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TechnoratiWall St. Implodes, but Bad Ideas Survive
The largest savings and loan and the largest insurance company go belly up. One trillion dollars lost in the stock market in one day. Two trillion dollars lost in housing values. Congress hands the Treasury secretary $700 billion in a panicked vote and heads out of town. This isn't the failure of one firm, or one industry. We are witnessing the collapse of a failed ideology -- what the famed investor George Soros calls "market fundamentalism," the belief that markets are always perfect and government should deregulate, cut taxes and get out of the way.
We now have learned once more -- as we did in the Great Depression -- that that road leads off a cliff. Tax cuts led to massive deficits, sustained because foreign countries like China were happy to buy our dollars so they could sell us goods. And Wall Street, liberated from the regulations created during the Depression, went on a binge. It invented exotic new products that no one understood, and then borrowed heavily -- 30 cents to 40 cents in debt for every dollar of capital -- to gamble on their rise. They had the party, and now we are paying to clean up the mess -- and to deal with what is likely to be a terrible and protracted hangover.
Yet the Wall Street implosion hasn't blown away the bad ideas. Look at the bailout plan passed by Congress. It is aimed at buying some of the trash debts of the Wall Street banks and investment houses in the hope of getting the financial system moving again. It does nothing for the real economy in which people work and live. Nothing on housing. Nothing to help states and localities about to make deep cuts in spending. Nothing for Main Street.
Keeping the banks afloat will help Main Street, we were told, because they supply the loans and financing that small businesses need. But this is like bailing out the pilot's cabin of a boat when the boat is taking on water through the hull. It won't work. The real economy is going into a downturn. People are losing jobs, hours are getting cut back, small businesses are hurting. States and localities will start cuts of teachers, police and construction projects. Restaurants and bars will lose business; many won't last. Retail stores will face a holiday nightmare.
But bad ideas have a steely grip. In the week before the Wall Street vote, Republicans in the Senate threatened a filibuster to kill even a vote on a small -- $50 billion -- stimulus package that passed the House. On the day of the Wall Street vote, they blocked even consideration of a measure to extend unemployment benefits to the hundreds of thousands now unemployed that are having a hard time getting jobs.
Ideology is blinding these folks to reality. We need, right now, a plan to kick-start the economy. That would include measures to stem the flood of foreclosures that are driving down the prices of homes across the country. That would include revenue-sharing with state and local governments in exchange for a promise to sustain current employment levels. It would include major investments in renewable energy and conservation, putting people to work while reducing our dependence on foreign oil. It would include rebuilding our infrastructure -- everything from bridges to mass transit to sewers --that is falling apart after years of neglect.
We are headed into a troubled time. We need to act now. We can't wait another year before those so blinded by their ideology wake up and see what is going on around them.
12 Comments so far
Show AllI love the way the Dems try to spin everything against the Republicans. For instance, this bit ...
"In the week before the Wall Street vote, Republicans in the Senate threatened a filibuster to kill even a vote on a small -- $50 billion -- stimulus package that passed the House. On the day of the Wall Street vote, they blocked even consideration of a measure to extend unemployment benefits to the hundreds of thousands now unemployed that are having a hard time getting jobs."
Except, the Democrats have control of both houses. That means they get to set the agenda in both houses. So, picture this. If it was really just the Republicans wanting to do this, then its an easy move to counter if the Dem leadership wanted to. If the Republicans wanted to filibuster last week, the easy answer is to let them.
While the filibuster is going on, the Senate could not have moved on to the bailout\theft bill. So, if the Republicans wanted to filibuster these provisions, let them. Don't call for a cloture vote. Just let them talk, and just let them know when they want to stop talking, then the Senate is going to vote on say the unemployment extension. And let the world know that its the Republicans desire to block unemployment benefits for Americans who need them that's holding up the vote on the bailout.
If the Dem leadership really wanted to pass such a bill, it would have been easy to do. The key to realize is that the Dem leadership was perfectly happy to kill the bill. That's the only real explanation of this.
As usual, ignore the spin and the crap from the Democrats and pay close attention to what is really happening.
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"To know, and not to do, is not to know"
www.samsonsworld.blogspot.com
Samson, you are so right - the Democrats are in cahoots with the republicans on this.
Deregulation is responsible for this mess. It would have not been possible to achieve what they did without it. Especially the repeal of Glass-Stegall in 99 under Bill Clinton.
But there is enough blame to go around every year for each party.
There is a major conflict of interest in the bail out as well. Paulson just left the industry to become the sec of the treasury very recently. Now he is, within a few months, going to be going back to that industry, after having given them a huge bail out of hundreds of billions. Don't consider that to be a coflict of interest? Most courts would, but they, of course, will never get the chance to rule on it. Republicans don't get brought up on charges or into court, only democrats and little people get that kind of treatment.
Funny how we keep havingt these one of a kind rulings and laws during the "law and order" party's reign. It started out with the SCOTUS doing a one time only ruling that appointed a brain dead moron as president. Now it ends with a bail out that has NEVER been tried before and that no one is even convinced will work.
And the worst part is that the idiots who got us into this trouble say it's not enough money for them. I say fine, don't give them a freaking penny, then. It's clear that no matter how much money they steal, it won't be enough for them.
And how about his hand picked boy, originally from Goldman Sachs, 35, whose name rhymes with Cash and Carry? Conflict of interest? You bet.
Why is our economy so tied to gambling ?
Why are people's retirement funds so tied to gambling ?
I agree with both of the previous comments. It is amazing that while Bush is going out the door he can grab another few hundred billion of plunder for his cronies. And by using the same fear tactics! Fool you once, shame on me, fool you twice, man you are stupid! Unbelievable.
The definition of Congress in the dictionary is I'm quite sure "stupid is as stupid does"
I'm not real sure that the people who walked away with $800 billion of our money are the stupid ones. Congress seems pretty damn smart to me. The stupid people are the ones who let the $800 billion get stolen from them.
The stupid people are the ones who keep voting for corporate backed and bought candidates and then expect them to represent the people. They are of course going to represent the people who gave them money.
So, in a few weeks, are you going to vote for the corporate backed and bought Democrats, or for the corporate backe and bought Republicans, or for a broke independent candidate you don't see on TV, but who would represent us.
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"To know, and not to do, is not to know"
www.samsonsworld.blogspot.com
If it isn't, it sure should be.
The bailout was nothing more, than the last successful attempt by the Bush administration, at robbing the American people.
I totally agree.
The bailout was nothing more, than the last successful attempt by the Bush administration, at robbing the American people.
Read the Obama Factor: How an Obama victory will lead to a Wall Street Bounce.
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