Living and breathing in the Second City
James Oliphant at the Swamp posts today about withering support for Secretary Paulson’s plan to bailout the investment industry. He quotes Richard Shelby of Alabama asking the fundamental question: “Once again, what troubles me most is that we have been given no credible assurances that this plan will work. We could very well spend $700 billion and not resolve the crisis.“
Of course, Shelby himself sits on the Senate Banking Committee and doesn’t escape criticism. Where was he? Why didn’t he seek second and third opinions on the issue from non-government sources?
Indeed, I’ve heard many complimentary things about Secretary Paulson over the last few weeks. But the question remains: If he’s so smart why couldn’t he see this coming? Maybe he did and there just wasn’t the political will in Congress to do anything about it. Or maybe he didn’t and instead he’s been listening too much to the investment firms that were trying to avoid the crisis as long as possible. I want to know, don’t you?
7 Responses to “The Paulson Plan’s Problem”
Leave a reply
The fog comes
on little cat feet.
It sits looking
over harbor and city
on silent haunches
and then moves on.
-Carl Sandburg
Flickr PhotoStream
Dan
September 23rd, 2008 at 5:25 pm
I agree with Ron Paul’s commentary on cnn.com link here: http://www.cnn.com/2008/POLITICS/09/23/paul.bailout/index.html
“I am afraid that policymakers today have not learned the lesson that prices must adjust to economic reality. The bailout of Fannie and Freddie, the purchase of AIG, and the latest multi-hundred billion dollar Treasury scheme all have one thing in common: They seek to prevent the liquidation of bad debt and worthless assets at market prices, and instead try to prop up those markets and keep those assets trading at prices far in excess of what any buyer would be willing to pay.
Additionally, the government’s actions encourage moral hazard of the worst sort. Now that the precedent has been set, the likelihood of financial institutions to engage in riskier investment schemes is increased, because they now know that an investment position so overextended as to threaten the stability of the financial system will result in a government bailout and purchase of worthless, illiquid assets.
Using trillions of dollars of taxpayer money to purchase illusory short-term security, the government is actually ensuring even greater instability in the financial system in the long term.”
Mike
September 24th, 2008 at 9:35 am
Ron Paul for President!
T.J. Schwab
September 25th, 2008 at 2:04 pm
September 25, 2008
To The Honorable Luis V. Gutierrez, Barack Obama, and Dick Durbin
Dear Sirs,
I must write to ask you, as my representative, to please not pass this bailout of seven hundred billion dollars ($700,000,000,000) of the people\\\’s money to corporations who are accomplices to the current financial situation. Instead, I ask that you please stand up for \\"We the People\\" and tell the Bush administration that:
1) We the People…are enraged that nearly a trillion dollars ($1,000,000,000,000) has already been sent to failing private institutions - failing by their own mistakes. Now he is asking for seven hundred billion ($700,000,000,000) more? Enough is Enough!
2) We the People…will not tolerate the Bush administration (especially Paulson) constantly presenting a doomsday scenario which means every time they open their mouths to spread fear, the market responds negatively (Remember WMD?).
3) We the People…have seen financial hardships before and have persevered - not by the government misspending OUR money, but by the American Citizens wisely spending our own, thank you.
The Congress owes it to its collective constituency, We the People, to not make a hasty and costly decision that rests squarely in the wallets of the citizens. After all, this is our money and with what we have witnessed to date Congress has not been doing that great a job with our money. Frankly, we do not trust another $700 billion dollars taken from our wallets to fatten those elsewhere.
It is time for Congress to do right by us…We the People deserve it.
Thank you for your time.
Mike
September 26th, 2008 at 8:55 am
Well said!
T.J. Schwab
September 26th, 2008 at 9:31 am
Well, I realized a mistake last night after I fired it off - I asked them not to pass a bailout of $700b. To give those parameters to a politician is suicide. We may end up with an $800b bailout and they could come back to me and the American people and say, \\"Well, you only told us not to vote for the $700b and we listened.\\"
T.J. Schwab
September 26th, 2008 at 9:33 am
Oh, and I just sent a revised version to Boehner since my representation is, well, not quite my type of representation.
Mike
September 26th, 2008 at 9:35 am
Boehner appears to be one of the good guys on this so we should all be sending him letters of support.