I admit it: I'm a Dean Baker fan. Although I might not agree with everything he says, I love the fact that he is a trained economist with a gift for communicating clearly who is not afraid to speak his mind.
In his latest post, "Paulson Missed the Bubble and Understated the Financial Crisis at Every Point," Baker addresses a concern about the former Goldman Sachs honcho -- aside from the questionable assumption that his previous experience running an investment bank means he has the skills necessary to resolve the current crisis -- that Congress (and others) should be taking into account.
Treasury Secretary Henry Paulson is telling Congress that if it doesn't give him a $700 billion blank check the financial system is going to collapse. It would be reasonable for reporters discussing this request to present some background on the track record of the person asking for this enormous blank check.
In March of 2007, after the first shock waves of the housing meltdown had already hit, the Associated Press reported Mr. Paulson's view that the credit difficulties linked to the housing slump would be limited.
In August of last year, after the second round of financial shock waves disrupted markets worldwide, Paulson commented, "We have the strongest global economy I’ve seen in my business lifetime."
Just last March he warmly endorsed a reduction in the capital requirements for Fannie Mae and Freddie Mac, saying "additional capital [invested in mortgages by Fannie and Freddie] will enable the companies to help more homeowners and will strengthen the underlying fundamentals of the mortgage market."
At every point along the way, Secretary Paulson has failed to see the extent of the crisis resulting from the collapse of the housing bubble. This raises serious questions about his judgment. Reporters should be discussing Paulson't track record in the context of this bailout proposal....
[The NYT is on the job -- I missed the excellent chronology in the sidebar.]
Paulson is now running around like a headless chicken, attempting to spook Congress into blindly authorizing his ill conceived rescue plan.
With the election barely 6 weeks off, the only fair thing is for Congress to put off this decision until after that event, thereby allowing the American taxpayer to weigh in on this critical matter -- one that will affect the finances of generations of Americans to come.
Surely the Fed and Treasury can continue staving off the purported meltdown of the financial system until then.
Posted by: gac | September 21, 2008 at 11:52 PM
Paulson and Bernanke are losers and they are rapidly making the USA a failed nation. Now they want to bail out Eurpean F'n Banks too? Is it possible that there are some major kickbacks coming for these two maniacs? Think about it.
Let's bail them into the boston harbor like the founders did when the tea tax was too high. $700 Billion dollars, I believe, is only the starting point. Next thing you know they will throw a party for MOBIL OIL! C'mon nationalize your mothers they need some money too. While you are at it Mr. Paulson why don't you thank the former chairman of Citigroup, Mr. Weill, for getting congress to allow different financial insitution and wall street to get together. Did I hear Sen.Schumer mentioned? So you think a deal's a deal? Credit card companies behaving like the Mafia with their 29% credit card fee's and when will this insanity stop. You know that guy in Texas was right a long time ago. Did you hear that wooshing sound? The air just went out of America. Stop them before they destroy the nation. Where is Ross Perot when you need him? Watch out for the jumpers.
Posted by: Leon Fainstadt | September 22, 2008 at 03:41 AM
If the bailout upsets you why not contact Washington and let them know how you feel?
Even though I think that it is a lost cause you can still complain. In fact why not help fill up the following email boxes?
Oh and feel free to call them too and jam up the phone switches!
Contact the President here;
comments@whitehouse.gov
Main: 202-456-1111
Switchboard: 202-456-1414
FAX: 202-456-2461
Contact your Senator;
http://www.senate.gov/general/contact_information/senators_cfm.cfm
Contact you Representative;
http://www.house.gov/
Contact McCain;
http://mccain.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm
Main: 202-224-2235
Fax: 202-228-2862
Contact Obama;
http://obama.senate.gov/contact/
Main 202-224-2854
Fax 202-228-4260
Contact Biden;
http://biden.senate.gov/services/contact/
Main 202-224-5042
Fax 202-224-0139
Contact Pelosi;
AmericanVoices@mail.house.gov
202-225-4965
I am disgusted.
Wall Street insisted that by getting rid of regulations that everything would be great. Now due to the LACK of regulations we are in this mess and Wall Street wants a bailout with my money. And Henry Paulson, former COO of Goldman Sacs says that no new regulations are needed. Isn’t that how we got in this mess? To top it off he wants to bail out foreign banks too. And HE gets to decide what to do with this money with no oversite at all and he is not even an elected official. This is madness. Why do I need to pay for the screwups of others? And where IS THE MONEY GOING TO COME FROM?? The people on Wall Street knew the risks and lost so why am I responsible for that?
I have to say that this is socialism at it finest. Take from the many and give to the few.
Currently I have a bunch of credit card debt. Will I get a bailout because of my screwups? No because I am TO SMALL NOT TO FAIL. If I loose my job I get about 13 weeks of unemployment and then I am on my own. If I have to file for unenployment I will be treated like a criminal. You don’t want get me started on our on our so-called “health care system’.
I say NO TO THE WALL STREET BAILOUT. EVER!
Posted by: | September 22, 2008 at 07:39 AM
The average small investor sees this for what it is...a massive transfer of wealth from us to Wall Street.
Posted by: bob | September 22, 2008 at 10:14 AM
....it seems to me, this could and should wait until after the election. An expenditure of this great a magnitude needs to be decided by the administration that will have to deal with its ramifications for the next eight years. I think Paulson has no credibility - notice his previous attempts of prognostication - and then there's Bernanke who I feel is "just plain losing it" - look at his eyes.
Do we just "JUMP NOW", or allow the participants of a future jump to line up on the cliff's edge?
To prove a point though, P&B are liable to let the market drain a bit - to add a sense of urgency - reminds me of a high-stakes poker game. He who blinks first loses.
I say wait. More time to think a bit more about the advantages and/or disadvantages of throwing ourselves off the cliff .
Posted by: Black Star Ranch | September 22, 2008 at 11:59 AM
Black Star Ranch, I think much of this "rescueing" is politically motivated. They are trying to get Congress to pass all these extreme measures before the election to try to get McCain reelected. Of course democrats say this isn't enough. They want homeowners rescued as well.
Posted by: Paul | September 22, 2008 at 12:33 PM
Please circulate:
When in the Course of human events….
The time is now. We the people must take our country back. No more bailouts. No more foreclosures. No more bankruptcies. No more raping of the people and looting of the People’s Treasury.
The call for action: On October 3rd, 2008 We The People call for a national day of protest. Do not make any purchases. Do not go to work. Do not send your kids to school. Limit all commercial transactions. We need to get our elected officials to understand that We The People will not take any further abuse at the hands of our leaders laying down. Take to the streets.
Please email/circulate to as many people as possible.
publius
Posted by: hotdogjam | September 22, 2008 at 12:46 PM
Morning Paul....
I wouldn't doubt this is being pushed through to hopefully bolster the Repubs hopes of electing McCain, AND I also imagine that there's truth in the "let me leave office before everything collapses" scenario as well. My faith in the actions of BOTH the Senate & the Legislature is sorely lacking - neither side of the aisle reads what they sign, says what they mean, nor do they act for the goodwill of the country. If they did, 95% of them would resign today in disgrace. Their duplicity with long-term pandering to all the special interest groups and spending money faster than the proverbial ink has dried has contributed to the sorry state of this nation.
IMHO, I don't think that even after the impending depression (and I don't think that THAT can be averted whether now or next year), is there any hope for anything short of what transpired in Russia - a "balkanizing" of the individual American States. It's what we call here in the Battle Born State: SECESSION.
Posted by: Black Star Ranch | September 22, 2008 at 01:48 PM
What's making things possibly even worse is that with this legislation trying to be forced through congress, now Wall Street is lobbying to unload even more toxic stuff to the government.
http://www.iht.com/articles/2008/09/22/business/lobby.php
What's to say that when this finally gets passed, the costs will be higher to the taxpayer, and we won't hear a word about it?
Posted by: Kamina Ayato | September 22, 2008 at 05:51 PM