I've been listening to the Congressional hearings on the proposed $700 billion federal bailout, aware that world equity and credit markets are not taking the gathering controversy well. But I can't help the feeling that politicians, economists and top government officials are on the same side of the row boat, pulling at only one set of oars: in other words, driving the boat in a circle.
If it took a weekend to craft a $700 billion to prevent a collapse in the economy like the Great Depression, then federal lawmakers and policy experts should take another weekend or two to consider exactly the configuration of oars on the other side of the rowboat so that it moves democracy forward.
There are intimations from both political parties that a blank check to the US Treasury is not in the cards. That's a start. Limits on executive compensation for financial firms participating in the bailout is essential-- and needs to be tightly drafted including those that underwrite or otherwise act as fiduciaries and not just those that get monetary relief.
No reward or riches for Wall Street and insurance execs who bankrupted their companies or otherwise managed risk so poorly that they cannot survive without a bailout.
But to regain the trust of the public, Congress and the White House need to look at the root cause of this national calamity: the lobbying culture and campaign finance system.
It should escape no one's attention that Treasury Secretary Henry Paulson's success as a private investment banker was according to the rules of the game in which Wall Street pushed regulators away at every turn, espousing a free market ideology that re-wrote definitions of risk and persuaded every level of government that wealth confers right.
If the biggest bailout in US economic history can be accomplished in a shorter period of time than erecting a firewall between governance and the influence of big money, it can only mean one thing-- that the banking and lobbying industry view this catastrophe as the yellow brick road. They couldn't get the privatization of social security that they sought: with a blank check in the hands of the appointed US Treasury Secretary, they might actually have a clearer path to riches and fortune.
Why should it be easier to put a $700 billion rescue package together than substantive campaign finance reform? If Paulson and Bernanke can patch together a plan to rescue the US economy in a weekend, surely Congress can take a day to fix the root of the problem: get big Wall Street money and the influence peddling of real estate developers and insurance companies and their lobbyists out of politics.
I understand exactly the problem of delay and uncertainty: we could lose another thousand points in the Dow Jones Industrial Average by the time it takes to get all the oars, on both sides of the boat, moving in concert. But there is a bigger-- much bigger-- risk in not taking care, now, to fix the whole systemic mess.
Think of the Paulson plan as a last-line antibiotic to a rampant financial staph infection without sterilizing the hospital room in which the patient lies, wrapped in dirty sheets and linens where the bacteria continues to fester. That patient would be our democracy. The risk is not overstated. It is very real.
2 comments:
Subject: Dear American:
I need to ask you to support an urgent secret business relationship with a transfer of funds of great magnitude.
I am Ministry of the Treasury of the Republic of America. My country has had crisis that has caused the need for large transfer of funds of 800 billion dollars US. If you would assist me in this transfer, it would be most profitable to you.
I am working with Mr. Phil Gram, lobbyist for UBS, who will be my replacement as Ministry of the Treasury in January. As a Senator, you may know him as the leader of the American banking deregulation movement in the 1990s. This transaction is 100% safe.
This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred.
Please reply with all of your bank account, IRA and college fund account numbers and those of your children and grandchildren to wallstreetbailout@treasury.gov so that we may transfer your commission for this transaction. After I receive that information, I will respond with detailed information about safeguards that will be used to protect the funds.
Yours Faithfully Minister of Treasury Paulson
Dear Friends,
Whenever a Great Bipartisan Consensus is announced, and a compliant media assures everyone that the wondrous actions of our wise leaders are being taken for our own good, you can know with absolute certainty that disaster is about to strike.
The events of the past week are no exception.
The bailout package that is about to be rammed down Congress' throat is not just economically foolish. It is downright sinister. It makes a mockery of our Constitution, which our leaders should never again bother pretending is still in effect. It promises the American people a never-ending nightmare of ever-greater debt liabilities they will have to shoulder. Two weeks ago, financial analyst Jim Rogers said the bailout of Fannie Mae and Freddie Mac made America more communist than China! "This is welfare for the rich," he said. "This is socialism for the rich. It's bailing out the financiers, the banks, the Wall Streeters."
That describes the current bailout package to a T. And we're being told it's unavoidable.
The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences - predictable, that is, to those who understand sound, Austrian economics - are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess!
• The Treasury Secretary is authorized to purchase up to $700 billion in mortgage-related assets at any one time. That means $700 billion is only the very beginning of what will hit us.
• Financial institutions are "designated as financial agents of the Government." This is the New Deal to end all New Deals.
• Then there's this: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." Translation: the Secretary can buy up whatever junk debt he wants to, burden the American people with it, and be subject to no one in the process.
There goes your country.
Even some so-called free-market economists are calling all this "sadly necessary." Sad, yes. Necessary? Don't make me laugh.
Our one-party system is complicit in yet another crime against the American people. The two major party candidates for president themselves initially indicated their strong support for bailouts of this kind - another example of the big choice we're supposedly presented with this November: yes or yes. Now, with a backlash brewing, they're not quite sure what their views are. A sad display, really.
Although the present bailout package is almost certainly not the end of the political atrocities we'll witness in connection with the crisis, time is short. Congress may vote as soon as tomorrow. With a Rasmussen poll finding support for the bailout at an anemic seven percent, some members of Congress are afraid to vote for it. Call them! Let them hear from you! Tell them you will never vote for anyone who supports this atrocity.
The issue boils down to this: do we care about freedom? Do we care about responsibility and accountability? Do we care that our government and media have been bought and paid for? Do we care that average Americans are about to be looted in order to subsidize the fattest of cats on Wall Street and in government? Do we care?
When the chips are down, will we stand up and fight, even if it means standing up against every stripe of fashionable opinion in politics and the media?
Times like these have a way of telling us what kind of a people we are, and what kind of country we shall be.
In liberty,
Ron Paul
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