What started as an emergency plan to bailout American Banks by purchasing sub-prime mortgages, now has nothing to do with either issue.
Six weeks ago, one Presidential Candidate claimed to be suspending his campaign...and suggested that his campaign would remain inactive until an emergency bailout Bill was passed. Six weeks later, instead of the government buying up bad loans, nearly all of the initial authorization of $350 Billion dollars has been distributed or obligated. However, not one piece of so-called "bad paper" has been purchased by the government.
During the intervening period, and of course AFTER the Congress was given "the old shake and bake" by the Bush Administration, yet again...not only were the Rules of the Game changed, but all of a sudden, someone determined that the world might not really end if the situation were not resolved overnight.
In order to simplify what has occurred to this point...
Wall Street Investment Houses, National Banks and Mortgage Lenders found themselves in a situation which they created and made boat loads of money off of, only to find that they had squandered all of it and more...and were now facing the prospect of "Industrial Extinction". These entities were successful in convincing the Bush Administration that the world financial system would self-destruct faster than a Jim Phelps tape recorder, if action was not taken to support them immediately. They refined the concept of "Too Big To Fail". And, of course...it didn’t hurt that the nation was at the tail end of a Presidential Election Cycle, either.
Your elected Representatives and Senators pretended to do battle with one another for a week, in a classic maneuver designed to do no more than heighten the tension, while you became totally convinced that none of your savings were safe, what was left of your 401K would be gone tomorrow, and the mortgage company was already on its way to your house with a padlock and a piece of legal-looking paper to tack up on your door.
You were still really upset. But, in the interest of not being the one person personally responsible for bringing down the world banking system, you reluctantly went along with the idea of buying up bad mortgages...so that your friends, family and neighbors would not be thrown out on the street in the middle of winter.
Now, we have half of the originally authorized amount of $750 Billion Dollars spent, not on bad mortgage paper, but, as direct investments in the form of Preferred Stock in banks and investment houses. On top of those amounts, we have another $150 Billion Dollars handed over to one insurance company, a Treasury determination that insurance companies in general, and any number of other companies within and without the Financial Sector, are also eligible to participate in the disbursement of the original $750 Billion...and that even more corporate entities are, or will be eligible to participate in Bailouts II, III, IV, or however many it will take to essentially correct every bad decision ever made, by any CEO with at least a $40 Million Dollar Severance Package.
After Lehman Brothers and Bear Stearns were left to twist in the wind, all of a sudden, Mom, Pop, and their corner pizza parlor are somehow, Too Big To Fail...whether or not they were either specifically mentioned in the original legislation passed by Congress, or are now contemplated as being part of any subsequent legislation which might be considered.
I have written on more than one occasion, that the difference between conservatives and progressives is the eagerness of the former to deem some segments of the population to be expendable. Their mission, which they have decided to accept, in this instance, was made even easier after even non-believers were convinced that certain segments of the corporate community were Too Big To Fail.
My problem with this bailout is not the fact that monies are being expended in a socialistic manner, to keep a capitalistic financial system from failing.
My problem with this bailout is not the fact that monies are being expended in favor of corporate entities whose continued presence in our personal lives has at least the potential to make some portion of the next twenty years as economically dynamic as the last twenty years.
My problem with this, or any other bailout is that those who are in a position to determine WHO is Too Big To Fail...have quite clearly decided that your neighbors, your family, your friends, and YOU...are not.
THEY are more than comfortable buying Preferred Shares in Banks, Investment Houses, Insurance Companies, Automakers, and anyone who can fill out a mere two page application.
THEY are willing to use YOUR tax dollars to retroactively correct the poor decisions of CEOs who have, or will walk away from the companies they ruined, with millions, tens of millions, or in some cases hundreds of millions of those same tax dollars.
THEY are willing to watch as the government’s investment in those Preferred Shares, dilutes the interests of existing Common Shareholders...blowing up the value of millions of 401K Plans, forcing State & Local Pension Funds to become underfunded, and running the substantial risk of doing no more than replacing one form of financial catastrophe with another.
Even more troubling is the fact that, once again, the willingness to use Preferred Shares to accomplish those negative purposes, further demonstrates an absolute preference to preserve, protect and defend corporate and governmental interests to the substantial detriment of millions of Americans who will now have no opportunity at all to realize the dream which they had worked for all of their lives...and been promised by those same politicians who continue to pretend to be looking out for them.
Where is the Constitutional obligation to protect the interests of corporate entities, to the exclusion of the equivalent interests of the American People?
What is it that makes Goldman Sachs, Too Big To Fail...while tens of millions of individual Americans whose financial lives, and their lives in general face the same end...and the latter is not only acceptable, but in essence, more desirable?
Why is it appropriate to utilize the full faith and credit of The United States of America in support of creating a governmental DO-OVER for corporate entities who made bad decisions and placed their corporate existence in jeopardy...when no elected representative with the exception of Dennis Kucinich, is willing to grant the same kind of 2nd Chance, Monday morning quarterbacking opportunity for the hard-working Americans who keep this country operating on a daily basis?
We are said to be a "center-right country". We are said to be a "capitalist country". We are said to be a Christian, or at least "Christian-dominated country".
Where are the voices of the center-right on this issue? Where are the soccer moms and NASCAR dads? Is it possible that Soccer Moms and NASCAR Dads would rather see perhaps $3 Trillion Tax Dollars used to buy Preferred Shares in everything from Banks to bowling alleys...while their families end up living in their minivans at a Wal-Mart parking lot?
Where are the flag-waving capitalists? During the course of a Presidential campaign, they call Barack Obama a socialist...and in the same motion, vote FOR Congressmen and Senators who will ultimately RE-DISTRIBUTE as much as $3 TRILLION DOLLARS to the same corporations who are already the recipients of federal tax subsidies for the specific purposes of moving American jobs to foreign countries?
Where are the voices of the more than 80% of Americans who profess a relationship with Jesus Christ? And, how many of those 80% of American Christians believe that Jesus would declare the poor and middle class of this nation to be expendable...while he was lining the pockets of THE MONEY LENDERS?
You will have to excuse me, but, I never got to the Book of The Bible where Jesus not only invited the Money Lenders back INTO the Temple...BUT RE-BUILT THE TEMPLE FOR THEM, after Kellogg, Brown & Root had given them a bad design...or some other Haliburton subsidiary cut corners on a Temple that fell down.
Would there be suffering in some form or fashion as a result of more bank failures, insurance company failures, the demise of General Motors or other Wall Street Institutions?
Of course.
All of these companies have employees, many of whom are our family members, friends, neighbors, or even ourselves. ANY loss of ANY large corporation will have negative impact. ANY loss of and bowling alley, or corner pizza shop will have negative consequences, if for no one else, then at least for those who are spotting pins or tossing dough.
The issue here is one of priorities, who is or is not advance-determined to be readily expendable...and most importantly, why it is almost accepted that Corporate America is ENTITLED to a DO-OVER when IT makes mistakes...while the poor and middle class who make essentially the same mistakes, are presumed to have done so with some decidedly devious criminal intent, and should presumably be prosecuted?
In my humble opinion...if we are going to permit Corporate America to have a DO-OVER...
...if, as a government, we are going to assist corporate entities to re-organize without the aid of the Bankruptcy Courts by refilling their coffers through Preferred stock purchases...
...and in the process effectively dilute the interests of Common Shareholders to a point where tens of millions of American Workers will see their 401K, pension and retirement plans virtually destroyed...
I believe ALL OF US should get this same DO-OVER opportunity.
The Bush Administration sought approval to buy up bad mortgages. It didn’t. The end result will be yet another windfall for corporations, who will end up not only NOT paying a price for their failure...BUT WILL BE REWARDED for those failures.
Simultaneously...credit will continue to tighten, homes will continue to be foreclosed upon, and sold, further reducing the same property values which were the motivation to buy up the mortgages which were never bought up...AND, ultimately preventing the real estate market from EVER finding the basement floor from which to begin re-establishing itself.
The good news is...at least those who are Too Big To Fail, will still be around in fifty years, so they can bend your great-grandchildren over whatever is being used to make tables at that time.
Again, in my humble opinion...if we, as a government, and as a people, are going to be willing to stop being a capitalist nation for a few months, and stop being a Christian nation for a few months, and stop being a center-right nation for the same few months, how about if we AT LEAST be FAIR about this deal?
If we are willing to re-capitalize banks, go on to buy up bad debt, retroactively correct the mistakes of corporate CEOs, and then allow those same CEOs to walk off with tens of millions of dollars in golden parachutes...
How about we forgive ALL of the debt owed TO ALL of the corporations who participate in any bailout?
Either we are capitalists...in which case, your bad decisions put you out of business, OR, we are a Christian nation, where if one person gets a DO-OVER...WE ALL GET A DO-OVER.
In the days ahead, I will have a far more detailed Posting on the immediate and long-term benefits of a nationwide DO-OVER. At that time, you can feel free to critically analyze those specifics of my Plan. For now, however, just try answering a few of the questions I raise, above...honestly.