LIBERTY: September 2008 Archives
A big shout out to The Cato Institute!
Dear Cato,
Thank you so much for all your hard work on opposing the bailout. This is a political crisis not an economic crisis, and the congress and the admin are not going to give up:
While many of you may be popping champagne bottles tonight in honor of the bailout plan that never was, we need to realize that this is only one step. The bailout is by no means dead. Having dealt with the legislative process before, here is my speculation about what may happen in the coming days, and the options that Congress has before it. (From a contributor to the Naked Capitalism Blog).It was a battle won, not the war; not a strategic but a tactical victory.
You may feel at times like a voice in the wilderness, but you have no idea how important you really are. PLEASE keep up the great work!
A very grateful supporter,
The Charters Of Dreams.
Dear Readers of The Charters Of Dreams, please consider giving a tax deductible contribution to the Cato Institute. The Cato Institute is a 501(c)(3) educational institute.
Finally — it's not over. We need to give the credit and banking markets a chance to clear the bad debts off their balance sheets. Sign the petition and call your representative today.
Arnold Kling (once of Freddie Mac and who co-edits EconLog) explains the housing bubble and gives a brief history of Fannie and Freddie. He explains that it was no surprise (at least to him) that we’d end up in this kind of mess. He then discusses if there any method to the bailout madness, and he blasts the Paulson plan as highly vulnerable to corruption, manipulations and abuse, and he offers some clear headed alternate solutions.
Here he is talking with Will Wilkinson of The Cato Institute on Free Will: Financial Apocalypse Explained -- See the videos segments below:
The Naked Capitalism Blog calls it:
As with Iraq, the fear card worked.
"Congressional leaders and the Bush administration last night struck a historic accord to insert the government deeply into the nation's financial markets, agreeing to spend up to $700 billion to relieve Wall Street of troubled assets backed by faltering home mortgages.
Negotiators emerged from a marathon session in the Capitol about 12:30 a.m. to announce that they had reached agreement on a proposal to give Treasury Secretary Henry M. Paulson Jr. broad authority to organize one of the biggest government interventions in the private sector since the Great Depression.
Full details of the plan were not immediately available. Lawmakers said their staffs would continue working through the night to commit them to paper.
Sen. Richard C. Shelby (R-Ala.), the senior Republican on the Senate Banking Committee, who has refused to participate in the talks, said a "critical mass" was forming behind the measure because lawmakers fear that their failure to act would cripple financial markets. The House is expected to vote on the plan as soon as today, with the Senate following as soon as Monday." (Lawmakers Reach Accord on Huge Financial Rescue, Washington Post, 09 . 28 . 2008).
A dark cloud of Big Government descends over Washington D.C.— use this Who Is My Representative link and call your representative right now (& go to the middle of this post to sign the petition).
The political classes of both parties said that in the face of this unimaginable crisis they would take the weekend – imagine that, a whole weekend! – to create a Solution. The Solution must now be implemented immediately before we can even fully understand what it is. This is a classic “rush to judgment” so that we may not notice that the Solution aims to destroy the fundamental ideals of individual freedom, accountability and responsibility that our nation’s Constitution was meant to defend.
I dissent and ask that you communicate your own dissent. (From I Dissent, No Bailout by Kenneth D. Peterson, Jr. Chief Executive Officer of Columbia Ventures Corporation, a private equity investor in Washington State).
Think Kenneth Peterson is exaggerating? Forbes is also alarmed:
In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.
It's not based on any particular data point, a Treasury spokeswoman told Forbes.com Tuesday. We just wanted to choose a really large number. (Bad News For The Bailout, Brian Wingfield & Josh Zumbrun, Forbes.com).
The last week has been a dark one for freedom in America. While most of us pay our bills on time and are prudent with our finances, some folks who made bad economic decisions are asking for and getting a bailout. This is not right, and the American people deserve better.
What we don't deserve is to inherit the bad debt of a few people on Wall Street that mismanaged money and then asked the federal government for someone else to pay for it. The taxpayers are now on the hook for $700 billion and what's worse, this intervention in the market will not solve the problem in the financial sector.
FreedomWorks recruits, educates, trains and mobilizes hundreds of thousands of volunteer activists to fight for less government, lower taxes, and more freedom, and -- not surprisingly -- has come out strongly against the bailout:
First, history has demonstrated that bailouts simply don't work. From Japan in the early 1990's to the New Deal in the 1930's, bailouts prop up failing enterprises, punish prudent businesses and taxpayers, and do not fix the underlying problems in the economy.
Our current economic crisis has its roots in nearly a decade of inflationary Federal Reserve policy, market distortions from the 'implied' government guarantee to Freddie Mac and Fannie Mae, and a wildly inaccurate signals from obsolete, government-chartered ratings agencies. These policies underpinned the housing market bubble, yet the bailout does not address any of these broken public policies (From FreedomWorks Opposes $700 Billion Wall Street Bailout).
Remember — this is the same administration that rushed into invading Iraq, and now they're rushing into this. There's little time left. Remember Congress's vote 5 years ago to authorize force against Iraq? They regretted that, and they — and we — will regret this if they don't put more thought into it.
Sign the petition now:
Now, if you're scared and worried, as you should be, you may be thinking "well, the bailout is a bad idea, but the alternative is worse," banking industry expert, Bert Ely, who has a stellar track record in predicting crises and calling false alarms says that the banking industry can handle this mess internally and does not need subsidies. Check out this post from the Naked Capitalism Blog:
"Banking Expert: Bailout Not Necessary, Industry Can Take Losses," and also see:
- "The Real Reason for the Rush?" and,
- "New IMF Study of Banking Crises Contradicts Bailout Bill Premise and Details," and finally,
- "Economists not keen on GOP bailout." That's an understatement.
The Naked Capitalism Blog and The Big Picture blog are two of the best economic blogs out there, and they're giving extensive attention to the problems in the credit markets.
Finally, if you're confused about what the hell happened, here's a couple of expert resources that give helpful, simple and straightforward explanations. It's a great starting point for trying to get a handle on what's happened, see:
- Constructing a Financial Perfect Storm" featuring Jagadeesh Gokhale, and
- A Simple Explanation of What Went Wrong.
Again, use this Who Is My Representative link and call your representative right now, and God help us.
Before Obama can talk about how he'll fix the current credit crisis, he'll have to explain not only how he failed to see it coming but also how Fannie & Freddie contributions to his career did not cause him to look the other way.
Why should he have seen it coming and why might he have looked the other way? Simple: over the course of his short service in the Senate, Obama was a top recipient of Fannie Mae and Freddie Mac Campaign Contributions. Sen.Chris Dodd, chairman of the Senate banking committee, was the top recipient:
