Paulson's Bailout Plan a Bid for Control

[helwen]

The folks at The Automatic Earth blog, among others, have been reading the legalese for Secretary Henry Paulson's plan to "save" the banks with a Federal bailout, trying to get it urgently rushed through. Full post at above link, but here's an excerpt to give an idea of what they're talking about:

The plan that Paulson and Bush urge Congress to accept as fast as "legally" and practically possible, gives the Executive Branch, in the office of the Secretary of the Treasury, full, unlimited, and unchecked powers over the nation’s financial system, the entire economy, and even attempts to provide far-sweeping power over international finance. Of course the Treasury completely depends on the Federal Reserve to execute its policies, since only the Fed can "print" money.

Congress is side-tracked into a spectator role, and the courts of the country will not be allowed to judge the legality of any action the Secretary decides upon. The plan also implies that $700 billion will be provided "at any given time", which leaves open the possibilty of limitless funding, depending on how many "given times" there might be.

I am not a lawyer, and I have no doubt that even the most intelligent and experienced members of the legal corps will have trouble deciding on these issues. But I don’t see how there can be any doubt that the courts need to study a plan like this, before it can be implemented. The plan itself expressly states that after the fact, they are not allowed to.

I have read many smart people tackle the issue in the past two days, and the only one among them who hits the nail square on the head is Russ Winter. His contention: the $700 billion provision does not constitute a bail-out, it will be used to create a tar pit, in which financial institutions can be liquidated at will.

And of course where is the Fed going to come up with the money to help out the banks? From the taxpayers of course -- you know, all us folks who already don't have a lot of money? Read. Consider. Decide if maybe now is a good time to write your senators and reps.

It is for me.

Comments

[vonblueguy.livejournal.com]

The current Obama Bailout Plan (http://www.obama-bailout.us/) is on progress but we have to do our share in coping with the economic crisis the country has for years now.

[helwen.livejournal.com]

We are coping. We're doing the best we can, at least the 'we' here on the farm -- can't speak for the rest of the country. The Bailout Plan has good intentions (and yes, I voted for Obama), but quite frankly I don't think that some of the banks being bailed out should be, especially when they're using the funds in such poor ways. And they complain about all the restrictions, when if they'd only restrained themselves in some ways, they wouldn't have had to deal with it all in the first place. A lot of people in banking and investing behaved for years as if they could do anything and it would be all right and it would make money for everyone, and paid no attention to the realities of limited resources.

The gov't can only get so much money out of taxpayers, with more folks going into the unemployment line (and yes, I know it's slowed down some, but it is still increasing). The alternative is printing up more money, which they have done. Continuously printing out more paper money devalues the money -- this should make sense to anyone. Gold and other metals are valuable in part because of their rarity, not just their physical properties. If we had a lot more gold available, people wouldn't be after it to wear as jewelry to show off as status symbols. It is the same with paper money and bonds and the like -- make some whenever you like and it becomes devalued. Then what happens when someone wants to cash in?

I don't expect miracles overnight. But I also don't think the plan is realistic enough or tough enough.

And quite frankly, the idea that our way of life (not mine personally but the perceived "American" way of life) being non-negotiable is a piece of crap. Obama himself said in his inaugural speech that this didn't need to be defended or changed, that it was fine to want to have everything people were used to having. But it isn't. Not everyone can have a flat screen tv, 2 cars, drive as much as they want, overheat their homes in cold weather and overcool them in hot weather.

We are supposed to be responsible adults, and we are not the only people on the face of the planet. The economy as currently run, with the idea of infinite and ongoing growth, is unworkable and has to change.

Short Addendum - apology

[helwen.livejournal.com]

Sorry if the response is rather strong. I generally try to be polite, but you pushed a button.