Bail Out

On my way to the Y, I saw a bumper sticker which said, "Friends do not let friends vote Republican."

On Rachel Maddow's MSNBC show Tuesday night, she reported that a Bush spokesperson said that the bail out bill the President brought out last week-end had been prepared and was sitting on his desk for a couple months. The spokesperson said they were waiting for a propitious time . . . like right before Congress would adjourn for the elections. When asked if that wasn't cutting it a little too close, the spokesperson said, "They can get it done in a few days."

That is one very good reason not to vote Republican! They pulled the same stunt to get the Congressional support for the Iraq war out of which the President not only took authority to pre-emptively strike Iraq but also trashed the Constitution with the first Patriot Act, which was also trotted out in a similar time-limited manner.

One Congressman was infuriated at the two and a half page bill from the President which gives the Secretary of the Treasury unchecked authority to spend $700 billion dollars. "That is one of the biggest power grabs I've ever seen!" he said.

Past interventions by governments to help a credit crisis in their banking system usually included an independent board with checks and balances to play that role. The acquisitions of bad assets in the most successful interventions included ownership, as we did with the AIG bail out where the taxpayers have an 80% stake in that company now. That way, if the assets ever return to value, the profits are shared with the taxpayers. Some interventions paid off with a profit for the tax payers as happened in Sweden some years ago.

The S & L crisis which involved Neil Bush and the Keating five (including Sen. McCain) was resolved with a board which was not fully supervised, resulting in an $85 million dollar loss to tax payers.

When a country goes into credit crisis as we have, people hang on to their money, if they have any. That goes for the rich as well and corporations and banks . . . .

So money is being hoarded and not let out for credit. However, because banks and financial institutions and other businesses end up in bankruptcy, someone with money can buy the valuable portions of those businesses for bargain basement prices. Bear Stearns became part of a growing J. P. Morgan financial empire that way. Merrill-Lynch was bought out by Bank of America. So there are very wealthy individual and companies that are making out like bandits accumulating assets.

This bail out lets the American people become the "white knight" that can step in and help companies survive the credit crunch and avoid bankruptcy. . . if it is structured correctly.

The President's proposal gives all the power to Secretary Paulson. Secretary Paulson was head of Goldman Sachs which has somehow stayed out of the limelight. I'm sure Sec. Paulson had opinions of his competitors on Wall Street. Is there a chance he didn't like Lehmann Brothers for some reason? That's the one corporation that didn't get help so far. When one individual has so much power, personal motives can come into play.

I can see him and his Wall Street friends having a great time if he ends up in charge of this bailout even with having to report what he's done . . . after it has happened and can hardly be reversed, as of the latest I heard about accountability in variations of the bail out bill.

I hope financial historians were at the meeting today with the President and the two nominees and Congressional members. They need to slow down the drive for sticking with the President's terms. Otherwise, it looks like the President will have brought off the biggest financial coup for his real base, the corporate barons who financed his run for the White House in 2000 and 2004.

No, my friends, I must warn you not to vote Republican!