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
 

 

 

 

More articles by:

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

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

June 27, 2017
Jim Kavanagh
California Scheming: Democrats Betray Single-Payer Again
Jonathan Cook
Hersh’s New Syria Revelations Buried From View
Edward Hunt
Excessive and Avoidable Harm in Yemen
Howard Lisnoff
The Death of Democracy Both Here and Abroad and All Those Colorful Sneakers
Gary Leupp
Immanuel Kant on Electoral Interference
Kenneth Surin
Theresa May and the Tories are in Freefall
Slavoj Zizek
Get the Left
Robert Fisk
Saudi Arabia Wants to Reduce Qatar to a Vassal State
Ralph Nader
Driverless Cars: Hype, Hubris and Distractions
Rima Najjar
Palestinians Are Seeking Justice in Jerusalem – Not an Abusive Life-Long Mate
Norman Solomon
Is ‘Russiagate’ Collapsing as a Political Strategy?
Binoy Kampmark
In the Twitter Building: Tech Incubators and Altering Perceptions
Dean Baker
Uber’s Repudiation is the Moment for the U.S. to Finally Start Regulating the So-called Sharing Economy
Rob Seimetz
What I Saw From The Law
George Wuerthner
The Causes of Forest Fires: Climate vs. Logging
June 26, 2017
William Hawes – Jason Holland
Lies That Capitalists Tell Us
Chairman Brandon Sazue
Out of the Shadow of Custer: Zinke Proves He’s No “Champion” of Indian Country With his Grizzly Lies
Patrick Cockburn
Grenfell Tower: the Tragic Price of the Rolled-Back Stat
Joseph Mangano
Tritium: Toxic Tip of the Nuclear Iceberg
Ray McGovern
Hersh’s Big Scoop: Bad Intel Behind Trump’s Syria Attack
Roy Eidelson
Heart of Darkness: Observations on a Torture Notebook
Geoff Beckman
Why Democrats Lose: the Case of Jon Ossoff
Matthew Stevenson
Travels Around Trump’s America
David Macaray
Law Enforcement’s Dirty Little Secret
Colin Todhunter
Future Shock: Imagining India
Yoav Litvin
Animals at the Roger Waters Concert
Binoy Kampmark
Pride in San Francisco
Stansfield Smith
North Koreans in South Korea Face Imprisonment for Wanting to Return Home
Hamid Yazdan Panah
Remembering Native American Civil Rights Pioneer, Lehman Brightman
James Porteous
Seventeen-Year-Old Nabra Hassanen Was Murdered
Weekend Edition
June 23, 2017
Friday - Sunday
Jeffrey St. Clair
Democrats in the Dead Zone
Gary Leupp
Trump, Qatar and the Danger of Total Confusion
Andrew Levine
The “Democracies” We Deserve
Jeffrey St. Clair - Joshua Frank
The FBI’s “Operation Backfire” and the Case of Briana Waters
Rob Urie
Cannibal Corpse
Joseph G. Ramsey
Savage Calculations: On the Exoneration of Philando Castile’s Killer
John Wight
Trump’s Attack on Cuba
Dave Lindorff
We Need a Mass Movement to Demand Radical Progressive Change
Brian Cloughley
Moving Closer to Doom
David Rosen
The Sex Offender: the 21st Century Witch
John Feffer
All Signs Point to Trump’s Coming War With Iran
Jennifer L. Lieberman
What’s Really New About the Gig Economy?
Pete Dolack
Analyzing the Failures of Syriza
Vijay Prashad
The Russian Nexus
Mike Whitney
Putin Tries to Avoid a Wider War With the US
FacebookTwitterGoogle+RedditEmail