Will the Wall Street bailout rouse a passive public? by gimleteye

"There are no atheists in fox holes and no libertarians in a financial crisis." The line belongs to Bill Mahrer. It is funny and true.

It is no wonder that Republicans in Congress are urging the Democrats to quick bipartisan consensus on the details of the $700 billion Wall Street bailout. So far, the details exist in a document only three pages long according to the New York Times.

President Bush said, last week, "This is a big package, because it was a big problem." It is worse than a big problem: it is the manifestation of economic policies and politics that have run the economy straight off the rails. Are American voters ready to accept their own complicity?

For twenty years the ascendancy of the Republican agenda was based on smooth sound bites ripping apart the New Deal and Great Society programs supported by Democrats ("tax and spend liberals") in favor of "free market" ideology including claims for "limited government" (proven, of course, not to be true.)

What is this trillion dollar crisis if not a call by a Republican White House for a New New Deal?

This day of reckoning for Congress and Wall Street is a repudiation of failed ideology that has done massive harm to equity, fairness, and the promise of democracy. If it could have been postponed by the Bush White House, it would have.

The Wall Street bailout represents the failure of an ideology that claimed to be conservative but was radical in its effects. If you think that $700 billion is the final price tag, I have a bridge in Brooklyn to sell you. It is a number drawn from thin air, anyone's guess-- yours or mine. It is the most palatable number that the Bush White House could summon before its exit from the stage on January 20, 2009.

Think about this: the total value of the market for credit default swaps-- a form of derivative insurance against the failure of other forms of debt-- is $62 trillion and no one knows what the true value of the market is worth because it is virtually unregulated. Why is it unregulated? Well, for the same reason that children's toys from China contain excessive amounts of lead and other toxics: it is profitable. (Mahrer also joked; the Chinese sell us toxic products and we sell them back our toxic debt.)

In Florida, for a decade under Jeb Bush and a Republican legislature, the bias against regulation was so fierce and so thorough that it literally paved the way-- with cement plants permitted illegally in Everglades wetlands, for instance-- for mortgage fraud and criminality (reported in the terrific Miami Herald series) that ran the economy off the tracks. Anyone who stood in their way was dismissed, denigrated, and marginalized: most of the Republican players in the Florida legislature are still in place. A full accounting of Senator Mel Martinez' role in fostering the housing asset bubble awaits good investigative journalism.

After leaving the governor's mansion, Jeb went to work for Lehman Brothers as a "consultant": we still don't know what that means exactly, as the terms of his agreement with Lehman have never been disclosed. The firm was the major broker of derivative financial debt to the Florida state pension fund. Lehman went bankrupt last week.

Jeb isn't talking to the mainstream press; but as an architect of Florida's future, we should have the benefit of a detailed explanation of this crisis and how he would pay our way out.

The production home builders and rock miners who dominated local government for decades in Florida, propelling Jeb to the governor's mansion and W. to the White House, demanding that new laws be erected against citizens objecting to platted subdivisions in farmland, or rock mines in Everglades wetlands, all now are crying for help; they want incentives for jobs, they want to write-off current losses against profits generated during the housing bubble, their financiers want taxpayers to accept the final responsibility for all their cumulative errors of judgment, crystallized in the hubris and confidence of Bush campaign finance chairman Al Hoffman in 2003, who literally warned off anyone who stood in the way of developers and their profits. Suburban sprawl is "an unstoppable force", Hoffman claimed to the Washington Post.

Well it certainly seemed so, only a few years ago when the K Street Project micromanaged by Tom Delay for Karl Rove and the Bush White House insisted that all lobbying and legislation be done through Republican lobbyists exclusively like Jack Abramoff who is now in prison.

The long and short of it: if this is a week of reckoning for the US economy, it is also a week of reckoning for a failed ideology.



Lehman bankruptcy hits Florida state pension funds
By Beatrice E. Garcia | Miami Herald
The bankruptcy of Lehman Brothers, a prestigious Wall Street firm, will touch Florida's pension funds and the state-run insurer because both hold its securities.

The State Board of Administration holds $322 million in Lehman stock and bonds. The SBA manages the state's employee fund and more than two dozen other funds, including assets for the Florida Hurricane Catastrophe Fund and the Florida Prepaid College Plan.

Dennis McKee, a spokesman for the SBA, said the agency has an $84 million unrealized loss on its holdings.

About two-thirds of the securities are held by the Florida Retirement System, which includes the pension funds for local counties such as Miami-Dade and Broward. The rest is spread out in the catastrophe fund and the Lawton Chiles Endowment Fund, which helps fund Medicare.

McGee said because the SBA is such a substantial investor in the financial markets, with more than $159 billion in funds under management, the agency has a relationship with most of the large Wall Street houses.

The agency said it was trying to quantify its relationship with Merrill Lynch and American International Group, a major insurance company that is seeking a $40 million capital injection from the Federal Reserve Bank to avoid being downgraded by the credit rating agencies.