Seven hundred Billion dollars the Secretary of the Treasury asked for, and wanted it within 24 hours, with no accountability, no oversight, and immunity from courts. Just give it to me because this is an emergency, and ask no questions.
Let's see. Um...centralized control of the economy by the government without any accountability to anyone ... isn't that the Communist way? What about the American way?
(And by the way, hasn't the Republican Party always stood for smaller government? And yet the federal government has grown more in the last 8 years than ever before in our history.)
AND, by the way, many financial analysts apparently are far from convinced that this big power shift plan will actually resolve the crisis or do any good.
No one man should ever be given that kind of power in this country, especially an unelected person. For myself, I'd rather suffer come what may, risk the whole rotten economy, than risk the Constitution. That's what patriotism is, willingness to stand for freedom even in the face of high cost and suffering. And I think any member of Congress who votes for anything even close to what Secretary Paulson originally asked unmasks himself as no patriot at all, and we ought to boot out every single proponent of such a totalitarian scheme. Every last one of them, of either party, as soon as s/he next stands for re-election. Even our favorites, because then they will have shown themselves no friends of freedom.
I'm hoping that won't happen, though. I'm hoping there will be (1) meaningful, effectual, bipartisan oversight; (2) no windfalls for CEOs who ran their companies into the ground by their greed; (3) some mechanism whereby the taxpayer stands some chance of getting back some of what has been and is about to be stolen from him, and (4) some help for the little people who are the victims of this disaster, the people whose houses have been/are being foreclosed, who are being laid off, etc. Why help just the big-wigs who are the biggest campaign donors?
We all ought to become involved in our local politics, get THAT cleaned up. If we did, then honesty and integrity would trickle UPward to state politics and eventually to Washington. It's the only way I can see to save this Republic. Let honest folk start to participate in it, instead of leaving that to greedy, corrupt, ambitious power-grabbers.
Another Look at Genesis 3:13-15
10 hours ago
4 comments:
The one thing being lost in the mix regarding the $700 billion is that this is not a gift, it is a purchase. The federal government is agreeing to buy the toxic debt (subprime martgage-bascked securities) from financial institutions. Currently, there is no market for these securities meaning that they are officially worth $0. Relatively new accounting rules require that these holdings be valued on the companies' balance sheets as worth whatever they could be sold at today - which is nothing. Now, these securities are not worth nothing, but no one will buy them due to the uncertainty surrounding them, i.e., is paying $0.02 on the dollar too high a price to pay for these bad debts, and if not, when will I be able to sell these at a profit? Financial institutions from deposit banks to investment banks to insurance companies' investment arms run on being leveraged - they borrow money to invest. Their debt can be expressed as a ratio of so much actual capital (money) to the amount of assets (good, products) they have. Different kinds of institutions are required by law to maintain a certain ratio - this is what happened to AIG: their investments lost so much value that they fell below the minimums they were required by law to have on hand. This ratio effects how risky a loan to this company would be rated. The higher the risk, the higher the return (interest rate) the lender asks, which makes it harder for the borrower to afford - this is why the people that need credit the worst usually have to pay the highest interest rates: they have shown themselves to be untrustworthy in paying back loans in the past. No one wanted to loan AIG enough money to shore up its ratio, except for the federal government who loaned them money at a high rate of interest and also took an 80% ownership stake in the company at fire sale prices. This is essentially what the up to $700 billion 'bail out' would do, too. Paulson is asking for that amount of money to buy toxic securities off of bank balance sheets at well below fair value (but well above current market value). At a future date, the government will sell these securities as well as the stake in AIG and make a profit because both are highly, irrationally undervalued in the market today. Paulson is looking to do this highly profitable deal in the same way he would have done a similar deal while at Goldman Sachs - so as to make a lot of money for his side, in this case, the government and the people. I.e., if he buys this debt at a penny on the dollar today and sells it for 2 cents on the dollar tomorrow when the markets are more stable and calm, the US Government has doubled its investment. The primary difference is government's motivation: it is not in the business of investing money in this way. However, it is in the business of stabilizing the financial markets, which have been destabilized by an irrational fear of subprime mortgage backed securities, which were held by very large institutions that lend money - meaning these institutions can't afford to lend to anyone else who needs a loan, which means the credit markets are frozen and business can't borrow money to purchase inventory to sell unless they can pay cash.
Yes, thank you. I realize this. Point is, at the very least, we must not let one (unelected) man try to do this himself, however he sees fit, with no oversight, review or accountability. That makes him virtually a financial dictator.
Amen, sister! Pass the law, but add oversight and accountability and security of taxpayers getting something back from the investment! I've already emailed my local congressman and Senators.
I just did the same. Thanks for the reminder! I used almost your exact wording, too, Monica.
Post a Comment