I need a bailout

Source.

America Deserves an Explanation

Congress got a wake-up call yesterday. Actually it was more like a big flying F.U. Colossal failure of the bailout package yesterday sent Wall Street sinking and the political machine began to take Tums. How did this happen? It's what I've been saying all along. No one has bothered to explain to the American public anything about this economic "crisis". If you expect Americans to support spending $700 billion to bailout Wall Street and--let's face it--the real American elite have been pulling down six- and seven-figure salaries for decades for little or no leadership or risk, you'd better be damned ready to 'splain yerself, Lucy.

“The risk we run now is we will have a much deeper and more protracted recession than what we had before,” said Mark Gertler, an economics professor at New York University.

He faults politicians and government officials for not doing enough to help Americans understand why the crisis on Wall Street could start to hit home on Main Street. He also thinks no one bothered to spend enough time explaining to Americans how the proposal would work, leading many Americans to see it as simply a handout for Wall Street fat cats.

The proposed $700 billion bailout plan failed to pass the House of Representatives on Monday amid political squabbling and fears that a vote for the plan would impact what lever ordinary voters pull come Election Day.

“This is really a failure, at a massive level, of the political system,” Gertler said.

Politicians have been treating the American public like a bunch of little kids. Fear of runs on banks, massive sell-offs of stocks and the like does not give our elected leaders the right to keep us in the dark and demand we walk in lock-step with an administration we no longer trust. Why should we give billions to already rich people who seem to have no concern for the people they are now raping for tax dollars? Those little guys let their representatives know that they would show their disapproval of a "yes vote" with their votes in the fall. Game over.

If this issue really is bigger than individual elections, Congress needs to grow some cajones and communicate with the American public. I'm pissed off about this. I'm a citizen, too. And I've been TRYING to learn about why this bailout is necessary. I don't think even the media understands. Somehow GWB, Harry Paulson and Paul Krugman get it and I'm supposed to just, you know, believe them. It is a massive breakdown of the political process. As Krugman notes, "We've become a banana republic with nukes." Oh, and we should thank John McCain. Because, you know, he was so instrumental in bringing everyone to the table and getting them on board.

Open Thread on Bailouts of the Securities Industry

The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the second world war. It will end eventually when home prices stabilise and with them the value of equity in homes supporting troubled mortgage securities.

Allan Greenspan in The New York Times

All this recent huggabaloo about the bailouts of Freddie Mac, Fannie Mae, Lehmann Bros, and now a broader bailout that assumes that the industry is about to collapse.

I have to admit, I believe that the economic problems are a national crisis, and I am not above spreading the damage around. We all benefit if the economy turns around. However, I am concerned about the enormity of it. I worry about the long-term implications. And I'm not the only one. more than a bit miffed about things like CEO salaries, especially when they do things like run companies in the ground and leave in disgrace (well as much as one can with a disgustingly large golden parachute package). I am pissed that those with the funds to invest in companies are reaping ALL the benefits on the backs of the workers who are receiving declining benefits and real wages. This is a lop-sided arrangement that has been perpetuated since the gilded age following the Industrial Revolution and has only been slightly modified (through civil unrest) to be slightly more favorable to American workers.

But I suspect that this bailout is far more reaching. And once again, it is disproportionately going to be shouldered by the American working class. It's a classic case of privatizing profits and socializing risk.

I am a biologist. I know embarrassingly little about economics.

I did hear an interesting idea wherein the banking industry is required to pay into an "insurance policy" against failure. I wonder what people with some understanding of economics think about some of these kinds of ideas. And so, I am opening up the discussion to you. Here is your chance to educate me. Spout off about your concerns. Invite your economist friends. Invite your CEO friends. Invite your political friends. Invite a Republican or two. Spread a little education around.

No fist fights, please.