Response to the Bailout
Obama has come out with a statement of how the bailout of banks has to be handled. Here’s the rundown:
- There must be accountability and oversight, no blank check;
- Taxpayers must be protected and allowed to recoup this investment;
- Homeowners must be helped in keeping their homes;
- Many nations should be called upon to help, as they have stakes in this as well;
- Rescue the American people, not just predatory bankers; and
- Reform and regulate the industry so this does not happen again.
The Republican response: don’t add extras. (True, the fifth one about rebuilding Main Street, not just Wall Street, seems to be a tack-on; the rest, however, is solid thinking and a good plan.) While there is some talk of protecting taxpayers amongst Republicans, there is wide disagreement among in the GOP about the plan itself, and resistance to doing more than just generally “protecting taxpayers,” which is what they claimed to be doing when they deregulated the industry. Since they should have learned their lesson with the Savings & Loan debacle and yet just went right ahead and did it again, one should have little confidence that they will do the right thing here.
And John McCain? He chimed in on “broad oversight,” but other than that, said that the CEOs of these companies should receive limited salaries. Oooo, harsh. Oh yeah, and he wants to blame Securities and Exchange Commission chairman Chris Cox and fire him. That’ll fix a lot of problems.
Meanwhile, the bill for U.S. taxpayers might be getting bigger, as foreign banks are now added to the protection we’re paying for. One of the biggest beneficiaries: UBS, the Swiss financial services company that top McCain economics advisor Phil “Americans are whiners” Gramm has close ties to. So foreign banks get bailed out by U.S. citizens, and Republicans are calling it an “extra” to have not only the institutions being bailed out but the countries invested in them join in paying the costs? Yeah, that would be a bad idea, adding extras like that. Maybe they just realize that they couldn’t swing it–but I’d bet that Obama could.
Why any American’s would vote Republican after this last decade is beside me.
A trillion on loan to China’s central bank. A trillion for the Iraq war. A trillion in obligations for the war after it ends. And now a trillion or two to stuff into Wall Street executives pockets. To paraphrase the late, greate Hubert Humphrey: “A trillion here, a trillion there, pretty soon it adds up.”
Bush looted the Treasury when he came into office with tax breaks for the rich. Now, apparently, he wants to give Paulson a cash bag of at least a trillion dollars, and empower him to give it out to Wallstreet as and where he sees fit.
And through it all, nearly half of all American’s want to give him the vote. Meanwhile, can Sarah Palin even explain how derivatives work or explain how this all happened?
My sense is, that we aren’t even half way through our years in the wilderness. There are simply too many stupid people in the United States that WANT to be manipulated by Republicans.
Everything that both candidates say about the economic situation is vague from an economic point of view. Both probably agree that stopping cascading defaults is worth tax payer money since the tax payer looses more if their atm does not work. The real question is how many dollars must be kept in reserve for each dollar lent. If the ratio is small, then you are less likely to get defaults during a storm. Yet also, you get less economic growth during a non-storm. Both candidates do not touch the reserve balance issue.
The reserve requirments for the last 2 years were based on models that had us doing ok in the event of a housing downturn, or a 3x oil price increase, yet not both at the same time (unlikely scenario). We could have been more vigilent, yet that would have meant less economic growth, and we did not want that. So now, in the end, the gov is the final insurer for that unlikely scenario, which seems reasonable.
“And John McCain? He chimed in on ‘broad oversight,’ but other than that, said that the CEOs of these companies should receive limited salaries. Oooo, harsh. Oh yeah, and he wants to blame Securities and Exchange Commission chairman Chris Cox and fire him. That’ll fix a lot of problems.”
But that’s exactly what Chris Dodd has put out there in his counter-proposal, except maybe the part about firing Cox. It’s not meant to fix anything per se, it’s just punitive. Frankly, jail time should be on the table.
More importantly, THIS is what you’re doing on your honeymoon? 😛