Dave Lindorff: The Power of "No" and the Need to Keep the Pressure on Congress

[Demeter]

http://www.buzzflash.com/articles/lindorff/151


Incredible! This time, when the People spoke, Congress listened.

At least 228 members of the House listened. They voted early this afternoon to reject the Bush Administration's scaremongering, and the cowardly Democratic Congressional leadership's attempt at ducking and covering by attaching some meaningless verbiage to what remains a case of legalized highway robbery. At least for the moment, the bailout scam is killed.

Earlier in the day, the Congressional switchboard was jammed. You could get through, but it took a dedicated finger on the redial button of your phone. Operators at the Capitol say it's been that way for a week now, as Americans across the country have been flooding their Congressional delegations with phone calls (and e-mails) urging them to vote "No" on the Bush/Paulson Wall Street bailout.
That today was no exception, even after Democratic Party leaders (and both major party presidential candidates, John McCain and Barack Obama) had bought into the plan following their adding of some window-dressing measures designed to make it look more palatable, showed that the public is not being fooled (calls were reportedly running better than 9:1 or more like 999:1 against a bailout, perhaps more like 99:1).

People see clearly that this proposal is a trillion-dollar giveaway to the very people who have been hollowing out and destroying the U.S. economy for over a decade or more by convincing both parties to let them do whatever they want to get rich, free of any kind of significant oversight or regulation.

As Nobelist economist Joseph Stiglitz has written of this outrageous ripoff, there are four problems facing the financial system, and the bailout proposal only addresses one -- getting the toxic mortgages off the banks' books and onto taxpayers' hands. Left unsolved is the gaping hole in banks' balance sheets in the form of loans made to people and companies that cannot be repaid, which will mean they still won't start lending money again. Left unaddressed too is the continuing collapse of housing prices, which will inevitably lead to more bank collapses even after the bailout. Finally, Stiglitz says there is the general loss of faith in the financial system -- a major crisis that the bailout will also not solve.

Stiglitz doesn't even address a fifth problem: this trillion-plus-dollar boondoggle (and when you add in the bailouts of Fannie Mae, Freddie Mac, AIG, Bear Stearns, the multiple mega-bank failures and the pending auto-industry bailout, you're already talking $1.5 trillion and counting), all of it with borrowed money, the stage is being set for a collapse in the U.S. dollar, with consequences that will reverberate through the economy. Consider: if the dollar collapses, as many experts say is almost inevitable with this kind of huge addition to the national debt, oil prices (set in dollars) will soar to compensate, the price of all the other goods that Americans import -- more than half of everything we use in daily life thanks to the decimation of American manufacturing -- will rise dramatically, and ultimately, in an effort to stem the bleeding, interest rates will have to be raised, thus bringing what's left of the economy to a grinding halt.


But it ain't over yet. We can be sure there will be arm-twisting now to try and get 12 members of Congress to change their votes and win passage in the House (the Senate, where two-thirds of the members aren't facing election for two or four years, will probably pass the bill easily). A continued expression of public outrage and of a promise of retaliation at the ballot box against those who vote for the bailout needs to be expressed.

DAVE LINDORFF is a Philadelphia-based journalist and columnist. His latest book is "The Case for Impeachment" (St. Martin's Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net.

[msongs]

1. obama should announce a new PROGRESSIVE business makeover nt

[Tansy_Gold]

2. Interesting, but I still question whether the "toxic mortgages" are

really the root cause.

Bad mortgages -- regardless of why or in what way they're "bad" -- can be negotiated, restructured, or otherwise resolved. The underlying asset remains. Even if it loses value, it still has form and function. Even if it is grossly over-valued, it's not going to go down to $0.

What turned the mortgages toxic was the slice-and-dice method used to securitize them, so that there was no longer any tangible asset. As the MBSes were traded and swapped and tranched and re-tranched, ephemeral values were placed on them that skyrocketed. Someone was pulling real money out of the system -- thus causing a "liquidity" crisis -- and replacing it with trillions upon trillions upon hundreds of trillions of imaginary dollars.

And that's what's collapsing. Not "the economy." The whole derivatives market needs to be cleaned up. There's no such thing as "investing" in derivatives. Didn't we learn that with the Enron collapse eight years ago? It's gambling. It's a Ponzi scheme, in which the new suckers' money is handed out to the old suckers, to make the old suckers think they're getting something for nothing.

It don't work that way, folks!

I remember watching, back in 2000, as Enron disintegrated and all those retirees and employees moaned and wept about their lost fortunes. Maybe they lost $100K. Maybe they lost $400K. Skilling and Lay and Fastow made out like bandits because they took REAL money from REAL people and swapped out their worthless stock. But those employees who got suckered in NEVER HAD THAT MONEY. We don't know how much of their real money they put into their Enron stock accounts. Did an "investment" of $10K suddenly balloon into $100K? Into $400K? Then when it all disappeared, they didn't lose $400K because they never had it.

And that's what's going on on Wall Street right now. The money that never was there has disappeared. And the last layer of suckers now wants someone else to bail them out.

As others far more knowledgeable and profound than I have said, this "bail-out" money is not going to do a thing for "the economy." All it's going to do is put real money --- OUR real money, OUR CHILDREN's real money, OUR GRAND-CHILDREN's real money -- into the hands of the swindlers who swindled us.

What would $700,000,000,000 do for the real economy? If it's put back in judiciously, it could do a lot of things. Rebuild roads and bridges and schools and hospitals for one thing. But it could also resuscitate the moribund U.S. manufacturing sector. If corporations are taxed for the jobs they ship to low-wage countries, making American workers competitive again, maybe there will be an incentive for jobs to stay here. That gives people work and paychecks and they can pay on their "toxic" mortgages. If hedge fund managers and CEOs and other obscenely wealthy individuals are taxed appropriately, the funds can go back into the economy and start to erase the wealth gap that right now is about what France had in 1789. And some of know what happened as a result.

The bail-out is a hand-out. No, it's worse than that. It's highway robbery.

And it will not do what far too many people think it will do. For one thing, it will not avert a depression. It will not free up capital -- there's already plenty of that floating around -- to jump-start the economy. The economy has been systematically destroyed by the same people who want the hand-out. And those are the same people who not only GAVE US "toxic mortgages" but who are now asking US to fund the de-tox.

And what are they giving up for it? Oh, nothing.


Tansy Gold

[Demeter]

3. There's a Tremendous Imprecision of Speech on This Issue

And when it's an expert speaking imprecisely, or someone who is presented as an expert, then you KNOW they are lying.

When it's the media, then you know they are either lazy incompetents, or co-opted.

When it's the public, you know we are doomed.