There are two “failures to communicate” on the bailout bill. The first is that the Washington insiders have not bothered to communicate why a bailout is needed, they’ve just threatened “meltdown” or similar if it is not provided. The other is that the grass roots opposition has not communicated that its objection, as I see it expressed, is mostly to the form of the bailout, not bailouts in principle. While people should object in principle, they’re not doing so, simply because they still don’t understand that it was government interventions just like this one that got us here. What makes the opposition really angry is that the proposal is to buy assets for more than they are worth, and they suspect - rightly - that the excess value will flow right into bankers’ pockets. As has the capital that should be saving the banks right now. Also Secretary Paulson’s continuing close ties to Goldman Sachs, for example the inclusion of Blankfein in the Lehman decision, also represent a conflict of interest that turns many people’s stomachs. Mine included. Even bothers Ben Stein, who of late has been a Pollyanna. Read the whole thing, but:

The people whose conduct got us into this catastrophe have not only taken our money, hopes and peace of mind, but they apparently also want a trillion or so more dollars to put into their Wall Street Buddy System Fund. This may be the most dangerous attack on the law in my lifetime. What anarchists even dared consider this plan? Thank heaven that minds more devoted to the Constitution on Capitol Hill are questioning this shocking request.

Maybe, but not for long. Soon the “bipartisan” agreement will pass the legislation, further deepening the anger that much of the citizenry feels as they realize how impotent they are when the two parties conspire. Just storing up more trouble for the future.

Paulson should resign, and if bailouts are necessary, they should be done by conservatorship like Fannie and Freddie, preserving client accounts but wiping out equity and debt as losses occur and taxpayer money is injected.

The Dow dropped 777 points yesterday, in part as reaction to the failure of the bailout bill to pass the House. The bullhorning for another attempt to pass it has already begun. Meanwhile, the Dow has recovered 200+ points this morning, as one might expect. 

Today’s problems are the direct result of years of government (read, mostly, Federal Reserve) attempts to manipulate the economy by pumping in more and more credit. Doing it yet again, but in more size, is not the way to fix the problem. At best, it simply defers the problem at the cost of aggravating it. Keynesian stimulus is applied by increasing borrowing, but never yields enough growth to repay the debt. As a result, the debt builds up over time, as more credit has to be injected just to cover the cost of servicing existing debt. In 2007, it took over $6 in new debt to yield $1 in increased GDP. Eventually the point is reached where servicing costs overwhelm borrowers and the whole structure crumbles.

The House rejected the bailout plan. Maybe there is hope for democracy, the wave of anger was so deep and wide that it was not ignored. However, they are leaving the vote “open” while the leadership intimidates the “nay” voters into changing their votes, so it is not yet a done deal.

“Hey,” the leadership is saying, “we ate pizza this weekend so we’d seem like just plain folks, you can’t ignore that kind of sacrifice.”

Somehow people think bipartisan legislation is good. Nothing could be further from the truth. It simply means that both parties know that in the “two party system” there is no choice other than one of the two, so if they present a unified front there is nothing the voters can do. The job of the party in opposition is to oppose, to provide an alternative, not to deny the voters a voice. Bipartisanship is the visible face of oligarchy, it shows that there is just one political class, governed by self-interest and perpetuation of its privileges.

Vote for Libertarian Bob Barr. No, it won’t make him President, the Republicrats are too entrenched for that.  Or, if you  must, Baldwin, McKinney or Nader. Anybody but a Demican. Show them that they have gone too far. Send a message.

I just listened to one of the local pols (Jackie Speier) explain that:

• They are going to limit executive compensation by making amounts over $400,000 non-deductible. Give me a break,  Jackie, do you think I’m a complete moron? These companies now have huge tax-loss carry-forwards. They aren’t going to be paying any taxes for years! They don’t care about deductibility! So, in effect, there are no limits.
• If the taxpayer is losing money five years from now they will impose a “tax on Wall Street.” Five years from now? Come on, no-one will remember or enforce that and in the meantime they will have taken the money and run.

I guess I can’t stop you screwing me, but don’t insult my intelligence while you are doing it. It is clear that the vast majority of taxpayers are opposed, local politicians’ offices are reporting mail and calls are 500 or 1,000 to 1 against this gift to the plutocrats. 

If you want to know why this handout has suddenly become an “emergency” just look at the recent collapse of the stock price of Goldman Sachs and ask yourself where Hank Paulson’s interests really lie. You can get a clue from the following:

As the group, led by Treasury Secretary Henry M. Paulson Jr., pondered the collapse of one of America’s oldest investment banks, Lehman Brothers, a more dangerous threat emerged: American International Group, the world’s largest insurer, was teetering. A.I.G. needed billions of dollars to right itself and had suddenly begged for help.

The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm. Mr. Blankfein had particular reason for concern.

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said…..

A Goldman spokesman said in an interview that the firm was never imperiled by A.I.G.’s troubles and that Mr. Blankfein participated in the Fed discussions to safeguard the entire financial system, not his firm’s own interests.”

Sure.