Senate: Just Say No
By: BJ Lawson
I corresponded with many voters regarding the bailout package yesterday. Here is my typical response, with some points to consider:
Those folks who are just interested in rising asset prices (CNBC talking heads and stock newsletter writers) generally like the plan, which those who are concerned with the foundation of the banking and economic system don’t like it.
The Paulson plan might deal with “liquidity”, but liquidity *isn’t* the problem. The problems are trust and solvency. There are a number of feasible options to deal with the fundamental issues — trust (among banking institutions) and solvency (of banking institutions).
Responsible plans focus specifically on recapitalizing viable banks instead of just allowing banks to offload questionable assets. But before you can even recapitalize a viable bank, you need to “drain the swamp” and figure out exactly what’s on the balance sheet — that’s key to restoring trust.
I’ve detailed/summarized these points, and more responsible approaches, here:
http://blog.lawsonforcongress.com/2008/09/27/the-height-of-arrogance/
What should also be concerning is the *way* in which this legislation was put forth — complete subversion of the typical legislative process, although they wasted over a week from initial proposal to vote:
http://blog.lawsonforcongress.com/2008/09/28/a-bipartisan-drama-resuscitating-a-dying-republic/
Also, the conflicts of interest present in the current administration are staggering:
http://www.nakedcapitalism.com/2008/09/mussolini-style-corporatism-in-action.html
The media chorus in favor of the bailout continues to grow. Interestingly enough, much of the chorus is international. This makes sense when you understand that Paulson’s legislation encourages us to bail out foreign investors, and foreign banks as well:
European Central Bank President Jean- Claude Trichet said U.S. lawmakers must pass a $700 billion rescue package for banks to shore up confidence in the global financial system.
“It has to go, for the sake of the U.S. and for the sake of global finance,” Trichet said in an interview in Frankfurt with Bloomberg Television late yesterday. “I am confident, but of course it is the decision of the U.S. Congress.”
Trichet said a pan-European approach to the banking crisis was unlikely, saying “we are not a fully-fledged federation with a federal budget.”
“Each country has to mobilize its own efforts,” said Trichet. “But of course there is a European spirit and that is the spirit of the single market.”
This point was hammered home by California Rep. Brad Sherman in an interview with Larry Kudlow, as documented by Mike Shedlock:
Rep. Brad Sherman, D California:
Larry I am glad you have a few seconds to talk to someone who voted against this bill. I am not changing my mind. I want to thank my colleagues who stood up to the purveyors of panic and voted against a very bad bill and voted with 400 eminent economists including three Nobel laureates who wrote to us and said don’t panic, don’t act hastily, hold hearings, work carefully. The fact is Larry if you read this bill, even you would have voted against it.
It provides hundreds of billions of dollars of bailouts to foreign investors. It provides no real control of Paulson’s power. There is a critique board but not really a board that can step in and change what he does. It’s a $700 billion program run by a part-time temporary employee and there is no limit on million dollar a month salaries.
Larry Kudlow:
Let me just ask you one question. I think you are referring to foreign banks headquartered in the United States. I do not see how foreign investors get bailed out.
Rep. Brad Sherman:
Larry you have to read the bill. It’s very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn’t owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can’t buy it. It was rejected.
The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can’t be sold to the Treasury.
Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.
We don’t just need to “do something” here, folks. We need to do something that will work.
October 1st, 2008 at 8:44 am
[...] Read the rest of this great post here [...]
October 1st, 2008 at 2:01 pm
please get this out asap!
http://www.youtube.com/watch?v=GqIFoBXGizc
October 1st, 2008 at 9:33 pm
I just read that Feinstein got 85,000 calls against the robbery plan, and she voted for it anyway. It seems that she’s always willing to set a new low in her career of public disservice.
-jcr
October 1st, 2008 at 11:11 pm
What, exactly, IS in the Senate bill passed tonight?
Here is an example for you …
I just pulled this out of the actual bill that the Senate passed this evening. This is a direct copy of text from that bill.
As Dave Barry (the humorist) says: “I am not making this up.”
* * *
SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED
FOR USE BY CHILDREN.
(a) IN GENERAL.—
Paragraph (2) of section 4161(b) is amended by redesignating
subparagraph (B) as subparagraph (C) and by inserting after subparagraph
(A) the following new subparagraph:
‘‘(B) EXEMPTION FOR CERTAIN WOODEN ARROW SHAFTS.
—Subparagraph (A) shall not apply to any shaft consisting of all natural
wood with no laminations or artificial means of
enhancing the spine of such shaft (whether sold separately or
incorporated as part of a finished or unfinished product) of a type used
in the manufacture of any arrow which after its assembly—
‘‘(i) measures 5⁄16 of an inch or less in diameter, and
‘‘(ii) is not suitable for use with a bow described in paragraph (1)(A).’’.
(b) EFFECTIVE DATE.—The amendments made by this section shall apply to
shafts first sold after the date of enactment of this Act.
October 2nd, 2008 at 8:32 pm
I agree with all that has been written, but pose an even larger question of representation and accountability. If Representative Price and those who voted “for” the bailout aren’t representing Constitutional law, and they clearly aren’t representing the will of the people, just who or what are they representing? Regardless of political affiliation, this country is doomed if we permit such arrogance, irreverence of law and disregard of the people’s will to meet any other fate than a decisive vote out of office.
October 3rd, 2008 at 11:22 am
With the House getting ready to vote on the “revised” bailout package I wrote Representative Emerson, one of the 65 House Republicans who supported the original bailout, urging her to oppose it.
I have posted the letter with the title Representative Emerson: Please Vote No on Bailout Bridge to Nowhere on my site Liberty Stop.
http://libertystop.semovote.com/article.php?story=20081003094109987
October 3rd, 2008 at 7:34 pm
One of my senators from Georgia — Chambliss — responded to my email urging him to use some rationality and consider other options besides further dismembering the Constitution, with the usual form letter (because apparently I was not alone in voicing my opinion via email) in which he stated, “This is not a popularity contest.”
I thought to myself, “This is what he thinks of his job, it’s a popularity contest?”
As King George III yells gleefully from the grave, “So, America … how do you like taxation WITH representation?”
October 3rd, 2008 at 10:33 pm
For the record, Representative Sherman kept his word and voted against the bailout when it came up the second time.
BJ, when you get to DC, I hope you will immediately introduce legislation to roll back the bailout. One idea that springs to mind is that if these banks are on the government teat because they’re “too big to fail”, then one of the conditions of accepting the bailout should be that they are broken up into entities that aren’t too big to fail. How many of those companies would accept those terms?
-jcr
October 4th, 2008 at 1:13 pm
Now that the Senate version of the “Bail Out Bill” has passed both Houses and been signed by the President, I expect that the Treasury is busy printing $700 to $850 billion in new money. This can only cause inflation as the value of the dollar is diminished. For most of us this means that everything will cost more and times will get even harder.
On the other hand, the collateral on these bad loans that the government has purchased will likely soon exceed the cost of the loans, thus allowing the assets to be sold to pay off the dept associated with them. How will the government liquidate this dept?
Most of the real estate that has been repossessed in connection with these bad loans are vacant and going to hell very fast. I expect that this is one reason why the majority in Congress felt the need to do something quickly. Now they have to get these properties back in the hands of people that will care for them and pay the local real estate taxes, before the properties decline in value as a result of not being maintained. These vacant properties are subject to vandals and squatters that can cost the tax payer. I hope that Congress can devise a fair and equitable way of getting this real estate back in the hands of private owners.
October 5th, 2008 at 9:13 pm
Although the bailout bill passed and the battle was lost, I am confident we will win this war against an out of control state.
There are many things we can do to fight and win the war. A few of them are listed here…
http://libertystop.semovote.com/article.php?story=20081005192239716
October 5th, 2008 at 9:52 pm
BJ,
Thank you Lawson. Thank you for campaigning for the common good and protection of Americans. Too many in Congress are fighting for special interests, and are giving the Constitution the backdoor. I have been following your campaign for months and I am excited about the money bomb Tuesday, as I will be making a contribution. You have been the subject of my blog quite often ( http://www.davidcarlsonpolitics.com ) and in yesterdays Saturday roundup I made note of your money bomb. I am a college student in Minnesota, but I think you are thee most important candidate in the upcoming election. Thanks again for vowing to uphold the constitution. There is much wrong with this country today, and you are standing up to the amazing task of making it right.
-David Carlson
http://www.davidcarlsonpolitics.com