Monday, September 22, 2008

Bush demands that all economic aid should be without oversight.

This is my problem with the Bush administrations reaction to the most recent economic crisis:

Sec. 8. Review.

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.

Why is he insisting that this enormous amount of money be outwith the oversight of anyone? Why is he insisting that even the courts cannot have any say and that this enormous sum be handed over essentially in good faith?

I am not an economics expert and have never claimed to be, but I am reading certain things which imply that we are being sold a dud here.

The "investment" houses built up a huge derivatives bubble in the 1990s, a pyramid scheme which needed more money continually fed into its maw to keep it alive. One of the prime sources of fuel was mortgages, which were used to spawn mortgage-backed securities and even more bizarre forms of casino chips like CDOs. The more mortgage money came in, the larger the profits that could be made from speculating in the securities, yielding more fuel for new mortgages.

It was that securities monster which drove the cost of buying homes -- and the mortgages on those homes -- into fantasyland. The Frankenstein worked so well that it drove the price beyond the means of many Americans; so, in order to keep the mortgages flowing in, the street dealers began to relax loan standards, and in the end were selling homes to people who could not afford them, just to keep the game going.

Soon, prices were so high, that even with the lax lending standards the game couldn't be sustained, and the whole mess collapsed.

"Subprime" loans collapsed first because they were the weakest, made at the top of market, so the subprime lenders and borrowers were framed as the villains, covering up any true view of the matter.

Now we witness a Bush Secretary of the Treasury asserting that the banks have been infected by this "housing crisis" and that "to protect the American people" we must throw our children into the fire.

But it was Secretary of the Treasury Paulson, a former investment banker, and his investment banking drinking buddies and their fat predecessors, who created this nightmare!

Now they are demanding that we save their asses from the consequences of their folly, and hand the bill to the very families they have been eating alive for decades.

The foxes are demanding that the chickens pay for cleaning up the blood in the chicken coop.

Obviously it is in no-one's interests for the entire US financial system to go into collapse - which is what we are being told will happen if we don't bail these guys out - but surely there should still be some kind of oversight?

Whenever Bush says, "Trust me" my instincts kick in and say, "What's in the small writing?"

In the small writing here is a demand that the US citizenry gives up all it's powers of oversight. That doesn't sound right to me. Perhaps Bush fears that, once people actually understand what is going on here that they might object; hence his desire to rule what is happening beyond the reach of any future court.
If the people go with this bailout scam, the people lose control over the situation, not to mention trillions of dollars that could be used for constructive purposes. Our Constitution and precedent give us the power to put this mess into bankruptcy reorganization.

Will the Congress, now OWNED BY the foxy perpetrators of this crime, represent the citizens who elected them --
to support and defend the Constitution of the United States against all enemies, foreign and domestic and bear true faith and allegiance to the Constitution – abide by their oath?

Good people have died far before their time because of these foxes and their drinking buddies. Here we draw the line.

It's not too much to ask that people should be given time to fully understand what is actually going down here before they sign away any future right to change their minds about this.

Robert Reich insists that there should be five conditions before this bailout is agreed to:
1. The government (i.e. taxpayers) gets an equity stake in every Wall Street financial company proportional to the amount of bad debt that company shoves onto the public. So when and if Wall Street shares rise, taxpayers are rewarded for accepting so much risk.

2. Wall Street executives and directors of Wall Street firms relinquish their current stock options and this year's other forms of compensation, and agree to future compensation linked to a rolling five-year average of firm profitability. Why should taxpayers feather their already amply-feathered nests?

3. All Wall Street executives immediately cease making campaign contributions to any candidate for public office in this election cycle or next, all Wall Street PACs be closed, and Wall Street lobbyists curtail their activities unless specifically asked for information by policymakers. Why should taxpayers finance Wall Street's outsized political power - especially when that power is being exercised to get favorable terms from taxpayers?

4. Wall Street firms agree to comply with new regulations over disclosure, capital requirements, conflicts of interest, and market manipulation. The regulations will emerge in ninety days from a bi-partisan working group, to be convened immediately. After all, inadequate regulation and lack of oversight got us into this mess.

5. Wall Street agrees to give bankruptcy judges the authority to modify the terms of primary mortgages, so homeowners have a fighting chance to keep their homes. Why should distressed homeowners lose their homes when Wall Streeters receive taxpayer money that helps them keep their fancy ones?
It seems to me that, with an election a mere six weeks away, and with dire threats that should Congress fail to act that the entire banking system of the United States is guaranteed to fall apart, that people have no choice other than to say yes. But they should be allowed to set conditions, and their decision should be allowed to be reviewed at a later date when they have better information than they have at the moment.

They are being asked to sign a blank cheque with no say as to where that money should go. That's wrong.

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