The Bailout and how we got there... actually explained.

Please spend an hour of your time listening to episode 365 of This American Life. 

They explain how the economy got to the dire straights it's currently in, and discuss the bailout.

If you have any desire to understand, you should listen.

Quote of the day

"We are now in the golden age of thieves. And where I come from we put thieves in jail, we don't bail them out." — Rep. Pete Visclosky, Democrat.

Thanks to Scott Olsen for the tip, and WSBT for the Quote, and to Pete for doing a hell of a job.

Bailing out the world?

If Karl Denninger is right, the bailout really is an attempt to bail out the World's banks... which explains why the people in Europe would care about our mess... watch the video, and decide for yourself.

I don't want to give away $700,000,000,000 of our money overseas, neither should you.

Learn from History

The depression became the Great Depression because Congress got stampeeded into passing the Smoot-Hawley Tariff Act and made things worse. From Wikipedia (emphasis MINE)

The Smoot-Hawley Tariff Act (sometimes known as the Hawley-Smoot Tariff Act)[1] was an act signed into law on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels. In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half. In the opinion of most economists, the Smoot-Hawley act was partially responsible for the severity of the Great Depression.[2][3]

Now we have the Bailout which is opposed by Economists... don't let them repeat the mistake again.

Trivia... it was the Hawley-Smoot Tariff Act which was the dry boring history that Ben Stein was talking about as a Teacher in Ferris Bueller's day off, which is why I knew about it.

Here we go again.... damn thieves are trying to rip us off again!

Senator Bayh's voicemail was full, but I was able to call Senator Lugar's office... I suggest you do the same. We can't let this bailout pass... it'll be pissing away $700,000,000,000 of our money as a start, and won't fix anything.

The administration is trying to scare you into giving them money... normally this would be called Strong Armed Robbery in the state of Indiana, but in Washington DC it's called politics as usual.

Don't let the thieves get away with it.

My Congressman Rocks!

Here's the email I got from my Representative - Peter J. Visclosky... who I will continue to vote for in reply to my letter opposing the bailout. (Ephasis mine - all mine)

  

Dear Michael:

 

Thank you for contacting me to express your concerns regarding government assistance to distressed financial institutions. 

 

I absolutely agree with you. That is why today I opposed H.R. 3997, the Emergency Economic Stabilization Act of 2008, and the House rejected it by a vote of 205 to 228.

 

I do not believe that it is the responsibility of Congress to bail out financial firms experiencing loss because of a lack of regulation, a lack of oversight, the greed of financial executives who often make sums in excess of 250 times the income of the average American worker, and bad judgment. 

 

I have the gravest reservations over this proposal, and I am appalled at the President's arrogance to suggest that Congress act within ten days to undo a disaster that has crescendoed over the last ten years and enriched countless Wall Street executives and speculators while impoverishing multitudes. Enclosed, please find a copy of the remarks that I submitted for the Congressional Record during consideration of H.R. 3997.

 

The problems in our current financial system are not temporary aberrations in an otherwise healthy system, and may not be so easily addressed. As I write, it is not known whether similar proposals will be considered in the future. However, given the gravity and systematic nature of these problems, you can be assured that I will examine any future proposal with the same care and deliberation I exercised with H.R. 3997.

 

Thank you again for contacting me. Do not hesitate to let me know if you have any other questions or concerns.

Sincerely,

Peter J. Visclosky

Member of Congress

It's heartwarming to me to know I've got good representation.

My plan to resolve the mortgage crisis... ugly, but effective

I believe that mortgages are a symptom, and not the real problem. Trust and transparency allow us to have expections that actually get met. Nobody knows what Paulson will do... which is going to make things worse, regardless of his actions. 

We have a solution that works...it's called the Bankruptcy Courts The process of Bankruptcy won’t have much (if any) stigma once the wave hits… people will be able to walk away from houses they shouldn't be in, and those that gave "home equity" loans to people based on inflated property values were taking a risk that shouldn't be rewarded either.

I firmly believe that the capital markets will not "sieze up" as the personal savings rate in the US has gone UP THROUGH THE ROOF in the past few months, people are saving cash like mad… if banks need money, all they need to do is offer a decent return on an FDIC insured savings account, and funds will FLOOD IN. 

We need to backstop the FDIC to protect individuals, possibly moving the limit from $100,000 per account to $1000,000 per person. Otherwise let the FDIC raise its premiums to recoup the losses in the long term, and this crisis gets solved from almost no money what so ever.

The simpler the solution, the better. The less new code in a program, the fewer new bugs. Let's not write a lot of new code (or laws) to try to fix this bug.

What do you think?    

--Mike--

Real Change - End the empire, restore the Republic

The United States sits at the apex of a mighty empire that stretches across the world. It is a former Republic that has been co opted by a Military Industrial Complex which profits greatly from the supply of tools necessary to coerce the rest of the world into give us more than our fair share of resources. The recent misadventures in war for profit have show us the limits of our power, and the future will not be kind if we continue to overreach and sow discord with the rest of humanity. We risk going the way of the Roman Empire, and we should learn from the past, and not repeat their mistakes.

If we settle down, get our own house in order, and play nicer, we might just survive another 200+ years, otherwise we're in for a chaotic inevitable decay.


This is the first in a series of blog posts to flesh out the list from yesterday.

What do you think REAL CHANGE means?

I was coerced into voting for Barack Obama in the Indiana primary instead of my first choice, Ron Paul as with most elections in the United States, I had to vote for a lesser evil instead of someone I actually wanted to support, it sucked, but I swallowed hard, and took it like a man. I'd rather have someone who might get us out of Iraq, and who might have enough sense not to continue the American Empire project which is leading us rapidly into a repeat of the last days of Rome. Mr Obama appeared to be the only electable choice who at least gave us that chance.

Now we see the true colors of Mr Obama starting to come out. He has chosen a running mate who has none of my views, and doesn't represent anything other than the status quo.

Our country is broken, and facing extinction, and all we get is more bread and circus... the shit storm is coming, and it won't be pretty. I don't think Obama represents enough change, and it's discouraging. I let this sit while I thought about it overnight... this morning a new twist arrived, in a comment on his blog, Doc Searls asked

what would real CHANGE be?

This gives me an opportunity to turn this around into a positive, and I'm glad.

Here's my list, off the top of my head:

1. Admission that we've been covertly building an Empire, and a promise to stop, and support Democracy around the world instead.
2. Admission that we're hooked on foreign fuels, and we need to break this addiction, starting now. Immediate tariffs on imported fossil fuels to start paying off the national debt.
3. Admission that we've been bought and paid for by lobbyists from all over the world, and it will stop now. Lobbying undermines the Constitution, and thus is a form of Treason.
4. Admission that the shift from the Gold standard was a mistake, and an immediate return to the Gold standard at $2000 = 1 Ounce, giving everyone a one time 50% inflation hit, instead of the 5-10 years of 17% inflation like the 1970s. After that, no more inflation, ever.
5. Trials for High Crimes and Misdemeanors of those involved in the planning and promotion of the Iraq war, which caused the death of over 4000 Troops, countless other injuries both physical and mental, along with well in excess of 100,000 civilians, and hundreds of thousands of displaced persons. Not to mention the trillions of dollars lost.
6. Immediate dissolution of both Fannie Mae and Freddy Mac, with the bondholders receiving whatever is left after costs are recovered by the US Government. Shareholders would get nothing.
7. Elimination of the Electoral college, replaced with a 1st/2nd/3rd choice system of direct election of the President. The VP would serve at the discretion of the President, subject to Senate confirmation.
8. Phased withdrawal of US troops from all foreign bases, including Gitmo.
9. Allocating at least 1/2 of all radio frequencies for use of the public to allow a free national wireless internet.
   

Hows that for a start?

The Bubble

Gas was $0.36/gallon in 1971.

Nixon closed the gold window in 1971

The dollar has dropped 95% since then relative to real money. (Gold)

Thus gas should cost $7.20/gallon now.

But it doesn't because the dollar bubble isn't done popping yet.

--Mike--