25 September 2008

The Bailout: Independent Viewpoints

Early reports of a bipartisan agreement on the proposed bailout of the banking sector are breaking down under pressure from a Republican faction that opposes the Bush administration's plan, preferring a free-market option in defiance of the failure in confidence that appears to make a bailout necessary. Senator Obama reportedly probed the Republicans for details of their alternative proposal, but wasn't satisfied with the response. It also remains unclear how much the Democrats will get of what they want, including a homeowners' bailout and a promise of rebates for taxpayers if the assets acquired by the government appreciate in value. Meanwhile, news has broken that the Washington Mutual company has failed, was taken over by the FDIC, and its assets sold. The stock market could be teetering on a precipice in the wake of this news and in anticipation of tomorrow's.

There is an establishment impulse toward a bailout deal, and ideological resistance from conservative (as in "limited government") Republicans. What do people think outside the Bipolarchy? Are there other options that you can actually vote for? I've made a quick survey and will summarize the opinions I've found.

Chuck Baldwin (Constitution Party): "So far, the only solution being talked about is more of the same failed monetary policies that got us into this mess in the first place – more fake money, more debt, more usury. It is time to demand a return to sound money. None of the other “Big Box” candidates is even talking about the most obvious place to begin the road to recovery, which is a return to the constitutional principal of sound money."

Bob Barr (Libertarian Party): "The financial crash is not a "crisis of capitalism." It is the result of foolish federal policies manipulated by private interests -- precisely how Washington always operates. Giving Washington more power is no solution.The federal government cannot eliminate financial losses and should not attempt to do so. It can only shift the burden -- in this case from irresponsible borrowers, lenders and investors -- to taxpayers. Keeping the walking dead on economic life support will only slow down necessary adjustments. The federal government's principal responsibility at a time of financial stress should be to maintain liquidity for use by otherwise sound institutions....Congress must address the causes of the current crisis; most of which stem from government missteps. Take the Federal Reserve, for example, which has untrammeled discretion--of the sort being sought by Treasury Secretary Henry Paulson--to mismanage the money supply.The Fed's easy money policy helped create an economic bubble. Everyone from consumers to investment banks over-extended themselves. Prices for commodities, and especially houses, rose dramatically. We must hold the Fed accountable--or even replace it--to ensure sound money that is safe from political manipulation.Second, Fannie Mae and Freddie Mac were used by Congress to simultaneously expand mortgage lending and enrich politically influential interests. The two entities must be fully privatized, and left with no federal support, guarantees, or dictates.The Community Reinvestment Act is used to force banks to make bad loans to poor credit-risks in inner-city neighborhoods. Some of the politicians who now denounce "predatory lending" previously attacked those same banks for not lending. The CRA should be repealed."

Gloria LaRiva (Party for Socialism & Liberation): "Working people didn’t make this crisis, why should we be the ones who have to suffer? We didn’t create the housing bubble, create predatory lending practices, gamble away billions of dollars in the Wall St. casino. Now the government is creating a fund with our money to take over the bad debts of the bankers and corporate capitalists. For the rich, it’s “heads we win tails you lose,” showing once again that the “free enterprise system” is nothing more than a myth. ...Make the greedy capitalists who created the crisis pay. Their vast fortunes should be expropriated and used to provide jobs, housing and healthcare for the people who go to work every day, who make this country run."

Frank McEnulty (New American Independent Party): "People need to go to jail. People need to lose everything they own and I'm not talking about the borrowers/homeowners here. I'm talking about the people who created this mess solely because they could earn larger and larger fees and huge incomes....When the federal government bailed out AIG, it did so by giving the company an $85,000,000,000 loan and it took ownership of 79.5% of the company. That looks more like an investment than a bailout to me and should probably be called such. It also gives us, the American taxpayer a chance to get a return on the investment. It may even turn out to be a good investment and make us, the American taxpayer, some profit.
That's the type of bailout we need. All amounts given to rescue financial institutions must have some expectation of being recaptured through future profits and loan recoveries."

Cynthia McKinney (Green Party): "The Federal Reserve is becoming the lender of last resort. This means that the people are becoming the owners of the primary instruments of U.S. capital and finance. This now means that the people have a say in how these instruments are to be used and what their priorities ought to be. The people should now have more say in how their tax dollars are spent and what the priorities of government and the public sector must be. We the people must now set our demands to ensure and promote the public good....The case of the AIG bailout is particularly curious as Merrill Lynch was denied taxpayer largesse. I wonder if AIG was the selected company for bailout because of its relationship to the U.S. intelligence community and what others would discover if AIG's books were opened in an audit. The last person to get close to AIG and its shady operations was Eliott Spitzer....The Federal Reserve should operate in the interests of the U.S.taxpayer and not the interests of the private, international bankers that it currently represents. This, of course means that The Federal Reserve, too, must undergo a fundamental ownership and mission change.This crisis does not have to be treated as merely a "market correction," or the result of a few rotten apples in an otherwise pristine barrel. This crisis truly represents the opportunity to introduce fundamental changes in the way the U.S.economy and its political stewards operate. "

Ralph Nader (Peace & Freedom, etc.): "[The Paulson proposal] recklessly empowers a government appointee with no accountability. It's clear that till the bitter end, the Bush/Cheney approach to government is one of unconstitutional over-reach, coercion, secrecy and zero accountability, with corporate comfort first, and the best interests of the American people. Something has to be done, says Nader, but not in secrecy and not without a Constitutional brace of protections for the American people added to the bill, including appropriate sunset provisions....changes to the bill [should] include: Provisions for homeowners to stay in their homes in default, or rent them at market value;A cap on executive compensation and disgorgement of ill-gotten gains;A stimulus package for infrastructure repair and upgrade to generate new community jobs; Comprehensive regulation of and disclosures by the financial industry and Wall Street to prevent this from occurring again;Prudent margin requirements on derivatives trading and a tax on securities derivatives transactions; Shareholders control over the corporations they own;Tougher criminal enforcement against culpable firms and executives."

That sums up the leading independent candidates that I've already covered in my alphabetical survey. I will update this post as I discover more comments from the other candidates.

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Friday: My Google news gadget picked up some comments from a candidate I haven't covered yet due to his rank in the alphabet. Here's Jerry White of the Social Equality Party: “The government’s plan to take over the nearly worthless mortgage-backed securities being held by the banks and big investment firms will, in the end, make even richer the financial aristocracy whose anti-social and no doubt criminal activity has brought the US and indeed the world economy to the brink of financial collapse on a scale not seen since the Wall Street crash of 1929....There will be massive resistance to the efforts to return working people to the days of the Great Depression. Many of the lies and myths that have been used to convince people that there is no alternative to the free market are being exploded. The great ‘innovators’ and masters of the financial universe have turned out to be con men and criminals.”

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