Bailing Out the Bailout

Congress gave the Bush administration the power to go to war in Iraq if all else failed.... with a misleading MWD scare. The Bush neocons snatched up that power and ran with it, right into a mismanaged wall.

That was the first "big time" Bush White House policy disaster.

Fast forward to September 2008 and the second "big time" disaster.... the collapse of the U.S. financial and housing markets.

Congress once again trusted the Bush administration with $700 billion plus to "manage" the collapse. The Bush Treasury snatched up that money and ran with it, right into a mismanaged wall.

The headline says it all... "Bailout Lacks Oversight Despite Billions Pledged - Watchdog Panel Is Empty; Report Is Unfinished" (WaPo)

The alarming news is that "In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

"Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

"Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed."

What happened? "In approving the rescue package, lawmakers trumpeted provisions in the legislation that established layers of independent scrutiny, including a special inspector general to be nominated by the White House and a congressional oversight panel to be named by lawmakers themselves."

This rudderless bailout of taxpayer gold is drifting toward the shoals without a captain, or a crew.

Will it help that the bailout legislation provided for a Financial Stability Oversight Board "whose five members include Paulson and Federal Reserve Chairman Ben S. Bernanke?" Hardly, "it has no staff of its own, and few expect that policymakers can conduct oversight of themselves. 'It's sort of a joke in terms of oversight,' a congressional aide said.

So, where are we? Yesterday a panicky Treasury Secretary Paulson addressed the nation.... "Treasury Redefines Its Rescue Program - Plan to Buy Distressed Assets Is Abandoned In Favor of Aid to Loosen Consumer Credit" (WaPo)

Paulson announced a series of moves that redefine the federal government's $700 billion rescue plan for the financial industry "in order to tackle what he called a dire situation in the consumer credit markets.

"In recasting the program, the Treasury no longer plans to buy troubled assets from financial firms, the idea initially presented to the country, but instead will offer aid to banks and other firms that issue student, auto and credit card loans in part by jump-starting the market that provides financing for these companies."

This latest reversal of Congressional intent evidently took The Hill by surprise.... it's stunning that they still trust, that they can still be surprised by The Decider's maladministration. It's clear that Bush has already mentally moved on to his Texas rocking chair, Paulson is the poster boy for the Peter Principle, and the Obama calvary is charging ahead but they're still in transition limbo-land.

The tourniquet needed to stop the financial hemorrhaging is public confidence in government and jobs. The administration's entire unaccountable bungling approach has made the situation worse.... consumer confidence is in the dumper.

Now it's a race to see if the economy can be kept on life support until it reaches the Obama emergency room on January 20.

Gordon is "Nobel" Krugman's Man

Congratulations to American economist Paul Krugman whose credentials were already formidable.... professor at Princeton University, columnist for The New York Times... who today was awarded the Nobel Prize for Economics.

And today Krugman has also written an op-ed, "Gordon Does Good" (NYTimes) in which he asks, "Has Gordon Brown, the British prime minister, saved the world financial system?"

Not George Bush. Not Henry Paulson. Not Ben Bernanke. But our long-suffering staunch ally, Britain's Gordon in concert with his chancellor of the Exchequer Alistair Darling, by thinking clearly and acting quickly.

Krugman explains, "On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement."

"And," Krugman continues, "whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness)."

For anyone who has watched the painful politicalization of our government by The Decider, even of the office of Attorney General, it'll come as no surprise that Krugman believes that... "It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as 'private good, public bad,' which must have made it hard to face up to the need for partial government ownership of the financial sector."

Hopefully Krugman is on Barack Obama's short list for Treasury secretary. In the meantime, on a day when Krugman is receiving bouquets for his prestigious Nobel prize, he is also throwing bouquets of his own.... "Luckily for the world economy, however, Gordon Brown and his officials are making sense. And they may have shown us the way through this crisis.

If we can all just keep a stiff upper lip.

McCain Stops Progress

Over a week ago the financial health of the country went Code Blue. Emergency measures were needed.

George Bush's administration proposed a $700 billion bailout. The Senate and House held immediate hearings with Treasury Secretary Paulson and Federal Reserve Chairman Bernanke. The chairman of the Senate Banking Committee Christopher Dodd worked almost around the clock with the ranking Republicans on his committee to forge a framework for going forward, as did the chairman of the House Financial Services Committee Barney Frank who worked tirelessly with Republicans on his committee to forge a compromise. A consensus was being hammered out, things were going forward until.....

John McCain, sensing a stage-center moment, said he was going to swoop into D.C. and save the day. Suspend his campaign. Call off Friday's debate. All of this while the last big test of his judgment, Sarah Palin, continued her take-your-daughter-to-work UN photo-ops and tour of New York City complete with ditsy "U.S. Has Achieved 'Victory' in Iraq" (WaPo) interviews CBS's Katie Couric.

Even though McCain said only ten days ago that the fundamentals of our economy are strong.... even though he has allowed that he doesn't know much about the economy.... even though he admitted to WKYC-TV in Ohio just this Tuesday that "I have not had a chance to see [the Bush administration bailout proposal] in writing. I have to examine it.".... and, even though when ranking GOP Senate Banking Committee member Richard Shelby was asked this morning on MSNBC's "Morning Joe" if McCain had called him before arriving in D.C..... Shelby had to admit he had not heard from McCain but did "spend a couple of minutes with him yesterday."

So far what has McCain accomplished by his grandstand play? He didn't have much to say in the White House meeting of leaders of both parties yesterday, he has no role in negotiations today. But, he stopped progress and created a climate where bipartisan agreement is even more difficult.

Good job, Johnnie.

November.

Bush: A Laugh a Minute

This week was a beaut....

Tuesday, Admiral William J. Fallon, commander of American forces in the Middle East whose outspoken public statements on the wisdom of diplomacy in dealing with Iran put him at odds with the Bush administration, announced his early retirement.... the White House mood being "Here's your hat and coat, what's the hurry?"

Senator Harry Reid (D-NV), house majority leader, called Fallon's departure "yet another example that independence and the frank, open airing of experts' views are not welcome in this administration." (NYTimes)

The Decider is in no mood to listen to those who would counsel diplomacy, after all, war is beautiful. On Thursday Bush told U. S. military and civilian personnel in Afghanistan by videoconference... "I must say, I'm a little envious.... I think it would be a fantastic experience to be on the front lines of helping this young democracy succeed. It must be exciting for you... in some ways romantic, you know, confronting danger." (Slate)

Spoken by someone who never put himself in danger, except to play "hot planes" with his guard unit... when he showed up.

While uttering this jaw-dropping inanity, Bush was flanked by Defense Secretary Robert Gates who also didn't experience combat.... serving in the Air Force at an ICBM base.... and Vice President Dick Cheney whose numerous deferments enabled him to avoid the "romance" of serving in any capacity. These are the boys playing soldier with the lives of others.

The Decider has just been full of himself lately, singing and dancing on the morass he'll leave behind. At the Gridiron Club dinner, attended by Washington's journalistic and political disgraces, Bush serenaded them, to the tune of "Green Green Grass of Home"....

"That old White House is behind me.... I spend my days clearing brush, clear my head of all the fuss, like that big fuss you made over Harriet and Brownie. Down the lane I look and here comes Scooter, finally free of the prosecutor. It's good to touch the brown, brown grass of home.... Down the lane I look, Dick Cheney is strolling with documents he'd been withholding, it's good to touch the brown brown grass of home." (WaPo)

And, everyone laughed and had such a good time.... while Hurricane Katrina victims still struggle, Scooter Libby got away with outing an undercover CIA agent and obscuring the White House lies that led us to war in Iraq, and Cheney was allowed to engineer the gutting of checks and balances that are the bedrock of good governance, to say nothing of the rending of citizens rights under the Constitution. Funny stuff.

Had enough?.... oh, but there's more. After repeatedly telling us "the fundamentals of our economy are strong" as home prices were dropping, mortgage loan defaults spiraling and financial markets imploding, The Decider finally fessed up yesterday admitting that the economy "is going through a tough time." (NYTimes)

As he spoke, investment bank Bear Stearns was being rescued by the Federal Reserve Bank of New York and JP Morgan Chase because of crippling losses on mortgage-linked investments.

How bad is this "tough time".... as Balestra Capital hedge fund president James Melcher said: "If the Fed hadn't acted this morning and Bear did default on its obligations, then that could have triggered a very widespread panic and potentially a collapse of the financial system."

In reaction to the financial tsunami coming down on us all, stocks continued their steep tumble. A panicked Federal Reserve chairman, Ben Bernanke, warned of worse to come and unexpectedly cut interest rates by three-quarters of a percent.

But not to worry.... surveying what the financial havoc and ruin of The Decider's "cut taxes and spend" voodoo economic policies, his monstrously costly war, and the administration's "look the other way" abdication of oversight and regulatory restraints have wrought.... Bush boasted that the "fix" was already on the way, referring to the tax rebates scheduled to be mailed over the next few months.

That "fix" is really too silly and facile to even talk about. It's not even a finger in the crumbling financial dike.

When the country elected Frat House Bush they reasoned he would be more fun to have a beer with.... still having fun?