The Fiscally Insane Bailout Bill

Link: The Fiscally Insane Bailout Bill Might Not Pass -- Here's 5 Reasons It Shouldn't | Corporate Accountability and WorkPlace | AlterNet. (Read the whole thing)

Though the deal negotiated between congressional leaders and the White House is better than what Treasury Secretary Henry Paulson originally proposed early last week, it remains an insulting atrocity, having omitted even basic aid to homeowners, bankruptcy reforms and any modicum of future financial industry regulation.

Two things that really get me about the discussion of this bailout over the last week: the claim that 'everyday people' need the bailout because they won't get credit they need. This smells for a number of reasons: since when is Washington concerned with everyday people? Where is the evidence that this a concrete and widespread problem separate from the mortgage collapse that has been going on without remedy for nearly a year? Isn't the real issue that big investors are the one's who are not getting credit? Why should they get it from us?

The other claim that gets me mad involves the presumption that "everyone" is in this, everyone needs it, everyone will benefit, everyone has to stick together. Since when did Wall Street, since when did Goldman Sachs, lookout for everyone? These are the highest paid people in the world. When did they start concerning themselves with the well-being of everyone?

They are lying.

Comments

[Seb]

Sirota makes the single best argument I've yet read against the bailout when he proposes plowing the money into a mortgage-relief fund for struggling homeowners (similar to the one appended to the bailout that was subsequently killed by Republicans):

"If the root of this problem is people not being able to pay off their mortgages, and those defaults then devaluing banks' mortgage-backed assets, then simply helping people pay their mortgages would preserve the value of the mortgage-backed assets and recharge the market with liquidity. That would be a bottom-up solution..."

I also dug the WaPo article Sirota linked to that describes the field day small banks (and even regulated giants like BoA) are having 'cuz they're the only ones with liquidity. There's that intrepid American entrepreneurialism! Take notes, Wall St!

[pds]

and dont forget the $67 billion Bill passed in the House without a peep from anyone. Check out Chalmers Johnson's piece in www.truthdig.com.

[Kareem]

"Where is the evidence that this a concrete and widespread problem separate from the mortgage collapse that has been going on without remedy for nearly a year?"

There isn't any concrete evidence supporting that it would expand beyong the mortgage collapse, but of course there isn't any concrete evidence saying that it will not.

What we have is yet another one of those unfortunate slippery slope arguments (or scenarios) with an underlying theme of fear to prompt action with the cause of inaction leading to catostrophic results. Do we develop the bomb or wait for Germany to do it first? Do we use the bomb to end the war? Do we go to war in Iraq because of weapons of mass destruction?

Hindsight often makes us feel foolish only when we look back and realize things weren't as dire as we thought...

I hope this is one of those case.

[voyou]

"When did they start concerning themselves with the well-being of everyone? They are lying."

I don't know if it's exactly lying - it seems more like a threat veiled in the language of objectivity: "the government must stabilize the markets" means "if we go, we'll take you all down with us."

[Rob]

I imagine lots of people on Wall Street etc. have always associated their own immediate interests with the interests of the country/world as a whole. I mean, it's a fairly common form of ideological self-deception to project one's own interests as the universal interests.

[Kareem]

And I am eating my words about the inevitability about this bill passing.

Amazing when the House actually performs their role in maintaining the balance of power... would have been nice to see such determination and independence as the Bush Admin was crippling the rule of law in this country and, well, before we ended up with a broken nation we now own in Iraq (among other things)....

[Jodi]

Voyou and Rob: I don't think their view is thinly veiled objectivity or ideological deception. These are not altruists. They don't get up in the morning asking how they can benefit others. They ask how they can make more and more money.

The idea of presenting one's particular interests as universal is political; it is not an economic argument or logic. And it is certainly not a supposition of finance capital.

[Rob]

Jodi, I think the point isn't that they ask whether they wake up and ask 'how can I help people'? Rather, that they think that 'making as much money is possible' is beneficial for everyone, or society as a whole, or whatever.

I'm quite skeptical of separating the 'political' from the economic too rigidly, but it seems to me fairly straightforward that a good deal of economics is based on the idea that the enrichment of a certain class of people is - indirectly - good for everyone else. Smith's invisible hand, the concept of trickle down economics etc., all say that the the particular interest of capital - making money - is good for everyone.

[voyou]

"Rather, that they think that 'making as much money is possible' is beneficial for everyone, or society as a whole, or whatever."

Furthermore, they've worked hard to make it so that that is true, in the sense that the finance capital really is deeply intertwined with the bits of capitalism that effect other people.

[matt]

Voyou gets it.

they are threatening to let the pensions and 401k's of the middle class democrat constituents go down the drain (before they bail themselves out–after all there is plenty of money out there floating around doing nothing, as some professor of economics said the other day). from my understanding that is the prime reason dems support(ed) the bill, despite their constituents' rage.

[Jodi]

That finance capital is 'deeply intertwined' in no way means that what is good for it is good for us/Main Street/the people.

To assume it is is the same as saying that what is good for the feudal lord is good for the serf since they are 'deeply intertwined.'

[voyou]

Well, "deeply entwined" is obviously deeply vague, but I don't think feudal lord and serfs are entwined in the same way - I don't think that a feudal lord could make the same "if I go down, you go down with me" threat that finance capital can make. Clearly, making this kind of threat isn't altruistic; but I don't think it's a lie, either. Capitalism is how we organize the majority of what we do, so a badly functioning capitalism is worse for everyone.

The lie, though, is that the only two choices are a working capitalism or a collapsing capitalism; clearly, there's also the alternative of no capitalism at all. But focussing on the specific insanity of this bailout makes it seem like it isn't part of capitalist business as usual, and makes it seem like what we need is the political will to oppose this particular bailout, rather than some kind of systematic dismantling of capitalism.

[matt]

What we need is the political will to oppose this particular bailout, on the road to dismantling capitalism.