Analysis of the Bailout

OK, the newest draft of the legislative pile of manure known as The Ripoff Bailout on Main Street but The Rescue Plan on Wall Street, has been released. The ‘‘Emergency Economic Stabilization Act of 2008’’ is the official DC title--110 PDF pages of junk.

Now we all know that is so full of bovine biosolids that it belongs on a Monfort feedlot. But the idiots in DC, in their perpetual "inside the Beltway" (them) vs. "outside the Beltway" (us) war--thanks to Wendy McElroy for the apt term--still seem to think they need to bail out their Wall Street Big Business friends and to Hell with real America.

That being said, I've been looking over the bill and have some following thoughts. The bill has 3 sections, so I'm going to break it down along those lines (or else this will run on forever!).

The full bill can be referenced here.

So without further ado, some thoughts on Section 100:

1. "Unjust Enrichment" (Page 9, Section 101-e):

"In making purchases under the authority of this Act, the Secretary shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in a program established under this section,"

Now, what is an "unjust enrichment" of a financial institution? Conversely, what is "just enrichment"? Why is the word "unjust" in there at all? It should be removed to prevent ANY enrichment--no profiteering for financial institutions under the bailout, PERIOD!

2. "Considerations" (pages 12-14, Section 103):

The Secretary of the Treasury is *supposed* to take some things into consideration:

(1) protecting the interests of taxpayers by maximizing overall returns and minimizing the impact on the national debt;

(2) providing stability and preventing disruption to financial markets in order to limit the impact on the economy and protect American jobs, savings, and retirement security;

(3) the need to help families keep their homes and to stabilize communities;

(4) in determining whether to engage in a direct purchase from an individual financial institution, the long-term viability of the financial institution in determining whether the purchase represents the most efficient use of funds under this Act;

(5) ensuring that all financial institutions are eligible to participate in the program, without discrimination based on size, geography, form of organization, or the size, type, and number of assets eligible for purchase under this Act;

(6) providing financial assistance to financial institutions, including those serving low- and moderate-income populations and other underserved communities, and that have assets less than $1,000,000,000, that were well or adequately capitalized as of June 30, 2008, and that as a result of the devaluation of the preferred government-sponsored enterprises stock will drop one or more capital levels, in a manner sufficient to restore the financial institutions to at least an adequately capitalized level;

(7) the need to ensure stability for United States public instrumentalities, such as counties and cities, that may have suffered significant increased costs or losses in the current market turmoil;

(8) protecting the retirement security of Americans by purchasing troubled assets held by or on behalf of an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B) of the Internal Revenue Code of 1986, except that such authority shall not extend to any compensation arrangements subject to section 409A of such Code; and

(9) the utility of purchasing other real estate owned and instruments backed by mortgages on multifamily properties.

Now, of that list, taxpayers would expect numbers 3, 8, and 9 to be top priority, because they are direct impacts to us. We *want* stable communities and to keep homes, especially those who are being screwed by this mess through no fault of our own (disclaimer: including me!). We want to make sure that the people who busted their tails for these lenders, the people who did the yeoman work just to make a living processing honest loans, we want to make sure that those people do not lose their retirements from these failures. And we certainly want to make sure multifamily properties like duplexes and apartments and condos don't go under, either.

BUT, those things will be considered by Secretary Paulson, for about a second, before the former CEO of Goldman Sachs rejects them in favor of number 2 first and foremost. I say that because that has been the pattern of his activity all along. Expect considerations numbered 1, 4, 5, 6, and 7 to go the way of 3, 8, and 9--considered and ignored.

The Boston Globe had a somewhat reasonable idea in that the government buy a 50% stake in these mortgages directly and refinance them with the homeowners to keep them in their homes, under longer fixed-rate terms, so that they can afford the payments. Once the mortgage is paid off the borrower works on paying back the government. If the home sells, the proceeds are split 50-50.

OK, so that's not the most libertarian idea in the world. But it's a far sight better than bailing out lenders that don't deserve it. I'd rather see those of us that did it right and are getting screwed through not fault of our own get some real relief besides and industrial-size tub of Vaseline and an extra $2300 per person tax bill.

3. The "Oversight" (pages 14-17, Section 104-b):

The "Financial Stability Oversight Board" will be the Secretary of the Treasury, Chair of the Fed, Director of Federal Home Finance Agency, HUD Secretary, and SEC Chair.

Some oversight, huh? No citizenry, nobody from real America--just political appointees and Wall Street types. Their "oversight" will be limited to who signs their paychecks--the White House and Wall Street--and not to the taxpayers. BTW, this group *is* the Plunge Protection Team, too! This is the robbers guarding the bank!

4. FDIC as a loan manager? (pages 23-24, Section 107-c):

This section puts the FDIC, the agency responsible for insuring regular bank accounts, into the loan management business. WHY???

5. The spending: (pages 40-49, Section 115):

- $250B AT ANY GIVEN TIME--no limit on number of times, either. Can be increased to $350B if the President whines to Congress.
- BUT--and here's the poison pill kicker!--in subsection a-3, if the President whines, Congress is on the clock for 15 days to pass a joint resolution disapproving of the spending, then if Congress doesn't get it done, the spending jumps to $700B at any given time, still with no limit on number of times.

THAT IS UNCONSTITUTIONAL! Congress cannot delegate the power of the purse to the White House! This basically tells Congress that if Bush complains, he gets another $100B of taxpayer money automatically and if they don't act on his complaints to say no he gets another $350B of taxpayer money. It gives the White House a $100B Whiners Check and another $350B Fine if Congress decides to not. It turns appropriating funds on its head, assuming a "yes" unless Congress says "no", which violates the Separation of Powers doctrine, instead of the other way around as is traditionally done.

BTW, there is a typo in Section 115-c-2-D, in that it refers to Section 114-a-1 and 2, when it should be Section 115-a-1 and 2--there are no paragraphs 1 and 2 under 114-a, but there are under 115-a.

How much Vaseline do we taxpayers get for that rape up the rear???

6. National Debt increase (page 68, Section 122):

Increases it from the current $10.615T (as of 7-30-08 per Public Law 110-289) to $11.315T.

More deficit spending outside the budget. If they had any smarts of guts, they'd cut current spending levels to pay for it. Instead this $700B adds $2333.33 per person in debt to the nation.

Note also that if even if the debt ceiling is not increased again, a spending cut elsewhere in the budget can create more funds to blow on this scheme without increasing the debt.

There are other pieces of Section 100 that most likely could come under scrutiny from people more versed in those areas than I am. But Section 100 covers 90 of the 110 pages as well.

Next Post: Section 200, which has to do with budget-related provisions.

UPDATE: 9/29/08: With the bill failing in the House, for now, there will be no Part II or III. However, should it pass on reconsideration, I will do Parts II and III.

Hillary's Speech a milquetoast flop

I heard Senator Hillarious' convention speech on the radio last night on the way home from work.

The junior Butternut Squash from New York had the chance to unify the Democratic PUMAs (Party Unity, My Ass!) behind Obama, vilify Panama John, and pass the torch to the next generation of America.

She failed 2 out of 3.

What She Did Right

She did vilify McCain, and painted an accurate portrayal of McCain as being a Bush extension and puppet:

Now, John McCain is my colleague and my friend. He has served our country with honor and courage. But we don't need four more years...of the last eight years. More economic stagnation…and less affordable health care. More high gas prices …and less alternative energy. More jobs getting shipped overseas…and fewer jobs created here. More skyrocketing debt...home foreclosures…and mounting bills that are crushing our middle class families. More war...less diplomacy. More of a government where the privileged come first…and everyone else comes last. John McCain says the economy is fundamentally sound. John McCain doesn't think that 47 million people without health insurance is a crisis. John McCain wants to privatize Social Security. And in 2008, he still thinks it's okay when women don't earn equal pay for equal work. With an agenda like that, it makes sense that George Bush and John McCain will be together next week in the Twin Cities. Because these days they're awfully hard to tell apart.

She did a good job of painting Panama John as a Bushite, and did a good job about showing where he's wrong on things. The Twin Cities line was a good one, but she should have referred to Bush and McCain as political twins to get it across better.

She even got the tagline right:

No way. No how. No McCain.

It's easy to vilify McCain. After all, the man is a ne'er-do-well career government man:

He got into Annapolis because his daddy got him in (the same Daddy who covered up the USS Liberty incident).

He finished fifth from the bottom of his class and had a reputation as a lazy partier.

He lost five planes out from under him, including the USS Forrestal incident and becoming a POW.

He sold out this nation while a POW in exchange for medical treatment and prostitutes, earning the nickname Songbird.

Once he finally got home he promptly engaged in an adulterous affair while his wife was invalided by an auto accident, then divorced her and married his mistress, who just happened to be a drug-addicted beer distribution heiress with ties to the Mob.

He used her fortune to run for Congress, allegedly ahving other affairs along the way, and then improperly rode the coattails of the late, great Barry Goldwater to succeed him in the Senate (McCain is no Goldwater, but only Ron Paul comes close!).

He got mixed up in the influence-peddloing scandal known as the Keating Five.

He used his seat to block legislation to investigate what happened to his fellow POW/MIAs, probably to keep his own treason secret.

He legislated the unconstitutional McCain-Feingold campaign finance legislation.

John Sidney McCain is simply the worst possible Republican canididate for the GOP, and the best for the Democratic Party.

What She Did Wrong

First, she made the speech all about what she did, not what Barack Obama will do. For a much better taste of that, check out the speech by the terminally-ailing Ted Kennedy. He channeled his late brother's words and actually said what his brother did in 1960: that the torch has been passed to a new generation. Instead, her's what Hillary said:

I haven't spent the past 35 years in the trenches advocating for children, campaigning for universal health care, helping parents balance work and family, and fighting for women's rights at home and around the world...to see another Republican in the White House squander the promise of our country and the hopes of our people.

Later on:

For me, it's been a privilege to meet you in your homes, your workplaces, and your communities. Your stories reminded me everyday that America's greatness is bound up in the lives of the American people -- your hard work, your devotion to duty, your love for your children, and your determination to keep going, often in the face of enormous obstacles. You taught me so much, you made me laugh, and...you even made me cry. You allowed me to become part of your lives. And you became part of mine. I will always remember the single mom who had adopted two kids with autism, didn't have health insurance and discovered she had cancer. But she greeted me with her bald head painted with my name on it and asked me to fight for health care. I will always remember the young man in a Marine Corps t-shirt who waited months for medical care and said to me: "Take care of my buddies; a lot of them are still over there….and then will you please help take care of me?" I will always remember the boy who told me his mom worked for the minimum wage and that her employer had cut her hours. He said he just didn't know what his family was going to do. I will always be grateful to everyone from all fifty states, Puerto Rico and the territories, who joined our campaign on behalf of all those people left out and left behind by the Bush Administrtation.

See, it was about her. Even more later on, it was still about her, not Obama:

I ran for President to renew the promise of America. To rebuild the middle class and sustain the American Dream, to provide the opportunity to work hard and have that work rewarded, to save for college, a home and retirement, to afford the gas and groceries and still have a little left over each month. To promote a clean energy economy that will create millions of green collar jobs. To create a health care system that is universal, high quality, and affordable so that parents no longer have to choose between care for themselves or their children or be stuck in dead end jobs simply to keep their insurance. To create a world class education system and make college affordable again. To fight for an America defined by deep and meaningful equality - from civil rights to labor rights, from women's rights to gay rights, from ending discrimination to promoting unionization to providing help for the most important job there is: caring for our families. To help every child live up to his or her God-given potential. To make America once again a nation of immigrants and a nation of laws. To bring fiscal sanity back to Washington and make our government an instrument of the public good, not of private plunder. To restore America's standing in the world, to end the war in Iraq, bring our troops home and honor their service by caring for our veterans. And to join with our allies to confront our shared challenges, from poverty and genocide to terrorism and global warming. Most of all, I ran to stand up for all those who have been invisible to their government for eight long years. Those are the reasons I ran for President.

Only afterward did she make one reference to Obama:

Those are the reasons I support Barack Obama. And those are the reasons you should too.

Yes, she did make some references to Obama, but most of the speech--almost half of it, was about Hillary Rodham Pumpkin. And that's not surprising, because to both her and her husband, it has always been Clinton first, Democratic Party second, America third. Always. was Hillary capable of delivering speech like Ted Kennedy? She can certainly technically do it, but her ego won't let her make that leap. That's why Obama was wise to not name her his Vice-Presidential choice or even consider her, PUMAs be damned.

Second, she fell short in passing the torch. The fact is, Clintons are the 90s Democratic Party. They're last millenium's news. This isn't 1960, but it's not far off with the generation switch, and the parallels are fascinating for the whole thing, from the outdoor acceptance speech to the parallels of JFK-BHO, Johnson-Biden, even McCain-Nixon. Hopefully for the nation's sake we won't relive 1963 again.

If you want to see the torch passed, look to Ted Kennedy, who despite his terminal brain tumor, kidney stones on the plane to Denver, and in general failing health, gave one helluva speech, and took up the mantle of his late brothers and rightfully passed on the torch they took up almost fifty years ago.

Other Miscellaneous Junk

There was a passing refernce to the Akransas DP chair being killed and Congressman Tubbs dying from too many lobbyist meals, but that was just political fluff which had no meaning.

There was also an inexplicable and long-winded reference to Harriet Tubman and the Underground. Why was that there? According to the speech, it was to get to the "keep going, but get going first" punchline, but she used it poorly, and it wound up playing to racist fears of the 1850s. It really had no place in this speech.

There was also this line:

We need leaders once again who can tap into that special blend of American confidence and optimism that has enabled generations before us to meet our toughest challenges. Leaders who can help us show ourselves and the world that with our ingenuity, creativity, and innovative spirit, there are no limits to what is possible in America. This won't be easy. Progress never is. But it will be impossible if we don't fight to put a Democrat in the White House.

Why the vague references to "leaders" and "a Democrat" in the White House? Was she referring to herslef in the implicit, "you should have chosen me" attitude? Why not refer to Obama directly here? That doesn't make sense, unless she cribbed this from a campaign sppech she never used, or if it was intended for a speech had there been a floor fight for the nomination (which still might happen as of this writing if the PUMAs have their way!).

There was a section relating to the 19th Amendment, as if that had to do with anything that day. Pure political pandering to women only.

There was way too much emphasis on national health care, as if that would cure our national ills. (For my take on that mess, read here.)

Conclusion

Hillary the Great Pumpkin gets a B- for this speech, probably the most important one of her life, and that's being generous. She probably deserves a C. She would do worse if she had failed to mention Obama at al beyond the first minute. Obama's campaing is about change, and the new generation. Hillary missed the memo a long time ago, and that's why she lost.

And she still doesn't get it.