I hate the Seven Hundred Billion Dollar bailout plan (full text at Huffington Post). Rich guys screwed up, and now rich guys are getting $2300 from each of us so they can keep gambling on the stock market.
O.K., it's not that simple. I understand the Rube-Goldberg nature of our economy. Pension funds now depend on rising stock indices. Investors rely on $46 trillion of magic money in "credit default swaps" to buoy their confidence (I don't understand credit default swaps yet, but they're out there). The bankers and brokers are rich with real estate, but they need liquid assets to make loans so businesses can grow and hire more people so they can buy more stuff at Wal-Mart and keep the GDP from going negative.... Leave the banks all constipated with their illiquid assets (foreclosed real estate that buyers aren't snapping up quite as quickly as the bankers would like), and the economy might indeed creak to a halt.
But thirty years ago, when my dad's personal economy came creaking to a halt after his plant closed and a real estate deal went bad, the government didn't send him any liquid assets. Dad went on the road to find work and slept in his truck. If Pat Powers can't sell any houses this month, the government won't cut him a check for groceries. If some drunk idiot smashed into your car and puts you in the hospital, the government won't rush in to pay your bills; you're on your own.
Imagine this, though: imagine some virus threatened to put everybody in the hospital. Or suppose a hurricane put everybody out of work and home on the Eastern seaboard. Would we say, "You're on your own?" No. CDC, FEMA, the whole Leviathan would be mobilized to fight the crisis.
We would, in essence, socialize the risk, socialize the damage, socialize the effort to save the country from total disaster.
It doesn't even take a nationwide crisis to provoke us to our innate socialism. Ten years ago, a tornado wiped out Spencer, South Dakota, a town of 315 people. Now this is nothing personal (my uncle Howard lives there still), but from a cold economic perspective, Spencer could have been left a pile of rubble, and the state economy (not to mention the national economy) would hardly have noticed. Nonetheless, we didn't say to Spencer, "You're on your own." Republican Governor Bill Janklow raced to the scene in his SUV that night and started directing a massive socialized recovery operation. Janklow put state resources and hundreds of volunteers to work clearing debris and providing other assistance to Spencer residents. Folks didn't ask, "Who's paying for this?" or "Where's my cut?" South Dakotans just came together and solved the problem.
Capitalism is fine and dandy when the sun is shining, although it seems to excuse a great deal of indifference to individual failures. But when the deluge comes—and Bush, Paulson, Pelosi, and Boehner are saying the economic deluge is a-comin'—"you're on your own" just doesn't cut it. In a crisis, we are all socialists.
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Update 09:10 CDT: The Economist on the bailout: "Unpleasant but essential."
Dennis Kucinich on the bailout: "I'm not just going to vote no, I'm going to vote hell no!" See Dennis's counterproposal, the Main Street Recovery Plan. Love ya, Dennis!
The "capitalists" want no oversight crying free market, but have their hand out when excesses and short-term thinking lead to downfall. It's disgusting. For 3 weeks of work "WaMu CEO Alan Fishman is entitled to $11.6 million in cash severance and to keep his $7.5 million signing bonus, The New York Times reports".
ReplyDeleteThere are earmarks galore on this bailout bill. It will be a pork banquet. Socialists, my patootie. We are all idiots.
ReplyDeleteIs this really socialism?
ReplyDeleteI don't think anyone is really argueing for collective ownership of assets. The hope here is to avert an economic collapse by buying up crappy assets and then reselling them over time to let the markets down easy.
No one is advocating keeping this stuff in government hands forever.
I think the better analogy is war. We are collectively putting a bunch of money against a direct threat to our way of life. Rather than a foreign army our enemy is economic in nature.
Now, if the politicians were saying "let's keep the stuff we buy" that would be a different story.
Stan, I skimmed the bill text, and I'm not seeing earmarks in the bailout. Am I missing something? You might be thinking of the temporary budget bill that includes $25 billion in federally backed loans for the auto industry?
ReplyDeleteMaybe I have fallen for another "wrong story" or else was misled. Instead of "earmarks," maybe they were "attached bills."
ReplyDeleteLast night I saw one of the television "news shows" (I don't recall which one) where taxpayers were calling in and an "expert" was answering questions. One woman objected to the "earmarks," citing an example of $6 million to go toward the study of the "hibernation of wild animals." The guest did not deny that there were "earmarks," but said that "extras" are always part of "processes" like this. He said something to the effect that each "congress person" will naturally try to get some "benefit" for their state.
I'm not an "expert" on things like this, but when I hear stories along these lines, I get a little "miffed." There are times to go around "picking up pork rinds" and times to "eat the veggies."
Anyhow, I see that the "bill" has gone down to "defeat." I don't know whether to "laugh" or "cry." So I guess I'll keep on "proofreading" the manuscript for "Calculus Know-It-All" and hope that the "solution" does not turn out to be "undefined."
Comrade:
ReplyDeleteWe might have to wait a few more days for socialism to take over. The bill failed the House and most likely won't see any more action until Thursday.
I don't know much about how the actual bill ended up that they voted on today. I hope they kept it as clean as Paulson asked for but I doubt it. This isn't about bailing out the companies though, it's about pulling out a systemic poison. If we can remedy the problem of the mortgage backed securities, then I won't care who the next Wall Street Behemoth it is that crumbles. It isn't about saving them, the best of them will survive and be stronger and the vacuum left behind will allow innovation to develop. As long as nobody can sell those stupid securities, it threatens everything.
ReplyDeleteDemocrats helped create the housing bubble, but if Republicans hadn't given that big pool of gasoline all that oxygen in the Glass-Steglow act it wouldn't have ignited quite so...impressively.
We are all Socialist? No, How about we are all puppets. We have been trained to be financial slaves to the banking industry, the credit card companies, etc.
ReplyDeleteIt is imperative that we re-learn to go back to the basics in our lives. There use to be a time that if you didn't have the money you didn't buy it, now its..oh I have credit cards, so I have money. Sorry, they are a fallacy. You do not have the money the credit card companies do and they will eat you alive. Personally, I will not ever use them.
There needs to be a way out, true, but should the Government be bailing out big business?
Where was the government after my husband came home from Iraq with injuries? We were on our own. In the process my husband lost his job which started a land slide of us literally coming inches to living on the street as one by one we began to lose everything we owned.
So now you know my secret and what has led me to run for District 8 House. I need to protect the people and create programs that actually help in a crisis. And I tend to do it through the guidance of God and the morals and values that I believe He expects from all of us.
Sending love to you all!
Patricia Stricherz
Candidate for District 8 House
I have also heard the new bill has earmarks but maybe that’s not exactly the correct terminology. Maybe an addition is a better word. One of the additions is a tax exemption protecting Alaskans from having to pay taxes on rewards from the 1989 Exxon Valdez oil spill. Despite John McCain’s often repeated vow to veto every single bill with earmarks and to make them famous, he has indicated will vote for this bill. Apparently an addition is different enough from an earmark to not qualify for the veto. I think the result is the same. Special treatment for certain people at the expense of the rest of us. I’m not necessarily against the idea. But I think it should pass or fail on it’s own merit instead of being attached to the bail out. I’m not a “black or white”, “with us or against us” type of person. I understand that not all earmarks are pork. I want a leader that is smarter then that.
ReplyDeleteI wonder what Sarah Palin’s view is? I also wonder how many times I’d have to ask her to figure out what her answer was?