Saturday, September 20, 2008


From the AP via the Houston Chronicle:

Financial crisis will cost taxpayers hundreds of billions

Struggling to stave off financial catastrophe, the Bush administration today laid out a radical bailout plan with a jawdropping price tag — a takeover of a half-trillion dollars or more in worthless mortgages and other bad debt held by tottering institutions.

Relieved investors sent stocks soaring on Wall Street and around the globe. The Dow-Jones industrials average rose 368 points after surging 410 points the day before on rumors the federal action was afoot.

A grim-faced President Bush acknowledged risks to taxpayers in what would be the most sweeping government intervention to rescue failing financial institutions since the Great Depression. But he declared, "The risk of not acting would be far higher."

The administration is asking Congress for far-reaching new powers to take over troubled mortgages from banks and other companies, including purchasing sour mortgage-backed securities. Administration officials and congressional leaders are to work out details over the weekend.

Congressional officials said they expected a request for legal authority to buy up the bad loans, at a cost in excess of $500 billion to the government. Democrats were discussing whether to try to attach middle class assistance to the legislation, despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility.

Click here for the rest.

A few years ago, during one of my rare and cautious conversations about politics, economics to be specific, with my very conservative father, he asked me after a few minutes if I believed in "redistribution." Fortunately, I had been recently listening to Rush and Hannity, to which my father listens religiously, so I was aware of how the right-wing talk idiots were using the word. For them, "redistribution" means using government money for people and programs for which conservatives don't believe it should be used. Of course, that's not how they would define it: they would define it as taking away somebody's hard earned income and handing it over to somebody who didn't work for it--a very related idea is that "redistribution" is inherently unfair and unjust, and that the government should never "redistribute" income. But that's bullshit.

I responded to my dad, "Everybody believes in 'redistribution;' the only real questions in this area are about whose money is being 'redistributed,' how much, who gets it, and why." For some reason I don't remember, phone ringing, distraction, whatever, the conversation ended right there, and I never got a chance to explain what to my father must have been an exercise in absurdity: how could everybody believe in "redistribution" when all conservatives and businesses are strongly against it?

Obviously, opposition to "redistribution" is lip service only. That is, countless Americans oppose the concept in the abstract, but fail to recognize countless instances of "redistribution" which they fully support, be it cheap or free mineral or logging rights handed out to private companies, massive tax breaks handed out to the rich but not to the poor and middle classes, cheap or free patent rights handed out to chemical companies, subsidies for various industries, stadium and arena deals, massive no-bid contracts and sweetheart deals given to companies and individuals friendly with government insiders, and the list just goes on and on. Indeed, conservative dissident Kevin Phillips in his book Wealth and Democracy has well documented how virtually all of America's fabulously wealthy families throughout history have benefited enormously from government money.

Everybody believes in "redistribution," whether they admit it or not. And we're currently experiencing one of those rare occasions where the hypocrisy is so egregious that conservatives feel compelled to explain themselves: "no, no, no, it's not socialism; you see, we have to do this or the consequences would be too terrible to consider."

Don't get me wrong. I actually agree. This isn't socialism, which is about government ownership of the economy for the purpose of giving workers a fair shake. We really do have to do this or everybody is fucked. But it is "redistribution." And it is in no way anything new. We've been doing it throughout our nation's entire history. The only real issue to consider here is whether we, regular ordinary tax payers, are actually going to get something for our money beyond saving a financial system which renders most of its benefits to wealthy and irresponsible elites.

Personally, I believe that if we don't attach some big time strings to this bailout, like heavy regulation coupled with some "redistribution" aiding ordinary Americans, it's all going to happen again, and there won't be any money left to save us next time.

(Kevin Phillips interviewed by Bill Moyers on this most recent financial meltdown here.)