Tuesday, September 23, 2008

Take from the poor and give to the rich

We all know that taxes are a form of legalized extortion; but this proposed bailout (does anyone really think that it will stop at $700 billion?) makes Secretary Paulson a reverse Robin Hood. I haven't had much time to digest this myself -- fortunately, others have...

We begin with Ohio's BizzyBlog, whose writer detests being stampeded into something. While he is willing to set aside the $700 billion, he has a few strings attached: He would demand proof of loss and a full explanation of why the loss occurred for each bad loan involved on a case by case basis, attested to by a CPA firm other than the one AIG, Fannie, or Freddie currently uses. Any money advanced ahead of that to keep the markets functioning would be treated as loans, not gifts, until such proof is provided.

Rebellion is giving out the call to contact Congressmen and Senators by phone and fax to oppose the bailout. In their post, they quote financial expert Ric Edelman:

''The insurers got rich selling policies with fat premiums, brokerages got rich selling new securities, lenders got rich selling more loans than ever, builders, real estate agents, title settlement companies, appraisers, inspectors - everyone got rich from the ensuing real estate boom."

Mr. Tuggle then dryly adds, "He could have included the politicians who enabled the irresponsible lending of Fannie Mae and Freddie Mac because they knew these ''government-sponsored enterprises'' - since bailed out by the government at a potential cost of $200 billion to taxpayers - would line their campaign coffers."

Rep. Dennis Kucinich (D-Cleveland) has already developed a comprehensive program to attack the problem. While some of it reads a bit too much like paleoliberalism, I will give him credit for at least making the effort to define a public interest. Some of his ideas include:

  • * Reinstatement of the provisions of Glass-Steagall, which forbade speculation

  • * Re-regulation of the finance, insurance, and real estate industries

  • * Accountability on the part of those who took the companies down; including: resignations of management, givebacks of executive compensation packages, and (this is where the paleoliberalism comes in) limitations on executive compensation.

  • * (This one is interesting:) An equity position for the taxpayers; including some form of ownership of assets using a credible formula for evaluating the price of the assets that the government is buying; AND

  • * Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust, a ban on political campaign contributions from officers of corporations receiving bailouts, and a requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts.


Rep. Kucinich is also demanding some mechanism for direct assistance to homeowners saddled with unreasonable or unmanageable mortgages, as well as protection for renters who have lived up to their obligation but fall victim to financial tragedy when the property they live in undergoes foreclosure.

Some observers have ominously called this bailout proposal "the economic USA PATRIOT Act". Clearly, we need to exercise our vigilance now or risk losing our liberty later. Write your Congressman or our U.S. Senators and urge them (1) not to act in haste, (2) not to rubber-stamp Secretary Paulson's plan, and (3) to consider the public interest. If you're feeling gutsy, I suggest you throw in a recommendation to throw out the Federal Reserve Bank and replace it with silver-backed currency. Most of the follies we have recently experienced could not have happened if money creation had been regulated by silver or gold.

Ohio’s Senators may be reached by e-mail at:

George Voinovich:http://voinovich.senate.gov/public/index.cfm?FuseAction=Contact.ContactForm

Sherrod Brown:http://brown.senate.gov/contact/

Your Congressman (links to home page -- each one has an e-mail link)
(If you do not know who your Representative is, use the handy tool at the top of this page.)

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