...I'm dead serious about this, as is former Bush Treasury Secretary Paul O'Neill today.As Bloomberg News reports, O'Neill said the $700 billion Paulson plan is "crazy" with potentially "awful" consequences for the economy. "Doesn't this seem like lunacy to you?" he asked.
Well, yes - actually it does, and not just to me, but to many of the nation's leading economists, financial analysts, business journalists, and investors. Many of these people say this bailout could actually make this situation far worse, and many of them also have terrific, commonsense, and historically proven ideas about how to structure an economic rescue package (the newest one is from The Nation's William Greider). Indeed, most bailout proponents (like Paul Krugman) acknowledge this plan will likely be unsuccessful and that the public advocates for it haven't explained how it will work. Yet, many of those proponents - especially those in Congress - say they support it anyway because of the ultimate ideology of the truly psychotic: Namely, that somebody has to do something, no matter what that something is. They are pulling the classic move we saw during the lead-up to the Iraq War - officially supporting it, but also giving speeches of skepticism so they can cover their asses with "I told you so" haughtiness in the future (and please, don't even try to justify this bill as a respectable bargain - spending 5 percent of our entire economy - $700 billion - in exchange for a few admirable renewable energy tax credits is not a good deal...I've heard of thinking minimally, but that's thinking microscopically).
And yet, the political system seems totally immune - even hostile to - basic sanity. O'Neill and Joseph Stiglitz, both bailout critics, are top advisers to Barack Obama on this bailout issue, but the Democratic nominee keeps insisting that it is unpatriotic to oppose this bill. John McCain is even crazier - saying that the bill is going to "put us on the brink of economic disaster" right after he voted for it. And worst of all, both Obama and McCain are insisting that the bill just hasn't been sold properly as a "rescue" instead of a "bailout" - the implication being that public opposition is borne out of stupidity rather than sanity.
O'Neill says part of the problem is that those running the asylum in the media and in the halls of Congress have little direct contact with the sane world. "I honestly don't think they really understand it and they're so much in a bubble that it's impossible to penetrate it," he said.
So as the House prepares to vote Friday on this bailout, the public has to burst through that bubble. Republican Sen. Bob Bennett (R) - a bailout supporter - has already inadvertently given us our marching orders. On MSNBC this week, he said the determining factor in whether this bill passes the House will be phone calls to House members' offices. So it's time to sign this CAF anti-bailout petition and then get on the phone to your Member of Congress and tell them loud and clear: America is a Democracy... and that means rejecting this bailout bill once and for all.
Glen Greenwald notes that the pundit trust of Darth Paulson isn't shared by many of the less public experts.
Maybe this has something to do with it:
...Where to begin? Oh how we long for the Glory Days when the Steve Pearlsteins had their Supreme Wisdom honored and never had to hear anyone talking back:
First, an enormous number of Actual Economists -- as opposed to newspaper columnists -- vigorously oppose the bailout. Professor Nouriel Roubini called it a "disgrace" and has repeatedly argued it will not alleviate the crisis: "the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown."
Second, all sorts of other Actual Experts -- not just Pearlstein's idiot-readers and moron-left-wing-bloggers who have the audacity to object -- have argued that this plan won't work, is deeply unjust, and that far better and more equitable alternatives exist.
Just today, in Pearlstein's own paper, Jonathan G.S. Koppell and William N. Goetzmann of the Yale School of Management argued that a far preferable solution is to have the government pay off all delinquent mortgages -- which would transform the toxic waste into solid instruments and would prevent people from having their homes foreclosed -- the very plan Pearlstein's reader advocated which provoked such snotty scorn. Many other ignorant, ill-informed morons have had the temerity to argue that other proposals were superior to the bailout, including George Soros (recapitalize the banking system) and Actual Economist Brad DeLong (nationalize under-capitalized institutions). One of the leading blogger-opponents of the bailout has been Duncan Black, an Actual Economist with a Ph.D. in Economics from Brown. And Actual Economist Dean Baker wrote earlier this week:How do we go about getting the banks in order? Almost every economist I know rejects the Paulson approach and argues instead for directly injecting capital into the banks. The taxpayers give them the money and then we own some, or all, of the bank. (That's what Warren Buffet did with Goldman Sachs.)
Pearlstein -- and so many other bailout cheerleaders -- scorns those same concerns as grounded in stupidity and ignorance when they come from the ugly, loudmouth, teeming, insubordinate masses who refuse to obediently bear the massive debt being tossed on their backs.
Third, just today I interviewed former New York Times reporter David Cay Johnston -- who, unlike Pearlstein, didn't beat his chest and boast that he "won a certain prize" for his journalism, though he did -- and Johnston condemned what he called the "atrocious" journalism on the financial crisis, and said "there's an enormous amount of just wrong reporting going on." In particular, Johnston documented the fear-mongering taking place among TV journalists that has plainly put the public into the state of submissive panic that Pearlstein wants them to be in, whereby -- exactly as was true for Iraq, eavesdropping, the Patriot Act and a whole host of other measures -- they come to be convinced that they better unquestioningly and immediately submit to the dictates of the political and media establishment, they better relinquish any belief that they should question what they're being told, lest they suffer imminent, inevitable, catastrophic doom...
...As Johnston pointed out, letting Lehman fail eliminated a Goldman competitor, while Paulson's decision to save AIG -- in debt to Goldman for $20 billion -- likely saved Goldman. The fact that Paulson's decision to save AIG was made in consultation with Goldman's CEO, Lloyd Blankfein, raises obvious, pressing questions for anyone who is not a blindly gullible establishment-worshiper. As Actual Economist Dean Baker said about that episode:
Did Goldman's influence with their ex-CEO make a difference in Paulson's decision? I have no idea, but this thing stinks. Can you imagine if clerical workers losing their homes got to sit around with bankruptcy judges deciding the fate of their mortgages? It doesn't work that way where the rest of us live.
It is impossible to exaggerate the corruption of this Wall Street crowd.
And then there is the fact that Paulson was leading Goldman when it was a leader in the very reckless derivatives wreaking such havoc, and it was Paulson who continuously insisted for the last two years that there was no housing crisis and that the market was correcting itself. The deep public distrust of our Government and the establishment which Pearlstein serves is profoundly rational and well-informed...
Obviously rational and well-informed opinion and action will let the Terrorists win.
With that in mind let me introduce a new Playah on the Market: StrategeryCapital Management LLC, "Putting your money where our mouth is."
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