I can't believe I wrote that title. Michelle Malkin? Is she even human?
But it gets worse.
She wrote:
I said it yesterday.
Newt Gingrich said it today.
Hans Bader sums it up succinctly: The Bush/Paulson bailout is "Inflationary, Unnecessary, and Unconstitutional."
Yes, it’s time for ideological purity.
Kill it.
Not only do I agree with Michelle Malkin, I agree with Newt Gingrich.
WTF? Have I gone mad? Is black white?
NO. I think this is a trap, and our Dem leaders walked right into it.
This mother of all bailouts is of such an immense size that the next President will not have the funds necessary to implement any new social initiatives. Between Iraq and the bailout, we will be broke.
Say goodbye to healthcare reform. Say goodbye to things like SCHIP and Pell grants. Say goodbye to funding for alternative energy and cancer cure research grants.
This is a last minute, literally end of the final session of Congress under George Bush, effort to drain whatever is left of the hard earned money US taxpayers have sent to Washington.
And our Democratic leadership has fallen for it lock, stock, and barrel.
The core issue is the deregulation of derivatives, things like CDO's CDS's, etc., ad infiniteum. They were completely deregulated by the Commodity Futures Modernization Act of 2000 (CFMA), covertly attached to the final federal funding omnibus bill under Bill Clinton. With his support. But with absolutely no public debate in either house.
The credit swaps in particular, which have turned into a $70 trillion or so market, enabled the creation of the toxic debt that we taxpayers may be forced to buy. They "guaranteed" that this debt would be repayed. And they were specifically unregulated because it was held that the buyers and sellers, the counterparties, were sophisticated enough to take the risk. They were the big boys, and would create a dynamic, fast moving, low risk market.
As recently as September, 2005, the CFMA was described thusly in testimony before the Federal Reserve Board:
The Federal Reserve Board believes that the CFMA has unquestionably been a successful piece of legislation. Most important, as recommended by the President's Working Group on Financial Markets in its 1999 report, it excluded transactions between institutions and other eligible counterparties in over-the-counter financial derivatives and foreign currency from regulation under the Commodity Exchange Act (CEA). As the Working Group argued, regulation of such transactions under the CEA was unnecessary to achieve the act's principal objectives of deterring market manipulation and protecting investors. Such transactions are not readily susceptible to manipulation and eligible counterparties can and should be expected to protect themselves against fraud and counterparty credit losses. Exclusion of these transactions resolved long-standing concerns that a court might find that the CEA applied to these transactions, thereby making them legally unenforceable. At the same time, the CFMA modernized the regulation of U.S. futures exchanges, replacing a one-size-fits-all approach to regulation with an approach that recognizes that the regulatory regime necessary and appropriate to achieve the objectives of the CEA depends on the nature of the underlying assets traded and the capabilities of market participants. Together, these provisions of the CFMA have made our financial system and our economy more flexible and resilient by facilitating the transfer and dispersion of risk. Consequently, the Board believes that major amendments to the regulatory framework established by the CFMA are unnecessary and unwise.
Obviously, in light of the events of the last twelve months, this testimony is complete and utter bullshit.
This completely unregulated market has grown in less than ten years to a size larger than the entire annual world GDP of $65 trillion. It is 100 times the size of the current bailout.
Which means this will not be the last bailout. Just the one that ties Barack Obama and the Democratic party, including all our downticket candidates, more thoroughly to the policies of George W. Bush that anything John McCain could ever do. More closely than McCain himself, who has publicly sided with the House Republicans against Bush.
Our Democratic leaders are not only bankrupting our country, we are cutting our own throats just a few weeks before the election.
This simply must be stopped. There is no reason we can't get through this bank by bank. They took the risk, they were big boys, there is trillions in capital out there looking for a home. It will show up when the price is right. Just ask Warren Buffet and Goldman Sachs.
I've heard calls to congressman are running 200 to 1 against this Wall St. big boy bailout. Let's make that 500 to 1. Let let our Dem leaders know this is a trap. That it is not the final fix-far from it. It only ties them very publicly to Bush policies at the absolute worst possible time.
Our Dem leaders look like BushCo buttboys all rushing to Washington to help with bailing out Wall St. The House Republicans are the only group that looks like it cares about Main St. Which we all know is ass-backwards, a warped view of reality. This is a trap, and can be left until after the elections!
Tell them to have Paulson and Bernanke monitor the situation and save the big decisions until after the elections.