The October Surprise (!), engineered by the Republicans, arrived early in mid-September. It's the last great heist before Bush leaves office.
Both Ian Welsh's excellent proposal, and Stirling Newberry's treatise on this bailout-inspired constitutional moment are well worth reading. Welsh's proposal implements a statement Barack Obama made yesterday that has not gotten much comment.
The New York Times quotes Barackspeaking in Florida yesterday:
"We have to make sure that whatever plan our government comes up with works not just for Wall Street, but for Main Street...We have to make sure it helps folks cope with rising prices, and sparks job creation, and helps homeowners stay in their homes. That’s the kind of help folks need right now."
There's more...put on your tinfoil hats and follow me over the jump...
I spoke with an investor friend in Arizona and he told me that the run on the banks was a deliberate, coordinated effort. Here's how old Joe Kennedy worked it in 1912:
- When Joe Kennedy was fresh out of college in 1912, his father got him a job as a state bank examiner. Here, Joe had access to useful information about the confidential affairs of companies and individuals who had credit lines with major Boston banks. He found out which companies were in trouble and which had extra cash, who was planning new products or acquisitions and who was about to be liquidated.
- A former Harvard classmate, Ralph Lowell, said, "That bank examiner's job took him all over the state and laid bare the condition of every bank he visited. He acquired information of value to himself and others."
- Joe's strategy was to obtain inside information about troubled companies from banks, then drive their stock down so he could buy them more cheaply. While still on the state payroll as a bank examiner, Joe made an acquisition that was aided by inside information. He bought a Boston investment company called Old Colony Realty Associates Inc. Joe turned the company from an old-line investment firm into one that made money on the misery of others.
- Under Joe's direction, the company specialized in taking over defaulted home mortgages. He would then paint the houses, and resell them at far higher prices. By the time the company was dissolved, Joe's $1000 investment had grown to $75,000.
Now that we have computerized records of stock buy and sell records, the SEC needs to report on the last 10 days of short sales of financial services sectors. (In this respect, John McCain was exactly right: Cox should be fired for not having ordered this process already.) The Justice Department needs to prosecute people who participated in a coordinated effort to engineer precisely this result, where the taxpayer would lock in (and pahy for) their profits.
Like the Rethug SEC and DOJ would lift even a fingernail in this direction!
Still, there is a good chance these actions could be carried out after the election of Dems to power. And this bludgeon could serve as a way to drive the bailout towards a more bottom up solution.
The wingnuts are calling the bailout "communism" and the new financial reality the "USSA." I may quibble with their fundamental misunderstanding of political and economic theory, but I nevertheless am in sympathy with their sense of betrayal.
I believe this may be an opportunity for people of all political beliefs to revolt. I say, "Fight this!" It may be time to take to the barricades. I wonder if it may be easier to organize protests against the bailout than it ever was against the war.
1. The first step is to slow this process down. The shock troops came in, scared the hell out of our spineless legislators (Dems included) by looking all mean and talking tough. Did they even ask, 'Gee, who short-sold to create the run on the banks?"
2. We need to make sure that the bailout is structured to move money from the bottom up by helping home buyers pay off mortgages, not from the top down by taking over toxic loans. In the current bailout plan, investors in these Ponzi schemes we call "Wall Street" and "derivatives," will not recover all their money. Nor should they. So re-writing mortgages in a bottom-up plan that home buyers can afford doesn't really change the situation for investors and banks. In short, government money should flow from the home buyers to the mortgage holders, converting toxic loans into moderately profitable holdings.
3. Make these thieves take responsibility for their own profits and losses and support the people (home buyers/taxpayers) who are being asked to pay for the perfidy of Wall Street.
4. Organize opposition to this evil Republican plan to bankrupt the public treasury. Reach Democratic politicians to enlist their help. Then take to the barricades (starting with the electronic ones).