Group News Blog: bailout plan

"Open Mouth Buddha, shedding Black Tears" Click for LARGE.
2007, Gallery #19, # 6915 - Kazuya Akimoto Art Museum.

It's Over -- We lost.

Obama and Pelosi made damn sure the bill passed.

Thanks Gidget. We sure appreciate that.

Congresswoman Donna Edwards says Obama personally promised her, in exchange for her "Yes" vote, that they would revisit the bankruptcy provisions later. We shall see. I think the Congresswoman, whom I respect, is placing WAY too much faith in Obama, and not enough faigh in his demonstrated history with FISA.

That there is no bankruptcy provision now, means there won't be one later. Obama will apologize, and that will be that. I'm holding 2:1 odds for friends (so don't write, trying to get some of my action.)

I give you the wisdom of Ian Welsh.

Firedoglake

Fundamentally it's the Treasury Secretary to spend pretty much as he chooses, with meaningless oversight, up to 700 billion or the debt limit. In theory it's "whichever is less" in practice it's going to be "whichever is more". Add to mark to the end of mark to market, and the move to mark to "whatever the bank says its worth" and banks are going to be allowed to stay alive no matter whether they're solvent or not as long as their cash flow doesn't go so far negative it can't be papered over the world's favorite wallpaper, the US buck. Zombie banks plus all the money flooding into trying to stop deleveraging from wiping out said financial institutions means this is a Japanification plan.

Japan had its own bubble back in the 80's. When it popped the Japanese decide that they would not force banks to write down their losses. Instead they left them on the books. Those of you who are old enough will remember when Japan was the economy of the future, who built the best stuff and were destroying everyone else. After the bubble popped that all ended. The world's most vibrant economy went into a long economic slump from which it never recovered. This wasn't a classic depression—there wasn't a huge immediate contraction. Things just generally got lousy - unemployment rose somewhat, jobs stagnated, no one had a lot of money. The good times never, ever, came back ever again. It was like being caught in a low grade recession, all the time.

That's what this bill will do in the most likely scenario. The US will go into recession, every once in a while it will seem to pop out, then it will drop again. Because the US has population growth, and Japan doesn't, the actual numbers will look better than Japan's, but the feeling of "there are no jobs anywhere" and "this economy sucks" will be pervasive. This will translate into a grinding down of Americans standards of living.

The reason this happens is that all the money that could be used to increase output and productivity or to decrease input problems (by, say, reducing the amount of oil and other commodities used) will be all be being used to prop up the current financial structure. 750 billion dollars, and this is key, is not going to be enough. Folks on Wall Street are already saying so. More money is going to keep flying into the structure to keep it from deleveraging in an uncontrolled fashion, and thus wiping out lots of rich people. I figure they'll be back for more money in 6 months, 9 max. 3 months wouldn't surprise me, since Paulson has a lot of incentive to use up his full allowance while he's still Secretary. After he does so the problem will still exist and the next Treasury Secretary will be back looking for more.

Now, if that money hits the real economy in a significant way, it will lead to inflation, and in my earlier writing that's what I figured would happen. But on consideration, I think the downturn in the economy combined with the sheer sucking power of the leveraged financial structure which has to be kept from collapsing means that very little of that money is, in fact, going to get to the real economy and what does won't be sufficient to overcome demand contraction. Simply put, the financial masters of the universe owe more money than exists in the entire universe. So their need is going to be pretty close to endless. 10 years minimum, probably 20. Maybe 30. Who knows... but certainly not a one time injection. If 700 billion was their total losses, they wouldn't actually need a bail out.

Note that Japanification was always the plan of the "neconomy", or Busheconomy if you prefer. It was always the endgame? Why? Because Japanification makes the winners of the final game permanent. All extra money in the system will be pumped to the people who made the bad decisions that crashed the prior economy, they will stay in power and because there isn't a dynamic economy left, no one is likely to rise to replace them.

There's more...

I hate that the plan lacks bankruptcy revisions.

If you are bankrupt, you will likely lose your home.

Get screwed over because you lose your job, a big chance in the economy we're about to have, lost your home.

Uncontrolled medical expenses and have to go bankrupt? Lose your home.

Or go underwater on your home mortgage because of the sub-prime crisis... LOSE YOUR HOME.

This plan bails out the same assholes who created the problem, but does NOTHING to protect you. YOU get to pay the bill. So do your children and grandchildren.

OPEN THREAD on the bailout.

There's more...

(Save My Ass Too, by TMNK, The Me Nobody Knows. Used by permission of the artist. Mixed media on canvas.)

Robbers and Resistance

(Bonnie Parker and Clyde Barrow, 1933; photographer unknown.)

My grandfather Bill Atkins ran a gas station in a tiny Crosstimbers town ten miles from the Oklahoma border. He claimed to have once pumped gas for Bonnie Parker and Clyde Barrow, giving them free soft drinks when he recognized them. He said they paid him with silver dollars that he was sure came from a recent heist. It's a good story, and certainly their route of coming and going did include that county. But I've never believed it. He was a great teller of tales, and Bonnie and Clyde were much admired in that part of Texas. They robbed banks, you know.

(Jesse and Frank James, Carolinda, Illinois, 1872. Photo from the collection of Phillip W. Steele.)

Bill's father, Joe Atkins, had been a blacksmith on the same block where Bill had his gas station. Joe claimed that around 1880, a couple of hard-looking men rode up on lathered horses. One of the horses had thrown a shoe, and as Joe fitted a new one, he realized they were the James brothers, Jesse and Frank. Joe said he didn't let on, and was glad to see them leave without incident: He did admire them, but people had a way of dying around them. Again, it's a possible event, but unlikely because of the mismatch of timing and geography. People in that community told the story about him, however, more than 60 years after he died. The James boys didn't just rob the hated banks, they often gave away some of the money to ordinary folks in need. Or so the legend goes.

When I was about to graduate from high school, I went to the man who had been in love with my mother all her growing-up years, Son, and asked for a job in his insurance office. I could type well and was the image of her, and he hired me almost before I could finish asking. I told him I needed to work and earn money to help me get through my first year of college. The truth is, I had a full scholarship but it wasn't enough. I needed money to buy my mother some clothes.

Two weeks before I graduated valedictorian, my father made the rounds of people in the small community where my mother and four generations before her had grown up and asked for "loans" to help buy me a car, so I could drive back and forth from college 70 miles away every week and help take care of my mother. As best I can tell from those who told me about it later, he assembled $500. He didn't ask me if I wanted a car, or what kind I preferred. He went to a shifty drunk in a nearby town and bought me a 1965 Pontiac Lemans, already 8 years old and with an engine which had been abused. It was a faded yellow with a black landau roof, bucket seats, and an 8-track tape player. On a list of automobiles I would have chosen for myself, it ranked near bottom.

He put down $50 on it, he said, and when he gave it to me, he said I'd have to come up with the rest of the $325 sale price. Over my mother's protests, he drove me into town in the car, showing me how it would go 100 miles per hour along the way, and escorted me into the local bank where the loan manager was Son's little brother, Kent, another man who had grown up with my mother. Kent knew about my summer job and college acceptance. He was uncomfortable, and so was I, but he gave me the loan, talked me through the process of repaying $30 a month for a year, and shook my hand when I left. He did not shake my father's hand.

I didn't like to speed. I had no 8-track tapes, only cassettes. And the monster ate oil. But it was the only car I was going to get. Later my friend Dale, who was Kent and Son's nephew, told me everybody knew the car's asking price was $175. The guy who sold it to Daddy gave him back $100 in cash from the loan check he received. There had never been a down payment. This means Daddy cleared at least $600 on the deal. I don't know what he did with the money. I saved enough to buy Mama some clothes. I bought myself a pair of persimmon-colored hip huggers which I discovered, once I was on campus, were totally out of fashion. The Pontiac died a year later, after I had paid off the loan without ever being late. It meant going hungry on my part. Kent may have been a banker but he was a friend of my mother's and wasn't about to let down her honor.

During my lifetime, the United States has become a society living by credit. Of course that can't go on forever, any more than the constant need for growth and expansion inherent to capitalism can exist indefinitely. (I'm sure we've all read the Edward Abbey quote, "Growth for the sake of growth is the ideology of the cancer cell.") So when it comes time to find a different sort of financial system because this one has become dysfunctional beyond repair, well, I can imagine it looking very much like this week. It was all based on belief systems and emotion anyhow, and when white men panic (as they do with depressing frequency), they too often hold everyone but themselves responsible.

I refuse to worry. For one thing, it does no good, and persisting in behavior which does not help bring about a positive outcome is nuts.

But more to the point, we have for years now been in the grips of a government which controls us by the use of fear. They know damned well we, the masses, stop thinking when enough of us get scared, and then they can do any shitting thing they want. The shell game didn't work Monday, the market boys went all henny penny but got some single-malt-induced sleep and, what a surprise, the market bounced back Tuesday. The news cycle now is all about how well it didn't matter that the drop was so huge (what? that's not what you said MONDAY night), now it's all about how banks won't loan to each other. Doom, doom, doom.

And by the way, now it's not a bail-out, it's a rescue package. As if comparing it to feeding refugees or finding housing for the growing tent cities in major American cities will make us feel more willing to write checks for the people who have been earning their living from charging us interest on what we need to survive.

What happens if a culture designed to run on credit abruptly finds credit limited only to those who can afford to pay it back safely and promptly? Cut through all the doom talk and you realize the number one outcome will be that profit will have be derived from other sources. Diverse, imaginative sources. This could be extremely positive -- imagine FDR style programs set up to invent and build alternative energy resources, or community-run health care clinics, or rehabilitation for Iraq war vets. But another possible scenario, of course, is what happened in Spain when the church declared collecting interest on loans to be usury. Those who sought quick wealth unearned by actual labor decided the slave trade and looting the New World were their best bet. The route our current reinvention will take depends on who is in power and shapes the direction we go as a nation.

I choose not to listen to those who are being Very Serious in their dire warnings and insistence we have limited options. We have an entire fucking horizon of options, and the thinking which pulls us into a new way of being is simply not going to come from those who participated in dragging us into this mudhole. Here's a few excerpts I have enjoyed reading this week. The first Michael Moore's Bailout Plan (hat tip to The Littlest Gator for bringing us this.)

The second is from Digby, her support for a "millionaire surcharge" in an addendum to Dday's post yesterday Now That's Not Really What I'm Talking About:

"A millionaire can easily afford to help pay a little bit more for this economic debacle. I'm sorry if their portfolios are going down and their home values aren't what they'd expected. That's the way it goes. They're still doing just fine. I see no reason at this point to pretend that the Randian myth that they must be coddled so the rest of us can benefit from the crumbs that fall off their tables, is anything more than the silly plot of a bad Romance novel. There are no crumbs -- given the chance they eat it all and tell everyone else to go eat a Ding Dong."

The third is a statement by New York City Street artist The Me Nobody Knows, accompanying his painting currently up for auction entitled "Save My Ass Too":

"Some of the wealthiest, most powerful money brokers screw-up and you say you want to use my money to bail them out? They make millions, hundreds of millions, fly first class, live in mansions, and have yachts. Yet we, the poor-ass-struggling folks are about to loan them 770 billion dollars?

"I have a better solution. Let the greedy idiots who caused this mess take their lumps and lose everything. Then do for the American people what we do for developing third world nations, simply forgive our debts. Bail us out. Keep all of us from going bankrupt, and pay our bills, our homes off. After all we're the backbone of the nation, right? Good, for once let those at the top of the mess suffer the consequences.

"Now you've already wasted a bunch of my money looking for weapons of mass destruction, then starting a very expensive war, funded again with MY money. So the way I figure, if you really care about a nobody like me: Dear Uncle Sam, Save My Ass Too! Save My Ass Too"

There's another Atkins family story I want to share with you, about thieves and how we react to them. During the mid to late 1870s, Joe Atkins and four of his brothers were traveling from one part of Texas to another by horseback. They were Tom (b. 1842), John Brittin (b. 1845), Ira (b. 1847), Joe (b. 1856), and Robert Bell Atkins (b. 1858). The three eldest were veterans of the Confederacy, and the two youngest had served in their local militia during the war, including Robert Bell at age 12. They had to camp out overnight, had shot a couple of rabbits and begun a stew in a cast iron pot over the fire. They were in a clearing surrounded by scrubby brush, and darkness settled on them as they made camp. They had just put in biscuits to bake on top of the stew and were waiting for these to be done when, into the circle of firelight, stepped a Chiricahua. He was armed with a rifle but it was not aimed at them. He squatted down on his haunches and looked at them, alert.

Robert Bell Atkins is the hero of this story as it is told. He saw the visitor first, and as he alerted his brothers, he told them firmly "Don't pull your guns. He smells the stew, he's just hungry." He picked up a bowl and put stew in it, adding a biscuit, and held it out to the newcomer. As the offering was accepted, from the night around them, encircling them, appeared a dozen more warriors, armed to the teeth and moving in complete silence. The brothers realized in that instant if they had reacted to the first man with aggression, they would have been killed on the spot.

The brothers, almost of one accord, lay their weapons on the ground. Once these had been collected, a final five Chiricahua emerged from hiding. They settled in to eat all the stew and everything else the brothers had. They left an hour later with the Atkins horses, but the brothers were allowed to keep their boots, pistols, and lives. No attempt at communication was made. When the brothers straggled into the nearest settlement the following day, lame and hungry, they refused to participate in any attempt to go after the Chiricahua. The local sheriff told them it was Geronimo they had seen -- he had just escaped capture again and was known to be in the area. The Atkins felt like they had done well by themselves, and the story was enough.

(Goyaałé/Golah kah yeh, called Geronimo, Chiricahua Apache; full-length, kneeling with rifle, 1887. Photo by Department of Defense. Department of the Army. Office of the Chief Signal Officer, now in the National Archives.)

It is a good story, and different enough from the usual braggadocio that I've thought it might have some truth to it. When I heard it as a girl from various Atkins relatives, the tone in which it was told was rueful, humorous, and always included the line "After all, we'd stolen their land. We were lucky to not get killed." However, Minstrel Boy here at GNB points out "It would have been very unusual for Chiricahuas to be in any part of Texas. Mescaleros, Mimbrenos, Tewas, Lipan, and our close cousins, the Comanche would have been far more likely. although during his time on the run from the army, Geronimo and his band were documented in the mountains of Chihuahua and Sonora quite often."

Geronimo was a resistance fighter of the highest order. Minstrel Boy is one of his descendants ("He was my maternal great-great-great-great-grandfather Taza's brother-in-law") and has quoted him as saying "dano'ah selwigoh doo iis dah do'o iindii eedihii nanah daagon'iillka'ad" which translates as "All the free men are dead or still fighting". His given name was Golah kah yeh, which means "The Yawner". Minstrel Boy states "He got Geronimo by attacking a mexican garrison on the feast day of Saint Jeronimo. The Mexicans ran to the battle shouting 'Geronimo!' He figured they were calling out for him."

If we reward and continue enabling those who live by theft and usury, then yes, indeed, everything will collapse around us. If we refuse to listen to fear and instead stay flexible, open, and resistant to greed, we will walk out of this alive and with a chance to live differently. As Minstrel Boy wrote day before yesterday, Which side are you on?

There's more...

Wednesday, October 8, 2008

No More Clowns: McCain v. McCain: The Bailout

My Sympathy for AIG and All the Other Failed Companies Ends Here

Friday, October 3, 2008

Bailout Bill Passes: Obama & Pelosi Whip Votes

Thursday, October 2, 2008

Robbers and Resistance

Blog Archive

Blog Search

FeedBurner RSS/XML Feed