I'm a day late and 700 billion dollars short on this one, but...what Thers says. Make the calls.
I know less about economics than John McCain so at first when I was trying to follow the news about the bail-out I told myself that I just didn't understand enough to get a sense of how this "fix" was supposed to actually fix anything.
I'm kind of slow on the uptake sometimes. It took me a whole two minutes to figure out that there is no fix in the bail-out Hank Paulson's proposed and trying to frighten Congress into taking or leaving, except that he expects they'll be too reflexively responsible or timid to leave it.
Bush Leaguers don't fix things. They break them.
What they didn't break themselves, they make worse by breaking them into smaller pieces, with all the pieces going into some friend or contributor's pocket.
Debates over whether they are stupid or incompetent or corrupt or blinded by ideology or all of the above are secondary to the main point: These people are part of and work for a self-anointed aristocracy. As far as they're concerned, the world owes them a living. Everything on the planet, and that includes other people, was put here for their use and pleasure. Government exists for one reason, to keep the riff raff in line. Their supposed superior and tougher commitment to national defense is really an expression of their belief that the military is essentially their personal security force, assembled and deployed to protect their assets and privileges, and the government's only role is to collect the taxes from the peasants that will go to pay for the salaries and equipment for their armed guards.
The purpose of government in an aristocracy is to protect wealth and privilege. The purpose of life is to accrue wealth and secure privileges. Money and power are the be-all and end-all.
To the kinder of them, those of us who don't have either money or power are suckers or chumps. To the vast majority of them, we're the hired help...or we're cannon fodder.
This is why whatever they do looks like theft or vandalism to the rest of us, because that's what it is. They are taking whatever they can lay their hands on however they can get it, because they're owed it, God or nature or Ayn Rand meant them to have it, and if they have to grab it out of other lesser mortals' hands to get it or smash whatever laws, institutions, traditions, customs, or human beings that are standing in the way of their grabbing it, that's just the way life is meant to be.
Hank Paulson may be a better specimen than the average Bush Leaguer, more intelligent, more competent, more responsible, even more and actually compassionate---President Clinton seems to think well of him. Monday night he was fairly emphatic about pointing out that a year ago Paulson had called for reforms of the sort Democrats and Progressives don't see anywhere in his bailout proposal because they're not there, but, Clinton said, "Nobody took him seriously."
If you're generously inclined, this might put a different spin on Paulson's attempt to get himself declared czar of all the financial Russias in the proposal. No oversight from the courts or administrative agencies, my eye! Paulson might have been figuring he would put in place the reforms he wanted before without any interference or foot-dragging.
But Paulson's a product of and a long-time employee of the corporate aristocracy. His first instinct, and his second, and his third, is going to be to preserve the system as it's designed so that it can continue to do what it's designed to do, make money and increase privilege for the lucky few and keep the rest of us hired help and riff-raff out of the way and doing what we're designed to do, make them money and increase their sense of privilege.
Think I said any of this to President Clinton? Think I could have gotten a word in edgewise even if I'd wanted to? Once Clinton gets going, try to stop him. I defy you. What's more, I defy you to want to. At any rate, he wasn't idly flattering Hank Paulson, and he wasn't about to defend Paulson's proposal as it is. He was stating a fact. Paulson saw there was a big problem and wanted to deal with it. Other people saw it coming too and made specific recommendations on how to deal with it, one of them being Senator Hillary Clinton, Mr Senator Hillary Clinton made sure to remind us about that.
Clinton wasn't interested in Paulson's motives or the Bush Administration's either, for that matter. He was only interested in whether or not the plan would fix anything and clearly, whatever evil might lurk in the hearts and minds of men like Hank Paulson and Ben Bernanke, it won't because all it does is push the problem down the road. The object is to minimize casualties among the elite while preserving the system as is.
But besides its not including any reforms, there's nothing in it that requires any of the taxpayers' money to get paid back. Which is crazy anyway, but also ridiculously immoral---this is me editorializing---considering the object here is for the system to start making gobs and gobs of money again. Why souldn't the taxpayers' get some of those gobs back?
Clinton brought up the Savings and Loans crisis of the late 80s' to underline the point. That was a case of the total collapse of a system. When the S & L's failed there was nothing left but over-valued assets---Clinton mentioned an indoor country club in Dallas, as an example---that the government could only sell off for whatever it could get.
But the system hasn't collapsed in this case, not yet. Paulson isn't saying it has. He's warning that it will unless what he want done is done and done NOW, but the fact is money-making is still going on. Some institutions have gone under, a lot of people have lost their jobs, a lot of other people are going to lose theirs and a lot more are going to lose their homes, but if and when something is done, there will be money to pay us back. So Congress should be demanding that re-payment be a condition of any bail-out.
Like I said, I know less about economics than John McCain, less even than his financial advisers, so I don't feel comfortable using the words equity and assets, or trust myself to have used them right, but this is how what President Clinton was saying sounded to me: As it is, the bail-out plan has taxpayers buying a lot of bad debt with no hope of getting any of it paid off. As it should be, the taxpayers should be buying a stake in those debts so that when they get paid off the taxpayers get some of the money, their money, out of the deal.
This is where Clinton got animated or as he described himself "excited." He arrived in the room bone tired and I think it bothered him. Several times early in his conversation with us he seemed to be deliberately working himself up in order to wake himself up. But when he started talking about people losing their homes he didn't have to gin up any excitement in himself. This was the part of the whole problem that is most crying out for attention.
"The Main Street component."
A lot of that bad debt we're being asked to buy and swallow as dead losses is other people's lives going down the drain. We're talking about people, the President said, "Who took out mortgages in good faith. They didn't know subprime from swiss cheese." They just cared if they could make the payments.
Now we're looking at maybe two million foreclosures by the end of the year.
These are the people, the other people, Clinton wants included in any help a real fix will provide. He's for something his wife proposed a while back, a moratorium on foreclosures and a review of every single troubled mortgage with the ones that can be rewritten to save the homeowners' their houses rewritten to help them to do it.
Clinton mock quoted hard-nosed conservative types, "You Democrats want to save everybody," capturing those hard-nosed types' self-congratulation at being essentially hard-hearted and conveying with an implied wink what he himself thought of anyone who considered the idea of saving everybody foolish.
But, Clinton said, we don't want to save everybody because we can't. A lot of people are past saving. They've already given up and walked away from the homes they can no longer afford. We want to save those we can, everybody with a regular income who will make a good faith effort to make their payments. And we don't want to do this just out of the goodness of our bleeding hearts. This is part of the way the taxpayers can get some of their money back and it's a way to save not just the system but the whole economy. People losing their homes costs all of us.
When a house is foreclosed upon, that's a property that is no longer paying taxes. When a house is foreclosed upon, the houses around it go down in value and their owners pay less in taxes (or more if the the town tries to make-up for lost revenue by raising taxes, which might trigger more foreclosures). Local businesses suffer too. They collect less money in sales tax, their owners pay less in taxes all around. Shops close, offices go vacant. The whole community begins to crumble because there's less money to pay the cops, less money for the schools, less money to maintain the parks and pick up the trash.
Each foreclosure, Clinton said, costs the country between 200 and 250 thousand dollars.
"It costs society less to keep you in your house."
This is what Clinton wants any bail-out plan to include, a way to keep people in their houses, and not because liberals are just nice folks, but because this is how grown-ups manage their economies. The kind of fix Clinton wants is one that says to everybody involved, up and down the line, from homeowners facing foreclosure to the CEOs of the banks and investment houses, "We want you to get well, and when you get well, we want you to give the money back."
To be revised.