Hi. As usual, today's Democracy Now presents the most comprehensive, best analysis of the crisis. We're now collectively experiencing and aware of many dimensions of life and governance, as a nation. The guests are Rob Johnson, former chief economist of the senate banking committee and a mortgage specialist who clearly represents Main St. The dialogue is respectul, incisive and heartfelt. A rare occasion. Listen.
Ed http://www.thenation.com/doc/20081013/greider3 Bailout Rejection Sends out Financial Shockwaves, But It's Also an Invigorating Moment for Democracy By William Greider, TheNation.com: September 30, 2008. Bowing to public outrage, the House rejected the bailout and Wall Street swoons. The political bedlam in Washington is as real as it gets. All of the political leaders blessed the deal, but the House of Representatives spit it out anyway. The Wall Street bailout is so odious to public opinion, the "people's house" rejected it today, 228-205. The fever chart in Wall Street -- better known as the stock market -- swooned instantly, with the Dow falling 700 points. The party leaders will probably try again. I doubt they have the energy or courage to renegotiate the terms in any serious way. A majority of Democrats voted for the measure, but most Republicans took a walk. They will be scolded -- and pounded by captains of industry and finance -- for being "irresponsible." But I doubt the public will agree. In all of elected Washington, representatives are closest to the people and they know a vote for this outrageous measure is going to end the careers of some colleagues -- maybe many of them. This time, the dissenters can claim principle and say they are voting with the folks, while also voting to save their own hides. It adds another deep shock to the system, both in politics and economics, but what an invigorating moment for democracy. The financial bloodbath will continue, but unless the deal on the table changes significantly, Henry Paulson gets to decide who lives and who dies. The former investment banker from Goldman Sachs would be empowered as treasury secretary to play savior or grim reaper, the liquidator who essentially pulls the plug on some banks and financial firms or the man who rescues them from ruin. Of course, Paulson would consult with other government officials. But you can be sure that, behind closed doors, he will ask former brethren in Wall Street to help decide which club members are worthy of saving. This power to pick winners and losers would remain in Paulson's hands until a new president arrives in January. This the essence of "the deal" Congress worked out over the weekend and was stymied today. Some bells and whistles were added to make the transaction less obnoxious to public opinion, voters and taxpayers. They are not meaningless, but both parties lacked the nerve to tamper with Paulson's basic proposal. This is still a massive bailout of imploding Wall Street, financed with the public's money. And it is still a massive crap shoot for the American people. If the billions from Washington somehow restore temporary calm and balance to global financial institutions and markets, then the usual cheerleaders will proclaim the "system" has worked. Most Americans, I predict, will not join the cheering. Too much destruction lies ahead, both in the financial system and in the real economy where people live and work. Too much bitterness and rage will be attached to the White Knight at Treasury when he dooms one pension fund or bank, but rescues others. Too much deceptive sleight-of-hand is already embedded in Paulson's approach for ordinary mortals to even recognize what Paulson intends to accomplish. The essential political failure, in my view, is that Congress did not step up and assert the full emergency powers of government in this epic crisis, that is, take temporary control of the entire financial and banking system so regulators and policy makers can steer the US economy to safer ground, compelling the private institutions to follow their lead. This rescue plan remains essentially voluntary. Yes, the Treasury Secretary would be awarded gargantuan personal powers, but there is not much in writing to compel the banking behavior of private interests he chooses to rescue them. One assumes Paulson will demand some private deals and use his enormous leverage to squeeze anyone who resists. But there is nothing to guarantee this path is taken. The bailout will belong to the club and the club will manage it. Democrats are the majority party and insisted on some qualifying terms in behalf of the populace--better than nothing, but weak half-steps. The government can claim warrants or equity ownership from firms in exchange for the public aid. It can put a lid on bloated executive salaries at the rescued banks or brokerages. It can demand more up-close oversight of how the Treasury Secretary performs. The language for all of these measures suggests to me--I need to read the text again more carefully--that these are essentially discretionary suggestions. Paulson can do them if he chooses. Or, if he likes, he can wiggle around them in the fine print. The Dems do not want to assert real control over Paulson's decisions for fear they will then be blamed if and when everything fails. Republicans, as usual, are playing their own political game--trying to evade the blame, now and later. Their proposal for an insurance program that financial firms must pay for is ludicrous. It's like trying to buy hurricane insurance on your house after the storm has already blown it away. But the GOP already is in ruin, so its members are thinking long-term survival and creating a predicate for revival. Blame the government, blame Wall Street, blame the go-along Democrats--maybe people will start liking Republicans again. Democrats are still in recovery from twenty-five years of deferring impotently to the wise men of Wall Street and retreating tactically from conservative initiatives. I see this crisis as the Democrats' hesitant first step toward rediscovering their nerve and abandoned convictions. They are not there yet. But this crisis is not over. I predict they will get another opportunity to stand up for something and rather soon. In the nature of this crisis, the next president will be compelled to clean up Paulson's irregular mess. He will be forced to act, not only because of the rising popular anger and enveloping recession but because the Paulson approach is founded on private deal-making and his deceptive statements of purpose. By January, whoever wins the White House, it will be clear that Washington cannot cure the disease by relying on one smart guy from Wall Street. A new federal agency will be needed to supervise the bailout and restore defined public purposes and enforce them on the system. The government will have to assert its powers forcefully, because by then it will be obvious the "voluntary" approach helped some losers to become winners, but it neglected to save the country. *** <http://www.huffingtonpost.com/eugene-jarecki/lessons-of-the-fall- ikes_b_129272.html> Excerpts from Eisenhower speeches: :Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed... The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities. It is two electric power plants, each serving a town of 60,000 population. It is two fine, fully equipped hospitals. It is some fifty miles of concrete pavement. We pay for a single fighter plane with a half million bushels of wheat. We pay for a single destroyer with new homes that could have housed more than 8,000 people." "Crises there will continue to be," Eisenhower declared in his farewell warning. "In meeting them, whether foreign or domestic, great or small, there is a recurring temptation to feel that some spectacular and costly action could become the miraculous solution to all current difficulties." It's impossible to read these words today and not see the Iraq war as a "spectacular and costly" reaction to the crisis of 9/11 and Paulson's $700 billion blank check as a "miraculous solution" to our "current difficulties." For ultimately, Eisenhower understood that misguided national priorities that place military expansion and unchecked cronyism above other vital aspects of our national life condemn us to "destroy from within what we are trying to protect from without." Instead, he argued, crises must be met not by spectacular and costly exercises of radical governance but through a consistent commitment to "balance in and among national programs." This requires a holistic understanding of what makes a nation strong. For Eisenhower understood that an uneducated country is an undefended country, that a country without adequate health care is an undefended country, that a country that bullies its friends in the international community is an undefended country; and, above all, that a country in which corporate- political corruption has compromised its people's faith in their leaders is a country they will not fight for. Ultimately, that country - and the principles on which it was founded -- cannot long endure. ------------------------------------ --------------------------------------------------------------------------- LAAMN: Los Angeles Alternative Media Network --------------------------------------------------------------------------- Unsubscribe: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Subscribe: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Digest: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Help: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Post: <mailto:[EMAIL PROTECTED]> --------------------------------------------------------------------------- Archive1: <http://www.egroups.com/messages/laamn> --------------------------------------------------------------------------- Archive2: <http://www.mail-archive.com/[EMAIL PROTECTED]> --------------------------------------------------------------------------- Yahoo! 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