“We are in a box. The United States’ current economic crisis has four corners, just like any regular box,” was how I framed it in my Friday post, “Squaring off.” Again today, activists — people who are trying to influence what Congress does about the financial crisis — are boxed in by fears#, by anger, by confusion, and by disappointment. Today’s post examines how those prevailing emotions are driving what Democrats, Republicans, plain citizens and the power elites are doing to respond to the Bush administration’s demands*. Activists may have set new records this week, as they called* and e-mailed their Representatives.
Of two minds, with an uncomfortable feeling of ambivalence — I really like what Rep. Dennis Kucinich (D-Ohio) said in his recent e-mail about what really should be done: “We are told that we must stabilize markets in order for the people to be protected. I think we need to protect peoples’ homes, bank deposits, investments, and pensions, to order to stabilize the market.” I also like what Rep . Chris Shays (R-Conn) said in an e-mail on the other side of the argument: “While this is not 1929 all over again, it could be if we step aside and let the wonders of the market work its will in this environment. We can’t let the foolishness and greed on Wall Street bring down Main Street; at least I don’t intend to.” Perhaps this ambivalence is what kept me from trying to call members of Congress. But a huge unknown number of people had no such problem with mixed feelings. Their fierce opposition meant that, as reported by by Paul Kiel, ProPublica – 9/30/08, “Despite Lobbying, Popular Opposition Sinks Bailout Bill”. And now there is a desperate GOP spin going on to shift the blame.
Democrats in the Senate did not let disappointment immobilize them. An article at Politico.com headlines an edgy reality: “Bailout not dead yet,” by Ryan Grim & Martin Kady II, 9/30/08. To quote:
Senate leaders have decided to take up the failed House version of the $700 billion economic rescue bill, and plan to add a widely supported change in the Federal Deposit Insurance Corp. caps.
In what is shaping up to be yet another historic vote, presidential candidates Barack Obama and John McCain will return to Washington tonight for a late night vote.
Sen. Charles Schumer (D-N.Y.), embraced the idea as well, but sought to give Reid credit for attaching the FDIC measure and a widely popular tax extenders bill to the bailout.
“I’m getting to the point in my life where I can’t start over” signals a kind of resignation in the story of how fast the situation has evolved in just a few hours. Now people are looking at “a second chance (and thoughts) on the House bail-out vote,#” in Time (10/1/08). To quote:
Representative Elton Gallegly, 64, a California Republican . . . says he doesn’t regret his “No” vote. Gallegly is adamant that the House must pass a bill to stabilize the nation’s fragile financial markets. Whereas phone calls to his office were once running 40 to 1 against the bill, now they’re “a mixed bag . . .”
It’s amazing what a 778-point drop in the Dow Jones Industrial Average, wiping out $1.2 trillion in equity, can do to change public opinion. An ABC News/Washington Post poll taken following the failed vote showed that 88% of Americans are concerned that the collapse of the bill could worsen the economic turndown and that 51% are confident that a bill will eventually pass. And where the people go, politicians very quickly follow. Most members explained their votes opposing the bill Monday as a reflection of their constituents’ anger about a rescue package for Wall Street. “Since the vote, it’s about half and half,” Representative Tim Murphy, a Pennsylvania Republican who voted against the bill, says of the calls coming into his office. “Half say, Do something — I’m worried about my business or my retirement; and the other half still say, Don’t vote for the bailout.”
Though we plain citizens remain anxious, angry, confused and disappointed, I am not sure that we can change now. I feel that the weight of influence has now shifted to the power elites, the investor class, such as the U.S. Chamber of Commerce, etc. Regarding who’s likely to get the second chance, I conclude this post with a comment from Pseudocyants from my yesterday’s post, that presents a logical prediction by this reader, along with some good advice. To quote:
Barron’s is attempting to set-up a soft-landing for the Republicans who will end up voting for the next version of the bail-out:
After the House of Representatives Monday dramatically rejected legislation to establish a $700 billion rescue package for the financial system and helped to trigger more than $1 trillion loss in the value of U.S. stocks, Congress worked Tuesday to put together a bill that could gain passage, perhaps by the end of the week.
What changed? Reports say that House members, who previously had been besieged with messages from constituents who reacted with blind anger over the prospect of laying out $700 billion in what they saw as a bailout for Wall Street fat cats, heard a very different tune Tuesday. America’s investor class reacted just as angrily at the losses suffered in their retirement and college-savings accounts as what they saw as the result of the House defeat of the bill.
Randall W. Forsyth , “Congress Reads the Returns — of Minus $1 Trillion“, Barron’s, October 1, 2008
Mighty broad definition of the “investor class”, if you ask me. In reality, the investor class are those who are pissed off about how big a percentage of their wealth now needs to be expended purchasing their monocle polish.
A great number of the persons opposed to the bail-out lost money in their 401-Ks and children’s college funds. It ain’t gonna be the Democrats would walked after the ACORN initiatives were excluded from the package who will return with a yea vote, because ACORN is off the table. It just won’t do for the “investor class” if po’ folk get a piece of the bail-out pie.
The Barron’s article goes on to describe the mark-to-market accounting rules required by Sarbanes/Oxley as a “relatively esoteric matter”. Really? A financial institution having to mark their assets to present day valuations is called transparency, and if this passes, there will be more trouble down the road, guaranteed.
My prediction is that there will be a bail-out passed by no later than next Monday, and that many of the Republicans who voted no previously will be onboard. It will be billed as bipartisan cooperation. Whenever the word bipartisan is mentioned in the same sentence as $700 billion, go and put on your best pair of steel trousers, because politicians are about to tear you a new one.
The proper way to handle this crises is to force all corporations who need government funding to completely and honestly mark down their bad debt publicly, forcing their share price to tank down to the real market value. Then whatever monies they receive, the Federal Government should receive stock warrants on a dollar for dollar basis at that value. As soon as the market stabilizes, and the Government is able to realize a profit from these warrants, they should be sold to the highest bidders at open auction, and the monies derived from these sales to be placed directly into the treasury, not siphoned off into pet projects. If Congress played free-market hardball with the financial corporations, most would suddenly discover new avenues of previously untapped investment capital, and would no longer be crying for a hand-out. Never extend credit to a lousy gambler. It’s like giving money to a junkie.
- “Breaking on the web — Wall Street crisis edition.” From ProPublica
- “History of U.S. government bail-outs” a fascinating “cloud” chart in color, from ProPublica
- “18 Tough Questions and Answers#” from Time Magazine
- “American financial crisis sparks German schadenfreude#” from The Local
Hat Tip Key: Regular contributors of links to leads are “betmo*” and Jon#.
View my current slide show about the Bush years — “Millennium” — at the bottom of this column.
(Cross-posted at The Reaction.)
My “creativity and dreaming” post today is at Making Good Mondays.