Saturday, September 20, 2008

No Deal

You might not be hearing about it yet, but there's an insurgency building against this bailout plan for the financial industry. People aren't just uncomfortable with the proposed $500 billion $700 billion buyout. They're deeply and righteously pissed.

Cenk Uygur
...when the American people find out what's been done here, they are going to be livid. Conservatives, liberals, moderates, everyone. Why should we have to pay a trillion dollars of our own money to save the asses of bankers who already made a killing from these loans? Now, they get to unload all of their "toxic assets," as Paulson is calling it, on us. Who in their right mind would support that?

Wall Street is ecstatic. The market is through the roof right now because they can't believe they got such a good deal. Understand this is not an isolated bailout here and there. The Treasury Secretary just said he is going to take ALL of their bad loans off their hands. Why wouldn't they be elated?

Glenn Greenwald
The way it works is that Bush officials decree how things will be, and then everyone -- from Congressional Democrats to the Serious Pundits -- jump uncritically and obediently on board, even if they were on board with the complete opposite approach just days earlier, and then all real dissent vanishes. That's how the country in general works. As Atrios says: "We've seen this game played before." I don't pretend to know anywhere near enough -- in terms of either raw information or expertise -- in order to opine on the necessity or lack thereof of The Latest Plan in terms of whether the alternatives are worse. But what I do know is that an injustice so grave and extreme that it defies words is taking place; that the greatest beneficiaries are those who are most culpable; and that the same hopelessly broken and deeply rotted institutions and elite class that gave rise to all of this (and so much more) are the very ones that are -- yet again -- being blindly entrusted to solve this.
Paul Krugman

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?


But here's all you need to know. Hank Paulson is asking for $700,000,000,000. That's $2,333 from every man, woman, and child in the United States.

In exchange for that money, Paulson is unwilling to accept any demands to make markets more transparent, limit executive compensation, or assist homeowners fighting foreclosure. The sole purpose of that $700,000,000,000 is to bail out Wall Street and only Wall Street, but not to fix it, or our larger economy.

He is asking to be absolutely unbound by any law when he spends that money.

Something stinks. Obama's going along with the plan. McCain's going along with it. Intelligent Democrats and Republicans - people who should know better - are buying into the "this is the only thing we can do" panic talk. Something is very wrong here, and we should all be very nervous about an action this large happening this quickly.

I don't propose to know all the answers. But you don't need to be a weatherman to know when your roof blows off. If you're not outraged, you're not paying attention.

Here's the questions to ask yourself: who does this help? Who does this relief plan leave out in the cold?

And if this doesn't work, what's the next move? Mark my words - this is not going to bring the economic crisis to a sudden stop. More steps will be needed. If this doesn't work, what's the next step?

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