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With the emergency economic bailout plan going down in flames in Congress, and with financial institutions continuing to fail at an alarming rate (Wachovia being sold for $1 a share to Citigroup today)–I genuinely fear for the future of our nation. That’s not because I thought the plan was particularly good–I agree with Boehner that it was a "crap sandwich"–but because something profound must be done immediately. Perhaps it’s for the best, because the plan failed to address the number one problem causing the meltdown: the rapidly escalating foreclosures sweeping the country. Until something is done about this root cause, our economy will continue to slide into the toilet.

As Congress dithers, the rivers of credit that form the lifeblood of our economy have ground to a halt. People can’t get mortgages, they can’t sell their houses, they can’t get car loans, they can’t get student loans, they can’t borrow short-term money to fund business needs. Every day that passes under these conditions is another day that hammers towards the destruction of the American economy.

We need a plan and we need it now–but one that stops the foreclosure bleeding and thus stopping the crisis at its source. It’s slow, it’s enormously expensive to administer. But if it’s a choice between buying toxic mortgages of unknown worth from failing banks for $700 billion, and helping homeowners by freezing foreclosures and re-setting their mortgages so they can stay in their houses, I’ll take the latter any day. The fewer owners who default, the fewer overall losses ultimately experienced by the financial system.

Meanwhile–Dow down 720 points and counting.

I don’t think people truly appreciate the magnitude of the painful recession or depression that could result from this crisis. Nobody of recent generations remember the hunger, the 23% unemployment, the slicing of economic output by half, that this nation experienced in the 1930’s. We are not prepared as a nation or as individuals to deal with that.

I think it’s fair to say that McCain’s campaign is imploding.

1) Nero fiddling while Rome burns (or is it Daniel vs. the lions?): Hoping to look like a hero and in control of the dire financial crisis, he swooped into Washington to inject presidential politics into a very delicate compromise happening between Bush, Democrats, and Senate Republicans. Instead, he observed passively without saying a word for the majority of a meeting called by Bush at the White House, and towards the end he garbled something unintelligible that vaguely sounded like he was siding with a conservative House Republican revolt against the plan. The compromise fell apart later in the day.

McCain is now in the unenviable position of being in between Bush/Democrats/Senate Republicans who are trying to save the nation from financial ruin on the one hand, and renegade conservative House Republicans who despise McCain but whose constituents McCain cannot afford to lose on Election Day. Who knows how this will play out, especially because a lot of Americans do sympathize with the House Republican position to some extent–but right now it’s looking like a nasty vise for McCain.

2) “Crawling to your corner and hiding behind your blanket”: this is how Barbara Boxer framed McCain threatening to walk out of the first debate tonight, and it was painful to watch. But various polls I’ve seen agree with her: most Americans want McCain there tonight. A president needs to be able to walk and chew gum at the same time, and attending some high level meetings where you hardly say a word is no excuse for failing to come before the frightened American people and present your case for why you should be the one to lead this mess in a few weeks.

3) Palin plunge: Did anyone see the horrendously embarrassing performance Palin put on for Katie Couric? This would be all over the news if it weren’t for Debate-gate. Here’s the bit about Putin “rearing his head”:

And then there was this little gem, where a question about the $700+ billion bailout devolved into an unintelligible set of talking points about healthcare:

Her answer was so nonsensical that she reminded me of this answer given during the Miss Teen USA contest last year:

Former Palin defender Glenn Greenwald put it best:

Sarah Palin’s performance in the tiny vignettes of unscripted dialogue in which we’ve been allowed to see her has been nothing short of frightening — really, as I said, pity-inducing. And I say that as someone who has thought from the start that the criticisms of her abilities — as opposed to her ideology — were much too extreme. One of two things is absolutely clear at this point: she is either (a) completely ignorant about the most basic political issues — a vacant, ill-informed, incurious know-nothing, or (b) aggressively concealing her actual beliefs about these matters because she’s petrified of deviating from the simple-minded campaign talking points she’s been fed and/or because her actual beliefs are so politically unpalatable, even when taking into account the right-wing extremism that is permitted, even rewarded, in our mainstream. I’m not really sure which is worse, but it doesn’t really matter, because with 40 days left before the election, both options are heinous.

This is all quite apart from the new story in today’s Washington Post about how Gov. Palin accepted $25,000 in gifts from industry executives and others. So much for being a reform-minded maverick!

As I said–”ka-boom.”

While I generally agree that it is the anti-regulatory environment pushed by Republicans for the last decade that is primarily responsible for the current crisis, there is one area where that is not the case: Freddie Mac and Fannie Mae.

Democrats, led by Barney Frank and Chuck Schumer, have consistently shielded these entities from further regulation under the argument that their business model encouraged homeownership for lower and middle income families. They did so despite being warned that the over-leveraging these companies engaged in posed precisely the systemic risk we are now seeing come to pass. Meanwhile, Bush and the GOP tried and failed to push for greater oversight (one of the few things over which I’ve agreed with them the last few years).

While this unflattering video is from Fox News, I consider the reporting accurate:

Gotta call a spade a spade.

I’m seething.

Democrats are proposing common sense additions to the mega-bailout being asked for under threat of Armageddon according to Paulson. They’re asking that executive compensation be limited (I believe to $400,000 if I remember correctly) for banks participating in the bailout, and that taxpayers be given the opportunity to purchase ownership shares in companies participating through the use of “warrants”:

Several lawmakers, including Sen. Jack Reed (D-R.I.), an influential member of the Banking Committee, are pushing for a provision that would require participating firms to grant the government warrants to purchase stock.

Sources familiar with the Treasury’s thinking said warrants would limit participation in the program. Only failing banks would be willing to give the government stock in exchange for buying up their bad assets, these sources said. But key Democrats said the point was critical.

“If this is an investment, the taxpayer should not be treated as dumb money,” said Rep. Rahm Emanuel (D-Ill.), chairman of the House Democratic Caucus. “If we’re going to buy these securities that are illiquid, toxic, we need to make sure taxpayers get an equity ride so they get to benefit on the upside.”

Another point of dispute is Democrats’ insistence that the government be given authority to cut the salaries of executives and restrict their severance packages if they take taxpayer money. Paulson has said such a move would be “punitive” and deter companies from participating in the bailout.

Here’s a message for Paulson, in language not often seen on this blog:

GO F*CK YOURSELF.

You’re trying to sell this sack of garbage to Congress and the American public while using a Sword of Damocles over our heads preaching imminent doom, and you have the unmitigated gall to say to our faces that banks might be “deterred” from participating because we insist on an equity stake and executive pay equivalent to that received by the President in order to benefit from taxpayers’ largesse?

Why don’t these banks and their executives take their business, their stock, their toxic mortgage products, their hedge funds, their six digit bonuses, and their fancy yachts and SHOVE them?

Any banks refusing to accede to these conditions make clear that they didn’t really need the bailout to save anything except their own lifestyles and the status quo. And that, my friends, is not worth my taxpayer money.

Democrats, don’t you DARE cave in on these conditions or you will suffer the consequences at the polls in just a few weeks.

The more I read and think about the proposed government bailout for Wall Street, the more outraged I get. As are many others across the entire political spectrum, I’m coming to view this bailout as nothing less than the mass raping of the American taxpayer–with no accountability, no help for people in foreclosure who really need it, and no stopping the people who benefited from this disaster from benefiting even more.

Nobody puts the flaws I find in this proposal better than my friend and consumer advocate Boztopia. I shamelessly rip this off from his blog, because I could not possibly say it better myself:

No oversight. The Bush administration is asking Congress to hand it a blank check for $700 billion without any controls or strings attached. This is the same corrupt regime that has wasted uncountable billions in Iraq through fraud, graft, corruption, and simple wasteful spending on unnecessary projects. The same regime that demanded vast new powers of surveillance with only the most minimal oversight to ensure that it is not abused. Do you really think Paulson is going to tell the truth in those reports to Congress, or that Congress will do anything about it if he lies?

Unchecked power. If this bill passes as written, it will make Henry Paulson the most powerful man in America, with incredible leverage to utilize trillions of dollars’ worth of capital as he sees fit. As an unelected official not chosen by the people, do you trust him to look out for your interests?

Foreign bank bailouts. Henry Paulson is on record as saying that Americans are too stupid to care if he uses our money to prop up banks based outside of the United States (Seriously, go read this article–that’s essentially what he says.) If that doesn’t set my right-wing friends in firm opposition to this plan, I don’t know what will.

No protections for homeowners or curbs on CEO pay. Paulson is actively resisting any attempt to add punitive or regulatory measures to the package, including foreclosure protections, additional economic stimulus packages, or stronger oversight of the financial markets to prevent something like this from happening again. This is a life raft to the very people who got us into this mess, mortgaging our financial futures to do so.

Rewarding irresponsibility. This is a clear message to Wall Street and the global markets that it’s completely okay to engage in ever-more-complex and opaque financial tomfoolery, because the government will bail you out when it gets rough. No consequences, no responsibility, no real fear of the vicissitudes of capitalism. In a true free market, banks that overleveraged themselves with crappy loans and nonsensical derivatives would collapse. It would be painful and turbulent, but is that really worse than enabling them to keep on going with the same awful practices that have left thousands of people with homes worth less than what they paid for them, with 401ks barely performing at a value worth the investment, and a dollar that can’t buy a fraction of what it used to? Again, tell your right-wing friends that this is as blatant an example of ignoring personal accountability as there ever has been.

Constraining our future. As I said yesterday, not only will this bailout deny us access to capital that we could have used for countless new projects and investments that we desperately need, but it will further constrain us from engaging in any sort of new infrastructure building or real innovation to put this country back on track. While Obama’s administration may be able to push through legislation that amends or changes existing laws, the real big-ticket items–climate change mobilization, national health care, broadband investment–will not happen without capital to fund them. This is a political time bomb designed to sabotage any attempt Obama will make at real change by hamstringing him financially until the Republicans move to take back Congress in 2010. It’s no coincidence that Paulson’s package is on a two-year timeframe, after all. [Me: I don't agree with this last characterization, I think the intent is truly to rescue the economy no matter how misguided the effort--but I can see why Boztopia would feel as he does.]

It won’t solve anything. Most of all, this bill is a Band-Aid on cancer. As this excellent article by Joshua Holland details, our financial structure and system is fundamentally sick, crippled, and retooled to act solely as a process to transfer money from the many to the few. Pumping more capital into it is like giving a blood transfusion to someone who’s undergoing heart surgery and is being kept alive by machines–it’ll help keep them alive, but it won’t fix the problem at hand.

On the last point, the issue really is that nobody knows if it will solve anything. The crisis on Wall Street is exactly because nobody knows what these toxic financial products are worth, and people therefore refuse to buy them or trust others who have them. That’s why it’s impossible to say how much this bailout will really cost, or whether it will work.

I’m not stridently opposed to ANY bailout–just THIS one. I’m deeply troubled by the complete lack of accountability, the inability of taxpayers to potentially profit from this move, and by the concentration of too much power in the hands of the Treasury Secretary.

One Trillion Dollars. That’s how much the government’s plan to fix the financial crisis is going to cost.

One Trillion Dollars. An unimaginably large sum of money very roughly equivalent to the real cost of the Iraq war. One that is not news, as I said recently. I’m glad the government is being up front about the cost, but it doesn’t have a choice. Actually I think $1 trillion is understating the case, as I think that’s the cost for Fannie and Freddie alone.

Here’s what we could have bought for One Trillion Dollars (and could have bought twice, if you include the Iraq War):

–Doubling of cancer research funding, treatment for every American with heart disease or diabetes, and a global immunization campaign for children–combined, for two decades.

–Giving every man, woman and child in America $3400, or sending $150 to every single person on the planet.

–Five years’ worth of investment towards complete energy independence, along with associated new job creation and other benefits.

–Taking huge steps towards solving the impending insolvency of social security.

–Funding two hundred aircraft super-carriers for the US Navy.

–Securing loose nukes and fissile materials, and securing our ports, so as to prevent terrorists from ever exploding a nuclear weapon in an American city (cost: merely $315 billion over 10 years.)

–Funding the equivalent of 170 National Science Foundations and 200 National Cancer Institutes for one year. Alternatively, funding 28 Departments of Homeland Security and all the work they do securing the nation, for a year.

–Benedictine nun Joan Chittister’s view:

“you could buy a $100,000 house for every family in Kansas, Missouri, Nebraska, Oklahoma and Iowa and you could put a $10,000 car in the garage of every one of those homes. Then there would be enough money left to build 250 $10 million libraries and 250 $10 million hospitals for every city in those states. And after that, there would still be enough money left over to put in the bank and, from the interest alone, pay 10,000 nurses and 10,000 teachers and still give a $5,000 bonus to ever family in those five states. That’s what one trillion dollars will buy in this country today.”

One Trillion Dollars: the price for a failed conservative Republican ideology that pushed the phony ideas that markets are 100% efficient, that they function best completely unfettered by regulation, that government was nothing but a hindrance. Scads of laws, rules and regulations have been modified or repealed in pursuit of this ideology over the last decade.

I’ve never been a fan of excessive regulation, preferring the market to usually sort things out for itself. But in cases where failing to tell the truth, failing to disclose all facts, or failing to do something materially harms the consumer’s health or pocketbook then the government has a duty to step in and enforce truth and honest dealing. The market, left unfettered in these situations, will simply reward selfishness and people lying to one another.

This entire debacle happened in the absence of sensible regulation because of a failure of all parties to tell the truth. Everyone lied: banks lied to customers about their creditworthiness; customers lied to banks about their income and ability to support payments; banks lied to mortgage-buying financial institutions about the quality of what they were selling; financial institutions lied to the SEC and to investors by hiding financial toxic waste through accounting chicanery that allowed them to both mislead and operate their businesses with grossly undercapitalized debt.

One Trillion Dollars is the price the rest of us will now pay for all this lying, enabled by by the rabid and irrational deconstruction of common-sense “tell the truth” regulation pushed primarily by Republicans and George Bush.

One Trillion Dollars that will never be used to capitalize growth, or create new industries, or finance research for medical cures–those benefits will now be left to other countries.

One trillion dollars (and another trillion for Iraq): the price of Empire run amok. The bill is coming due.

Think about that, and about who is responsible, before voting in November.

In an interview with the Omaha World-Herald, Nebraska Republican Senator Chuck Hagel on Sarah Palin:

“‘She doesn’t have any foreign policy credentials. You get a passport for the first time in your life last year? I mean, I don’t know what you can say. You can’t say anything.”

…

“‘I think they ought to be just honest about it and stop the nonsense about, “I look out my window and I see Russia and so therefore I know something about Russia. That kind of thing is insulting to the American people.’”

…

“‘I think it’s a stretch to, in any way, to say that she’s got the experience to be president of the United States.”

Ouch!

When a network known for being sympathetic to your campaign calls you out for lying, it’s time to change your tactics.

Wall Street is having a full-on meltdown, the kind you see once in a hundred years. Merrill Lynch has been sold, Lehman Brothers has filed for one of the biggest bankruptcies in history. AIG is next, and other banks from Wachovia on down are having very serious problems. The Feds had to step in and take over Fannie Mae and Freddie Mac last week, Communist-style.

The root of all the evil going on right now is the housing market. People sold houses to each other for way too much money they could not afford, and then all these Wall Street companies sliced and diced these mortgages and sold them to each other while claiming everything was “safe.”

While pushing for a less and less regulated environment, screaming the conservative philosophy that government had to stay out of their businesses so they could fully thrive, Wall Street invented and re-invented all kinds of financial hocus pocus and pretended they were actually contributing to the economy while paying themselves outrageous dividends.

Sooner or later the Ponzi scheme had to stop, and now that it has you hear a whole hell of a lot of screaming on Wall Street, but for something entirely different. Now the screaming is directed at the Fed and its taxpayer money, BEGGING and PLEADING and CRYING and GNASHING for a bailout, so that all those bonuses and six figure incomes and stock options and fancy yachts won’t be relegated to the dustbin of history.

Therein lies the hypocrisy: the Republicans that infest Wall Street insist that the government keep its hands off their finance businesses during the good times…..but when times go bad, they come running and screaming behind Mommy Government’s apron strings.

You can’t have it both ways, sister. If you’re going to push for unlimited freedom from regulation, then you HAVE to take the bitter medicine when all of your plans go awry instead of begging for a taxpayer bailout. Conversely, if you want to have a taxpayer bailout, then you’re going to have to submit your business, especially one so essential to the economy, to reasonable government regulations that require telling the truth and being transparent.

After putting the taxpayer on the hook for potentially hundreds of billions of dollars in losses from toxic mortgages from Fannie, Freddie, and Bear Sterns–a cost similar to another Iraq war in magnitude–the Treasury finally came to its senses over the weekend and said enough was enough, letting Lehman Brothers slide into bankruptcy. Seeing the writing on the wall and that no White Knight would come to the rescue, Merrill Lynch slaughtered its bull mascot and sold itself to Bank of America at firesale prices. Meanwhile, Treasury sharpens its pencil as it prepares to draft a whole slew of regulations that the financial industry now has no choice but to accept.

“He who lives by the sword dies by the sword.” Matthew 26:52. That’s exactly the way it should be, and conservatives should stop caterwauling when they’re forced to face the butt end of their “hands-off,” “leave it entirely to the market” philosophy.

Harsh video showing reporters and news outlets calling out McCain’s lies again and again and again.