Friday, September 26, 2008
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It Is Time For Business
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Posted by:
Carol Platt Liebau at
9:45 AM
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I admire the House Republicans' purity of purpose -- and like them, I wish that the crisis could could be solved through cutting taxes and deregulating that would attract a flood of private capital into the markets.
The problem, however, is that the problem has become too big and needs to be solved fast. We're talking $700 billion that's needed . . . and remember, it was big news when Warren Buffett was able to pump $5 billion into Goldman Sachs earlier in the week.
There's simply not enough private capital out there -- with people willing to sink it immediately -- to solve the problem. And make no mistake. If the markets crash and borrowers remain unable to access the credit markets because the markets lack liquidity, the problem will spread to every sector of the economy. Everyone will be hurt.
Anyone who (like me) worries about the "creeping socialism" that the Paulson plan may represent needs to remember the aftermath of the first Great Depression. That's when the modern administrative state and previously unheard-of powers for the federal government came into being. Does anyone think that if we encounter a second Great Depression -- especially coupled with an Obama presidency (how, exactly, does McCain make the case for himself this fall if his party scuttles the deal?) -- that we're not going to see even more socialism than the Paulson plan represents?
Again, I salute the House Republicans' commitment to principle. But they need to tread very carefully here. It would be wrong to allow our economy to collapse -- and (just to put it in terms that make sense to politicians) politically suicidal for some conservative Republicans, who will risk being marginalized.
A deal needs to be done today.
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Boehner and Pelosi have respectively posted the agreement both have said they have reached on their two sites at http://www.realclearpolitics.com. You can read it there. Basically $250 Billion plus Paulson has an option for $100 billion if needed, and $350 b more subject to congress's approval. Of course, if you think they won't have to pony up that other $350 B, and maybe more, I've got a bridge to sell. But, maybe they think the public will swallow this more than a straight $700 B today. Spread out the pain until "after" the election.
Better than the Paulson plan? Looks like it to me.
Good idea at all? Good question.
And Obama and McCain - they'll take the credit where they can and undermine the other guy. However, neither want to tell the public that the money will be borrowed, the deficit will soar from the projected $482 B plus the mid year Iraqi budget to $800 B or more - and practically everything they both said they were going to do is now hostage to the bailout. Tax cuts, no tax cuts, cap and trade, health care, expanding the military - etc.
So, let's see how silly it really gets these last 30 days as everyone spins their hopes and dreams while staring down the barrel of the bailout gun.
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and so am I. Recent review of history has shown that it was FDR/Democrats tariffs and excessive government mismanagement which prolonged the Depression. If you look at the GDP for the country, by 1932 we were starting to come out of it; by 1936 FDR had us back into negative growth territory.
And that is what Government intervention offers; the possibility that this economy will become so screwed up that we can never fix it. That is why I believe the right response is None, Nada, and Zip. |
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see those old ads (or jokes) about the salesman making a pitch to a customer (pigeon) to buy that car (lemon) now because the price is gonna go up, the deal is only for one day, one hour whatever.
You have to close the deal NOW.
That's the impression I've gotten from the
administration, DemonRATS and fellow travelers.
They are telling us, including some from our side, we have to buy this lemon TODAY because tomorrow will be too late.
Why? My father always said "why" was my first word and I haven't changed. Tell me why. Who will benefit? What's in it for me, the taxpayer?
and any more whys that can be added. It doesn't smell right.
And the one thing that really turned me against it, besides learning of Paulsons cozy relationship with the DemonRATS and Obama's
campaign is "Decisions by the Secretary pursuant to the authority of this Act are non-renewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." That's giving Paulson
dictatiorial powers over our currency, and over this mess. Call me paranoid, but I have a very
strong distaste for an unelected bureaucrat, especially of the DemonRAT persuasion, to have this much power. My take is that by court, it includes the Supreme Court. If we let this
continue, we may as well crumple the Constitution up and light a match to it.
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the next ad you see is the dems vote 100% with bush and mccain says sorry but no thanks.Its the dems playing politics and everyone sees it but dems cuz they are delusional and dead fron the neck up.What idiots, a party full of obermans!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! |
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Carol,
What are you talking about?!?!?
"It would be wrong to allow our economy to collapse -- and (just to put it in terms that make sense to politicians) politically suicidal for some conservative Republicans, who will risk being marginalized."
I know people hate all caps, but I need to make this clear... DEMOCRATS HAVE ENOUGH VOTES NOW IN BOTH THE HOUSE AND THE SENATE TO PASS THE PAULSON PLAN!
If they are so concerned that this country is going to fall into a depression, then why are they not calling for a vote now? Think about it, if the Democrats have not yet called for a vote, then either they do not have the courage to lead or even worse, they are not too sure the plan they have in place is GOOD FOR AMERICA! The House Republicans fielded the only plan that contains growth (lowering cap gains, etc.), which is VITAL to prevent the near future need for another $700B.
Democrats want to hold this up so that they can drag the House Republicans into the dirt during an election year to make them look good. Did you notice Harry Reid's snicker when he mentioned the idea of reducing the capital gains? They want the House Republicans to drag their tail between their legs to sign this bill so that they can say two things: 1. Democrats lead this effort, and 2. If (and when) this plan fails, they can point the blame at the Republicans.
Also take notice that one of the anti-McCain jabs is that he mostly votes with Bush. It is funny to see the Democrats agreeing with Bush and McCain against him. Ha! |
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The claim that taxpayers are on the hook is misleading. The 700 billion is to be borrowed. Nobody is asked to pay a dime. If irresponsible borrowing and lending is the root of the problem is more borrowing the solution? If you are suffering from arsenic poisoning is more arsenic the cure? |
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Further, It has been over a week since the crisis was so imminent that it had to be resolved immediately. Again, the leaders have misled us. Obviously the repercussions of doing nothing are not as dire as they threatened. When I am misled, I become suspicious. There is something fishy about this whole deal. Congress sold us out and now their handlers have them dancing again. |
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A couple of points, first, the feds got us into this mess by either their duplicity or their ignorance. Neither of these two factors have been eliminated. Why believe they know what they are doing now? I just saw a letter signed by 165 economists who oppose a bailout. Of course, why would economists know more than the government (that is a facetious question).
Second, no one knows the future. However, making credit too easy to obtain is what put us in this mess. How does, not loaning money, but just giving money to the people who were so irresponsible with it the first time make matters better? Especially, if the effect of the bailout is to make credit easier to obtain?
Credit has been too easy to obtain, we will fix the problem by making it easier to obtain. That is about as nonsensical as the Mad Hatter.
I am not an economist. However, I believe the market, if left alone, is the best mechanism to mitigate the damages caused by this abrogation of duty by the administration, Congress and the fat cats on Wall Street. If there are no consequences to bad economic decisions, there is also no reason to stop making bad economic decisions. Under the proposed bailout, the only people facing consequences are the American taxpayer whose primary responsibility for this debacle is electing doofusses to Congress.
As you can see, you and they (even Tom Sowell who I greatly admire) have not yet persuaded me that the consequences of the bailout will not be more damaging than the consequences of doing nothing. I am open to persuasion, but I am a CPA and numbers are important in making financial decisions. Have you or anyone else seen any numerical analyses of the crisis? I have not. That is my biggest objection to the process to date. We, the American taxpayers, are being asked to buy the proverbial "pig in a poke". Only a fool would do so.
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is that if they pass it, and it does not work, we still have the ability of using the Paulson plan in the future.
The bad thing about the Paulson plan is that if they pass it, and it does not work, the only thing left is another $700,000,000,000.00 and another and another and another.
The problem with Paulson's plan is that they are putting $700,000,000,000.00 into the market, that $700,000,000,000.00 can be leveraged, likely at 10 to 50 times to make loans. So we are talking about really injecting between $7,000,000,000,000.00 and $35,000,000,000,000.00 into the economy. How much has most peoples paychecks gone up in the last decade? Not much. Think that when the 10% to 15% inflation starts that these people are going to be getting 15% to 20% pay increases? No, they won't they will still be getting 3% to 5% increases and instead of being able to get a steak dinner once a week, they will be eating much less and never being able to indulge in a nice steak.
No to Paulson plan A. |
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