Wednesday, September 24, 2008

FEAR AND LOATHING; Of Wall Street from Main Street

"You can always count on Americans to do the right thing- after they've tried everything else"- Winston Churchill

I never claimed to be an economist- in fact the "dismal science" tends to make my eyes glaze over faster than the Saturday mornings spent as a ten year old in religious instructions with Dominican nuns ever did.

But the numbers are so very staggering; a $700 billion bailout of Fannie Mae, Freddie Mac, Lehman Bothers, and American International Group will cost every American $2,333 each.

Two days ago former President Clinton told a national TV audience that if nothing is done the price of each foreclosed home will be $250,000 to the taxpayers. New York Mayor Mike Bloomberg warned that inaction by Congress would result in more foreclosures, rows of vacant homes, and the destruction of entire neighborhoods.

Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson warned of dire consequences unless Congress acts now. The reaction of some in Congress, both Democrat and Republican, is this; the same Bush administration that got it wrong about Iraq and the WMD's, that got it wrong about the conduct of the war and Iraq's occupation, that bungled the aftermath of Hurricane Katrina, and did nothing when gas prices rose to more than $4.00 a gallon now wants to be taken seriously is this crisis. Senator Jon Testor, a Montana Democrat, wanted to know, "Why one week (to pass the bill)?". Republican Rep. Joe Barton of Texas reacted that it took the Good Lord more time to create the earth than the time allocated for Congress to rescue Wall Street.

Democrats- and many Republicans- want some form of protection for home owners facing foreclosure. In addition, most Democrats and many Republicans demand a ceiling on salaries and bonuses by officers of the affected companies. The Bush administration resists this ceiling. Democratic Sen Chris Dodd said this is "unacceptable".

Conservative Republicans see the bailout as irresponsible and contrary to their philosophy- though most concede that the era of deregulation is over. Republican Senator Mel Martinez of Florida declared, "There will be oversight".

In the 1980's President Reagan, the head of government in the United States of America, told us that "government is the problem". Thus began the era of "Distrust the Washington Insiders" that exists to this day. And ironically, it is the Washington insiders who are being called on to make possibly the most significant and far reaching decision of the last 40 years.

And "just do it" in seven days or less.

Contrary to what President Reagan said, "government" is not the problem. Bad government....ineffective government...dysfunctional government...is the problem.

Both Senator McCain and Senator Obama have said that to do nothing is not an option. However, Senator McCain has issued a plan on what he would do; Senator Obama has chosen to let Congress to do its job- for in reality neither Obama or McCain can do anything in this crisis except act as the titular leaders of their parties in finding some sort of common ground.

Hopefully the politics will stay home in this process....but it probably won't.

We have an imperfect system of government. Most of the time its system of checks and balances works to limit what one branch of government can or cannot do...unless one branch turns over the the keys to the car without knowing where "junior" is driving (see "The Patriot Act").


A parliamentary system in which the head of government is the head of the majority party is great for efficiency- laws get passed and things get done. But when things get done the wrong way (in that system) it sometimes takes a "vote of confidence" from the constituency to insure that government should remain in power. We may have congressional gridlock; those countries sometimes have a governmental revolving door.

Maybe we as a people will get lucky in this crisis. Perhaps Congress will do the right thing and do what would be of the most benefit for the majority...as unlikely as that seems.

Maybe it is time that "Putting People First" should be more than just a slogan.

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