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Protecting the public interest in any economic “bailout”

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RichardH told me that my blog posting was #2 if you did a Google search for this topic. By the time I tried the search, this blog had dropped to #3.  The #1 spot is now this link on Dennis Kucinich’s web site. Rather than removing my copy, I’ll leave it here for the historical record.

I cannot seem to find a link for this email that I got from Dennis Kucinich, so I will just copy the whole thing here.

Dennis Kucinich – www.Kucinich.us

Protecting the public interest in any economic “bailout”

Dear Friend,

The U.S. government has been turned into an engine that accelerates the wealth upwards into the hands of a few. The Wall Street bailout, the Iraq War, military spending, tax cuts to the rich, and a for-profit health care system are all about the acceleration of wealth upwards. And now, the American people are about to pay the price of the collapse of the $513 trillion Ponzi scheme of derivatives. Yes, that’s half a quadrillion dollars. Our first trillion dollar compression bandage will hardly stem the hemorrhaging of an unsustainable Ponzi scheme built on debt “de-leverages.”

Does anyone seriously think that our public and private debts of some $45 trillion will be paid? That the administration’s growth of the federal debt from $5.6 trillion to $9.8 trillion while borrowing another trillion dollars from Social Security has nothing to do with this? Does anyone not see that when we spend nearly $16,000 for every family of four in our society for the military each year that we are heading over the cliff?

This is a debt crisis, not a credit crisis. Just as FDR had to save capitalism after Wall Street excesses, we have to re-invigorate our economy with real – not imaginary – growth. It does not address the never-ending war on the middle class.

The same corporate interests that profited from the closing of U.S. factories, the movement of millions of jobs out of America, the off-shoring of profits, the out-sourcing of workers, the crushing of pension funds, the knocking down of wages, the cancellation of health care benefits, the sub-prime lending are now rushing to Washington to get money to protect themselves.

The double standard is stunning: their profits are their profits, but their losses are our losses.

This bailout will not bring real jobs back to America. It will not bring back jobs that make things. It does not rebuild our schools, streets, neighborhoods, parks or bridges. The major product of this financial economy is now debt. Industrial capitalism has been destroyed.
In the next few days I will push for a plan that includes equity for every American in any taxpayer investment in this so-called bail-out plan. Since the bailout will cost each and every American about $2,300, I have proposed the creation of a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, convert those assets to shares, and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American.
I will also insist that all of the following issues be considered in whatever Congress passes:

  1. Reinstatement of the provisions of Glass-Steagall, which forbade speculation
  2. Re-regulation of the finance, insurance, and real estate industries
  3. Accountability on the part of those who took the companies down:
    a) resignations of management
    b) givebacks of executive compensation packages
    c) limitations on executive compensation
    d) admission by CEO’s of what went wrong and how, prior to any government  bailout
  4. Demands for transparencey
    a) with respect to analyzing the transactions which took the companies down
    b) with respect to Treasury’s dealings with the companies pre and post-bailout
  5. An equity position for the taxpayers
    a) some form of ownership of assets
  6. Some credible formula for evaluating the price of the assets that the government is buying.
  7. A sunset clause on the legislation
  8. Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust.
  9. A ban on political campaign contributions from officers of corporations receiving bailouts
  10. A requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts

And, most importantly, some mechanism for direct assistance to homeowners saddled with unreasonable or unmanageable mortgages, as well as protection for renters who have lived up to their obligation but fall victim to financial tragedy when the property they live in undergoes foreclosure.

These are just some thoughts on the run. You will hear more from me tomorrow.

McCain’s Friends Attack Him For Wrong Reason

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Follow this link to the  column by George Will that RichardH sent me.

George Will is quoting a Wall Street Journal editorial that castigates McCain for attacking the SEC Chairman.

The problem is that the Wall Street Journal (and all the main stream media) got it wrong.

If you just see the sound bite of McCain attacking Cox, you think it is baseless.  If you manage to read John McCain’s complete remarks, you find out that he nailed Cox for exactly the right reasons.

Follow this link to see an article that quotes all of McCain’s remarks and still gets it wrong.

The following are the comments that John McCain made that are exactly right.

The primary regulator of Wall Street, the Securities and Exchange Commission (SEC) kept in place trading rules that let speculators and hedge funds turn our markets into a casino. They allowed naked short selling — which simply means that you can sell stock without ever owning it. They eliminated last year the uptick rule that has protected investors for 70 years. Speculators pounded the shares of even good companies into the ground.

Follow this link to see my comment on the article from which the quote above was taken.

Follow this link to my earlier post about the uptick rule.

Remembering the Keating 5

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Follow this link to hear an interview with William Black about the Keating 5 scandal.

John McCain was one of the 5 caught helping Charles Keating make the Savings and Loan debacle of the 1980s even worse.  Listen to the interview and decide for yourself whether or not it has relevance to the financial meltdown we are experiencing now.

This is another item that RichardH brought to my attention.

Capitalism and Skepticism

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Follow this link to the article by Christopher Carroll. Christopher Carroll is Professor of Economics at the Johns Hopkins University.

Richard H. provided the pointer to this article. He provided the following excerpts from the article:

Why does the economy perform so badly under Republican Presidents?

…

Maybe (…) capitalism works better when it is being held accountable to some external standard than when it is left to its own devices.

…

[T]he reigning Republican orthodoxy is a kind of smug pseudo-Friedmanism which believes that markets left to themselves can do no wrong; perhaps it is time for another breath of fresh air.

Of course,I find this article intriguing because it corroborates a number of things I have been saying and believing for some time.

Any system you can describe in words is just a model of the real world.  As such, there will necessarily be real world situations that are not covered by the model. You have to be able to adapt to these complexities that are not covered by your model.  You have to adapt faster than you can fix your model to explain the anomalies.

In my mind, this is one of the differences between science and engineering. In engineering, you have to make decisions even though you do not have all the information you would like to have. You try to build in margins of safety in order to protect yourself against Murphy’s Law. The believers in unfettered capitalism think that Murphy’s Law has been suspended like much of our Constitution.  Unfortunately, Murphy’s Law comes from a higher authority.

McCain’s Campaign Manager Lobbied For Fannie Mae

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and Freddie Mac.

Follow this link to the New York Times article that gives some details of the $2 Million salary that was paid to Rick Davis because he had influence with John McCain.

I have frequently noted that Republicans know what damaging charges to make against their opponents because it is frequently something that the accuser has done.  This shows that they know the difference between right and wrong when they do wrong.  That is exactly how they know that the accusation, if true, would have been damaging.  When will they learn that making such charges just gets people to investigate if the charge is something they, themselves, have done?