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Financial Crisis: Bailout : Time for a Citizens' Plan?

Business  (tags: Bailout, Depression, Economy, Financial Crisis, Government Bailout, Henry Paulson, Taxpayer Bailout, Treasury Secretary, Wall Street, Wall Street Crisis, Bush, Republicans, McCain, Business News )

- 3830 days ago -
These demands will be met with howls of outrage, a renting of pinstripes. It will require a Congress, lathered with Wall Street contributions, to insist on a deal that makes sense.


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Blue Bunting (855)
Sunday September 21, 2008, 11:38 pm
Call it extortion. Every American is now being told to ante up $2000 - an estimated $700 billion in all - to bail out the banks from their bad bets, or they'll bring down the entire economy.

In the speculative frenzy that allowed the Masters of the Universe to pocket millions personally, the banks filled their coffers with toxic paper that no one wants to buy. Now they sensibly don't want to lend money to each other, since no one knows if the other is solvent. So they go on strike, and threaten to trigger a global depression, if they don't get rescued.

(for more details go here.)

The bail out will take place simply to avoid that depression. But depressions have some salutary effects - the scoundrels go belly up, the weakest get purged. And, in the wake of the disaster, people demand strict regulation of the money lenders to keep their greed in check, and government spends money on the real economy to put people back to work.

So if we're going to ask Americans to pay to avoid the depression, we better demand the accounting that wouldn't otherwise take place.

We need a citizens' plan on the crisis. Here's a first draft, derived from discussions with a range of independent experts.

No bail out should go forward without the following minimal conditions:

1. Taxpayer money; taxpayer accountability. The Treasury wants unlimited authority to spend $700 billion in a revolving fund with no rules beyond its own discretion. We can't trust the most spectacularly corrupt administration in memory to decide how they'll cut the deals with the banks. We'd get fleeced. Instead, the law must require an independent entity, with consumers and workers having a majority of the seats on a board with authority to create rules that will prohibit gaming of the bailout. And the Congress - itself sadly compromised by Wall Street money - should be empowered to name independent monitors and to approve all board members.

2. Taxpayers share in the upside. The Treasury bill would buy the bad paper of firms without taking any equity in the firm. That's an invitation to larceny. If a firm decides to auction off its toxic paper to the US agency, taxpayers should get equity in that firm, in proportion to the assets we buy. That will deter profitable firms from using the agency as a dump for their toxic paper. And it will insure that if the bailout works and the firms become profitable, taxpayers, not simply bankers, benefit from the upside.

3. Shut down the casino. No bailout of the predators can go forward without new regulation for the financial system - capital requirements, leverage limits, bans on exotic instruments, transparency, limits on compensation schemes. The shadow banking system - hedge funds, private equity firms - must be brought under the glare of regulators. The Federal Reserve should be directed to police asset bubbles. Over the counter trades - like the credit default swaps - should be brought into public exchanges. Some details should be written into the law; Treasury can be mandated to issue more comprehensive regulations by a date certain, with fast track rules for consideration by the Congress. One thing is clear: any promise to do the bail out now and the regulation later is simply a lie.

4. Curb excessive CEO pay. Wall Street fatcats shouldn't be pocketing millions taxpayers are forced to bail them out. Any firm that applies for relief must agree to limit the compensation of any executive - pay, bonuses and perks - to no more than the highest pay offered a senior federal official. Future compensation should be linked to profitability.

5. Invest in the real economy. Ending the bankers strike is not sufficient to avoid a serious recession, as consumers tighten their belts. A major public investment agenda - $200 billion or more - for developing new energy and conservation, rebuilding schools and infrastructure, extending unemployment and food stamps, helping states avoid crippling cuts in police and health services - is vital to get the real economy moving and put people back to work. If we don't do this, the coming recession will raise the cost of the Wall Street bailout dramatically, as credit card, auto and home loan defaults rise.

6. Aid the victims, not just the predators. No bail out of the banks can take place without a freeze on foreclosures and renegotiation of bad mortgages so people can stay in their homes. Bankers and home owners both made a foolish bet that home prices would keep rising. Many homeowners were misled by predatory lenders to taking mortgages that they didn't understand and couldn't afford. It would be simply obscene to help the predators and not those that they preyed on.

7. Curb the political corruption. No contributions from Wall Street PACs or executives should accepted by any legislator or candidate for national office. Paid lobbyists of Wall Street firms should be banned from any legislative contacts. Any meeting with representatives of Wall Street - and many will be needed to understand what is happening - should be posted immediately by legislators in a central place on the web. All those employed over the past five years by troubled firms seeking relief should be prohibited from profiting from the bailout. Without this ban, legions of executives from Bear Sterns or Lehman Brothers will create consulting firms to profit from cleaning up the mess that they made.

These demands will be met with howls of outrage, a renting of pinstripes. It will require a Congress, lathered with Wall Street contributions, to demand a deal that makes sense. This won't be easy, particularly with Republicans apparently lining up en mass to rubber stamp the Bush administration proposals. But trusting this administration to decide without conditions on how to bailout the banks with $700 billion in taxpayers money is simple lunacy.

These banksters have brought the global economy to the brink of the abyss. They want to use that crisis to give the Treasury a virtual blank check to bail them out. Counting the money already spent, more than a trillion dollars will be spent rescuing them from the mess that they have made. Before agreeing to that, Congress has to demand common sense conditions that insure the taxpayers won't get fleeced, and this won't be done to us again.

Make your voice heard. Add your comments below. Write Senate Majority Leader Harry Reid, House Speaker Nancy Pelosiand demand that they stand up. Write Senate Republican Leader Mike McConnelland House Minority Leader John Boehnerand tell them that saluting the Bush administration is not sufficient. Tell the Committee Chairs Senator Chris Dodd and Rep. Barney Frankthat the Treasury proposal is unacceptable. Finance is too important to be left to the bankers. And the bailout is too costly to be left to the Bush administration.

It's time for citizens to demand common sense.


Jacques E. (0)
Monday September 22, 2008, 1:14 pm
can you turn this into a positive petition that can be sent to appropriate members of congress including Frank and Dodd? I would sign it -- and ask friends to sign it. Time is critical and we need to get out the parts that accuse them of stuff they "might" do if we allow a free hand. I also want to ask Bloomfield and Buffet to be on the committee to decide how this money will be spent. I would set up the petition myself but I don't know how.

Blue Bunting (855)
Monday September 22, 2008, 2:04 pm
Jacques, theose plans will be submitted, they are being refined by economist bloggers to be presented to the Congre$$.

Blue Bunting (855)
Monday September 22, 2008, 2:05 pm
The Democrats in Congress must hold out for everything they want. This is basic negotiation. So what if Secretary Paulson wants the cash upfront with "the reforms need to come later."

Here's what this Democrat wants:

1. No more $ for the Iraq War.

2. Expand Medicare and/or Medicaid to include all members of the population.

3. Codify the "Fairness Doctrine" of the FCC removed by R. Reagan. Return the public airwaves to a marketplace of ideas.

4. Triple the amount of money available for students under the Pell grant program.

All of the New Deal, or none of the New Deal.

There MUST BE NO bailout without considering the following facts:

1. Paulson was Goldman Sachs-CEO, before he became US-Secretary of the Treasury.

2. Goldman Sachs is the only invesment-bank, which not only SURVIVED last week's bloodshed, but THRIVED on it. (Question: What did GS know, to thrive, while others faltered - something, that other Investment Banks apparently didn't know - and HOW did they get to know this?)

3. Paulson now suggests that the USA shall unconditionally buy toxic debt from the remaining Banks and Investment Banks - aka Goldman Sachs.

4. Goldman Sachs will shed all her toxic debt and sell it unconditionall to the taxpayer, only keeping the good, profitable debt in her portfolio.

5. After January 20th, Paulson will very likely return to the board of directors at Goldman Sachs. I BET MY HOME ON THAT. But even if he didn't return, He had $632,000,000 in Goldman Sachs stock when he left.

1 + 2 + 3 + 4 + 5 = Everybody at Goldman Sachs is laughing their sleeves up, celebrating their unprecedented bravery and recklessness in looting America

A pattern. Anyone?

Eric Straatsma (3802)
Monday September 22, 2008, 8:52 pm
First, McCain was against bailing out AIG... that is Conservative values for sure.

The next day, McCain was FOR bailing out AIG.. that is liberal values for sure. I think that is a record for the fastest flip flop ever, or did someone do it faster? I think he should get an award for that.

What is a bailout called when the government buys out the controlling interest in a private corporation, and replaces the CEO with their own hand picked person who is under their control?

How can Conservatives and Liberals agree that Communism is now needed, when we have been fighting it for generations? The definition of Communism is government controlled enterprises.. right? Read it for yourself...

If we are going to become loyal Communists, and our best friends with most favored trading nation status is Communist China, why not go all the way, and take over all of the biggest corporations, starting with the OIL companies? Start by distributing checks to all Americans as they do oil 'royalties' checks in Alaska, out of the profits from all of these companies that the Communist government is taking over, including Fannie Mae, Freddie Mac, and all the rest?

If it works for Alaskans, and for Saudi Arabia, why not for the rest of us? It seems we are going to live under an authoritarian government controlled by corporations, which tries to shove solutions down everyones throat under threat of total collapse if we do not take the deal. It seems we are going to live under an authoritarian government that does not debate issues or talk about issues of any substance. The least we can do is nationalize these corporations that the government is bailing out on our behalf., In return, the least these corporations can do is hand out money in return for us bailing them out of their mess.

Blue Bunting (855)
Tuesday September 23, 2008, 2:16 am

Make your voice heard. Write Senate Majority Leader Harry Reid, House Speaker Nancy Pelosiand demand that they stand up. Write Senate Republican Leader Mike McConnelland House Minority Leader John Boehnerand tell them that saluting the Bush administration is not sufficient. Tell the Committee Chairs Senator Chris Dodd and Rep. Barney Frankthat the Treasury proposal is unacceptable. Finance is too important to be left to the bankers. And the bailout is too costly to be left to the Bush administration.

It's time for citizens to demand common sense.

Blue Bunting (855)
Tuesday September 23, 2008, 2:20 am
I just sent the following letter to my congressional delegation, the congressional leadership, and the committees with oversight. I urge everyone to send their own.

"I just read the administration’s plan for the Wall Street bailout. My initial reaction is, “You are out of your tiny little minds!” This is a monstrously bad plan with no guidelines for dispensing the money, no protections for taxpayers, and explicitly prohibits any oversight. Any member of Congress brain dead enough to vote for this proposal deserves to be tarred and feathered, placed in the stocks, and pelted with rotten produce, before being run out of the country.

If we have learned anything over the past eight years, it is that you never give any member of the Bush administration a blank check for anything. This administration, best noted for gross incompetence and pervasive corruption, cannot be trusted with spare change, let alone $700 billion, without intensive, detailed oversight. It would not be unreasonable, given their record, to require specific direct congressional approval for each and every expenditure (including for postage). Strict controls and oversight by both Congress and the courts must be in place before even considering any proposal from this administration.

Any acceptable proposal must include detailed guidelines for spending the money including mandatory discounting of financial instruments purchased, replacement of all of the senior executives and boards of institutions receiving assistance, implementation of strict regulations and oversight of these institutions, and guarantees that the taxpayers will be the primary beneficiaries of this program. Anything less simply rewards stupidity, incompetence, and unbridled greed. I urge you in the strongest possible terms to reject this and any other bailout proposal which does not meet these standards."

We need to flood their offices so they are more afraid of us than of Wall Street or the presidunce.

start here:

Past Member (0)
Tuesday September 23, 2008, 2:35 am
Thank you my friend This realy is a great idea: Make a petition.....GET OUT ON THE STREETS AND SEND BUSH TO WHERE HE BELONGS! I like the comments on this biggest fraude in the history of mankind!

Our international members must be torn between sardonic laughter and whiplash from shaking their heads and asking WTF??

Although I signed it, I don't think it will matter. Congress wants to bailout Wall Street as they are heavily involved in this fiasco too, and many of them will probably benefit as well from insider knowledge to sell off quickly. Martha Stewart must be seething with envy. From everything I am learning, it appears this is the 2nd biggest scam played on Americans since 911. Bush, supported by McCain, has served big business and is now giving them their biggest payoff before leaving office.

Noted. We have no money...we are bankrupt and operating on 'funny money' that does not we, as a country, just keep in the world could we bail out anything with what does not exist? Talk about living in Never, Never Land! I signed, but it was a token. This is a done deal folks...and do not buy what a 'stimulus' it has been to the market. This is all smoke and illusion. A real boondoggle. I am disheartened this morning, big time. Thank you, Cate, for bringing this to us.

I"m sorry, I can't sign that. That gives them permission to do this. This is completely unconstitutional. I'm re-watching the new documentary movie Fabled Enemies. It talks about the money laundering going on in America by our government agencies for the specific goal of these attacks. So, I'm thinking, well, first the air went blue, then I'm like. F__K, they've been ripping us off and the probable result is the current financial meltdown. If this wasn't specifically rigged to happen, damn it I'll eat it.

It is time to abolish this government and form an even more perfect union than the current failed one. It will not stop here, if we let them continue on this path and let them bail out private companies, they won't stop until they have it all and "We the people" have nothing.

If they took that $700 BILLION and Nationalized Healthcare & shored up Social Security - we wouldn't Need Insurance. Let Wall Street DIE - Nothing's TOO BIG to fail - ask the Soviet Union!;)

But these constant, "Oh My, another sightly injustice has been committed" notes are starting to become annoying. EVERYONE on their Computer whining isn`t going to change a thing. We need to get out and protest. Do SOMETHING !!!!

I vote no, this is insane. What about the hard working middleclass and poor that are living from pay check to pay check and still send their children to school hungry and without the proper clothing. What about our veterans that return and cannot even find a job, the rich are getting the richer and they sure as hell don't need us to bail them out. Believe me someone knoew what was going on and someones pockets are well padded. Vote if we can for NO which I truly doubt will even be counted. Southern New Jersey Mad As Hell

This problem is a global problem do you think that this only concerns you?

The speculations must stop no more bubbles.....this is the next big bubble why do you want to bail out nothing? No sane person would pay 700 Billion to save a dead patient!

Let wallstreet die and spend the 700 billion for the funeral of capitalism!

Party time people! GWB is inviting to his after party.......One trilllion now how many times nothing is that or do we need a few more 000000000

GWB Is one big 0!

Blue Bunting (855)
Tuesday September 23, 2008, 4:09 am
What is happening in the global macroeconomy? 11/27/22/15 of 16-17 months

The global macroeconomy is likely but several weeks away from the greatest of all lower high saturation valuation areas that the world has ever known. It is a 150 year event whose expected nonlinearity will be nearly unimaginable. This is the time area where all of the particular investor-buyers interested in commodities and equities will be fully invested and where those interested in safer markets will have their resources during the same time period squarely placed there. The equity, commodity, debt, and dollar indicies are moving in a quantum fractal manner toward that pretransition saturated area.For equities and commodities the lower high saturation day will be followed by a day or market-halted days where there are simply no more next day buyers. That is the nature of the lower high valuation saturation area - where the transition could be a 70-80 percent drop in valuations from the prior night to the next morning of trading. All of this event's epiphenomena - of world bank and treasury interventions - are puny and nonmeaningful news events occurring tangentially in the shadow of this total debt-wage contracting money supply end point.


The underlying economies will not support the demand for commodities and investment vehicles whose prices have been driven up by huge concentrations of cash seeking a high return. People will stop buying gasoline if it is $15 a gallon and will even stop eating if bread is $15 a loaf. The wealth of the global economy will disappear overnight as prices for commodities and any and all investments collapse to what the underlying markets, real consumption, can afford. And the lower peoples wages are, the less the value the investment will ultimately have.

Everyone will be broke. Fortuantely for the poor it will be business as usual, living and dying on crumbs. Rich people will be jumping out of their high rise windows.

This has been the utter falacy of Reaganomics and Friedmanism, that concentration of wealth creates prosperity, when the truth is shared prosperity alone creates wealth and that wealth cannot exist for long without shared prosperity.

Blue Bunting (855)
Wednesday September 24, 2008, 12:02 am
Insofar as the economic crisis is concerned let us all be reminded that the fundamental flaw in all the "solutions" offered is that those solutions are offered to "fix" a problem that cannot be fixed. To understand this basic point, you require only three sentences from Mike Whitney's analysis. Here they are:

This cycle [in the market] will persist until the bad debts are accounted for and written off or until the exhausted dollar-system collapses altogether.


In truth, there is no fix for a deleveraging market any more than there is a fix for gravity. The belief that massive debts and insolvency can be erased by increasing liquidity just shows a fundamental misunderstanding of economics.

This is the truth that almost no one will accept.

Will Dmeocrats NEVER recognize when they're being "set up" by the RepubliCON crook$ AND LIAR$?

"I wonder how many times you have to be hit on the head before you find out who's hitting you? It's about time that the people of America realized what the Republicans have been doing to them," - Harry Truman.
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