Even more on the financial mess.....

This financial bailout to the tune of $700 Billion continues to make me queasy. But I do take some comfort in the fact that there are members of Congress on both sides of the aisle who are at least asking important questions. And then there are others who simply believe that Congress ought to bury its collective head up their collective asses and simply give the President whatever he asks for. Here’s a quote from the online edition of the NY times:

“When there’s a fire in your kitchen threatening to burn down your home, you don’t want someone stopping the firefighters on the way and demanding they hand out smoke detectors first or lecturing you about the hazards of keeping paint in the basement,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a speech on the Senate floor. “You want them to put out the fire before it burns down your home and everything you’ve saved for your whole life.”

So continuing in the “fire fighting” vein, Mr. McConnell of Kentucky, let me point out:

1) Before you send fire fighters to put out a house fire, you need to make sure that you understand the risks associated with the going into that burning house. You don’t want to send fire fighters into a burning house and have the roof cave in on them, and kill six of them, do you?? Take a look at Paulson’s interview with Brokaw on Meet the Press this past Sunday. Paulson has no idea how much bad debit, or the quality of the bad debt that he is asking the American tax payer to underwrite. In other words, he has no idea of the risk associated with sending taxpayers into this burning house.
2) You risk the lives of fire fighters by sending them into a burning house only if there are lives to save – i.e. if the rewards justify the risk. Paulson is asking the taxpayer to take on this risky bad debt, but resists allowing the taxpayer to enjoy the rewards if the $700 Billion bailout does work, and the financial industry is back to making money.

The President and his cohorts are asking the taxpayer to give them $700 billion – no strings attached, no questions asked, no oversight, - just a warm kiss on the cheek and a paternal pat on the head!! And some Democrats are saying that they simply do not trust the President, and drew a parallel to Mr. Bush’s request for authority to wage war in Iraq. No kidding! Read Angler: The Cheney Vice Presidency by Barton Gellman. In order to get Dick Armey to vote for the war in Iraq, Cheney told Armey that Saddam Hussein and his family had direct ties to Al Qaida (a bold-faced lie!) and that Saddam Hussein had miniaturized nuclear bombs so that they could fit into a suitcase, and was planning to hand them over to his terrorist friends (another lie!). So not trusting this Administration is a wise move.

And then, who are the geniuses that are going to be entrusted with this unfettered access to $700 billion??? Treasury Secretary Paulson and Fed Chair Bernanke. Here’s what they say in prepared remarks on September 23, 2008:

"If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse" – Ben Bernanke.

"We must do so in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten the well-being of American families' financial well-being, the viability of businesses both small and large and the very health of our economy" – Paulson.

This problem did not develop overnight. How come Paulson and Bernanke were not in front of this crisis, instead of trying to play catch-up?? Here is an excerpt from the Wall Street Journal on February 19, 2008:

Following the U.K.’s surprise move to nationalize mortgage lender Northern Rock, will the U.S. need to make similar moves? “Absolutely not,” U.S. Treasury Secretary Henry Paulson told CNBC, dismissing talk that the Bush administration needs to initiate a widespread bailout program to assist the financial industry and restore investor confidence.

Here’s another Paulson gem from the Wall Street Journal February 28, 2008:

In an interview yesterday, Treasury Secretary Henry Paulson branded many of the aid proposals circulating in Washington as "bailouts" for reckless lenders, investors and speculators, rather than measures that would provide meaningful relief to deserving, but cash-strapped, mortgage borrowers.

More pearls of wisdom from the esteemed Secretary, this time from CNBC on line, July 21, 2008:

The U.S. economy needs months to recover from its slowdown, but the banking system remains sound despite a home mortgage crisis that could cause more problems, Treasury Secretary Henry Paulson said.

"Our banking system is a safe and a sound one," Paulson insisted on CNN's "Late Edition."

"this is a very manageable situation ... our regulators are focused on it."

But now Paulson feels that the world will come to an end if we don’t give him $700 Billion! Paulson does not want to limit compensation and bonuses for top executives of companies that get bailed out by the taxpayer. Of course he doesn’t!! In a few months, Paulson will be back on Wall Street, and he does not want to be held accountable for the millions that he hopes that one of the Wall Street firms will pay him to peddle influence in the corridors of Washington.

And what does the taxpayer, who is paying this $700 Billion, think of this bailout? A CNN/Opinion Research poll, 79% of 1,020 respondents said they were worried that the economy could get worse if the government takes no action. However, 77% also said they believed that a government bail-out would benefit those responsible for the economic downturn in the first place.

And the fun continues…….


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