So it passed, the massive bailout to help save the banks of America. $810 billion dollars. It was $700 billion a little while ago and failed to pass, but disaster relief and further incentives sweetened the deal and like a greased sex toy into the collective butts of working class America… it goes through… and guess what, we’re getting screwed again.
In the words of Jay Leno, we should have passed it when it was only $700 billion and saved ourselves the spare change.
I was until this point a self-confessed econo-moron, but felt it was important to have at least a grasp of the details regarding the current crisis. To be honest, I wish I’d left it alone. From what I gather, the U.S. government is buying out securities and loans from the ailing banks, in some cases the proposed spending technique being for the government to act as primary share holders, buying the majority stocks and keeping the whole thing afloat. As I heard recently from one radio commentator, it’s a little bit like the Titanic buying out the iceberg that’s about to sink it. A sobering thought, made more so by our current trade deficit with China and the rest of the world, running two wars and in addition having a populace that spends $800 billion more than it earns, every year.
The plummeting housing market takes the lion share of the blame, and herein lies an interesting fact. That is, no politician can admit the truth regarding the poor of this country and the houses they live in (at least for now) and why the buy-out of millions of mortgages is a bad idea. To state this truth would be politically untenable. Why? Because they would have admit this: some people don’t get to own homes. They simply can’t afford them. Know any politicians that will say that?
During the Clinton administration and beyond, the government was
paying off encouraging lenders to give home loans to lower income families through the Community Reinvestment Act, loans which inevitably these families would not be able to afford. It looked good on paper to the government, poor people had homes, and lenders were making a crap load of money lending to this new demographic. A lot of these loans were adjustable rate, which is great during times of prosperity, but when things fail, you’re stuck with higher payments. Then, with changing financial innovations where mortgages could be bought and sold, large companies such as Fannie Mae and Freddie Mac started gaining the majority of these bad loans. People started defaulting on their loans (to the tune of 1.5 million homes in foreclosure, and a further 8.8 million with zero or negative equity in their homes) causing a loss and capital and resulting in bankruptcy of these massive firms.
The fault for this lies across the board, the homeowners should have done their math better, loaners shouldn’t have been irresponsibly lending to those they must have known couldn’t afford it, and the government shouldn’t have been prodding the loaners to, well, loan.
Will the politicians admit the mistake? No, they’ll simply buy out the mistakes, meaning we will absorb the cost and Wall Street can get back to work creating the next bubble to burst, exchanging financial common sense and forward thinking for the ever addictive ‘quick buck’.
Thanks financial deregulation!
As Christopher Hitchens states in his Vanity Fair article:
“I have heard arguments about whether it was Milton Friedman or Gore Vidal who first came up with this apt summary of a collusion between the overweening state and certain favored monopolistic concerns, whereby the profits can be privatized and the debts conveniently socialized…”
5 thoughts on “what smells bad in the bailout (as if you need me to tell you)”
In the end I wonder who will be the real winners.
Hello, I do disagree with the bailout, and there is blame to go around. A lot of it as a matter of fact. The blame does go to the different levels of government, activist groups, banks, Wall St., etc. I think there has been a group that has gone under the radar (for the most part) since the media's favorite candidate is close to victory. Maybe it is because Sen. Obama is the #2 politician to receive contributions from Fannie/Freddie and the other big winners of contributions are John Kerry and Chris Dodd, both Democrats…to make sure there was no regulations…thank you Barney Frank. ACORN, a group that was defended by Obama, and who he has numerous associations with, was forcing banks to make loans to people who could not afford them, or they would be hauled to the courts as "racist." In your comment you wrote, "loaners shouldn't have been irresponsibly lending to those they must have known couldn't afford it, and the government shouldn't have been prodding the loaners to, well, loan." I agree with that statement, but many of the banks were forced to loan to people who could not afford them by groups like ACORN, they were not simply, "irresponsible." ACORN, and other activist-Marxist groups with the "spread the wealth" mantra are just as much to blame as the government and other groups. They blackmailed banks with the support of politicians like Obama, into making loans at the expense of everyone who pays taxes. Ironically, your former post, "bush did what?…surely not" does not mention the current and former fraud committed by ACORN. Currently, there are numerous ACORN offices that have been raided and there have been hundreds of thousands of false voter registration cards that have been used to vote for guess which party…democrats.[http://www.americanthinker.com/blog/2008/09/more_acorn_fraud_what_else_is.html]
There is also a new case in the battleground state where college kids working for a group called "Vote From Home '08" are being investigated for voting fraud and they themselves voted in the state of Ohio, even though they are not residents nor live there…which is a felony.[http://messageboards.aol.com/aol/en_us/articles.php?boardId=566751&articleId=974528&func=5&channel=News+AOL+Managed].
I wonder who they are voting for….oh, I get it. If they are Republicans, it is fraud, if they are Democrats, it is a mistake. I am glad I got that sorted-out, I thought that if anyone one, regardless of party commits fraud…it is fraud and a felony. But, some get reported by Obama's comrades (the press) and some do not, especially if they are not in favor of him. Thank you for reading and thank you for not "proofreading" my comments like some blogs do. Censorship is despicable and we should be free to exchange ideas in a public forum such as this. Thanks.
I would never proof read comments on my blogs, thank you for recognizing that.
I think there is some worrisome aspects to this Acorn group and I will do further research. However, the mainstream media is fully expected to be biased and unethical when it comes to reporting on candidates, this is the farce which is modern media. As you clearly do, you have to go deeper to understand the issues. Liberals yell at Fox and Conservatives yell at CNN etc. That in my opinion makes that subject point a moot subject.
I think that you need to look across the board to see campaign financing, donations etc. McCains list of lobby supporters are just as long as Obama’s, revealing that the whole system is fraught with error and bias. I do not defend Obama or democrats, nor McCain or republicans. I think some of secular based speeches that Obama has done are encouraging (and I stress ‘encouraging’, it’s hardly enough), but wouldn’t be enough to cause me to vote, even if I could. I also think McCain makes some good points. Remember, I note that it was the Clinton administration who initiated the Community Reinvestment Act, and it’s also important to note that the majority of House representatives who did not pass the first bailout bill were Republican.
I see all sides of this battle and as such, consider that if fraud is a term that should correctly be attributed to the actions of either candidate, or any group associated with either candidate, then I will use said term. I don’t think that the term fraud is any different whoever it is applied to. The term fraud may be attributed incorrectly and in a biased way, depending on the news show you watch, but then anyone serious about journalistic excellence shouldn’t be watching that rubbish anyway.
Very nicely said.
I found a very interesting article written by a Democrat named Orson Scott Card.
Would the Last Honest Reporter Please Turn On the Lights?
by Orson Scott Card
October 20, 2008
“An open letter to the local daily paper — almost every local daily paper in America:
I remember reading All the President’s Men and thinking: That’s journalism. You do what it takes to get the truth and you lay it before the public, because the public has a right to know.
This housing crisis didn’t come out of nowhere. It was not a vague emanation of the evil Bush administration.
It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.
What is a risky loan? It’s a loan that the recipient is likely not to be able to repay.
The goal of this rule change was to help the poor — which especially would help members of minority groups. But how does it help these people to give them a loan that they can’t repay? They get into a house, yes, but when they can’t make the payments, they lose the house — along with their credit rating.
They end up worse off than before.
This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.
Furthermore, Freddie Mac and Fannie Mae were making political contributions to the very members of Congress who were allowing them to make irresponsible loans. (Though why quasi-federal agencies were allowed to do so baffles me. It’s as if the Pentagon were allowed to contribute to the political campaigns of congressmen who support increasing their budget.)
Isn’t there a story here? Doesn’t journalism require that you who produce our daily paper tell the truth about who brought us to a position where the only way to keep confidence in our economy was a $700 billion bailout? Aren’t you supposed to follow the money and see which politicians were benefiting personally from the deregulation of mortgage lending?
I have no doubt that if these facts had pointed to the Republican Party or to John McCain as the guilty parties, you would be treating it as a vast scandal. “Housing-gate,” no doubt. Or “Fannie-gate.”
Instead, it was Sen. Christopher Dodd and Congressman Barney Frank, both Democrats, who denied that there were any problems, who refused Bush administration requests to set up a regulatory agency to watch over Fannie Mae and Freddie Mac, and who were still pushing for these agencies to go even further in promoting subprime mortgage loans almost up to the minute they failed.
As Thomas Sowell points out in a TownHall.com essay entitled “Do Facts Matter?” (http://snipurl.com/457to): “Alan Greenspan warned them four years ago. So did the Chairman of the Council of Economic Advisers to the President. So did Bush’s Secretary of the Treasury.”
These are facts. This financial crisis was completely preventable. The party that blocked any attempt to prevent it was … the Democratic Party. The party that tried to prevent it was … the Republican Party.
Yet when Nancy Pelosi accused the Bush administration and Republican deregulation of causing the crisis, you in the press did not hold her to account for her lie. Instead, you criticized Republicans who took offense at this lie and refused to vote for the bailout!
What? It’s not the liar, but the victims of the lie who are to blame?
Now let’s follow the money … right to the presidential candidate who is the number two recipient of campaign contributions from Fannie Mae.
And after Fred Raines, the CEO of Fannie Mae who made $90 million while running it into the ground, was fired for his incompetence, one presidential candidate’s campaign actually consulted him for advice on housing.
If that presidential candidate had been John McCain, you would have called it a major scandal and we would be getting stories in your paper every day about how incompetent and corrupt he was.
But instead, that candidate was Barack Obama, and so you have buried this story, and when the McCain campaign dared to call Raines an “adviser” to the Obama campaign — because that campaign had sought his advice — you actually let Obama’s people get away with accusing McCain of lying, merely because Raines wasn’t listed as an official adviser to the Obama campaign.
You would never tolerate such weasely nit-picking from a Republican.
If you who produce our local daily paper actually had any principles, you would be pounding this story, because the prosperity of all Americans was put at risk by the foolish, short-sighted, politically selfish and possibly corrupt actions of leading Democrats, including Obama.
If you who produce our local daily paper had any personal honor, you would find it unbearable to let the American people believe that somehow Republicans were to blame for this crisis.
There are precedents. Even though President Bush and his administration never said that Iraq sponsored or was linked to 9/11, you could not stand the fact that Americans had that misapprehension — so you pounded us with the fact that there was no such link. (Along the way, you created the false impression that Bush had lied to them and said that there was a connection.)
If you had any principles, then surely right now, when the American people are set to blame President Bush and John McCain for a crisis they tried to prevent, and are actually shifting to approve of Barack Obama because of a crisis he helped cause, you would be laboring at least as hard to correct that false impression.
Your job, as journalists, is to tell the truth. That’s what you claim you do, when you accept people’s money to buy or subscribe to your paper.
But right now, you are consenting to or actively promoting a big fat lie — that the housing crisis should somehow be blamed on Bush, McCain and the Republicans. You have trained the American people to blame everything bad — even bad weather — on Bush, and they are responding as you have taught them to.
If you had any personal honor, each reporter and editor would be insisting on telling the truth — even if it hurts the election chances of your favorite candidate.
Because that’s what honorable people do. Honest people tell the truth even when they don’t like the probable consequences. That’s what honesty means. That’s how trust is earned.
Barack Obama is just another politician, and not a very wise one. He has revealed his ignorance and naivete time after time — and you have swept it under the rug, treated it as nothing.
Meanwhile, you have participated in the borking of Sarah Palin, reporting savage attacks on her for the pregnancy of her unmarried daughter — while you ignored the story of John Edwards’ own adultery for many months.
So I ask you now: Do you have any standards at all? Do you even know what honesty means?
Is getting people to vote for Barack Obama so important that you will throw away everything that journalism is supposed to stand for?
You might want to remember the way the National Organization of Women (NOW) threw away their integrity by supporting Bill Clinton despite his well-known pattern of sexual exploitation of powerless women. Who listens to NOW anymore? We know they stand for nothing; they have no principles.
That’s where you are right now.
It’s not too late. You know that if the situation were reversed, and the truth would damage McCain and help Obama, you would be moving heaven and earth to get the true story out there.
If you want to redeem your honor, you will swallow hard and make a list of all the stories you would print if it were McCain who had been getting money from Fannie Mae, McCain whose campaign had consulted with its discredited former CEO, McCain who had voted against tightening its lending practices.
Then you will print them, even though every one of those true stories will point the finger of blame at the reckless Democratic Party, which put our nation’s prosperity at risk so they could feel good about helping the poor, and lay a fair share of the blame at Obama’s door.
You will also tell the truth about John McCain: that he tried, as a senator, to do what it took to prevent this crisis. You will tell the truth about President Bush: that his administration tried more than once to get Congress to regulate lending in a responsible way.
This was a Congress-caused crisis, beginning during the Clinton administration, with Democrats leading the way into the crisis and blocking every effort to get out of it in a timely fashion.
If you at our local daily newspaper continue to let Americans believe — and vote as if — President Bush and the Republicans caused the crisis, then you are joining in that lie.
If you do not tell the truth about the Democrats — including Barack Obama — and do so with the same energy you would use if the miscreants were Republicans — then you are not journalists by any standard.
You’re just the public relations machine of the Democratic Party, and it’s time you were all fired and real journalists brought in, so that we can actually have a daily newspaper in our city.”