posture, expend a lot of words about how he'll do things post-1/20/2009, and support the bill as written.)

    I agree (5.00 / 1) (#15)
    by robrecht on Sun Sep 21, 2008 at 09:38:37 AM EST
    As a candidate, he probably cannot realistically control the narrative so that's pretty much what he has to do at this point.  If he had been a leader in the Senate, it might have been different, but I don't expect he can become a leader overnight.  He's just trying to get elected President.  That's all.

    He is the leader of the party (5.00 / 2) (#24)
    by ruffian on Sun Sep 21, 2008 at 09:59:46 AM EST
    right now. If he couldn't handle it he should not have campaigned for hte job.

    I agree (5.00 / 1) (#27)
    by robrecht on Sun Sep 21, 2008 at 10:02:48 AM EST
    but too late to change that now.  But who will hold Obama's feet to the fire now?  The Democrats, the Netroots, 6 weeks before an election?  Ain't gonna happen.

    You're right (5.00 / 2) (#40)
    by ruffian on Sun Sep 21, 2008 at 10:23:37 AM EST
    I guess that is why I am so frustrated and furious this weekend.

    Republicans (and Chris Dodd) are all over my TV this morning using their scare tactics trying to get something passed in a hurry.  This 'crisis' has been brewing for two years - and now we have to do something in a week?


    More like vote "present" (none / 0) (#34)
    by supertroopers on Sun Sep 21, 2008 at 10:19:19 AM EST
    You think?

    This Bill Basically does the following (5.00 / 3) (#12)
    by Stellaaa on Sun Sep 21, 2008 at 09:32:01 AM EST

    1. No Healthcare.
    2.  No plans for incentives for alternative energy.
    3.  Existing social programs will be cut.
    4.  Finance industry, a broken industry, will continue to be propped with artificial ploys.  
    So, what is the use of having a Democrat as President?  Party on, Bipartisan orgy.  

    WSWS: Deception and subservience to Wall Street (5.00 / 3) (#17)
    by Andreas on Sun Sep 21, 2008 at 09:45:51 AM EST
    By Bill Van Auken, SEP vice presidential candidate

    If the cataclysmic events in the financial markets over the past week have revealed anything, it is the complete subservience of every branch of the US government and both major political parties to the banks and the biggest capitalist interests. Behind the façade of American democracy lies a dictatorship of finance capital that, under conditions of crisis, exerts its power directly and nakedly. ...

    Obama and the Democrats are full partners in this system. Behind all of the Democratic candidate's rhetoric about Wall Street not "minding the store" and how "CEOs got greedy," his campaign enjoys ample support from finance capital, and his administration would, no less than the Republicans, represent its fundamental interests.

    The Obama campaign has raised close to $10 million from the Wall Street investment houses, nearly 50 percent more than the amount they have given to Republican McCain. Three senior executives at the now bankrupt Lehman Brothers raised more than $1.5 million for the Democrat. ...

    Obama's response to financial meltdown:
    Deception and subservience to Wall Street

    By Bill Van Auken, SEP vice presidential candidate, 19 September 2008

    Obama's Economic Advisors (5.00 / 6) (#19)
    by liberalone on Sun Sep 21, 2008 at 09:50:43 AM EST
    Most of the folks advising Obama on the economy have Wall Street connections as deep as McCain's team.  To the degree all these advisers are chummy with Wall Street, neither Obama nor McCain will receive widely different options.

    I believe that team Obama will emphasize more assistance for average Americans, but I doubt very  seriously that anyone in Congress will hold Wall Street accountable.  That is, the Dems will remain silent on the most egregious aspect of this bailout plan-- absolute, unchecked, unquestionable decision making authority.  No entity in the US deserves this type of blank check regardless of the dollar amount.

    And voters can be excused if they conclude (5.00 / 4) (#22)
    by ruffian on Sun Sep 21, 2008 at 09:56:26 AM EST
    there is no significant difference between the parties, and that they may as well vote for the war hero and the hockey mom in that case.

    Just what we need - giving them perfect reason to draw that conclusion.


    Another Great Point (5.00 / 1) (#37)
    by supertroopers on Sun Sep 21, 2008 at 10:21:34 AM EST
    Remember, McCain and BO are two members of the same club.

    Look At Who Was In Serious Contention This Year (none / 0) (#72)
    by daring grace on Sun Sep 21, 2008 at 11:12:25 AM EST
    Along with the two nominees, Clinton and Romney, right?

    So everyone we had to choose from, realistically, is in that club, aren't they?

    In my lifetime, that has usually been the case in POTUS elections. Unless you want to count McGovern maybe...


    Yes, but some can rise above it (5.00 / 1) (#106)
    by hairspray on Sun Sep 21, 2008 at 02:24:16 PM EST
    when the danger is great.  that is where leadership and courage kicks in.

    And I 'Hope' It Does (none / 0) (#117)
    by daring grace on Sun Sep 21, 2008 at 02:48:33 PM EST
    but I'm fairly cynical about all politicians--in case you couldn't tell.

    Sen Sanders (none / 0) (#119)
    by jen on Sun Sep 21, 2008 at 03:24:18 PM EST
    is speaking sense about it, but who will listen?

    Sanders Comments on Economic Crisis

    It is sad... (5.00 / 1) (#21)
    by Jjc2008 on Sun Sep 21, 2008 at 09:52:49 AM EST
    I do believe we need to stop the collapse of the banks but NOT without oversight.  And not without provisions to stopping foreclosures and keeping people in their homes.

    Exactly (5.00 / 5) (#42)
    by ruffian on Sun Sep 21, 2008 at 10:27:45 AM EST
    And not run by the same people who made the mess in the first place.

    I'd rather see 1 trillion spent (correction: borrowed from China) and used strictly to refinance loans for people to stay in their houses - at 1% interest if that is what it takes for some people.  That would stabilize the housing market and attack the problem from the roots up rather the top down for a change.


    Very good discussion on Moyer's Journal, and (5.00 / 5) (#23)
    by DFLer on Sun Sep 21, 2008 at 09:57:44 AM EST
    an examination of an important part of the puzzle with guest Kevin Phillips, whose new book, BAD MONEY: RECKLESS FINANCE, FAILED POLITICS, AND THE GLOBAL CRISIS OF AMERICAN CAPITALISM "explores the role that the crumbling financial sector played in the now-fragile American economy."

    I was particularily struck by the fact that 'financials" now make up to as much as 25 % of our GNP.

    Bill Moyer's Journal

    Phillips explains that these are the fruits of what he calls the "financialization" of the United States: the decline of manufacturing and the rise of finance as the central driver of the nation's GDP. It is not a change Phillips believes happened by chance:

        You had essentially a financial sector that let's say was sort of neck and neck with manufacturing back in the late 1980s. But they got control in a lot of ways, in the agenda. Finance has been bailed out. I mean, everybody thinks this is horrible now what we're seeing in terms of bailouts. Even a lot of the people who do it think it's bad.

        This has been going on since the beginning of the 1980s. [...] Finance has been preferred as the sector that got government support. Manufacturing slides, nobody helps. Finance has a problem, Federal Reserve to the rescue. Treasury to the rescue. Subsidies this, that, and the other.

        So bit by bit, they got bigger. And the other reason they got bigger was because this became a country that was further and further in debt. Consumerism was just pushed to the nth degree. People were given the sense that they had to buy everything and they had to borrow to do it increasingly.

        But we've seen the central component of the rise of the financial sector is the rise of the debt industry. Mortgage, credit cards, all these gimmicks that Wall Street sells-- just all kinds of products. And, of course, the products are laying an egg all over the world right now.

    Kevin Phillips has been sounding the (5.00 / 1) (#109)
    by hairspray on Sun Sep 21, 2008 at 02:29:07 PM EST
    alarm on the dangers to America for the last 15-20 years.  His American Theocracy and his Wealth and Democracy have been out for a while and spell out the religious right's effects on our political system and the way that wealth in our political system is corrupting our democracy.  I also read the book on American Dynasty about the Bush/Prescott family and our role as a militaristic/intelligence obssessed society.  He is fantastic.  His books are long but he is wonderful.

    Depends on what "lead" means (5.00 / 5) (#26)
    by pluege on Sun Sep 21, 2008 at 10:01:11 AM EST
    If "lead" means Obama bucking the tide, then its not going to happen. Obama is an inside player desperately longing and seeking to be one of the boyz. His FISA capitulation told everything you need to know about Obama's "leadership".

    If "lead" means offering a bunch of meaningless words about protecting "the people" and punishing those who caused this disaster, but which have no affect whatsoever on the outcome, then yea, Obama will be leading this week. (note, Obama's coming "leadership", though meaningless will still be better than the vacuous psycho-babble of Big Liar John mccain - at least Obama will be lucid.)

    Also, make no mistakes about it - wall street's collapse IS THE OCTOBER SURPRISE to get mccain elected. Iraq and bush's wah on terra have lost their luster for herding the sheople, so this is the new fear monger deluxe invented to move the heard. Anything Obama says against it will be a sure sign that he isn't prepared to protect the sheople from the new completely undefined and undefinable impending doom. (You have to hand it to republicans, they're really good in their malfeasance.)

    100% Correct (none / 0) (#33)
    by supertroopers on Sun Sep 21, 2008 at 10:18:16 AM EST
    BO, McCain are the establishment. Don't be fooled.

    I'll take a guess (5.00 / 7) (#29)
    by lentinel on Sun Sep 21, 2008 at 10:13:45 AM EST
    "...will Barack Obama lead the Democrats in a fight against the 700 billion dollar blank check the Bush Administration is asking for to bail out Wall Street?," you ask.

    My guess:
    No, he won't.
    If he follows his well established pattern, he'll come down equally on both sides. He'll blame Bush and McCain, and support the bailout.

    Frankly, I don't see what else he can do.

    But, to expect leadership from a guy who has shown no signs of leadership is not realistic.

    And - the bottom line -
    What difference would it make to Obama supporters if he, once again, finds a way to simply vote "present"? FISA made no difference. Choosing Biden made no difference. Nothing he says or does makes a difference. So what's in it for him to "lead"?

    He has no motivation to go against the tide. He figures that fear of the evil twins, McCain and Palin, will be enough to get him through.

    He's a fundamentally cautious politician (5.00 / 3) (#41)
    by andgarden on Sun Sep 21, 2008 at 10:26:06 AM EST
    And that's going to hurt him here.

    Lack of (5.00 / 1) (#46)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:33:43 AM EST
    knowledge & experience makes for a "cautious" politician - which in this case clueless gets translated into "cautious".

    Thank You (1.00 / 1) (#50)
    by supertroopers on Sun Sep 21, 2008 at 10:44:11 AM EST
    Like Palin, BO has limited-no experience.

    False Equivalency (none / 0) (#74)
    by daring grace on Sun Sep 21, 2008 at 11:14:48 AM EST
    Obama has experience Palin has yet to begin developing.

    And he has judgment McCain seems unable to develop.


    And where has that "experience" gotten (4.00 / 3) (#80)
    by nycstray on Sun Sep 21, 2008 at 11:28:35 AM EST
    him? If he had been dealing with reality instead of hope, change and tired old politics, he might be in a better position to speak/lead. As it is, we have to wait for his advisers . . . .

    So You Have A Problem (none / 0) (#94)
    by daring grace on Sun Sep 21, 2008 at 12:24:57 PM EST
    with a politician consulting advisers in order to come up with a realistic and fair remedy to an extremely complex crisis? Do you think there is any politician who doesn't do this?

    I have no idea whether Senator Obama (or any of our leaders) is well equipped to deal with this situation or not. My response was to the idea that he and Governor Palin are both inexperienced. I'm very confident he is better skilled to handle this than she or Senator McCain.


    His cautiousness is due (5.00 / 2) (#110)
    by hairspray on Sun Sep 21, 2008 at 02:32:19 PM EST
    to a real lack of depth, and experience IMHO.  It was always there.  So how come we got him?

    I predict that Obama (5.00 / 3) (#51)
    by kenosharick on Sun Sep 21, 2008 at 10:47:08 AM EST
    will give a nice speech calling for "change" and "bringing us all together" on this issue and then vote "present" or not show up at all. In other words- the opposite of real leadership.

    Shorter story (5.00 / 1) (#54)
    by Katherine Graham Cracker on Sun Sep 21, 2008 at 10:48:28 AM EST
    Paulson = Rumsfeld
    Credit Crisis  = Iraq

    Obama (5.00 / 3) (#56)
    by mmc9431 on Sun Sep 21, 2008 at 10:52:15 AM EST
    And the Democratic leadership will kick and scream about assisting the "average" person, and then cave when the vote comes. They'll be afraid of being accused of creating the worst depression since 1929. Republican's are at their best when touting fear.

    Dems cave? Come on (5.00 / 1) (#62)
    by supertroopers on Sun Sep 21, 2008 at 11:03:58 AM EST
    It's not like they didn't authorize so far $1,000,000,000,000 for Iraq or anything!

    blank check in both cases (none / 0) (#84)
    by pluege on Sun Sep 21, 2008 at 11:44:26 AM EST
    bush never committed, and wasn't made to commit to any cost estimate of his Iraq adventure.

    Iraq costs were never put "on the books"

    bush goes and gets congressional rubberstamp authorization every 6 months or so for the next 6 months or so or UNTIL THE MONEY RUNS OUT.

    ergo, Iraq is a blank check.


    Then Dems will lose the election in Nov (5.00 / 1) (#63)
    by ruffian on Sun Sep 21, 2008 at 11:04:23 AM EST
    because they don't stand up for anything. Again.

    Unusual Alignment (5.00 / 2) (#65)
    by Pianobuff on Sun Sep 21, 2008 at 11:05:30 AM EST
    I've been navigating between left and right blogs.  While names/players might be swapped out, the nature of frustration is eerily consistent from many (not all) posters (i.e. it's a Washington problem, not an exclusive Dem/Rep problem).

    Odd situation in which to find some grass-roots bipartisan consensus.  I'm confused and still processing as it's the last thing I would have expected.....

    I'm just going to let Atrios speak for me on this (5.00 / 1) (#67)
    by ruffian on Sun Sep 21, 2008 at 11:07:32 AM EST
    from here on out.
    He's the economist, I'm just an engineer who knows when something makes no sense whatsoever.

    Have you called (5.00 / 4) (#98)
    by Amiss on Sun Sep 21, 2008 at 01:21:02 PM EST
    your representative or senator and let your feelings be known about this issue?

    I agree wholeheartedly with Atrios on this, everyone should be calling, writing and e-mailing everyone they know in Washington about this.


    I think everyone who reads this blog who's American, first thing on Monday morning, needs to call their Representatives and Senators and say: No. Blank. Checks. For. Crooks.

    Be as polite as you can be and don't use bad words. Personally, this injunction may limit the duration of my calls to under a thirtieth of a second, or shorter.

    TO CLARIFY. Look, right now the choice is, Bush's Plan, or Something Else. Kill Bush's Plan now, worry about Something Else later.

    Short Term and Long Term (5.00 / 2) (#81)
    by santarita on Sun Sep 21, 2008 at 11:29:51 AM EST
    I buy into the basic concept that there is a need for immediate intervention and a need for longer term solutions.  The immediate intervention should be done in such a way that it doesn't preclude longer term solutions and in fact has some mechanism for insuring that longer term solutions are taken.  I wouldn't saddle the immediate intervention with too much of the longer term aspects.  Perhaps the wisest course is for Congress to have a legislative history or a preamble to the $700 b that provides guidelines to the Fed in administering this bailout.

    Obama needs to make sure that this bailout doesn't prevent him as President from exercising policy control over Treasury and Fed (any more than he would be restricted under today's regs and laws).

    I think Congress should focus on making sure that there is adequate oversight of the bailout and that the institutions that make use of the facility do not benefit by being paid huge fees.  This should be a bailout and not a handout.

    WTF! (5.00 / 1) (#85)
    by robrecht on Sun Sep 21, 2008 at 11:45:42 AM EST
    " ...
    (b) Necessary Actions.--The Secretary is authorized to take such actions as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation:
    (3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them;
    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."


    DEALBREAKER (5.00 / 2) (#103)
    by Amiss on Sun Sep 21, 2008 at 01:29:56 PM EST
    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."

    This week, republicans get their bathtub (5.00 / 1) (#88)
    by pluege on Sun Sep 21, 2008 at 11:57:38 AM EST
    this is the $700 billion and counting republican ideologues need to squeeze out all other discretionary spending, i.e., norquist's drown government in a bathtub'.

    republicans have been working for 28 years to cripple the ability of the government to spend money on average citizens. First reagan tried it with tax cuts and ballooning the military budget, but it wasn't enough. Then bush went at it by giving Clinton's surplus to the rich with tax cuts and using 9/11 to inflate the defense budget to $700 billion per year, but again it wasn't quite enough and Americans have soured on starting another war, which is the best way to flush money into the sewer pockets of republicans.

    Now, that republicans have recreated the 1980's record deficits, they're adding this $700 billion payout to their crooked friends nugget to put more pressure on to defund programs the American people think they need. It is incredibly outrageous.

    The same, disturbing thought occured to me (5.00 / 1) (#95)
    by kempis on Sun Sep 21, 2008 at 12:29:40 PM EST
    this is the $700 billion and counting republican ideologues need to squeeze out all other discretionary spending, i.e., norquist's drown government in a bathtub'.

    I am dumbfounded that we're about to spend a trillion dollars (and that's how much it will end up being, at least) when we're already in dangerous debt--and the Boomer retirements are about to place even more strain on SS and Medicare. This is appalling. It cannot work. Our monstrous debt was already a serious problem. Now it will be an insurmountable disaster.

    We have to do something, no doubt. Otherwise, a post-modern version of the Great Depression will indeed be upon us. But I agree with those who say that we must not panic and presume that this is the one-and-only solution. When we panic, we get screwed and the Halliburtons, etc., make out like the bandits they are.

    No bailout without oversight. Let them panic and agree to regulations that will stop something like this from happening again.


    Yes (5.00 / 1) (#101)
    by Ga6thDem on Sun Sep 21, 2008 at 01:25:29 PM EST
    but that would actually require leadership wouldn't it? It would require throwing post partisan namby pambyism out the window. I wouldn't hold my breath waiting for leadership to suddenly break out.

    Me either. (none / 0) (#111)
    by alexei on Sun Sep 21, 2008 at 02:38:04 PM EST
    I'm not (none / 0) (#116)
    by kempis on Sun Sep 21, 2008 at 02:43:21 PM EST
    I'll be pleasantly surprised if the Democrats take a stand on this. As it is, I'm preparing myself to be furious when they don't.

    Paulson got schooled (5.00 / 1) (#91)
    by pluege on Sun Sep 21, 2008 at 12:05:55 PM EST
    the key to the bailout [i.e., the giveaway] is the Paulson flip-flop from no bailout a week ago to blank check several days later. Obviously, just like 9/11 and the invasion opportunity for Iraq, republican opportunists got to him and schooled him.

    So angry this morning. (5.00 / 2) (#92)
    by Faust on Sun Sep 21, 2008 at 12:09:31 PM EST
    that is all.

    The key issue ... (5.00 / 1) (#96)
    by Robot Porter on Sun Sep 21, 2008 at 12:50:59 PM EST
    that Obama needs to focus on is Main Street.  This is the perfect opening for him to switch to a more populist message.

    If we, as taxpayers, are supposed to bailout a bunch of companies that made idiotic choices, we must get something in return.

    If Obama focuses on this side of the issue, as Hillary did the other day, he'll be seen as a leader and easily win this election.

    But if he gets lost in the weeds, and is seen as supporting bailouts without clear conditions which help the average citizen, he will lose.

    It takes a Socialist to state Dem Party's values-- (5.00 / 3) (#107)
    by jawbone on Sun Sep 21, 2008 at 02:26:00 PM EST
    Sen. Bernie Sanders proposal--10% surtax on all couples earning over $1M and individual's earning over $500K. Will raise about $300B annually, per Sanders. The uberwealthy are the one who benefitted from this crazy approach to fiduciary responsibility--and the middle class and below have lost ground. Why, asks Sanders, ask the losers to pay for the winners? How dare they ask that!

    I read it and now feel a tad better. Now to the sunshie.

    Not that Obama would dare support this.

    Or, maybe on a double dare?

    Why not? As Sean-Paul's title says, "We're All Socialists Now."

    Sen. Obama, please read: (5.00 / 1) (#113)
    by oculus on Sun Sep 21, 2008 at 02:41:31 PM EST
    Obama should follow Hillary's lead (4.66 / 6) (#83)
    by myiq2xu on Sun Sep 21, 2008 at 11:34:29 AM EST

    Bold? Obama?! Lead? Democrats?! (4.57 / 7) (#70)
    by clio on Sun Sep 21, 2008 at 11:10:00 AM EST
    BTD, you slay me.

    McCain is an incompetent flip flopper on (4.00 / 3) (#3)
    by tigercourse on Sun Sep 21, 2008 at 08:48:39 AM EST
    this issue, not really an incompetent ideologue (though he is that on other issues). He was originally against bailouts, before he was for them.

    And it would be great for Obama to lead on amending the new legislation (something I'm sure it needs). I think it would be a mistake to lead on killing it altogether.

    All he has to do (3.50 / 2) (#4)
    by Dadler on Sun Sep 21, 2008 at 08:53:14 AM EST
    Is associate this with the rush to war.  The sky is very grey, he can say, but it is not falling, and we need not make it collapse on us entirely by handing a blank check, of the American peoples' money, to an administration and to a Wall Street, that got us into this mess in the first place, and that has never taken responsibility for their destructive actions.  That this needs to be about more than the greed of the few at the expense of the many.  HOLC, HOLC, HOLC...  And pound it home: these are the same people who sent us into Iraq on lies and deceit, are you really willing to trust them again?  Call this sh*t was it is -- pure theft, with the typical Bush desire to have the American people shut up and take it, with no recourse, no input, no power as "We the People".

    Blank Check? (5.00 / 1) (#43)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:29:34 AM EST
    You really don't understand what is going on here at all. The securities being purchased will have a dollar value when they are resold so the 700 billion dollar figure being thrown around will not be the bottomline.

    Check our Calculated Risk--it's possibly more than (5.00 / 1) (#55)
    by jawbone on Sun Sep 21, 2008 at 10:51:47 AM EST
    a $700B blank check. It can go higher.

    ...yes the cost is still unknown, but there is no way that the taxpayers will profit. My initial estimate is that the direct costs of the Paulson plan will be $700 billion to taxpayers. That is about double the cost of the S&L crisis (compared to GDP).

    Why $700 billion?

    The plan only limits the Treasury to "$700,000,000,000 outstanding at any one time", so the total purchases can exceed $700 billion. In fact, every time the Treasury sells some securities, they will probably plow the net proceeds back into more troubled assets until the entire $700 billion is gone.

    Think of a drunk gambler at a slot machine. He starts with $100 and slowly loses. Every now and then he wins some money, but he keeps putting the coins back into the slot until he has lost everything. That is how this plan will work.(Emphasis in original)

    Read the rest--it's brief. Plus Krugman video.


    Yup - for the last few years (none / 0) (#60)
    by ruffian on Sun Sep 21, 2008 at 10:56:55 AM EST
    Wall Street was the drunk gambler.  Now it is the US Government.

    Oh boy! (none / 0) (#66)
    by fercryingoutloud on Sun Sep 21, 2008 at 11:06:29 AM EST
    Pure speculation just trying to make a bad situation look worse without any basis other than speculation for doing so.

    Bush himself (none / 0) (#76)
    by robrecht on Sun Sep 21, 2008 at 11:15:33 AM EST
    said that Wall Street got drunk and is now hung over.  Let's give them a $700 Billion plop plop fizz fizz so they can go get drunk again.  Bush understands this metaphor very well.  What is he putting in place to make sure it doesn't happen again?  Just the temporary ban on short selling of financial stocks?  That's just like turning down the volume on Laura Bush yelling at you for getting drunk.

    But if these securities were so valuable (none / 0) (#48)
    by robrecht on Sun Sep 21, 2008 at 10:35:15 AM EST
    we wouldn't be in this mess in the first place.  What we mean by blank check is that there doesn't seem to be much oversight over the overseers spending the money where they see fit and the beneficiaries are financial institutions and not those in debt to these financial institutions.  The tax payer is on the hook, maybe there will be some return on our blanket and blind investment, maybe not.  We give Bush and his administration another blank check.  Iraq all over again.  Here's some financial advice I'd like to give the tax payers: don't give $700 Billion to an idiot.  Just say, "No."  Problem is, then everything is in danger of falling apart.  It's Governing by Fear all over again.

    The value of the securities (5.00 / 2) (#61)
    by fercryingoutloud on Sun Sep 21, 2008 at 10:57:49 AM EST
    today is not the value that they will represent in the future when the real estate market stabilizes and then recovers.

    Your particular comments regarding Bush have nothing to do with the financial crisis we are being forced to solve. You are mixing in emotion which makes it difficult to focus on the real problem at hand.


    Of course, (none / 0) (#68)
    by robrecht on Sun Sep 21, 2008 at 11:07:36 AM EST
    I realize that is the hope.  But why don't you see the private sector rushing in to buy these securities?

    The emotion of fear is an integral part of every financial crisis.  I'm not interjecting that into this crisis.  I do believe Bush and the Republicans are trying to capitalize on this fear to win an election, that's part of the connection that I, and others, see here.  

    Then there's also the fact that Bush and the Republicans have been in charge for most of the time that this financial crisis has been brewing.  Are the Democrats free of blame?  Of course not.  But it's ludicrous to say that Bush has nothing to do with the financial crisis.


    asdf (none / 0) (#78)
    by fercryingoutloud on Sun Sep 21, 2008 at 11:23:21 AM EST
    "But why don't you see the private sector rushing in to buy these securities?"

    Because the private sector already owns a bunch of these securities. You don't think that mutual funds already won some of these securities? They do.

    And not everyone who owns these securities are going to get bailed out. They will probably have to hold them until their value rebounds and they won't rebound without what Paulson is suggesting to do which is meant to save the financial companies which are the bedrock of our financial society.

    What people fail to address here is what happens to our country if we let all these financial companies fail? Who would you borrow money from to finance a car, a home, or even use your credit card? How would Sears finance your new refrigerator when your old one stops working. Where would you get the money to finance your daughters college education and then pay for her expensive wedding someday?


    Of course I realize mutual funds (none / 0) (#82)
    by robrecht on Sun Sep 21, 2008 at 11:32:48 AM EST
    and our 401Ks are stuck with a lot of these securities.  How's that workin' out for you?  The point was, what is your basis (other than hope or emotion) for saying their value will benefit the taxpayer down the road?  Are mutual funds still buying these up as fast as they can?  No.  Have they been providing a good/any return on their investment so far?

    If you can buy them for .30 on the dollar might they eventually have a return?  We all hope so.  So we're going to blindly trust Bush & Co are going to play fund manager with the big 401k in the sky?

    You say we haven't addressed the issue of what happens if we don't write Bush a blank check.  But we have, that's why it will probably pass without much meaningful opposition from BO or Congress.  But you seem to be just blindly accepting the either/or fear-based proposal that the administration is selling and banking on.  The real point of the conversation, ie, leadership, is to define the issue otherwise than that of a simpleton.


    asdf (3.66 / 3) (#87)
    by fercryingoutloud on Sun Sep 21, 2008 at 11:55:06 AM EST
    "of course I know"

    "hows that working out for you?"

    Those are exactly the type of senseless comments that I see online that tell me not to waste any more time on particular posters. Your last post says nothing really. It is an exercise in just trying to be witty without much success.

    Good luck.


    Not exactly a graceful exit (none / 0) (#93)
    by robrecht on Sun Sep 21, 2008 at 12:12:39 PM EST
    But an exit nonetheless

    Fine (none / 0) (#89)
    by Jjc2008 on Sun Sep 21, 2008 at 12:04:48 PM EST
    do it but DO NOT AGREE to no oversight, to immunity for the crooks involved. That's just stupid.  Paulson may as well just put a gun to our heads and say "Give me all your money, don't call the police...trust me and all will be better."

    You're right. (none / 0) (#118)
    by oldpro on Sun Sep 21, 2008 at 03:12:02 PM EST
    The private sector DOES already own a lot of these mortgages.

    To address your last paragraph, though...I've been thinking about this for a very long time and it's not only Wall Street.  It's Main Street, too, and the spendthrift ways of individuals who want it all - right now - but can't pay for it except on a credit card or a secondary mortgage or other loan...even on a predatory payday loan.

    Where to borrow the money?  Well, some of us could go to our cr3edit unions and/or our local, private hometown banks which are NOT in trouble.  Some of us have equity in our homes and could even get a reverse mortgage.

    Tell you what, tho...I wouldn't borrow money to send my kid to a school we couldn't afford or to pay for a ridiculously expensive wedding (or funeral!) just to show off to the friends, relatives and neighbors.  Those are not my values but they seem to be America's.

    Now the bill is due.  Pay up.

    And the first people who need to pay are those who made the big bucks in the market...the new multimillionnaires.  Raise their taxes ASAP to Clinton-era levels, at a minimum.

    And cut spending until everybody gets a grip.


    Valuation is the crux of the problem; the slicing, (none / 0) (#75)
    by jawbone on Sun Sep 21, 2008 at 11:14:50 AM EST
    dicing, renaming, reselling (over and over and over), with no transparency is at the bottom of the problem. As I in my limited econ knowledge understand it.

    I do know Atrios has been writing about The Big $h*t Pile for well over a year by now.

    Nobody knows what other banks', sometimes their own, paper is worth.

    I am an econ dummy, fer sure. But I have devloped trust in Krugman, Atrios (when he actually explains his sometimes cryptic remarks), Roubini, Bernhard at Moon of Alabama, Calculated Risk, writers at The Agonist. Kevin Phillips has been writing about the underlying problems for years now.

    I do not trust Paulson or and BushCo personnel.
    I do not trust cable happy talkers.
    I do not trust many MCM journalists, but there are some outstanding writers.

    We must not give BushCo a blank check. Period. Other blank checks have not worked out well for the nation or the world. BushCo believes in using power, taking as much power as it can, then daring anyone to stop them or correct them. Remember those flaunted subpoenas? They live on power, seek it whether granted or not, legal or not.


    The securities are what Atrios (none / 0) (#59)
    by ruffian on Sun Sep 21, 2008 at 10:55:35 AM EST
    named "Big Sh--pile". No one knows how little they are worth.  Why do I as a taxpayer want to buy the whole pile?  

    Yeah (none / 0) (#99)
    by MichaelGale on Sun Sep 21, 2008 at 01:22:35 PM EST
    since what we are buying or trying to shore up has so little value or none at all.

    It's all paper and very volatile...and what little value there is will keep diminishing.  Of course, speculators will snap up the crappy paper and hope for a miracle.  

    I don't believe this will do much of anything except buy some time.  WE could beat them at their own game; pay off debt and sit it out and hope for the best.

    I don't think either candidate can even begin to fix this. Who ever wins is walking into a disaster.  If I were Obama I would say; "forget everything I promised the middle class.  It cannot be done."  No one wants to hear this but at least it's honest.


    It used to be volatile (none / 0) (#100)
    by robrecht on Sun Sep 21, 2008 at 01:25:27 PM EST
    Now it's worthless.  Some value may trickly down onto it again if we save the fat cats first.

    Do you really think the Obama campaign (5.00 / 1) (#114)
    by hairspray on Sun Sep 21, 2008 at 02:42:08 PM EST
    wants to be seen as picking up an idea from HRC?
    Sounds like too much ego in that camp.  I'll bet the reason they are so slow on coming up with something is because they are trying to craft an idea that isn't hers!

    Heh. (5.00 / 1) (#120)
    by oldpro on Sun Sep 21, 2008 at 03:27:09 PM EST
    You may be right...and it should be easy because Obama has the entire Clinton economic team in his camp now.

    This is so typical...while all the guys are arguing over who has the best idea/plan, the savvy woman manages to focus and goes straight to the bottom line:  "Let's do this...it'll work."

    Reminds me of Patty Murray's campaign in '92...while all 7 of the guys who thought it was 'their turn' to run for US Senate battled among themselves about who should drop out, Patty went door to door, made her case and lined up all the endorsements!


    OMG Donna Brazile makes sense (none / 0) (#47)
    by ruffian on Sun Sep 21, 2008 at 10:34:19 AM EST
    "Democrats should not rush to rubberstamp this blank check."

    That's easy enough to say... (5.00 / 2) (#57)
    by EL seattle on Sun Sep 21, 2008 at 10:53:34 AM EST
    ...on a day when the markets are closed.

    Naomi Wolf's (5.00 / 1) (#71)
    by KeysDan on Sun Sep 21, 2008 at 11:11:53 AM EST
    thesis of Republican-style government does seem to be in play, but then "Washington" (to use Senator Obama's catch-all, catch-none word) rarely takes serious action without a crisis.  And, this is a crisis, make no mistake about it.  The general framework of the federal plan presented by Secretary Paulson is required. However, as Paul Krugman cautions, the devil is very much in the details and, at least a trillion dollars of borrowed money is on the line. Senator Obama, it seems to me, needs to continue to support the general notion proposed, but show the caution that dealing with the Bush/Cheney, and now their clones McCain/Palin, has taught us. Such general support should provide the needed confidence in the short term to stave off economic disaster and serve political viability while sensible amendments are made to the proposal.  These amendments should include ideas of Senator Clinton (HOLC) and other assurances of congressional and judicial oversight. Moreover, be on the look out for  escape clauses for any civil responsibilities or get out of jail free cards (vis a vis FISA) for those with criminal liabilities.  

    Tone will be important (none / 0) (#90)
    by Manuel on Sun Sep 21, 2008 at 12:05:17 PM EST
    Suppose Obama leads the charge.  The deal gets killed.  Nothing gets done.  The markets tank.  Obama and the Democrats are blamed.  Although he has been more feisty lately, Obama has ridden the post partisan pony pretty far.  To deviate now would devalue his trust.

    This is a real crisis.  Thoughtful action is needed.  This isn't the time to be railing against Bush and Co.  Particularly since the Dems have a significant minority stake in the blame.

    The effect on the debt of this bailout is significant but manageable.  Deficit spending is not the bogeyman that fiscal conservatives have pushed for so long.  This crisis can be used politically the next time Republicans refuse to act on other pressing issues like health care and clean energy.

    Michael Hudson writes at Counterpunch that we are (none / 0) (#105)
    by jawbone on Sun Sep 21, 2008 at 02:10:50 PM EST
    really, really, really messed up--and it's not a good idea to keep going with the ones that messed you up.

    America's Own Kleptocracy.

    But it is Friday, September 19, that will go down as a turning point in American history. The White House committed at least half a trillion dollars more to re-inflate real estate prices in an attempt to support the market value junk mortgages - mortgages issued far beyond the ability of debtors to pay and far above the going market price of the collateral being pledged.

    These billions of dollars were devoted to keeping a dream alive - the accounting fictions written down by companies that had entered an unreal world based on false accounting that nearly everyone in the financial sector knew to be fake. But they played along with buying and selling packaged mortgage junk because that was where the money was. Even after markets collapse, fund managers who steered clear were blamed for not playing the game while it was going. I have friends on Wall Street who were fired for not matching the returns that their compatriots were making. And the biggest returns were to be made in trading in the economy's largest financial asset - mortgage debt.


    Overnight, the U.S. Treasury and Federal Reserve have radically changed the character of American capitalism. It is nothing less than a coup d'êtat for the class that FDR called "banksters." What has happened in the past two weeks threatens to change the coming century - irreversibly, if they can get away with it. This is the largest and most inequitable transfer of wealth since the land giveaways to the railroad barons during the Civil War era.


    ...does this really mean that the only solution is to re-inflate the real estate market? The Paulson-Bernanke plan is to enable the banks to sell off the homes of five million home mortgage debtors faced with default or foreclosure this year! Homeowners with "exploding adjustable-rate mortgages" will lose their homes, but the Fed will pump enough credit into the mortgage-lending agencies to enable new buyers to go deeply enough into debt to take the junk mortgages off the hands of the gamblers who presently own them. Time for another financial and real estate bubble to bail out the junk mortgage lenders and packagers.

    Hudson had been Kucinich's econ adviser, btw.

    Time to get out in the sunshine.

    One more view, this time from Europe: Cancel all (none / 0) (#115)
    by jawbone on Sun Sep 21, 2008 at 02:43:04 PM EST
    CDS, credit default swaps--globally. Declare them null and void. Bernhard says there is precedence for this.

    We currently see a credit-freeze because nobody wants to lend to anybody as it is impossible to know how much credit insurance the other party has written or how much it depends on their validity. You do not lend to anyone who might already be bust.

    That is the situation we are in and it shows why the Paulson plan is utter cr*p and nothing but a huge robbery.

    The Paulson plan would not help at the bottom of the inverted pyramid, the housing market, and not at the top, in the CDS market.

    Paulson knows that the crash of the CDS market is inevitable. His plan is an attempt to let the taxpayer pay for the stabilization of the middle of the pyramid in the hope that the big crash will come only after the election (and in the hope that the loot might help Paulson's beloved Goldman Sachs to survive.)

    There is only way to avert the crash.

    Declare all CDS contracts, worldwide, as null and void. There is precedence for this:

    "During the Great Depression, many debt contracts were indexed to gold. So when the dollar convertibility into gold was suspended, the value of that debt soared, threatening the survival of many institutions. The Roosevelt Administration declared the clause invalid, de facto forcing debt forgiveness. Furthermore, the Supreme Court maintained this decision."

    The maze of the value and ownership of $65+ trillion of financial credit insurance contracts has frozen the credit markets. Nobody is lending to anybody else because the value of the counterparty is in doubt.
    A $700 billion bailout can not save a unregulated $70 trillion CDS market that is under severe stress.

    This may be the nut that must be cracked. Do out Congress Critters understand this, see this problem??

    Oh, Bernhard also supports HOLC. Send in the HOLC! (pronounced Hulk, like the action character)

    He strongly suggests American citizens should call their Congress Critters. ASAP.

    Finally, now to the sun, as the clouds roll in....

    Anglachel has several good posts up, some with (none / 0) (#122)
    by jawbone on Sun Sep 21, 2008 at 05:33:16 PM EST
    purported insider information. This one claims to be from a Hill staffer who listened in on conference call about the Paulson Fix--apparently, we are not being told the whole truth, but what's new about that, hey?

    ...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. (My emphasis. And whassup with that last bit? "Nice little economy you got there. You wouldn't want anything to happen to it now, would you? Wall St is now blackmailing the US govt? Do what we want or we'll go out of business and take your whole economy with us?

    SNIP and then understatement of the year)
    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.

    We're depressed and angry, frustrated at the way the Dem leadership keeps caving and enabling; it must be terrible to be a progressive-minded staffer and see all this going on first hand.

    Anglachel also has a statement from Hillary and a letter purportedly written by a member of Congress listing what the Dems should really be going for.

    This post is kinda scary, titled The Mother of All No-Docs:

    ...Paulson wants the US taxpayers to make a loan to Wall Street. It seems that the big financial firms are underwater on the investments they made.

    They don't want to provide actual balance sheets, just self-reported assets which may or may not exist. They want to borrow the full value with no collateral down. Oh, and none of that pesky insurance against their defaults. They don't have any proof of income, and their employers can't really be reached. In fact, it's not clear they have any employment at the moment.

    We're talking major league NINJA loans here. Oh, and it appears to be a 0% interest loan, too.

    Update has some links which seem to indicate the Dems are going to go along to get along:

    And Chuck Schumer and Chris Dodd, the dynamic duo that helped bring us GLBA in the first place, are pushing hard to prevent any kind of oversight, restructions or even a faint promise of ROI for this massive transfer of wealth:

    I know there are lots of Wall St. jobs in both Schumer's and Dodd's states, but, please guys, give a thought about about the nation and our economic system going forward.