The Bushies Cash Out

Okay, I'm no economic expert, despite being a Fundamental of the economy.  But I spent the whole morning watching Treasury Secretary Henry Paulson make the rounds of the Sunday talk shows, touting his one trillion dollar plan to bail out not just Fannie Mae and Freddie Mac, but also AIG, American banks, American investment companies, and even foreign banks and foreign investment companies.

I'm convinced there is a crisis.  A serious crisis.  I'm also convinced that the proposed solution is nothing but another Bush/Cheney/McCain/Rove/Gramm scam.

Paulson emphasized the need for speed.  He emphasized the depth of the crisis. Okay, I'm convinced.

But the really interesting part came whenever Paulson was pressed about the details of the plan.  Who will it benefit?  What will it involve?  What do taxpayers get from these banks, insurance and investment companies in return?  Why can't we, as Tom Brokaw astutely asked, get warrants from these banks to represent the liability we have assumed?  What about, as Stephanopoulos quite rightly asked, protection for homeowners facing foreclosure?  Can these mortgages be restructured?  Can people stay in their homes?

In response, again and again, Paulson emphasized the need for speed.  Again and again, he emphasized the depth of the crisis.  He never addressed the merits of any question about the specifics of the plan, or why his plan was preferable to any other alternative.  He never even acknowledged the existence of alternative methods to resolve the crisis.

All we know is that the plan allows Paulson, and apparently Paulson alone, to buy mortgage-backed securities (whatever that means, and the meaning appears to differ depending on who's doing the talking) to protect liquidity and the availability of credit.  At what price?  Under what conditions?  On whose say-so?  In return for what?  We don't know.  Because of the need for speed and the depth of the crisis, we shouldn't even ask.

The whole thing has been repeatedly compared to the Savings and Loan crisis of the '80s, in which the Resolution Trust Corporation took over and sold the assets of failed S & Ls.  But there are differences, big differences.  The S & Ls went out of business or merged.  Their assets were sold off in a somewhat orderly fashion.  The price tag was steep, but it did not come without some trade-offs.

Tell me I'm wrong, economists, but this proposed plan is very different.  It appears to protect failed companies from the consequences of their risky decisions, thus placing cautious, responsible companies at a competitive disadvantage.  I waited in vain to hear whether shareholders will be wiped out in this process.  Apparently not.  Will they just skip away with their burdens relieved and their better-performing assets intact?  Is anybody gonna pay for any crimes committed here?  Or are we counting on the public's collective ADD, as we did in the long attempt to bring Enron executives to justice?

Tell me, economists, why an alternative plan that benefits taxpayers and homeowners first and foremost cannot be implemented with equal speed and urgency.

I know, because of the need for speed.  Because of the depth of the crisis.  Don't ask any questions, just be very, very afraid, and jump on board.

The whole thing just smacks of the fear-driven PR campaigns that stampeded Congress into rubber stamping the Patriot Act, or that catapulted us into the Iraq war.  If only the Bushies were as good at actually solving a crisis as they are at convincing the public that we're in a crisis, and at causing us to react, immediately and perhaps stupidly, out of fear.  This time, we must ask: do we have an exit strategy here?

Until someone shows me otherwise, I will remain convinced that the only real urgency driving these measures is the upcoming election, and the prospect that the current regime will lose both the Presidency and Congress in a rout.  The anti-government neocons are leaving the cupboard bare so that the next White House tenant can't govern.  Don't worry, we'll have no universal healthcare, no Social Security fix, no retraining funds or expanded college assistance.  The same characters who subverted the Constitution and brought us a war against a country that didn't attack us are now mopping up their war on the middle class before it can fight back.

The Bushies are cashing out.  Gettin' out of the game while the gettin' is good.  They're taking their money and going home.  Better yet, they're taking our money and going home.
Cross-posted at www.vagreatblueheron.wordpress.com

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