Paul Krugman wonders why we are going to pay billions to bail out greedy bankers?
I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.
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Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.
The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything’s OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers’ money at the financial world.
And there’s no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.
I hope I’m wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.
How are churches addressing this? What do you think?
9 comments:
Now that taxpayers will "own" Wall Street, I wonder if the taxpayers will have any say about CEO salaries? Can you imagine that John McCain wants to privatize Social Security and put in the hands of this same corrupt market system? I get tired of hearing we "can't afford" health care and other necessities. But we can always afford war and corporate welfare. Isn't the Gospel parable today about this same sort of economic exploitation: http://kaieuthus.blogspot.com/
Phil Gramm wants to deregulate all things private except when it comes to the abject failure of those very systems. Then, "because our financial systems will fail" the government needs to bail everyone out. Isn't it nice to know that "the government" can't do anything right -- except bail out market players. The issue really is that the dollar has no ties to anything of value except itself. The dollar, in fact most currency has no real value outside of what some folks say it has. The big time players have played with money only ad carelessly disregard everyone and everything as too weak and too stupid to understand. So, us poor stupidos are going to do what for this rich bas***ds?
On, and BTW, our economy is fundamentally sound!
When we "entrust" our yes and no's to proven thieves, greedy manipulators, exploiters of fellow human beings and all-around bigmouthed idiots (or worse) we are simply "slothful" and "unwise"...does that ring any bells or shall we just allow the World around US and US to bleed to death from our fecklessness?
All I want to know: when will *I* get a bail-out, for my student loans? (Trust me, there were no "private jet trips to Aruba for 100 guests/orgy to follow" on these!)
Imagine the mess we'll be in if Bush-Cheney decide to attack Iran? I imagine their window of opportunity for doing that will be the first ten days of October (or they will have Israel start it or will falsely claim the Iranians attacked U.S. forces).
How are churches addressing this?
How Christians respond to the crisis will be a test of their wisdom, courage, integrity, and compassion for the mighty as well as for the humble. One executive told CT, "Our response will answer the question, 'Who is Jesus on Wall Street?' "
Bishop Roderick Caesar of New York City's Bethel Gospel Tabernacle, which has a number of members from Wall Street, says that the crisis is so fundamental to our world that "the church has to be poised for the moment and be prepared to work together."
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Mike Faulkner, pastor of New Horizon Church, says, "Honestly, I am praying God will bring healing and revival." He recalls how during the 1930s Wall Street crash, Central Baptist Church on Manhattan housed people who had lost their homes. "The church should be available in every way for people on Wall Street who maybe didn't think much about God before."
The whole article is at http://www.christianitytoday.com/ct/2008/septemberweb-only/138-53.0.html?start=1
That's just great.
Our government is bailing out financial institutions while squeezing me for student loan money I don't have to the point it is - quite literally - about to kill me.
Hey! Of course! I'll contact Sanford Bishop, Johnny Isaakson and Saxby Chambliss! They'll help me! After all, I'm part of the economy and their constituent!
Oh, wait. That's right. I don't contribute millions to the parties, like the creditors' associations!
Phil Gramm, eh ? Even my 80-yr old mother, who is the nicest, most polite Southern lady you can imagine & who lives by maxims like "if you can't say something nice about someone...", refers to Gramm as "smarmy."
I recall reading somewhere recently that fifty years ago the average CEO's salary was 20 times the average entry position salary in the company. Now the average CEO salary is something like 400 times the average beginning salary. (You know where I'm going with this!) Perhaps a proper gummint bailout would include the dismissal of all the top executives in the financial fields -- no severance packages, no golden parachutes, let them apply for unemployment benefits like everyone else -- and turn the jobs over to bright young people with a public conscience who would be entirely content to do the job for, say, $250,000 a year. I'm sure there are lots of potential well-qualified candidates. Hell, I'd do it myself, except I am not young and only occasionally bright.
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