The $700 billion bailout needs adjustment.
The $700 billion bailout needs adjustment.
The $700 billion bailout needs adjustment.
The $700 billion bailout needs adjustment.
The $700 billion bailout needs adjustment.
The current $700 billion bailout plan presented by the Bush administrations provides no concessions to help homeowners facing foreclosure or anyone on main street who’s experiencing a hardship. In fact, it will probably accelerate foreclosures. This is because banks would now have those losses insured by the feds and then when default occurs it will not effect any financial institutions bottom line after they’ve taken the loss write-offs from the sale of the mortgage backed securities. The institutions will no longer have any reason to work to modify sketchy loans they made FULLY KNOWING THE RISK.
This is exactly what the banks are counting on: indemnification for their bad lending practices. The call is to protect the markets, again. You can substitute the word markets with wealthy with any time during any discussion of this bailout. They’re interchangeable. Meanwhile, the guy who’s lost his job and is getting a re-trained or has transitioned into a lesser paying job and our property values will continue to be hurt. Property values will experience and even greater descent because the Bush administration’s bill is forgetting the reason peoples credit went bad in the first place. Foreclosures and property value declines are not the cause of this crisis, they are another symptom.
Stagnant wages, outsourced jobs, companies closing, inflation, sketchy bank tactics to increase revenue; these are the things that caused people to stop paying bills, using credit and caused a tight credit market. Until you take care of the problem at the source it will not really be solved. The current bill will only provide temporary relief in the markets and provide no relief to the underlying problems. It would be a $700 billion dollar farce that will stimulate our economy only for those on the top of the financial totem pole. It will do nothing to stimulate job growth, technical innovation, or most importantly stop foreclosures.
The Democrats are calling for these provisions as part of the bailout. They are interested more in helping the man on the street and not the CEO’s who’s employment contracts state they get a $10 million severance package if they’ve utterly failed. Is it possible they know this will also strengthen the US economy to a much greater extent than just protecting bad lenders? Of course, the Republican’s have responded with a typical partisan tactic stressing “urgency” and that there’s no time for pandering with the proposal they’ve laid out. Once again Bush pushes forward and it’s his way or no way. How is that a bi-partisan solution to the problem other than to say “we’re glad they saw it our way”?
Bush and crew are the same people who were on guard through this whole mess. Yet they think we should sign their first copy of a bailout proposal without scrutiny, without review and without modification. I really think their motivation is two fold: They’re being pressured to save the wealth of their constituency, the US Aristocracy, and to make sure foreign investors holding mortgage backed securities don’t call the notes due. I could care less if either one of these end up being a by-product of the proposed bailout but it must first and foremost stimulate the US economy and bring rise to the dollar. From what I currently understand of this initial proposal it will not drive prices down, wages up, create jobs or stem coming foreclosures. If it succeeds, in it’s current form, banks may lend to banks but they will not lend to consumers in the end.
Larry Beinhart detailed the cause of the bank freefall – In January 08!
In this January 2008 article for Alternet Larry Bienhart, the author of Wag the Dog and Fog Facts: Searching for Truth in the Land of Spin, did an uncanningly good job at detailing all of the economics policies leading to the inevitavible bank failures that occured over the last couple of weeks. I’ve always liked Bienhart’s writing and often hoped that one day my own prose would reach a fraction of his ability and style. As far as I’m concerned Larry out performed himself with this article. It narrows down, in specific detail, the failures of administrative policy that brought us to the downward spiral of the financial services industry.
To fully understand the article it’s nice to have some knowledge of the 1999 deregulation of the financial services sector that allowed commercial banks to start competing with investment banks. Once this concept of deregulation is understood Bienhart’s article is easy to digest as an account of facts more than angry rhetoric. Furthermore it clearly spells out the reasons we should be weary of McCain’s economic platform and why more tax breaks for wealthy corporations would be the most damaging path of policy any administration could pursuit. Larry summed it up best in my favorite excerpt from the article:
“The administration largely believes in supply-side economics (otherwise known as “trickle down,” or “piss on the people.”); if you increase the supply of something, consumers will appear to buy it.
The actual results are a perverse triumph of the idea.
The supply of money was increased. The price of money was kept artificially low.
Think of borrowing as buying money. It is.
People (and businesses and corporations) did rush forward to buy it. Once they had it, what was there to do with it? There was no new trend, no dot.coms, no high techs, no bio techs, no nothing.
So they went out and sold money. That is, they made loans.
There are two big retail loan areas, credit cards and housing loans. Both were pushed very aggressively. With cheap, cheap money available to finance home buying, that market heated up. At the same time, commercial interests started aggressively buying up loans, packaging them together, and reselling them as financial instruments. That created more desire to make more loans (sell money). Financial institutions bought more money (borrowed), in order to sell it at a profit (make loans). Since the loans were quickly resold — and profit taken off the top — the quality of the loans didn’t matter to the people who made them. The housing market — or rather the loans that fueled it — grew into a bubble.
The subprime crisis, the housing bubble, whatever you want to call it, is not the problem.
It’s a symptom of pumping in money with no place to go.”
While Bush may not have been responsible for the initial deregulation this article is testament to the fact that we cannot continue to support the supply side or “give to the rich” economic policies of the Republicans which McCain endorsed at inception and continues to endorse to this day.
If we’re lucky McCain will just let the Caribou Bimbo speak in public a few more times. It’s comical but at the same time demoralizing because this mindless airhead actually has a following. One that is more about ideology than genuine understanding of complex economic and policy issues. As long as she continues to proclaim that gay people can’t get married and that we ought to ban abortion those focused on these narrow issues (the ones they understand) will go out and vote for her, not McCain. I live in NC and I can assure you most Republicans are still undecided about McCain. He forgot to bring his bible.
Is the US economy still stable?
Presidential Press Secretary Dana Parino would not commit to that statement today.
Since my last entry, just over 72 hours ago, my Grandchildren bought AIG, Bank of America swallowed Merrill Lynch (absent First Franklin which Merrill got rid of a long time ago) and Lehman Brothers is gone. Barclay’s will be occupying Lehman’s building in N.Y. What a week.
Now we get to listen to all of the analysts tell us what went wrong. It’s not that complicated when you break it down to greed. Corporate financial execs were forced to show an increase in revenues or lower than anticipated losses to maintain market share values. To achieve this analysts and lawyers found or created loopholes providing short term gains while the bottom fell out because of bad lending practices. The short term returns ran out and the reality of a pure debt economy caught up. And we’re not done yet. By the end of next week WaMu should be owned by another institution, possibly JP Morgan.
But let’s not regulate, oh no. That’s “socialism”and infringes on the free market economy. It’s still “buyer beware” as others gamble with your investments. So the way to revive our economy, according to the GOP, is to increase tax breaks to the institutions responsible for this mess in the first place. “It will create jobs”, they say. Bullshit, I say. I call for industry regulation with the same tenacity McCain used to call for domestic drilling. Regulate here, regulate now! Self-regulation is an oxy-moron in finance and industry.
Regulation does not interfere with, but serves to compliment and protect the free market. Removing the intentional corruption, gouging, legal loopholes and fine print used by corporate think tanks to generate revenue at any cost to the consumer will reinstate the consumer confidence necessary to get the US economy moving again. Any less than a complete resurgence of American consumer confidence will be detrimental to all global markets.
So the resounding and obvious answer is: NO Dana the US economy is not stable even though you did a good job avoiding the question. Good little Press Secretary. Your input and statements were as valuable as those from my desk lamp.
You think things are bad now?
We could have a bigger storm heading towards the US than Hanna and Ike combined. We’re heading towards Hyperinflation. Know what that is? Most people don’t.
Well you’ve got your typical recession, that’s a mess. They you’ve got Stagflation: That’s where prices and interest rates rise faster than the average wages. Then you have Hyperinflation: This is when prices quickly rise beyond our ability to afford common goods based upon real wages.
It’s argumentative what can be done to stop the looming problem. But I assure, without question that once the Necon economic policies are continued we are in big trouble. What’s McCain’s plan for creating jobs? More tax breaks for corporations. Yes, his concept is the same as the Bush economic policies: give them tax breaks it will create jobs. Bullshit. Trickle down economics failed the mighty Reagan, it failed Bush and now it will fail McCain.
These tax breaks will be recorded as additional revenues for the corporations and the richest 10% of investors (many of which are overseas) will continue to profit. Almost none, zero, no jobs will be created under this strategy. The “bailouts” will continue, the banks will face no scrutiny and they will survive on the good intentions of an increasing federal deficit.
Who suffers? The middle class. Now I’m not saying that the Obama plan is much better. I’m not certain there is a government plan that could help short of repealing NAFTA, which would only be a start. To overcome this crisis we need a completely new perspective in socio-economics in America. And if there’s anything Americans hate, it’s change.
Americans need to understand that the unregulated Capitalist economy so many strongly endorse is in fact their demise. Now quick, someone point at me and yell SOCIALIST PIG! I don’t care if you do because I firmly believe that any company left to police itself will only have one interest in mind that being revenue. Companies do not have the best interest of children, the elderly or any of the rest of us at heart. It’s the governments job to protect us from the ravages of profiteering when harm is being done to American families. “Buyer Beware” is an outdated, 19th century, snake-oil philosophy that is useless in our modern, purposely deceptive economic environment.
For so many the idea of capitalism vs. socialism is black vs. white. Most true Neocon’s would love nothing more than to see all social services and social safety nets disappear. Who cares about homeless and the crime rate? Those who can’t find a job didn’t go to college for an advanced financial or technical degree so they don’t deserve a job. But when you’re homeless don’t loiter on our beautiful streets – go to jail. That’s more or less the Aristocratic perspective of most hyper-religious social conservatives who’ve never in their lives faced a true financial challenge. Those who can’t compete take their place on the food chain in the system of incarceration. God forbid capitalism actually needs a middle class. But not a “middle class” measured at income levels above $150K a year in 2009.
Instead of seeing any shades of gray or middle ground Liberals and Conservatives will battle on issues where there is no compromise. And it doesn’t matter if more jobs are lost, gas and food become unattainable, foreclosures continue and banks get bailed out more and more often (or fail) while the majority of people can’t eat. As long as people are going to church three times a week and gays can’t get married then the “good people” of America will continue to vote for Sarah Palin and crew. And face it Neocons, you’re not voting for McCain, you’re voting for the ideals of his running mate Rev. Caribou Barbie. You were never decided on McCain.
Unfortunately the Democrats don’t have much of an economic recovery plan either. But it’s better than the “give to the rich” theme that is openly promoted by McCain and company. And Obama cannot and will not overcome this. The voting population of rednecks have their glory girl and regardless of how ridiculous she is they will vote for her.
I realize not many are going to read this, or care. I just wanted it on the record so that when all the self-proclaimed “intellectuals” out there ponder how in the world the Democrats lost to yet another round to the Aristocracy and corporate kickbacks I can say I told you so. Obama can’t win. Rednecks decide elections in America and they care little about foreign affairs or economics. They only know “God and Country”. Whatever that means to them at the time. Usually a bona-fide redneck, Neocon in a cowboy hat can’t even tell you in specific terms.
Putting bank fees in perspective.
A July report by the Federal Deposit Insurance Corporation showed that banks took in $38.6 billion in fees and service charges last year. This may not sound like much when some of the richest individuals in the world have that much under their control. But let’s put this number in perspective by comparison.
- The federal budget deficit is currently $168 billion. This deficit was created over the past eight years and is projected to be about $407 billion by the end of 2008. That’s an average accrual of $50.87 billion per year. So banks collect consumer service fees almost as fast as the government created the current federal deficit.
- Microsoft projects to earn about $40 billion in profit after operating expenses from June 2008 to July 2009. So the banks could collectively purchase almost all of the products to be sold by Microsoft next year using the amount they collect in customer fees in 2007.
- Banks will collect more in consumer fees from their American customers than the average annual Gross Domestic Product (GDP) of many countries including Syria, Kenya, Sri-Lanka, Tunisia, Panama, Jordan and even oil rich Qatar.
I could go on but I’m not. If anyone still thinks that consumer bank fees are not hurting this economy as a whole they’re living in denial. The big question is: What, if anything are banking consumers getting for this money? You’re providing the banks a reason to exist so they can continue to do what? Protect the money? The money that only exists in a virtual world of electronic transaction systems? I really hope China doesn’t ever follow the lead of the US and give up their cash and carry culture in exchange for a nation of consumer debt and fees for the banks. No, I won’t even wish that on our biggest economic threat.
McCain is ahead.
The conservatives have found their girl in Caribou Barbie. Obama may have lost the south and could ultimately lose the election as a result. Sorry Dems, you haven’t learned: GOP spells GOD and unless you can win the south you cannot win an election. Very sorry to see all the support for Obama amount to nothing. The country will remain divided. But like I’ve said before, the idea of unification in America is a pipe dream. We are divided on the issues and as long as people vote based upon single minded agendas like abortion views, the plight of the Alaskan salmon, or the rights of homosexuals their will never be common ground.
There is and always will be two Americas and it’s not rich and poor. It’s conservative and liberal. Obama could win the popular vote and will still lose the election. The conservative states carry too many electoral college votes for the Democratic mindset to prevail. As for myself I think both parties suck and neither truly represent the issues most important to the majority Americans which do not include abortion and gay rights.
Neither party wants to enforce the laws on the books and handle illegal immigration, or change them. Neither wants to attack the source of health care problems, the cost. And neither wants to be responsible for imposing government oversight on out of control corporations and the financial sector, an issue that many Americans feel is a key factor in our current social and economic status.
I will tell you this: Republican’s are way out of touch with what needs to be done to fix America’s economy. The continued idea that if you cut corporate taxes it will result in job creation is way off track. We’ve tried this for eight years. McCain says we’ve got the second highest corporate tax rate in the world. I say why shouldn’t we? We have the largest number of corporations in the world. Any further tax breaks will only result in more profits for these companies, not jobs. Automation and technology will replace the manual workforce. We don’t need to give additional breaks to already established, highly profitable corporations. We need to give tax incentives for corporate innovation and increase the wages in the service and labor sector for LEGAL workers in the US. This may increase the cost of domestically produced goods but it should be balanced out by an across the board wage increase.
We are living in an era when 1950’s Capitalism has come to collect on the note and the debt is enormous. The model of Capitalism as we know it today needs to be changed, not to socialism, but to whatever form necessary to level the playing field. No longer is a college education and a positive attitude enough to compete when the rules are regularly manipulated by corporate, legal think-tanks so those with money can continue to take more and more from those without such resources to defend themselves. Case in point: Bank Fees, consumer enemy #1.