FacebookTwitterGoogle+RedditEmail

Hank-ering for a Bailout

by RICHARD RHAMES

 

“Section 8:
Decisions by the [Treasury] Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.”

— Proposed Bush-Paulson financial bailout legislation

“Wall Street bet that the government would rescue them if they got into trouble. It appears that bet may be the one that pays off.”

— Sen. Richard Shelby, (R – Alabama)

In 1929, as the Big Casino’s bad bets tanked, the show-biz trade paper Variety famously employed a theatrical metaphor proclaiming in its banner headline, “Wall Street lays an egg.” The yolk’s on us again, it would appear.

To pay for today’s egg dump, Treasury Secretary “Mr. Risk” Paulson, proposes that congress pass a three page bill worked out over the last 6 months by Hank and the administration’s other Wall Street alumni/shills. He warns that the bill must be kept “clean”— unblemished by conditions or reciprocity: A straightforward gift. He insists it not be “punitive.”

While poor women with children are subjected to stricture and sanction in order to receive a block of surplus cheese, or a token less-than-subsistance sum from government, the Ponzi schemers must be respectfully coddled and further enriched by an obsequious population. We are to lay $700 billion on their gilded altar and then back away bowing and scraping as we go.

Based on the testy reaction of the normally supine and servile Senate Banking Committee at Tuesday’s hearing with Paulson/Bernanke however, it appears that vast popular outrage may have temporarily stiffened vestigial spines in the apparently spineless political class.

Ohio Senator Sherrod Brown told the financial Bushmen, “I don’t think a single call to my office on this proposal has been positive. I don’t believe I‘ve gotten one yet of the literally thousands of emails and calls we’re getting. Part of this reflects outrage by taxpayers making $30,000, $40,000, $50,000, $75,000, $100,000 a year bailing out people whose country club memberships cost many times that…”

Recently economist Dean Baker, co-director of the Center for Economic and Policy Research suggested a few “conditions” that ought to be attached to any Christmas-in- September presents. Baker regularly comments on the structural failures of economic policy and reporting on his Beat the Press Internet site and in frequent op-eds published both here and abroad. Years ago he was warning of the inflating housing bubble, the blizzard of unregulated “innovative” financial paper that attended it, and the societal pain that would ensue when what went up came down.

Interested readers can find a link to Baker’s suggested conditions at his web site. I caught up with Mr. Baker by phone and digi-gizmo. He was kind enough to respond to a few questions:

RR) One of your constant objections to press coverage of economic issues is that, presented without some context, the numbers involved are essentially meaningless to most people. Paulson is demanding a $700 billion gift to the financial sector. How should we understand that number? Is it enough?

DB) “It’s 100 times what was needed to extend SCHIP for a year. It’s about $6,000 for every family in the country. It is real money. It is likely to be enough to keep the financial system from collapsing. It will not be sufficient to prevent a recession.”

RR) Some are suggesting that one aim of the bailout is to keep housing values from returning to their constant 100 year levels — essentially propping up real estate prices and keeping the bubble partially inflated. Would this be good public policy?

DB) “The country has no interest in an unaffordable housing policy. High house prices are a transfer from those who do not have homes to those who do. I can’t find a good argument for this sort of upward redistribution of wealth.”

RR) You’ve called for the public’s getting an equity stake in the bailed out firms (proportional to the size of the public’s “contribution”). Is this potentially like lashing the public to the Titanic’s deck?

DB) “Not really. Many of these banks are likely to go under. In that case, the government will take a loss, but the purpose of the intervention was not to make a profit, it was to keep the financial system operating. In cases where we lend money to a bank that does well, then the government will have a substantial stake.”

RR) You’ve recommended something like a Tobin tax on stock transfers to help fund the Wall Street rescue. The Conyers HR 676 single payer health care bill proposes a similar levy. What is a “Tobin tax?” Might it be an idea whose time has come?

DB) “It is a small tax on the transfer of a financial asset like a stock, bond, future or option. For example if we tax a stock trade at 0.25 percent (the rate in England) and have scaled taxes on other assets (perhaps 0.02 percent on an oil future), we can easily raise $100 billion a year. This could easily finance this bailout and leave money in future years for programs like health care.”

RR) You’d condition the bailout on the democratization of the Fed’s board, and making subsequent legislation filibuster-proof (i.e. based on simple majority rule). Please explain.

DB) “We often have legislation pass that is filibuster proof. A budget measure passes every year under this rule. Similarly, most trade agreements have also had this fast track status. As far as the Fed, the argument is that monetary policy should not be conducted by people who are not accountable to the public. As it stands now, 5 of the 12 people who determine monetary policy are appointed by banks. The banks should have no special voice in the conduct of monetary policy.”

RR) Is the press up to the task of usefully reporting events at this historic moment?

DB) “They have been way behind the curve. Most importantly they do not point out that this crisis was entirely foreseeable and is the result of a housing bubble that would inevitably collapse. It also neglects to point out that most of the leaders in the effort to “fix” the problem (e.g. Bush, Bernanke and Paulson) played major roles in creating the problem.”

Thanks to Dean Baker.

RICHARD RHAMES is a dirt-farmer in Biddeford, Maine (just north of the Kennebunkport town line).

 

Your Ad Here
 

 

 

 

RICHARD RHAMES is a dirt-farmer in Biddeford, Maine (just north of the Kennebunkport town line). He can be reached at: rrhames@xpressamerica.net

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
January 20, 2017
Friday - Sunday
Paul Street
Divide and Rule: Class, Hate, and the 2016 Election
Andrew Levine
When Was America Great?
Jeffrey St. Clair
Roaming Charges: This Ain’t a Dream No More, It’s the Real Thing
Yoav Litvin
Making Israel Greater Again: Justice for Palestinians in the Age of Trump
Linda Pentz Gunter
Nuclear Fiddling While the Planet Burns
Ruth Fowler
Standing With Standing Rock: Of Pipelines and Protests
David Green
Why Trump Won: the 50 Percenters Have Spoken
Dave Lindorff
Imagining a Sanders Presidency Beginning on Jan. 20
Pete Dolack
Eight People Own as Much as Half the World
Roger Harris
Too Many People in the World: Names Named
Steve Horn
Under Tillerson, Exxon Maintained Ties with Saudi Arabia, Despite Dismal Human Rights Record
John Berger
The Nature of Mass Demonstrations
Stephen Zielinski
It’s the End of the World as We Know It
David Swanson
Six Things We Should Do Better As Everything Gets Worse
Alci Rengifo
Trump Rex: Ancient Rome’s Shadow Over the Oval Office
Brian Cloughley
What Money Can Buy: the Quiet British-Israeli Scandal
Mel Gurtov
Donald Trump’s Lies And Team Trump’s Headaches
Kent Paterson
Mexico’s Great Winter of Discontent
Norman Solomon
Trump, the Democrats and the Logan Act
David Macaray
Attention, Feminists
Yves Engler
Demanding More From Our Media
James A Haught
Religious Madness in Ulster
Dean Baker
The Economics of the Affordable Care Act
Patrick Bond
Tripping Up Trumpism Through Global Boycott Divestment Sanctions
Robert Fisk
How a Trump Presidency Could Have Been Avoided
Robert Fantina
Trump: What Changes and What Remains the Same
David Rosen
Globalization vs. Empire: Can Trump Contain the Growing Split?
Elliot Sperber
Dystopia
Dan Bacher
New CA Carbon Trading Legislation Answers Big Oil’s Call to Continue Business As Usual
Wayne Clark
A Reset Button for Political America
Chris Welzenbach
“The Death Ship:” An Allegory for Today’s World
Uri Avnery
Being There
Peter Lee
The Deep State and the Sex Tape: Martin Luther King, J. Edgar Hoover, and Thurgood Marshall
Patrick Hiller
Guns Against Grizzlies at Schools or Peace Education as Resistance?
Randy Shields
The Devil’s Real Estate Dictionary
Ron Jacobs
Singing the Body Electric Across Time
Ann Garrison
Fifty-five Years After Lumumba’s Assassination, Congolese See No Relief
Christopher Brauchli
Swing Low Alabama
Dr. Juan Gómez-Quiñones
La Realidad: the Realities of Anti-Mexicanism
Jon Hochschartner
The Five Least Animal-Friendly Senate Democrats
Pauline Murphy
Fighting Fascism: the Irish at the Battle of Cordoba
Susan Block
#GoBonobos in 2017: Happy Year of the Cock!
Louis Proyect
Is Our Future That of “Sense8” or “Mr. Robot”?
Charles R. Larson
Review: Robert Coover’s “Huck out West”
David Yearsley
Manchester-by-the-Sea and the Present Catastrophe
FacebookTwitterGoogle+RedditEmail