Posting to Headlines Wire of Scoop
Column: Michael Collins
Date: Thursday, 25 September 2008
Time: 3:09 pm NZT
The Money Party (7): Bailout Blackmail
Just Say No
"Scoop" Independent News
(Wash. DC) We're being blackmailed into accepting the responsibility
and debt for the worst managed financial institutions in the
history of this country. The starting price, our debt, is $700
What's really about to happen is that the failed financial institutions
will be rewarded for their bad behavior. As a result, they and
others will be encouraged to do it again. It's just a matter
We're under the gun and told that we have just days to make a
decision to bailout these mismanaged entities. The last thing
they want is an open hearing on the problem. Deliberation is
deadly for them.
We're told that our world will collapse; there will be a systemic
breakdown if the president's bailout legislation is not passed.
Without it, we'll all be eating stale beans and rice for the
rest of our lives.
How do you argue with a premise like that - vote yes and you
get a chance to live. Vote no and you'll be soon living in a
cold house or damp shelter, if you're lucky enough to be off
This is the same type of argument that was used to pass the Patriot
Act after 9/11. It had to be passed right away. The vulnerability
to attack was blamed on the Constitution. We were asked to forget
the president's disregard for the many warnings of just such
an attack. The people paid for that egregious error through
the loss of constitutional rights.
Now we're told that to avoid economic ruin and all that portends,
we must give up common sense, evaluation, and deliberation and
allow more debt to be piled on our backs.
The largest financial institutions have made very bad decisions.
They bought into schemes that were senseless. Subprime loans
sold as premium securities and the looming credit derivatives
melt down -- 50 times larger than the subprime problem -- are
obvious losers just on the face of it.
How can grouping subprime loans create a stock that's anything
other than subprime? What kind of institutional investor would
bet your retirement on a subprime investment?
Why would anyone other than a very experienced financial expert
get into anything as complex as credit derivatives? Because
the commissions on sales were huge. For buyers, the short cut
to profits was too good to resist.
So what are we supposed to do? Give $700 billion to these companies
to keep them afloat. While those who marketed these flawed products
bear some responsibility, the responsibility and blame grow as
you move up the management chain to the top. They all knew what
was going on. They ignored the certain risk and failure of these
schemes for their personal benefit.
The culprit financial products, subprimes securities and derivatives,
were bought and sold by many in the financial industry, including
the firm formerly headed up by the Secretary of the Treasury.
Why should we trust any of them to decide who gets bailout money
or how the firms receiving it are managed?
The debate in Congress is shaping up to be one over style rather
than substance. Both Republicans and Democrats agree that some
sort of bailout bill needs to happen. But the Democrats want
oversight and monitoring, as if that will change a single thing.
The Republicans want centralized control by one person, the
Secretary of the Treasury, with no review of who gets how much
Here's a message for the grossly irresponsible politicians, regulators,
and financial firms.
Don't tell us you're going to do it right this time when you're
the people who got us into this mess.
Don't tell us you that your interests are the same as ours.
You haven't been able to have just one vote to eliminate the
loophole that allows oil speculation responsible for high gas
and home heating oil prices. Why should we trust you now?
Don't tell us that we can't survive without these decadent financial
This bailout makes no sense. Listen to people with alternatives
to financial blackmail. Find solutions that impose a minimum
of harm to the innocent and that create opportunities for all
citizens. Talk to some smart small business owners, union people,
and a variety of citizens. Deliberate in the open with all assumptions
on the table.
Who will stand up for the people and say, let the failed firms
bail themselves out or let them do what every citizen does in
this situation, declare bankruptcy.
Why is it that the greater your failure, the greater your chances
are for a debt canceling rescue? The vast majority of citizens
aren't getting that option.
This is the first of many bailouts to come. The time to say
no is right now. No bailouts. No socialism for the rich with
survival of the fittest for the rest of us. And stop pretending
you're doing something by arguing about details when you're doing
nothing more than rewarding failure while you set us up for the
next take down.
This article may be copied in whole or part with attribution
of authorship, a link to this article, and credit for
any images used. (Previously in The Money Party Series)