As best as I can tell, the Bush administration has convinced itself that it has brought on the Second Great Depression and it is desperate to do something to prevent a full meltdown on their watch.
Their proposed solution doesn’t make a whole lot of sense to me and it doesn’t seem to make a whole lot of sense to economists on either side of the political divide. On the other hand, I don’t see anybody arguing that we aren’t on the verge of a Second Great Depression.
I’m certainly not qualified to opine on how to avoid a Second Great Depression. But I do have two recommendations. Err on the side of not trusting the administration that got us in this pickle, and err on the side of oversight, even if it takes some time to craft the regulatory procedure.
The pattern:
Our financial industry tanks because of serious mismangement. Taxpayers must pony up.
An expensive stadium is built in Arlington TX. Taxpayers must pony up.
Wall Street firms must now be bailed out.
Arbusto, and two other oil companies had to be bailed out.
And so goes the sorry history of George W. Bush. Everything he has been associated with has failed with others left holding the bag.
When will Bush and all his fellow failed CEO cronies pay for their failures?
What horrible, horrible scam. how they can even say the things they are saying with a straight face is beyond my comprehension. The same deregulation, free market crowd that’s constantly preaching personal responsibility now tells us we must buy the bad debts of financial giants. And not in any comprehensive way, but in a “take our word for it” way that should disgust every citizen expected to pay for it.
And if you aren’t sick to your stomach already, consider that just a few days after the $100B corporate welfare commitment to Fannie Mae, the government (and I use the term loosely) approved a dividend payout at the end of this month!
As per their announcement, Fannie Mae “received the consent of the conservator, the Federal Housing Finance Agency (FHFA), and the United States Department of the Treasury to pay the previously declared but unpaid dividends on all of its outstanding preferred stock series, on September 30, 2008, as scheduled.”
How many in Congress are personally vested in these financial institutions? How many foreign corporations are holding these junk bonds? Where are the parallel criminal investigations? This is nothing less than fascist totalitarian.
There are two important differences about the situation in the US today v. The First Great Depression.
The US gov’t sends out millions of checks each month to people who draw Social Security, who are retired military, who have a service connected disability, who have retired from a federal gov’t job and who get unemployment compensation.
“Everybody” has at least one credit card.
With these two situations, there will still be money circulating, which was one of the big problems during the 1930s, i.e. the lack of circulating money.
I have yet to read a credible scenario where we head into a depression. In fact, where are the scenarios of any stripe?
It doesn’t have to involve the entire system, but I’d like to know how a bail-out makes it so that Hewlett Packard can get a loan, and no bail-out precludes that. If Bank X is insolvent, why can’t HP go to Wells Fargo, or directly to the Treasury through a new entity?
It’s a scam when you’re being asked for money and at the same time being told that “it’s too complicated” for you to understand. Instead, trust Paulson.
I demand a clear exposition of what the problem is, so that I can look at it – along with economists – to see if there is a way to preserve the operation of the economy while giving Wall Street the absolute minimum in cash (preferably zero).
This whole thing stinks of a pure toss of money to the financial firms that gambled.
Last time Bush was in a corner he came up with the Surge. No reason not to view this bailout as such.
“On the other hand, I don’t see anybody arguing that we aren’t on the verge of a Second Great Depression. “
There are plenty of people arguing that. I don’t see any possibility of any serious depression. At least, not globally. In the US, yes, of course. What goes around, comes around and Americans are going to have to pay their bills. But the global economy is stronger and larger than it’s ever been, and in fact is growing even now. Credit crunch? No, actually there’s more capital (much, much more) available now than ever before in human history. Tens of trillions of it if you count globally.
This is an engineered “crisis”, designed by the Democrats and Republicans so that they can steal hundreds of billions of dollars. That’s all it is. The whole thing is a sham.