{"id":2432,"date":"2008-09-22T11:34:04","date_gmt":"2008-09-22T16:34:04","guid":{"rendered":"http:\/\/planetwaves.net\/news\/?p=2432"},"modified":"2008-09-22T14:40:57","modified_gmt":"2008-09-22T19:40:57","slug":"the-700-billion-dollar-shoe-has-dropped-credit-crisis-contd","status":"publish","type":"post","link":"https:\/\/planetwaves.net\/news\/economics\/the-700-billion-dollar-shoe-has-dropped-credit-crisis-contd\/","title":{"rendered":"The $700 Billion Dollar Shoe Has Dropped: Credit Crisis Cont’d"},"content":{"rendered":"

Dear Friend and Reader:<\/p>\n

I SPENT SUNDAY evening with my selected family of friends, pulling together a little cacciatore, wine and a salad of dandelion greens. Even though this evening felt a lot like all our years of evenings together making and enjoying food, laughing and pushing each other’s buttons, this evening had an air of pensiveness and uncertainty.<\/p>\n\n\n\n\n
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\"Planet<\/div>\n<\/td>\n<\/tr>\n
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$10 bill\/The US Treasury. Photo by Musely<\/a>.<\/em><\/div>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Even though\u0412\u00a0most of us at this dinner party have jobs and some of us are securely in retirement, there was a sense of unease as we broached the topic of what happened on Wall Street and at the White House.<\/p>\n

There’s really no precedent for what’s going on — at least in our lifetimes. And none of us had a clue what to do next. It felt as though we could not bring ourselves to think<\/em> that there may be a problem facing us so insurmountable that nothing we’ve done before could help us out now.\u0412\u00a0 Was there something out there we’re not seeing that’s about to fall on our heads?<\/p>\n

What does the financial crisis and breakdown of last week really mean for us? What is it that we can do? Or are we in no position to do anything at all? As Eric mentioned this morning, with the whole deal going down with Mercury retrograde, we’re in prime territory for skimming a little cream off of the hundreds of billions that are about to change hands.<\/p>\n

To re-cap [as we covered in detail Friday, see Full Moon Over Wall Street<\/a>], Wall Street giant Merrill Lynch avoided collapse through selling itself to Bank of America, while Lehman Brothers filed for Chapter 11 after its big boss earned nearly half a billion dollars the past 15 years. The federal government has agreed to bail out major Wall Street company American Insurance Group, adding it to the list of companies which includes Fannie Mae and Freddie Mac as recipients of government largesse by rescue using taxpayer dollars.<\/p>\n

Late last week, Treasury Secretary Henry Paulson announced the White House plan<\/a> for the bailout. As Paulson proposed, the plan requests from Congress a massive Wall Street bailout package not to exceed $700 billion with minimal or no oversight other than the Office of the Secretary of the Treasury and no protection for you and me, the taxpayers. The original proposal was just three pages long<\/em>, heck, shorter than a Discover card contract. And the White House wants Congress to pass this legislation pretty darned quick.<\/p>\n

We will stop right here.<\/p>\n

This is the same White House which brought us Weapons of Mass Destruction, produced evidence of Saddam Hussein’s direct link with the destruction of the World Trade Center and the subsequent cause of the decision to invade Iraq, the Katrina disaster, the campaign to privatize Social Security — this same White House is proposing use of taxpayer dollars to stem the economic crisis in our country’s major financial center with no accountability to anyone outside the White House.<\/p>\n

Okay.<\/p>\n

Fortunately the reaction has been highly skeptical, as evidenced by Paul Krugman’s op-ed in this weekend’s New York Times:<\/a><\/p>\n

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system \u0432\u0402\u201d that is, convince creditors of troubled institutions that everything\u0432\u0402\u2122s OK \u0432\u0402\u201d simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem \u0432\u0402\u201d which seems doubtful \u0432\u0402\u201d or if Treasury is going to be paying a huge premium, in effect throwing taxpayers\u0432\u0402\u2122 money at the financial world.<\/p>\n

And there\u0432\u0402\u2122s no quid pro quo here \u0432\u0402\u201d nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.<\/p>\n

I hope I\u0432\u0402\u2122m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work \u0432\u0402\u201d not try to panic Congress into giving it a blank check. Otherwise, no deal.<\/p><\/blockquote>\n

Representative Bernie Sanders was much less circumspect:<\/a> “This proposal as presented is an unacceptable attempt to force middle income families (and our children) to pick up the cost of fixing the horrendous economic mess that is the product of the Bush Administration’s deregulatory fever and Wall Street’s insatiable greed. If the potential danger to our economy was not so dire, this blatant effort to essentially transfer $700 billion up the income ladder to those at the top would be laughable.”<\/p>\n

I don’t know about you, but last week’s feeling of shock is getting replaced by numbness. Listening to Paulson on the weekend pundit shows, and talking to my friends at dinner last night, I was feeling a queasiness the cause of which I couldn’t place at the time, but now I can.<\/p>\n

It’s the feeling of being deceived yet again and yet not quite certain whether it’s you or the other causing\u0412\u00a0your sense of\u0412\u00a0vast internalized dismay. It’s happened before,\u0412\u00a0the same feeling of the beleaguered spouse of a severe alchoholic when the partner comes home after yet again another binge, begging forgiveness and\u0412\u00a0assuring you that\u0412\u00a0somehow, redemption and sobriety was just around the corner, if only you would help. You’ve seen this scene time and again, and you have little confidence anything will change.<\/p>\n

Today might be a good day to call your Congressperson. Let them know what you think.<\/p>\n

Yours and truly,<\/p>\n

Fe Bongolan in San Francisco<\/p>\n","protected":false},"excerpt":{"rendered":"

Dear Friend and Reader: I SPENT SUNDAY evening with my selected family of friends, pulling together a little cacciatore, wine and a salad of dandelion greens. Even though this evening felt a lot like all our years of evenings together making and enjoying food, laughing and pushing each other’s buttons, this evening had an air … Read more<\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":""},"categories":[14],"tags":[289,262,36,271,52,117,288,290],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/2432"}],"collection":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/comments?post=2432"}],"version-history":[{"count":0,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/2432\/revisions"}],"wp:attachment":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/media?parent=2432"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/categories?post=2432"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/tags?post=2432"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}