Published on Thursday, October 2, 2008 by Americans News Project
Economist Asks: Is The Bailout Necessary?
Economist Dean Baker on the Bailout Panic
Economist Dean Baker shares his thoughts on the bailout panic during a public panel held at the Institute for Policy Studies on Sept 30, 2008. Dr. Baker is the Co-Director of the Center for Economic and Policy Research in Washington, DC and a columnist for The Washington Post and Atlantic Monthly.
© 2008 American News Project
Posted in Bailout
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45 Comments so far
Show AllRich people get richer while poor ones get poorer. This is the fact that though it’s hard to accept, we must still do. The new administration of the government, which is President Obama’s administration, is now taking an action. The American Reinvestment and Recovery Plan economic stimulus package is going to the House for a vote. And in order to get it approved as quickly as possible, bipartisan support is being sought by President Obama so that the economy can get that payday loan that it needs. Critics have been saying that the stimulus measures won't be effective as quickly as it needs to be, absolutely not like the way President Obama wants to happen.
Silly me...by virtue of his title and position in life, I have made the presumptive assumption that Dr. Dean Baker is someone that others pay attention to and take heed of his wisdom. If not, why not? Why is no one listening to this man? Given his position and stature, can we not assume that he speaks on the behalf of the little man...US? I don't get it. If this prominent man can ask these questions and make his statements in public, why are there not more people alarmed or sharing his opinions? I do but, my voice cannot possibly be heard until November 4th.
While I'm on the subject of why no one raises the hard questions, why has no one yet asked John McCain or Barack Obama about the "allowances" and other "exceptions" made in the BBBB ("Big Billion-Dollar Bailout Bill)? As in, all the millions that are being allowed or excepted to the winemakers and all those other really outlandish, outrageous dollar amounts that were being given to those pork-y places??? Why is no one asking McCain, Obama and every other member of Congress about those gawd-awful dollar amounts in that bill that have absolutely nothing to do with the so-called bailout? I can't think of a better time in which to demand that Congress cease and desist with the practice of bartering their votes to get something they want in order for a handful to get their part of the bill passed? Why is no one telling them that that behavior is just not acceptable?
Silly me! And, here I sit...thinking my voice somehow matters. Sorry for me and sorry for Us!
Just an aside about race. Some have tried to link the mortgage crisis with community groups' efforts to help first-time homeowners, particularly African-Americans. My experience is that community groups are generally responsible about helping potential homeowners plan, save, clean up credit, choose a house they can afford etc.
It turns out that in Brooklyn a group of Russian crimesters has been running a fraudulent mortgage ring and defaulting on payments. They would be more likely to induce the naive to take mortgages they cannot afford. They were indicted yesterday, presumably because they don't know how to play the game as well as the legitimate institutions.
The main source of the problem has been banks, who have not had to break laws. The regulations have been eliminated.
I want to see facts and figures about who lent what to whom and who paid back what to whom.
Joe
Instructive: William M. Isaac, former FDIC chairman, in his 9-27-08 Washington Post article "A Better Way to Aid Banks" speaks of government solutions to S&L problems of the 80s and to the recent Washington Mutual problem.
The federal government already has the history, the organizations, the procedures, and the laws to handle this situation.
Why do we have to put $700 billion in a plain brown bag and give it to the Secretary of the Treasury to dispense as he (or his bosses, GWBush and RCheney) see fit?
Why did the Senate need to pass a $700 billion "bailout" bill that has an additional $150 billion in gifts to executives, NASCAR racetracks, etc. The answer is either that (a) the lobbyists have their hooks in almost Everyone in Congress or (b) the NSA wiretapping has pulled up fearsome info on almost Everyone in Congress.
Another Bush/Cheney project. A last little October surprise by the GWBush administration to cripple the government for years while it pays back the trillions of dollars in principal and interest.
Or, the people who have not known how to govern now face this situation and don't know the federal government is set up to deal with such situations. Have GWB and RC so filled the executive branch with "Brownies" that it no longer works?
An 10/1/08 John Nichols' article , "The No BAILOUTS Act", from The Beat, The Nation spoke of Representatives Peter DeFazio of Oregon and Marcy Kaptur of Ohio ("among others") working on a plan along the lines indicated in Isaac's article. The plan was called BAILOUTS (Bringing Accountability, Increased Liquidity, Oversight, and Upholding Taxpayer Security); it is on DeFazio's website at http://www.defazio.house.gov/index.php?option=content&task=view&id=441.
It is shocking (but then not unexpected) that Isaac's 9-27 Washington Post article DID NOT prompt the Senate and the House to work out such a plan. They appear to prefer sticking generations of US taxpayers with the debt of trillions of dollars rather than disappointing their campaign contributors.
Well stated, nyvisitor.
I try to limit myself to minimal exposure to local news-- I don't have cable-- but I grind my teeth every time I see another dumbed-down "report" that plays like the eldest pre-teen sibling of a family crouching halfway down the back stairs listening to the grownups talking in the kitchen, then tiptoeing up to tell the frightened little'uns what's happening.
It's strictly on the level of Congress struggling to pass a bill to solve the financial crisis, and the "good news" is that this time the grownups seem to be settling their differences to save the day!
Perhaps "pull the fat out of the fire" is a more appropriate metaphor; it truly adds insult to injury that the "improved" legislation is a matter of dipping a rancid turd into several kinds of honey to attract recalcitrant flies. And that, by all indications, this degraded parody of political leadership is succeeding!
And it's also discouraging to hear qualified economic analysts concur that the bailout IS a legislative turd-- I usually eschew scatological references, but euphemism fails me-- then lamely tack on the "half-full" glass, or tinsel lining, of expecting or hoping that the new president will make it all better when he's elected.
Hedge Funds may fit the letter of the law (which is debatable), but they defeat the spirit of it.
I used to work at a standardbred horse racing track. You are not allowed to 'bet $10 on each horse in the race". That is scamming.
The stakes are much higher onh Wal St. WHY, if the Dems "care so much", do they allow this to go on. It is a pyramid/Ponzi scheme, where investers are actually betting that the mkt,or that the homeowner, will fail.No matter what happens, they make money.
For those that think it doesnt hit them. get your house appraised, check your IRA, try to get a student loan.
We should seize all of these CEOs assets and throw them in jail. Since 50% of the bailout money gose to China and Saudi Arabia, that wil be difficult. We HAVE to insist that DC use this horrible "opportunity" to fix this idiotic, "capitalist" system. HOw can you possibly believe this is a "meritocracy", when W is in the WH, and Trump has his own shows, lots of females.
Its just fricking ridiculous.
Peace
It is amazing that so many in Congress feel they are in a bind, either way they vote may be 'wrong'. There is so much hand wringing. So much sweating. What were they thinking of these past 30 years.
Here I go racing down the interstate in my Silver Penis, a smile on my face, a wad (of cash) in my hand. Kicked in the four barrel. Ah, life is so grand.
Oh shit! Is that a flashing blue light in the rear view mirror. Can I outrun him. Not his radio. Should I stop and face the heat. No way to escape. Maybe he'll believe I racing to the next exit to find a bathroom. Who's going to bail me out. The Lord is my Shepherd I shall not want...
The reporting on "Democracy Now" indicates that the basic obscenely flawed premises of the legislation remain intact-- the "new, improved" version is simply loaded with pork chops-- prizes to seduce a sufficient number of opponents to jump on board. Nobel Prize-winning economist Joseph Stiglitz admitted that the bill was a disaster, and that the way it was being sold really "smelled"; he dutifully tacked on the tinsel lining that its considerable defects could or would be "fixed" after the election.
And they're pushing the blatant spin that it's not a "bailout" this time around-- no, no; it's a "rescue". These craven and venal charlatans are counting on Amerikans being just stoopit enough to swallow such transparently mendacious drivel. It's all sickeningly appalling.
We'll soon see just how "principled" the opponents are. As I wrote the other day: one refusal to swallow does not a summer make.
Rep. Brad Sherman D CA, was just on C-SPAN. He said that half the 700 billion would be going to foreign investors, like China and Saudi Arabia.
He also said that stock brokers have their people flooding the offices with messages to pass the bill, trying to make it look like all of us who've been sending the message that we don't want it to pass have changed our minds.
wilmoor October 2nd, 2008 8:07 pm
"He also said that stock brokers have their people flooding the offices with messages to pass the bill, trying to make it look like all of us who've been sending the message that we don't want it to pass have changed our minds."
They, meaning the stockbrokers, were slimy greedy b#st#rds before the bailout and they still are. Fortunately when I called my Rep today they had the good sense to ask me some questions to confirm that I live in his district.
Lobo Gris
He's still on, and he's talking about the threats they're getting of what will happen if they don't pass the bill.
,
NO to BAILOUT..............Don't give Bush another 700 Billion Dollars.
Bush and his Administration wants "Blank Check" for 700 Billion Dollars.
NO to taxpayers dollars for Wall Street Brokers and Mortage Bankers.
BUSH AND CHENEY must be IMPEACHED.............ASAP !!!!!!!!!!!!!!!
,
Economist Dean Baker is a good man, and I agree with everything he says in this clip --so far as it goes.
He believes markets and financial institutions must be regulated through democratic political processes which are answerable to and reflect the interests of small investors and debt holders.
No surprise, then, that he sees the likely provisions of the financial sector bailout as "an insult to the intelligence of the American people" -- a phrase he keeps repeating so often throughout the film clip that I can only take it as a sign of his surprise that the 'American people' obviously ARE NOT sufficiently insulted.
What surprises ME is Baker's expectation of the public's civic intelligence. Even if he's, underneath, just feigning surprise; just politely goading the average person to feel insulted by the manipulative ripoff, he must know that his need to do so denotes something much more fundamentally wrong with the average American's personal instincts and public consciousness than a financial crisis could alone explain or rectify.
Baker needs to remember that most of the US electorate long ago abandoned its interest and participation in civic consciousness, nay, even in basic moral sanity, when it allowed its government to lie the nation into an obviously fradulent war and then, on top of that do a hundred other vile and unconstitutional things -- without its (the electorate's) objection, though in perfectly adequate view of such vileness and unconstitutionality.
Baker might consider coming to grips with the fact that, in a cognitively and morally unhealthy society, nothing can or will be fixed until mass-cognitive, moral, and democratic health is reasonably restored.
I hope Baker will stop wasting his time on economic analysis; see the handwriting on the wall, and use his smarts to address the mechanix of building a new political movement that fosters such principles as something sine qua non.
Let the trigger be pulled, the bankers and Wall Street ought to commit sepuku. Contact the politicians who represent you. However, those of you who are still whining third party are still just wasting your breath. Vote for whomever you wish, it is your absolute right, but I am voting Obama and I know the shortcomings there, but the alternative is totally insane and for my part I won't let that happen. Even if you imagine there are three, we have two choices, not three! Let Obama know what you think, email his website unendingly. He will get the message.
I am chiming in with mary lou. Dean Baker should say what ordinary people ought to do. His criticism ought to be posted everywhere.
yeah, we all know mcCain would be worse than obama. but wright, "surge" in afghanistan, aipac speech, fisa, bailout...enuf is enuf. i ain't whining 3rd party. i'm VOTING 3rd party.
Shenonymous October 2nd, 2008 6:17 pm
"Let Obama know what you think, email his website unendingly. He will get the message."
Obama is still somebody's Senator and e-mails and phone calls were flooding into the capitol 100 to 1 against the bailout. You like the rest of us saw how much it affected Obama by his speech and his vote. You are the one dreaming if you think you will have any influence over how he acts and votes if he becomes President if he is like this even before he is elected. But, vote for whomever you wish, that is your absolute right. Just don't be under any delusions that you will be able to influence things afterward.
Lobo Gris
The bailout is deeply flawed, and addresses none of the questions we as members of the American public have for the government and for Congress. This is not surprising, however, given how badly disappointed we have been in Nancy Pelosi since she becme Speaker. She talks tough, and votes very differently - so I expect this nonsensical legislation will pass and once again the taxpayers will take a hit in the wallet.
I'm glad you mentioned that. For all that have been expressing fear that Palin would be one heartbeat from the Presidency, think of Pelosi being two heartbeat's from the Presidency. THAT scares the hell out of me.
.
don't just say the bailout is bad--say what you would do.
for peace and sustainability
For peace and sustainability you MUST stop feeding the Federal Beast and STOP feeding the bigger monster, corporate America, especially Big Energy, (including mostly coal electricity) but also Tobacco, retail, your budget for everything but food must drop. Your contribution to the US Federal government MUST be 0.
rocyahsoul@yahoo.com
www.lamegame.name
Daniel Vincent Kelley
I see that Bush and our Senate kicked in another $150 billion in bribes.
This reminds me of feeding a reluctant python by tying a cute baby chick
to a big ugly slab of horse meat...
I will support the bail out if:
There is a five years freeze on bonuses for executives
All the bonuses paid to executives are to be returned as they were obtained fradulently.
Halliburton, oil companies to chip in at least 15% of their profit as a reconstruction tax. One of them made 40 billion last year
Let the Banksters pull the trigger. I can live with that.
Been here done that. Now its "Mortgages of Mass-distruction" and "Fiscal Mushroom clouds". I have been in the real estate biz for the past 35 years. This nothing new, Big investors (fannie, freddie, wall street) bundel all the crap properties up and dump them on a buyers (the tax payers) with more money than sence (Congrees). This is just a hard "Market ajustment". No need for bailout! All you Obama or MCcain fans, how do you like your change? Real economist (Off the hill) have said this bailout is un-nessassary and will cost each American $6,900. They are right!
Oh reptilians, they will try and try and try again, to get this "Bailout" and the shiny empty people on tv are spinning it all perfectly to make all the people who played it straight to follow the leader.
The scary thing is that these people are the ones who's 401k's are going to vanish, these beleivers are the worst kind of suckers that instead of RADICALIZING, they entrench FURTHER in believing the narrative and press for the experts that are fleecing us to pay themselves out... oy vey.
How did we become so embedded into this magic theater? It's as if our whole material world is controlled by screenwriter magicians who spin us with their words, strange days indeed.
Thanks for posting my Congress Staffer Email site.
http://OutsourceCongress.org
Please use it to pound Congress about the Wall Street welfare/bailout
It really works, in 3 clicks you'll be writing your email to the staff of any Senator or Representative. It's that easy, free and requires no registration.
http://OutsourceCongress.org
This website uses the slogan "Re-elect Nobody".
I offer this sound bite -
"It's time to sweep out the House."
Tell your Congressperson that the bill they will vote on Friday is MUCH WORSE than the bill they voted on on Monday. Tell him/her to line up with Oregon Democrat Pete DiFazio's plan to approach this issue in a problem-solving mode, rather than the problem worsening mode that the Senate bill represents.
I am reminded of the famous National Lampoon cover from days gone by: "Buy this magazine or we'll shoot the dog."
If there's a credit crisis, it's due less to the bursting of the housing bubble than it is to the bankers trying to force the government's hand by threatening harm to the American people (hey, isn't that the definition of terrorism?). Buy this bailout or we'll shoot the economy.
Call your Congressman. No negotiations with economic terrorists, and no bailout for Wall Street con artists whose scam imploded.
The economy is about to crash hugely in any case but due energy not finance. Which is another bunch of CEO's that need to be prosecuted.
If we need to invade Switzerland to make it happen, whatever needs to be done to expose hidden accounts needs to be done. If that means we have to put the drives back together with glue so be it.
Then the MRI memory scan needs to be processed to determine what each of their memories holds of their crimes and accomplices.
Direct Democracy is critical to this outcome, justice instituted above financial control.
The current financial crisis is a means of distraction from the real reason people will soon be able to get much less than they were getting yesterday, World Oil Production Decline, Peak Oil +3 years.
The most heinous part of the whole mess is that vegan, EVERYONE on the planet could live far better. But because we accept our products from the industry of mass murderers, we have and will continue to be totally murdered as a species, the situation existing now for almost a deca millenia. Read the book of numbers in the old testament. It's the story of a census taken that Moses would know when EVERY of the people he led from Egypt was eliminated. Moses, in that story, swears that none of the people he's lead will be allowed to the promised land, that every of them will perish, which turns out to be the reality of the situation for all but one. Moses hard living nomad society plan was not acceptable to many who on registering their dissent were terminated expeditiously by woefully murderous Moses.
By Wind, Tidal, Wave, Solar heat engine and GeoThermal there is more than ten thousand times the amount of energy available compared to what we use today from all fossil fuel sources. Vegan agriculture is the MOST efficient agricultural system. By vegan agriculture the planet could support more than 24 billion people. By the hugely wasteful meat producing agricultural system the world is literally at the brink of what can be sustained in the short term.
The solutions don't this lifetime benefit a few old crackhead like addicts that happen to be in the position totally dominant and the most prepared to war. Their afterlife expectation is fierce for how badly they've savaged people to "enjoy" what they stole from people and at this point beings in general, people having under their influence so devastated Earths ecosystems.
I think the best you can do right now is keep a shovel in your basement and be prepared to dig in because it might be atom smashing bad on the surface of this planet for a long time.
rocyahsoul@yahoo.com
www.lamegame.name
Daniel Vincent Kelley
Anyone else get the email from Common Dreams? I hope that they realize that , making peole get in line behind Obama, is not a good way to win support.
This video expresses exactly how I feel about the Dem. Party, now. The bailout is deplorable. They wouldnt even allow decent amendments.
Obama chose Wall St. He did NOT chose you.
I preferred Kucinich in the primaries, but he didn't win. Not even close.
You can only push the country a little bit each year, but once in awhile, there are big jumps in effect, like a 'punctuated equilibrium': the New Deal, a Constitutional Amendment, a crucial Supreme Court decision, etc. And make no mistake: if you push off to the side, ineffectively, the country will get pushed backwards by the idiots pushing in the wrong direction.
Obama is at least the right direction. Of course there will be things about him you don't like, otherwise he could not be leading in the Campaign ! Push that direction, and keep building the institutions that will make the next non-linear breakthroughs possible (e.g. alternative media, solar power organizations, civil rights organizations, whatever is most important to you).
Voting third party in a two party Presidential democracy doesn't 'show them' anything. It just makes it one vote easier for McCain to steal the election with voting machine manipulation. If McCain wins, Game Over.
hell yes. i read it and then immediately unsubscribed and will not be receiving anymore email from CD, hopefully. it is not a good way to win support or to champion the causes you hold dear if you support candidates that don't back your agenda, period. why can't people get it? it's like they think they can do their own version of arm twisting on obama after he's elected to make him "change" for the better. that's not how it works.
I've set my mail controls to permanently delete every and each e-mail coming from CommonDeams since they started with these free speech cages, so I didn't see it. But I'm not surprised. CD wants to become the next Huffington Post and for that they need to line up behind Obama bin Biden and their corporate sponsors as soon as possible.
Amazing how these lunatics, even on the face of his most evident sellout to Wall Street (not to mention FISA, drilling and war funding) are still supporting this chocolaty version of George Bush with everything they've got.
it's a disgrace to the overwhelming majority of posters here who do NOT support obama/biden. it's not just amazing really, it's flatout astounding that there are still such lunatics, as you say..... these people make me more furious then the repubs because if the DPAs would only fall in sync with the true progressives who do not support corporate, wall street politicians, we could actually unite finally and overwhelmingly defeat any republican, money grubbing move easily.
I assumed that they would post the letter somewhere.
They did: http://www.commondreams.org/donate0908-2.htm. However, they won't allow comments.
Obama is a fraud. McCain is a Bushie. The only way to express your outrage is to vote third party. The disdain for the people by both the Republicans and Democrats must be repaid in kind.
That is true...even if a relatively small percentage vote 3rd party, it will make a huge difference, meaning they'll attract more attention, maybe even get into the debates. Obama is ahead enough that he'll probably win this election...but 3rd party debtors in the next election can only be a good thing. Most important you will be voting your conscience, and not for 'lesser evil-ism.'
This is the kind of information we need. Thanks for shoring up our instinctive common sense, gained from years of observation, with the opinion of an honest professional who has the academic cred.
BTW - Common Dreams is in need of funds to keep up this work. That is a bailout I am supporting with a donation. Hope that others here who depend on Common Dreams for progressive news and comment will send some $$$$ too.
Joe
I wish I could. I am $300 short on my bills this month.
This not about being a conservative versus being a progressive or being a Republican versus being a Democrat; this issue is about the ordinary citizens of our nation standing up to an arrogant condescending elite that wants to steal from us. This is about us slapping down both Barack Obama and John McCain.
After last nights Senate vote last night I would encourage you all to contact the presidential candidates of both major political parties and let them know you will be voting for a third party candidate. Vote for anyone, Ralph Nader if that is what it takes. But for god’s sake don’t vote for either Barack Obama or John McCain!
Now here are two links. The first link is the recorded roll call vote on Monday. The second link is to the congressional staffers. Some the email addresses are not valid and you will return notifying you of the error. But many of those addresses are valid.
Don’t vent on a stupid Message Board.
SPAM the CONGRESS INSTEAD!
Let them receive so much negative email that their SERVERS CRASH!
SPAM the CONGRESS, CRASH the SERVERS!
http://clerk.house.gov/evs/2008/roll674.xml
http://www.outsourcecongress.org/outsource/congress/schstaffers.html
For the sake of completeness, how about a link to the Stupid Message Board?
Thanks for the links!
These are important, now that the switchboards are , basically, closed