09/19/2008 04:58:56 PM EST

This Federal Bailout Proposal is a Disaster

posted by Cenk

I am so mad about this proposed federal bailout of Wall Street, I can't see straight. Do you understand what they're going to do? They are about to steal ONE TRILLION dollars from us and just hand it over to the guys on Wall Street who screwed everything up. They are going to take all of their bad loans and dump it on us. We're going to have pay for their mistakes!

But they already made the money. They keep the profits and we keep the debts. It is absolutely, positively outrageous. The only thing more outrageous is that both of the presidential candidates are going along with it. Obama seems to be supporting it almost more enthusiastically than McCain. That is a terrible idea.

Email Print
Google Technorati del.icio.us digg reddit Facebook
Here are two important things you must know about the impact of the financial bailout.

First, when the American people find out what's been done here, they are going to be livid. Conservatives, liberals, moderates, everyone. Why should we have to pay a trillion dollars of our own money to save the asses of bankers who already made a killing from these loans? Now, they get to unload all of their "toxic assets," as Paulson is calling it, on us. Who in their right mind would support that?

Wall Street is ecstatic. The market is through the roof right now because they can't believe they got such a good deal. Understand this is not an isolated bailout here and there. The Treasury Secretary just said he is going to take ALL of their bad loans off their hands. Why wouldn't they be elated?

The Bush administration and the Republicans (especially Phil Gramm) pushed for deregulation that allowed for, and almost encouraged, these mistakes. Now, the guys who told us they didn't believe in big government are going to send in big government to pick up the tab. Privatize the profits, socialize the debts. We have been robbed!

Even Jim Bunning (R-KY) said that when Hugo Chavez nationalized industries in his country at least the Venezuelan people get the profits as well. We only get the losses.

Secondly, this is likely to be the biggest issue of this campaign. How the candidates handle this could easily determine the outcome of this election. Whoever taps into this anger the best will win. Elections are about marketing. It doesn't matter that John McCain has been pushing for deregulation his whole career if he seems like he is going to be tougher on Wall Street in the next 45 days. He can be wrong as long as he likes as long as he wins the PR war over the next month and a half.

Obama is well on his way to blowing this already. Today he issued a terribly professorial statement about this bailout plan. He promised to be non-partisan and fully backed the plan. I couldn't imagine a worse response.

Non-partisan? Are you kidding me?! The Republicans are nearly completely responsible for this debacle (Bill Clinton should have never signed those laws Phil Gramm pushed through Congress, so the Democrats get blame, too). On the most important issue of the election, you're going to be non-partisan? Especially when you have the facts on your side? How badly do you want to lose this election?

For the love of God, tell the people what they need to hear - this meltdown is completely the fault of the George Bush, Phil Gramm, the Republican Party, the conservative movement and yes, most importantly, John McCain! John McCain with his reckless deregulation caused this to happen. If you don't tell the American people this, who will?

And why are you supporting Paulson's plan? The plan is a total overreaction, has no accountability, no checks built in so this mess won't happen again and leaves all of the "toxic assets" on the American taxpayer's lap. It will be judged very poorly by the history books. It is an amnesty plan for Wall Street. You should be tapping in to people's anger over this, not siding with the guys who are blowing it.

Do these guys know anything about politics? Blame it on Bush. Blame it on the Republican Party. Blame it on John McCain. They earned it. It is their fault. Now, you're going to bail them out by agreeing with their stupid bailout program (I understand the need for limited bailouts, even though I can't stand them, but this general amnesty is a terrible precedent -- it's like pardoning Nixon) and treating this as a non-partisan issue. This is a terrible mistake. And one that could cost Obama the election.

McCain has already done a much better job of sounding populist on this issue. If he plays the politics better, the people who are really going to get burned are us. He is going to put the same deregulators who caused this mess back in charge. He might even select Phil Gramm as his Treasury Secretary and put the fox back in charge of the henhouse. I'm asking Obama to be better at politics because the most important policy consequences are at stake here.

If Obama allows the Republicans to deceive the American people into thinking it wasn't their fault and they are put back in charge, this is all going to happen again. What message do you think Wall Street just got from Paulson's bailout plan? Take all the risks you want, the government will always take your bad loans off your hands. You are too big to fail. You will always be bailed out. If McCain gets elected, we'll have to pay for this round of mistakes and the next.

Obama better not blow this and he's in the middle of doing just that right now. I have one important piece of advice for him right now: Get mad. Get mad like it's your money they just took from you. They came to your house in the middle of the night and took your daughters' education fund. They robbed you. Now, are you going to go get the sons of bitches who did this or are you going to let them get away with it?  

Watch The Young Turks Here

< A trillion dollar welfare for the rich. | Friday Fun Post: Won't Someone Please Think of the Swingers? >
 Display:
This Federal Bailout Proposal is a Disaster | 21 comments (21 topical, 0 hidden)
This is pure shock doctrine (none / 0)

They scare the bejeesus out of people, then demand that the Congress hand over ONE TRILLION DOLLARS, and vote on it WITHIN A WEEK, just before the election!  Does this remind anyone of Iraq?  Of the Homeland security scam - getting rid of unions?

WTF?  When you see all the Republicans on the TV repeating the same talking points about how we can't be partisan about this, it is too important, and we have to act right away, that is a CLUE, people!

We need to stop and think this over.  In this so-called "crisis" the stock market went UP something like 800 points in the last two days.  That is not a crisis that demands we all give all our money over to these crooks within a week.

by davecjohnson on 09/19/2008 05:41:48 PM EST

Provide an alternate solution fast (none / 0)
Everyone who follows the news and watches this show is angry. Anger is good and can get people motivated but what we really need is one or two alternate solutions and get them out fast. The Congress is going to go along with this in the next week or two unless we can get a viable option out there quickly. Anyone........

by Postman55 on 09/19/2008 06:05:27 PM EST

[ Parent ]
Did you hear the same speech I heard? (none / 0)

Forget the "let's be non-partisan" BS that has to be there whenever you are trying to take advantage of a situation to get what you want.  Any time a politician says that Republicans and Democrats should come together on this, he is asking for something.

Obama's support for the plan hinges on including 4 "principals" - and I seriously doubt he will sign a bill that does not include most of it:

1. Emergency bail-out plan for FAMILIES who are hit by this financial crisis.  This is the big one.

2. None of the bail-out money can be used to provide golden parachutes for the executives who got us into this mess.

3. STRICT new oversight and regulations that make certain that this will never happen again.  He also wants an "exit strategy" for the bail-out and a means for the public to get their investment paid back.  and

4. The G-20 have to be included in this plan, since these are world markets we are trying to help heal.  I'm not sure exactly what he had in mind, but I have no doubt he is planning something there.

I'm not sure what Obama said that gave you get the idea that Obama would support a bail-out plan that does not include all or most of this.  Obama has been asking for this stuff for at least a year, and he intends to use this opportunity to get it.  He figures we have the Bush administration by their Wall Street balls, and we are going to squeeze to make certain that the public is helped by this bail-out and not just the wealthy.

by rbruck on 09/19/2008 06:05:53 PM EST

5 Point Plan (none / 0)
That was the first time I ever turned off the TV when Obama was speaking. The plan and speech was a convoluted mess somewhere between Kerry and a day of school with Charley Brown.

 

How about a plan that starts with throwing some of these guys in jail?

by sisco66 on 09/21/2008 08:57:18 PM EST

[ Parent ]
The Policy and The Politics (none / 0)

Cenk is wrong on the policy and the politics of this crisis.

First the policy:

My understanding of the situation is this:  We have a bunch of debt out there owned by a bunch of financial institutions.  It turns out that a lot of the people who borrowed it can't pay it back.  This occurred both because of lax borrowing rules and partly because of the housing crisis and falling home prices.  People aren't sure what this debt is now worth.  Basically it has fallen in price to so much that it isn't worth anything, and nobody can get rid of it.  So it is sitting out there and people can't trade it.  The government's plan is to buy up these "toxic assets" from everybody instead of rescuing one bank at a time.  Cenk is correct that Paulson is saying this could cost up to a trillion dollars. 

But what are the alternatives?  The bailout of AIG alone cost $85 billion.  How many more institutions would we have to bail out if we didn't get right to the heart of the problem?  Just 12 more bail-outs and we'd be spending the same amount anyone playing defense instead of offense.  This doesn't even count the amount of money the Fed has been shoving into the system around the last 72 hours or so--at least $100 billion. 

What we can't do it let more and more banks fail.  That is going to eventually result in a run on the banks and a total financial collapse similar to the Great Depression.

Also, on the policy side, I wanted to take note of Cenk's characterization of Bernanke as a part of the Bush administration.  Ben Bernanke is not a partisan Republican.  He is an accomplished and impressive academic economist.  Do you know what subject he studied throughout his career?  He studied financial crisis.  He wrote journal articles about the mistakes made during the Great Depression.  This is a guy who knows what he is doing probably better than any other person in the world right now. He's not going to play defense any longer.  He is going right at the heart of the problem, and the positive, almost jubulant reaction from Wall Street and markets around the world is a good thing.  It means they believe this will work.  It means they are no longer thinking everything is going to collapse. 

Finally, do the bankers get off scott-free under this plan?  No.  The US government is going to be buying these "toxic assets" from them at much lower prices than they were worth before this crisis.  And remember, not everybody is going to default on these loans and mortgages.  We will be the owners of this debt and collecting what we can, and eventually we will sell this debt back to the financial sector--probably at a very high profit after everybody has calmed down, and knows how to value these assets.

The politics:

Cenk's plan is for Obama to sound like a raving manic right now:  He should be an angry, fist pounding populist.  Instead Obama talking about substance, and looking like a leader.  People like Cenk don't need to understand what he is saying the the stump.  Obama just needs to look like he knows what he is saying. 

by publius on 09/19/2008 07:13:12 PM EST

Politics con't... (none / 0)

Just another quick point about the politics.  McCain came out today and basically said the Fed was overstepping its bounds and should stop bailing out trouble banks.  My advice would be for Obama to come out and say he supports what the Fed is doing and thinks it is a good idea to avoid complete economic disaster.  What is McCain's solution?  Do nothing?  Don't even improve regulation?

This is the opposite of Cenk's advice to Obama, but it is a much more responsible position.  All of congress is going to vote for the bailout anyway...I would bet a lot of money that even McCain will.  That should be portrayed as a flip-flop.  

by publius on 09/19/2008 07:28:39 PM EST

[ Parent ]
I take issue with this... (none / 0)
You wrote: "Cenk's plan is for Obama to sound like a raving manic right now:  He should be an angry, fist pounding populist.  Instead Obama talking about substance, and looking like a leader.  People like Cenk don't need to understand what he is saying the the stump.  Obama just needs to look like he knows what he is saying. 

I agree with *part* of what you wrote. These speeches are pretty much irrelevant at this point for people like Cenk and people like you and people like me (read: informed voters).

They are only relevant in so far as they impact low-info voters (a sadly astounding number of Americans). Obama "talking about substance" will have little if any impact on these people. If it did, Bush never would have won (ok, he didn't win the first time but close enough).

Does he need to look like a leader? Yes, on that you are absolutely right. Does he need to *sound* like he knows what he's doing? Yes, of course.

I think it's a huge mistake to assume that most voters appreciate the same level of substance and nuance as we do. It's that kind of thinking that has cost us many, many elections.

PS---I'm not saying Obama is doomed to fail or that the bailout was avoidable. I'm just directing these comments specifically to the excerpt I posted above.

by Tom Hanc on 09/19/2008 09:14:24 PM EST

[ Parent ]
Let me explain (none / 0)

I was trying to write the previous comment quickly while simultaneously listening to the show, as evidenced by the number of typos.  So let me try to clarify what I meant in that section. 

"People like Cenk" is meant to refer to people who have a cursory knowledge of financial markets, and the current situation; believe me, although I have a masters in Economics I'm not far removed.  At the beginning of the show today Cenk was railing against this bailout, saying Wall Street was getting off easy, taxpayers were getting screwed, and Bernanke and Paulson were just trying to scare Democratic leaders into accepting this legislation.  I don't think Cenk actually believes this.  I think if he were actually a US Senator or a political strategist for Obama he'd be advising that we implement this bailout hoping to avoid the Great Depression II, and at the same time making sure that strong regulatory legislation is passed as well. 

I think this move by the Fed is brilliant, and they are probably saving us right now from a collapse similar to the collapses that lead to the Great Depression.  Their alternative course of action seems to have been bailing out individual institutions one by one as they go under in the coming weeks.

My point about Obama is that it doesn't matter that he lost the audience in the room, or the one on TV.  It doesn't matter that he lost me.  You're right that they don't care specifically about the substance.  What the audience understands is that Obama can talk well about this stuff, and he seems to have a plan. Everyone, even low information voters, can understand that. 

One of the best interviews from the Democratic convention was Cenk's conversation will Bill Burton, Obama's communications director.  Cenk was making his point about the "politics of strength"--about not caving on issues like off-shore drilling because of the message it sends to voters.  Burton disagreed.  He believes that voters need to see the kind of president Obama will be. 

I think this is the philosophy we are saw from the Obama camp in that speech.   The speech Cenk was mocking was Obama showing the country the kind of president he will be.  The speech Cenk was mocking was the kind of speech I pray to see in the future with a real presidential seal on a podium in front of the man that, to me, symbolizes a greater America. 

And as Cenk admitted, the campaign still seems to be playing hardball with McCain (calling him "panicked").  ; Not every speech has to be a hard-hitting and partisan. 

by publius on 09/20/2008 04:09:41 AM EST

[ Parent ]
What do you think of this (none / 0)
Someone made an interesting comment at Democratic Underground regarding the bailout:

"Think about it. We are basically in the same mess as we were in 1931. And for much the same reasons: Corporate Greed.

So we are about to elect Obama who has the potential to be our generations FDR.

And if there's anything we need right now it's another New Deal

But this time the crooks turned the tables on us pre-emptively.

They come up with this bailout to:

This time instead of bailing out the people with WPA and other public works programs and restructuring and regulations to prevent the abuses again.

If we do this bailout there will be no money left for Obama's promises.

No Money for Green Jobs and the like.

This time we spend even more money BAILING OUT THE CROOKS!

And putting us in hock to them for generations.

They are heading our New New Deal off at the pass".

by Tom Hanc on 09/20/2008 11:47:06 AM EST

[ Parent ]
When we say Great Depression... (none / 0)

We're talking about letting hundreds, maybe thousands of institutions fail.  We're talking about millions, maybe hundreds of millions, of Americans losing their savings.  We're talking about people lining up outside banks trying to get their money out, but there is no money.  We're talking about nobody getting a new mortgage or a car loan for years even for the few who could afford such luxuries and houses and cars.  GDP falling by 30 percent, Unemployment rising to 25 percent. 

That's not the situation we want Obama to preside over.  Obama wouldn't be FDR.  Bush would be Coolidge, and Obama would be Hoover.  It's not good for anybody to let our financial system crumble; that's why we can't let it fail. 

We don't need a depression to get progressive policies implemented.  We are on the crusp of doing that right now.  What will help us more than anything is a healthy economy.  

by publius on 09/20/2008 01:02:02 PM EST

[ Parent ]
I don't know that we are on the cusp (none / 0)
right now.

Watch the Kevin Phillips interview with Bill Moyers that was posted in the forum, it's very sobering and fair.

by Tom Hanc on 09/20/2008 01:15:11 PM EST

[ Parent ]
Big difference (none / 0)
Publius, there is a huge difference between the kinds of speeches I want to see Obama giving when he is president and the kinds of speeches I want to see him giving now.

If he had given that same exact speech as president, I would have had a completely different reaction. There is validity to the point that he has done a good job of appearing "presidential" through this crisis. And he did a great job of calling McCain "panicked." That's perfect. But overall, the person who best captures the outrage of the average guy over this, I think will come out way ahead. That is not what a president necessarily does but that is what a candidate should do.

I have a lot more to say abou this on Monday, of course. But I found this discussion on here very informative.

By the way, I posted this on Daily Kos, Huffington Post and here. And this was by far the smartest conversation about it.

by Cenk on 09/20/2008 09:07:37 PM EST

[ Parent ]
Looking forward to Monday's show (none / 0)

by publius on 09/21/2008 10:28:00 PM EST

[ Parent ]
Reagonomics 101 (none / 1)
Cenk, you do know that if Reagan had not repealed the upper tax bracket, none of these MF's would a have good enough reason to steal that much money and we would not be in our current world of shit. The looting of banks, pension funds and corporations began with the repeal of the upper tax bracket in the 1980's. The capital gaines tax cuts in the 90's and early 2000's just made it more profitable.

by sisco66 on 09/19/2008 07:54:12 PM EST

Thanks, that is a good point. (none / 0)

People always forget that there might be reasons behind laws that are not immediately obvious.

Nobody actually paid 70% when there was a 70% tax bracket.

People who earned that much were forced to either keep their money in their company, keep reinvesting their investments, or keep their money in tax-free investments.  There were no multi-million dollar golden parachutes because no shareholders wanted 70% of their golden parachute cash to go toward paying income taxes.

Now that the top tax bracket is so low, we have to encourage people to keep their money invested by giving them a ridiculously low capital gains tax.

by rbruck on 09/19/2008 09:26:34 PM EST

[ Parent ]
Top Marginal Tax Rate (none / 0)
Right, the other point is that the top marginal tax rate doesn't kick until you've reached a certain amount of money.

Meaning that if you make 10 zillion dollars a year you would NOT be taxed at the 70% rate on every single dollar. You'd be taxed on a lower rate until you passed a certain threshold, and then *every dollar after that* would be taxed at the 70% rate.

It's like saying "look, you've made it, you've got MORE than enough money to live very, very well. So every dollar you make after this is just icing on the cake. And you're cake will still be more than fucking delicious if you only get 30% of the icing, trust us".

Or something like that.

by Tom Hanc on 09/20/2008 10:07:14 AM EST

[ Parent ]
R&D vs Capitol Gains Cut (none / 0)
What is investment? Is it buying stock in  a company hoping that 10 years from now it will turn into Apple or Google having exponential growth and return on investment. Or are we investing for the dividend? The problem is that the low capitol gains rates on both encourages the BOD, who are often major stock holders, to be short sided increasing dividends rather than investing in R&D and the type of growth that creates jobs. Not to mention accounting “innovations” and stock buy backs. We only have to look at the exploding deficit and exodus of jobs to realize that entire supply side theory is a myth. The combined market free for all is what led to pressure for more deregulation, the tech bubble and the now housing bubble, as well as raiding of pension funds ect.
If we want to really fix the problems we need to start to undue the mistakes that got us here

by sisco66 on 09/21/2008 08:09:18 AM EST

[ Parent ]
Reagonomics 101 (none / 0)
Cenk, you do know that if Reagan had not repealed the upper tax bracket, none of these MF's would a have good enough reason to steal that much money and we would not be in our current world of shit. The looting of banks, pension funds and corporations began with the repeal of the upper tax bracket in the 1980's. The capital gaines tax cuts in the 90's and early 2000's just made it more profitable.

by sisco66 on 09/19/2008 07:54:56 PM EST

pure and simple (none / 0)
It's wealth redistribution, Labowski.

by toosinbeymen on 09/20/2008 10:49:16 AM EST

Borrowing to pay for Tax Cuts is Pork (none / 0)
10 Trillion Dollars Worth, and still counting…

by sisco66 on 09/21/2008 08:45:53 PM EST

[ Parent ]
Good Perspective (none / 0)
This is a good summation of the debacle.  I was particularly impressed by how this is more debt on the taxpayer combined since the Revolutionary War.

by psyche2 on 09/20/2008 03:31:25 PM EST

This Federal Bailout Proposal is a Disaster | 21 comments (21 topical, 0 hidden)
 Display: