"Where are the Customers' Yachts?"
(title of Fred Schwed's book on Wall Street)
What? Another bailout? Another opportunity for average taxpayers to
help poor billionnaires escape their own folly? Another opportunity
to "Privatize profits, socialize losses"?
Is this a good idea for the nation? For us? For our children?
Start with a background in gang-based politics
economics, and confidence games
(lovell2003). Then add a bit of history
- The wealthy financiers who hijacked the Republican Party in the 1970's
under Nixon have spent 30 years crippling the US Government's ability
to protect citizens from gangs of con artists in 3-piece suits.
- Every time a con game goes up in smoke, the Republicans come to
the taxpayers for a bailout. They sell the bailout as helping poor
downtrodden Joe Sixpack, whereas in fact it is yet another case of
"Privatize profits and socialize losses".
- Each time, taxpayers (and Democrats) fall for it because they
think there are only 2 options: Bailout, or disaster for themselves.
- There are in fact other options, e.g.
- Do NOT give Henry Paulson dictatorial control of $1T.
- Take the ill-gotten gains back from the financiers
and use that to pay off insured losses.
- Refuse to indebt the US in order to cover losses
(insured or uninsured). If you got caught in a con game,
that is your problem, not my children's problem.
- Tar and feather the politicians who voted for the de-regulations.
- Sell Texas to pay down the national debt. They gave us
the S&L disaster, the Bush administration, Enron, the Iraq war,
and now this Phil Gramm-inspired and George "W" Bush-conspired
debacle. Not to mention Texas Holdem and the phrase "All hat,
no cattle". Folks, we can't afford Texas.
A bidding war between China (for the remaining oil, and as a
place to site more Walmarts), Saud Royal family (for love of the
Bush family), and Venezuela (out of spite) would be interesting.
I'd disallow Russia, because they just use oil for political
The best bet is to read
Frederic S. Mishkin. "The Economics of Money, Banking, and Financial
Markets", 7th ed. Addison Wesley,2004. ISBN 0-321-12235-6.
However, I'll give a quick summary:
Basics John has $1000 he isn't using at the moment. Mary needs
$1000 to start a small business. Scrooge runs a bank in town. He
stores John's $1000 in his safe, then lends it to Mary at 5% interest.
To make a profit for himself, he only gives John 4% interest and
pockets the 1% difference, or $10/yr.
Given enough Johns and Marys, Scrooge does quite well. Enough money
is coming and going so that he can loan out most of the deposits, and
still cover John's weekly request for $50 cash from his deposits.
Bank Panics One week Scrooge loans out nearly every last penny, and
hopes only a few people will ask for cash. Unfortunately the whole
bowling team comes asking for cash for a new bowling lane. Scrooge
can't pay. Everyone in town finds out and rushes to get their own
cash. Scrooge calls in loans early. Mary can't get an extension on
her business loan and cannot pay her workers for that week. The whole
systems crashes. Even those who got their cash out early are hurt,
because the whole town is in a depression.
Reserves, Deposit Insurance The town decides that banks MUST
maintain 25% of deposits in the safe. That "reserve" provides a
cushion. But it isn't enough to prevent all panics. So several
towns, covering several banks, agree to set up deposit insurance: If
there is a run on a bank, the insurance covers it.
Moral Hazard Scrooge is prudent, and only lends to folks who are
likely to pay. He seldom needs to use the deposit insurance. Dirty
Dirk lends to anyone at all -- if they repay then he gets richer; if
they don't repay then the deposit insurance covers the loss. Heads I
win, tails you lose. Dirty Dirk has an incentive to game the deposit
insurance, thus a "moral hazard".
Adverse Selection Due to his aggressive lending practices, Dirty
Dirk ends up with quite a few low-lifes and nere-do-wells on his
books. His bank becomes systematically more likely to have problem
loans and thus difficulty repaying depositors. This is "adverse
Regulation Folks throughout the county finally catch on to Dirk's
scheme. They institute regulations about the level of reserves
relative to the quality of loans. Dirk is effectively forced to
pay more for insurance than Scrooge.
Principal-Agent Scrooge is a "principal", in that he personally has
his fortune invested in his bank, and is careful to avoid imprudent
loans which might bankrupt his bank. Unfortunately, his new loan
officer Jimmy (fresh out of Harvard B-school) doesn't have that investment
or that concern. Since Jimmy is paid a percentage of cash flow of the
loan portfolio, he has incentive to do more agressive loans (with
higher risk of default). Almost without noticing, Scrooge's bank has
lost some of its loan portfolio quality. Jimmy is an "agent".
NOTE: In complex bailout schemes involving campaign contributors,
politicians are agents while taxpayers are principals.
Asymmetric Knowledge Scrooge and Dirk manage loans from inception
to payout -- perhaps decades. This gives them a good feel for their
loans and customers. They go out on the job site, chat with
neighbors, notice when the customer is in trouble, and work out
delayed payments if things are a bit tight one month. They do as well
as they can, but in truth, the customers always know more than then
banker. So the banker builds in a cushion for misinformation when
setting loan rates. This is based on a shrewd sense of the specific
loans and customers in question.
Bundling Cadillac Sam shows up and explains he can cash out
Scrooge's and Dirk's loan portfolios. Just bundle them and sell
shares to institutions, pension funds, etc. The buyers look up
Scrooge's and Dirk's ratings and decide to pay a bit more for
Scrooge's bundle than for Dirk's. They aren't really sure what is in
the bundle, but they think they generally got a good deal.
Derivatives Bundles, futures on bundles, interest only bundles,
principle only bundles, etc. If Cadillac Sam can find a way to sell
it, he makes a new form of security. Nominally, they all track back
to real loans secured by real houses or tractors but in truth no one
has a clue what the "derivatives" are worth. Understaffed regulators
can't keep up. Assorted forms of insurance committments are applied
to some of these derivatives. Even officially non-insured forms may
become so widespread that it is political suicide to refuse to payoff
Bubble Buying and selling bundles is so easy compare to managing
real loans and real customers! Let's just do more of same, and maybe
get a bit giddy about how much we are paying. There is always a
greater fool who will buy it from us.
Leverage Cadillac Sam has $100,000 of his own money. He uses that
to buy the rights to buy $1,000,000 in various derivatives. He makes
5% ($50000) on the total, or 50% on his original investment. Yee-Haw,
leverage is fun!
Liquidity Crunch Sally's SuperDeLuX X957 Derivative just defaulted.
She expected to use it to pay the grocer and the furnace
repairman. Now they can't pay their bills, so they go to the bank to
withdraw their deposits. To cover withdrawals, Scrooge and Dirk stop
making loans. Mary suddenly can't get the 90-day loan she depends on
between sale of her custom pickup truck liners, and receipt of the
Central Bank lending Central bankers in Gotham hear about the local
difficulty, and make funds available to Scrooge and Dirk. They start
lending again, Mary is back in business, and all is well.
Naked Shorts Cadillac Sam hears that there is trouble brewing, so
he sells the rights to buy derivatives. He doesn't actually have the
derivatives to sell (and hasn't even borrowed them from someone else),
but figures it will be cheap to buy them when the contract comes due.
Covering Cadillac Sam is getting worried. The markets are jumping
up and down faster than even he can react. He can't buy the shares
to cover his short position. Ferrari Frank therefore can't cover his
short position, and the whole Gucci Gulch is in danger of going broke.
Bust 6 months later, the Central Bank hears that banks
all across the country are in trouble. No one knows quite what is
happening, but it appears the bundles of loans are the problem. Dirk
and Jimmy have been making bad loans for years, and never admitted it
to the bank examiners. So now there are derivatives with no clue what
they are worth. They are a mixture of loans for
- Financially healthy firms and families.
- Marginal performers, barely making payments, and maybe ready to default
- Properties worth less than the original loan -- the customer has just walked away.
- Pure fly-by-night crooked deals,
slipped into portfolios by cons and cronies.
CDS and CDO Credit Default Swap (CDS) Collateralized Debt
Obligation (CDO). Ouch. It hurts to be leveraged and have things go
south. So let's sell insurance on that. Cadillac Sam can buy
insurance on a $1B bundle of mortgages for 2%/yr or $20M/yr. Sam was
making 5%/yr on the bundle, minus 2%/yr, leaving 3%/yr. Sam makes
$30M/yr just for setting up a few contracts.
Netting Cadillac Sam buys the CDS insurance from Ferrari Frank.
Frank likes the $20M/yr, but now has a problem: If the mortgages go
bad, Frank has to come up with $1B (which he can't do). So Frank buys
CDS insurance for the $1B from Mr. X at $15M, and is satisfied with
the $5M he nets on the deal.
Why doesn't Mr. X do the deal directly with Sam and get the whole $20M
insurance premium? Because CDS's are not sold in open exchange
markets. They are private deals, and no one knows what the next guy
did or did not pay for insuring the same bundle of mortgages. Sam does
a deal with Frank. Frank does a deal with Mr. X. Further, due to
asymmetric knowledge, the insurance seller never knows as much about
the underlying value as the buyer.
This chain of netting leads to everyone thinking he/she is insured,
whereas in fact the insurers themselves are in danger of going
bankrupt. AIG, as an insurer which was not netting, was liable for
over $400B in CDS's.
Busted Normally insurance depends on most folks being ok and just a
few needing help. Health, home, car, business, and shipping insurance
work on this principle. But with netting, once some insurer can't
actually pay off, the whole chain breaks down. Oops. We now have
$60T of such instruments, triggered by a few hundred billion of actual
bad mortgages. Banks must hold more reserves, other banks can't get
overnight loans, businesses can't get operating loans, etc.
Bailout Various deposit insurers are overwhelmed. Gotham Central
Bank is overwhelmed. Nobody has the cash necessary to collect all the
underlying loans, mark them all down to true market rates, and get the
financial markets moving again. Time to get taxpayers to take
worthless bundles off Cadillac Sam's hands. Just have to convince them
that World Disaster(!!!) will ensue if they don't act immediately.
The idea is that unloading these "toxic loans" will allow otherwise
financially secure banks to get back to the business of business.
Of course there is the question of exactly what to pay for the toxic
loans. Use the value on the books? That (by definition) is too high.
What the market will really pay for them in open auction? That may be
so low that financial institutions may default anyway.
Collapse In a fit of panic, taxpayers pay premium prices for toxic
loans ("cash for trash"). But it turns out that some firms can't
cover their debts even with all the bad loans off the books.
Fortunately, these do not include regulated banks -- Scrooge and Dirk
(and their depositors) are ok. Unfortunately, they do include
investment banks run by Cadillac Sam and Ferrari Frank, which are
interwoven in the fabric of business.
Recovery Cooler heads handle the true short term crises with short
term fixes, then settle in for a grim few months of triage and
markdown and open auction. Anyplace that politics demand baliout,
they institute regulation (and vigorous audits) to ensure the deadly
mixture of insurance and non-regulation can never recur. Highly
leveraged non-insured institutions are allowed to fail. Cadillac Sam
and Ferrari Frank are down to a single Tuscan villa apiece. Taxes are
raised to cover the monumental expenses.
Adam Smith, patron saint of Republican de-regulators, noted that even
a market system needs some regulation:
"The obligation of building party walls, in order to prevent the
communication of fire, is a violation of natural liberty, exactly of
the same kind with the regulations of the banking trade which are here
As the Great Depression unfolded, and citizens understood the causes,
Congress enacted the Glass-Steagall Act (1933) to segregate banks,
investment firms, and insurance firms. "Commercial banks" taking
normal deposits and making personal or business loans had to play by
safe rules. "Investment banks", operating on their own accounts could
make riskier moves. These two were to be kept separate by a
"firewall" (referring to Adam Smith's phrase).
Given a firewall, Congress established deposit insurance for regulated
banks (FDIC). Unregulated investment banks could do what they wanted,
but were expected to not come crying to Congress or the taxpayer for a
In the 1970's modern computing systems made massive financial
operations possible and profitable. Financiers went looking for
relatively non-regulated (and naive) sources of cash, and found
Savings and Loan associations. S&L's were struggling due to low
mortgage rates (income) and competition with high interest
money-market funds (outgo). In a marriage started in Texas,
financiers converted S&L's from sleepy community resources to highly
leveraged profit centers.
In 1980 S&L deposit insurance went to $100,000/account. In 1982 S&Ls
were allowed to increase interest rates paid, make new types of loans,
play in real estate market on their own account, do deposit brokerage
(bundle deposits for resale) and borrow from the Federal Reserve.
Given taxpayer-backed insurance, fraud was inevitable. That too
NOTE: Lincoln Savings and Loan was where John McCain became one of the
Taxpayers backed the FSLIC as it covered losses on deposits from
hundreds of S&L failures. In 1987 over half the value covered was in
- By 1989 FSLIC had failed. Congress's bailout plan invented a Savings
Association Insurance Fund (SAIF) run by the FDIC. It also raised the
insured amount from $100,000/account to $250,000 for retirement
accounts. SAIF was totally separate from FDIC's Bank Insurance Fund
NOTE: In 2005, Congress merged SAIF and BIF.
A run on either S&Ls or banks ruins both.
Taxpayers paid $125B ($125,000,000,000). Just as soon as Republicans
pay their $180,000/voter share of the Republican-induced national debt,
I'll consider another bailout.
- In the 1990's Newt Gingrich's GOP revolution pushed through the
1999 Gramm-Leach Bliley Act, breaching the Glass-Steagall firewall and
thereby putting the average citizen with a bank account in the same
risk world as global financiers.
[Accepting the economic analyses above, but highlighting the politics.]
The analyses have been known for years, but the media drumbeat keeps
changing to match Republican needs.
- When it was subprime borrowers hurting. it was their fault.
and due to the Community Reinvestment Act of 1977 (CRA). As Barney
Frank has pointed out, CRA was around for a long time before this
crisis, and even now CRA banks are not the ones in trouble.
- When it was tracked to subprime lending fraud, it was a few bad
- When it was Republican-friendly investment bank and bond trader Bear
Stearns, it was a national emergency requiring bailout.
- When it was Democrat-friendly investment bank Lehman Brothers, it
was "no more bailouts". http://www.opensecrets.org/news/2008/09/brothers-grim-is-lehman-next.html
- When it was the enormously powerful Freddie Mac and Fannie Mae,
bailout was necessary politically but disasterous financially. Guess
which one won.
- When it was insurance giant, AIG, the Bush administration was
for another bailout but some Republicans needed to say they were
- When the whole financial market looked ready to tank, it was a
crisis needing $0.5T ($500,000,000,000)... or maybe $1.5T, but who's
counting? The Bush administration was working deals with the Fed but
not SEC. House and Senate conferees were working deals in conference,
and most politicians were pointing fingers.
As a reminder, $1T is enough for:
- 3.3 million Ferraris (at $300,000/each)
- 2 billion back to school shoping sprees (at $500/each)
- 833 gallons of gas and heating oil for each man/woman/child
in the US (at $4/gal)
The interest alone, at 2%, will be $20B/yr.
Of course, the loans will have some value. We just don't know
what. Today (2008-09-23) the estimates were that the US Government
would gain or lose maybe $200B on the deal (as if this is an
acceptable gamble!). Without more data, no one knows if the
out-of-pocket expense to the taxpayer is $200B or $1000B ($1T).
An even more insidious political gambit has been mentioned by some (e.g.,
Bernie Sanders): In a classic Rovian Wedgie, the Bush administration
will push for the massive bailout, but Republicans loudly resist.
There are several possibile outcomes:
- Democrats buy it as-is. Congressional Republicans hotly
denounce the misuse of taxpayers' funds. McCain declares himself an
anti-Bush maverick and wins the election.
- Democrats refuse to play at all. The financiers arrange or
allow a bloodbath in the weeks leading up to the election, and the
press is full of "Dems put politics ahead of saving the nation."
McCain declares himself an America-Firster caring more about the
nation than politics, and wins the election.
- Democrats take the time to work through a sensible bailout, but
insist on protections and some equity for taxpayers. Congressional
Republicans hotly denounce incipient fascism. McCain sides with House
2008-09-27: Oh, wait, that is what just happened...
Everybody else seemed to be rushing for a deal and John McCain came
back and said, "Wait a minute, I think the House Republicans have the
taxpayers in mind and I'm with them,"
[Roy Blunt, minority whip]
Democrats would have to be insane to lift a finger under these
- Democrats insist that foreclosed and near-foreclosed homeowners
get a shot at the firesale prices on the mortgages. Talk Radio
Righties denounce pandering to fools and crooks (meaning the
homeowners, not the financiers). McCain declares maverick status and wins.
A few observations:
- The current crisis is directly traceable to Republicans and
their 30 year war on the US as a regulatory mechanism.
- The reaction to the crisis is vintage Republican. They are
anti-government until they want a handout. "Privatize profits,
socialize losses". And shame on you for insisting on "pay as you go",
revenue-neutral legislation. Don't you understand? This is a
CRISIS!!!. Let future generations pay the bills.
- Any student of con games will also recognize the timing: The
facts-and-data have been well known for over a year. Barney Frank
pushed for orderly re-regulation months ago, and was dismissed by
Republicans. Suddenly, we need a vote on some stupendous sum of
money, in a $9T debt nation, in a recession, with no time for an
orderly public discussion of the nuances of the legislative wording.
- In an echo of past bailouts, we are seeing "It isn't to save the
financiers their multiple chateaus and vineyards; it is to save Mom
and Pop their money market funds".
- The safe/insured/regulated parts of the market are doing ok. However,
thanks to Republicans, the safe/insured/regulated parts of the
financial markets are intertwingled with the investment banking such
that they are jeopardized too -- if we leave things as is.
- The atmosphere of crisis is manufactured and intended to
stampede voters and (this near an election) Senators and
Congress(wo)men into really bad legislation.
- 2008-09-27: Somehow the media is focused on golden parachutes.
Yes, tens of millions for a few months of failure is obscene. But the
real money left town in the Bush tax cuts -- billions upon billions
stripped from the public treasury. Recoup that to pay off the
Here was my initial list:
- Ride out the disaster. Just like WWI, let a problem in one segment of
the market infect all legally bound segments. Let it ALL collapse.
- If you have any money left, use it to buy investment banks as party
- Make friends with people living on subsistence farms.
- Anticipate that urban gangs will stop shooting each other and go
looking for gated communities in Montana.
2008-09-27: After a week of "the sky is falling", yet no chunks
landing nearby, many are getting suspicious. What would *really*
happen if Congress did nothing, and maybe waited fro a new
administration to tidy up what the "free market" did not solve?
Paul Krugman cites
suggesting that level-headed economists really don't like the do
- Pass emergency legislation to re-establish the firewall. Make it a
felony to co-mingle or to hide the fact of co-mingling regulated and
non-regulated funds. Stipulate 4 year minimum sentence, no parole or
pardon (to get past any presidential pardon scheme).
- Pass a resolution of condolences for financiers. Offer to provide
cots at a local school gym. Read into the Congressional Record the
section of Lovell2003 about it being impossible to fleece an honest
- Open Congressional hearings on the politicians, lobbyists, campaign
donors, and financiers who pushed deregulation. Use enhanced
interrogation techniques (up to but not including organ failure)
to elicit confessions.
- Impeach Presidents, judges, and SEC chairs who allowed the mess to
- Decharter the companies which participated.
- Rescind FCC spectrum allocations for media corporations which refused
to air cogent analyses as legislation came up for review and vote.
- Establish a national lottery to choose the next chairs for the
Federal Reserve and the SEC. (Anyone would be better than
2008-09-27: Hmmm, that was before I'd seen Sarah Palin doing
interviews. Ok, let's limit to anyone the math background to
understand econometric models and the street sense to recognize
bullsh*t even when it is wrapped in differential equations.
The consensus seems to include (as of 2008-09-23):
- Immediate factfinding under subpoena
- Short term stopgaps, committing no more than equivalent of a few weeks Iraq war funding
- Midterm regulatory action, including shutting down major institutions,
and retrieving payments from golden parachutes.
- Longterm re-regulation and criminalization. As someone said: If these
institutions are "too big to fail", then we need to invoke the Sherman
Anti-Trust Act or provide similar legislation.
- Undoing the Bush tax cuts for the wealthy, so they pay for most of the cleanup.
- If mortgages are to be sold for pennies on the dollar to anyone,
then foreclosed homeowners should have a chance to bid.
Convey the background and observations above to politically active
people. Not to convince them, but to give a set of resources for
triggering further discovery and debate.
Contact Congress(wo)men and ask them to refuse to vote until the
proposed legislation has been posted on the web for 48 hrs. Ask them
to use the full media facilities at their disposal to request review
Only then is there a chance we will discover hidden phrases and
footnotes which may come back to haunt us in years to come.
I just barely had time to read the bill before the vote. From
comments on the floor, I gather several House members resented the
effort to pressure the pace of deliberation. Even more insulting, the
bill calls for a month of planning *after* the bill is signed into
law. Hey, do some planning and then come to me for money.
- Paulson's original proposal
- Ready for Congressional votes: Bailout_2008
- Here is a cached copy of the PDF file.
I read all 110 pages, and marked it up with commentary. A summary:
- There are lots of nice words about protecting the taxpayer, but
no legally binding controls.
- The result is the current administration, over a period of a few
weeks (three 15 day rampups, with no practical recourse by Congress)
can expend the full authorized amount, with nothing to show for the
- There are reports to Congress at 30 or 60-day intervals -- long
after the entire kitty could be shoveled out the door.
- There are no controls whatsoever to ensure the money applies to
US banking, US loans, US lenders, US debtors, or even US speculators. There
is a restriction about foreign government-owned banks, but that is
easily circumvented. Foreign banks, foreign wealthy families, and
global consortia of wealthy cosmopolitians are free to play.
- The offer to ask a future President for a plan to recoup losses
from the industry 5 years hence is an insult to the intelligence of
the American voter.
The purpose of voting No was to provide time for people throughout the
nation to investigate and share their findings. And what findings
- The crisis is driven by need to renegotiate foreign debt at
start of new fiscal year, Oct 1.
- Bank of China, House of Saud, and a few other really big players
have hundreds of billions of non-performing loans, and refuse to roll
over our debt unless we bail them out.
I have to admit, their concerns are legitimate. When Japan was riding
high, they bought everything in sight. When the US tanked, the
Japanese lost their shirts -- and their economy didn't recover for
The Saudis have repeatedly been hustled by Bechtel et al, into doing
massive infrastructure projects which are unsustainable with available
This time, however, they are embedded inside the banks which must be
bailed out, e.g.:
- Globe-trotting financiers can't go to US the taxpayers asking
for a bailout of foreigners, so they have run a scare campaign. As
Rep. Sherman (D. Calif.) says, it is a hostage crisis: You bailout
our bad loans or you will never see your 401k or your kid's college
tuition alive again.
- Every time someone suggests rearchitecting the plan to focus on
US loans or the real US economy, this is scuttled. It is essential to
allow foreign loans and foreign owners of loans to be covered.
- A good clue that something is amiss is that politicians jumped
on "Let's increase the insurance obligation for FDIC covered accounts
and for money markets".
This is as if I paid $1000 for car collision insurance, good up to
$10000. Then I get in a wreck, repair costs $25,000, and the
insurance company says "No worries, we'll pay it all". No insurance
agent would do so and no sane taxpayer would either. The claim of
course is that this prevents a panic-style run on the banks, thus
protecting all of us.
Here is a different way to handle it:
There are X individuals and businesses with over $100,000 in bank
deposits. They knew they were not covered by FDIC. They knew they
could have gotten private insurance to cover the excess, just like an
insurance rider for a diamond ring on a home insurance contract. They
chose not to do so.
Now economists are claiming that precisely these same people will
panic and withdraw the excess, leading to a run on the banks. This is
so bad that we as taxpayers should just pay for their private
insurance riders for them. For some reason, the right cutoff is
$250L. Not $127K, $177.6K, or even $401K.
As a voter and taxpayer I want a web-published list of the individuals
and businesses to whom I'm giving this donation, so I can send along a
"Sorry for the inconvenience" card along with my tax dollars.
- The House smelled a rat, and voted no. Well, actually, just
enough of them smelled their phonelines melting from irate
constituents, which is the same thing.
- So the Senate tried to push the issue by tucking the same
provisions into an AMT bill. Rep. Sherman calls this the second
hostage crisis: Vote for the bailout or effectively vote to raise
taxes for 20 million voters a few weeks before a Congressional
election. [However, Senate loggyists got greedy and threw in so many
earmarks and giveaways that the whole bill is embarassing.]
- Meanwhile the sky has not fallen, and there are suspicions that
even the damage to date is orchestrated to create panic. More and
more reports that prudent, regulated banks are not in trouble. And
that just because companies cannot get operating loans to grow at
breakneck pace is no reason to bankrupt the nation.
- Finally (2008-10-02, as the VP debates start), a few House
members are speaking up. Whether or not the body has the courage to
vote it down again remains to be seen.
McCain and Obama both voted for the bill in the Senate. Both spoke in
favor. Apparently Obama followed up with a serious push to House
members to pass it. Whatever the cause, this is a Democratic
Of course, the Dems had few choices. Due to the "1 month for
planning", the Republicans can wait until after the election to decide
how they play it out. McCain wins, aim for a soft landing. Obama
wins, max out the credit card (to cronies of course) before Jan 20.
The Dems' only hope was to stand up en masse, declare the whole
process to be a scam, and demand that real issues and real
alternatives be examined before the American people. However, they
were warned behind closed doors that if they didn't act, there would
be martial law. I can only hope they concluded "If there is to be
martial law, at least let it be on our watch instead of the neocons."
Nevertheless, if the bill fails to prevent near term crisis, the Dems
will be blamed for squandering badly needed funds. If it merely does
what it claims to do, Republicans will be in position to profit from
the process and still call it the Dem bailout for decades to come.
I'm proud of Inslee and McDermott for voting No. As a voter, active
citizen, and taxpayer, I've done what I can on this one. I failed.
We'll deal with the consequences in the streets.