Andy Martin on the Washington bailout circus
Democracy is messy, says Andy Martin. And foreigners do not understand America’s freewheeling economic culture. The treasury secretary’s lack of political experience may be hamstringing the bailout.
Andy Martin on the U.S. financial “crisis”
Just say “no” to a Wall Street bailout: Part Four
“Three cheers for the House Republicans”
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ANDY MARTIN SAYS WE SHOULD NOT DEMONIZE HOMEOWNERS WHO FAILED; WE SHOULD TRY TO KEEP PEOPLE IN THEIR HOMES, NOT THROW THEM ON THE STREET
ANDY SAYS TREASURY SECRETARY PAULSEN’S POLITICAL INEXPERIENCE IS A STUMBLING BLOCK
ANDY REPEATS HIS “MCCAIN MANTRA:” MCCAIN IS A FIGHTER PILOT. NEVER FORGET THAT FACT
(NEW YORK)(September 26, 2008) The next time some American politician criticizes Iraqi politicians for behaving badly, the Iraqis should roll a tape of Washington in action during the “Begging Banker Bailout Caper.” Democracy is messy, and independent politicians cannot be corralled. I say three cheers for the House Republicans that have blocked the proposed Wall Street bailout.
There are problems aplenty in this political bouillabaisse. The treasury secretary is one of them.
We always hear “politicians” derided. But politics and politicians are essential to the functioning of democracy. In Baghdad or Washington. People do have to make deals, negotiate settlements, and work together on a continuing basis. And, finally, politics is not a perfect business. People do make mistakes. There are delays. Egomaniacs. Bad actors and backstabbers.
Hank Paulsen is not a politician and he has no political experience. He is a Wall Street trader and former manager of one of the wildest of the investment banks. Successful executives such as Paulsen are used to making decisions and giving orders, and expecting subordinates to fall in line. Sorry, Mr. Secretary, that is not the way Washington works. I went to Washington, DC to work on Capital Hill 42 years ago. I know of what I speak. Politics hasn’t changed in 42 years even if the people have. Politicians will do what is in their best interest, and their best interest involves satisfying their constituents and getting reelected.
During the Viet-Nam era Speaker Sam Rayburn is said to have remarked of the “brightest and best” on President Johnson’s staff, “I wish one of them had run for sheriff.” http://president.uoregon.edu/speeches/whatgoesaround.shtml
I will echo Rayburn and say I wish Paulsen had run for office before he became treasury secretary. He would have a better idea of how political give-and-take operates. Trying to scare Americans into accepting a bad proposal is not working and will not work.
Here is the reality: There are better options than the bankers’ bailout proposed by Paulsen and Bernanke. House Republicans have done the entire nation a great service by stymieing a bad deal that would have negative long-term consequences.
In a partial repudiation of the bailout deal, the Washington Post reports today that smaller banks are doing fine and there is plenty of money available to lend. That’s what I reported yesterday. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092504155.html?hpid=topnews
So what’s the hurry? Chase Bank just swallowed Washington Mutual without a bailout and without a guarantee. On the contrary, Chase turned around and guaranteed WaMu’s uninsured deposits. How’s that for a twist? Does Chase see something that Paulsen doesn’t? Maybe the word is “opportunity.”
Foreigners just don’t understand America, they don’t understand Americans and they don’t understand how we deal with economic challenges. The famous economist Joseph Schumpeter coined the term “creative destruction” to explain what happens in a dynamic capitalistic economy such as the United States. People are always going up and going down. Making money and losing money. As long as no criminal activity is involved, Americans broadly accept those dynamic social parameters. Unlike Europe, there is no sin or shame in economic failure. Pick yourself up, and start over again. That’s the American way.
Wall Street may be caput, but Main Street is doing fine. Bank of America and Chase are expanding while wheeler-dealer investment banks collapse. What’s the big deal? Democrats want to badmouth the economy to win votes. Republicans have been intimidated by the Democrats’ aggressive negative rhetoric. Well. Yes, we are in a slowdown. But, yes, the “economy” is us, and we are just as inventive and productive as ever. Never sell the American economy short. You can “short” stocks. Don’t short the economy. It’s us.
House Republicans say they want to create incentives for the people who made bad loans to administer them. Makes sense. Three cheers. Keeping the government out of the economy should be praised, not condemned. Leave us alone.
Liberals and Obamabots want to erase the history of the past two decades. I strongly disagree. I do not believe America made bad choices even if some people were bad individuals. I strongly believe in supporting home ownership for everyone. I am glad there was a bipartisan consensus to push homeownership to the outer limits of possibility. We didn’t fail just because we ended up with a few bad loans.
I have been complaining about the artificial “crisis” for the past eighteen months. Repeat, there is no “crisis” in home ownership, even if a few borrowers were over-extended and a few mortgage lenders engaged in fraud. Both Republicans and Democrats worked to expand home ownership. That was a praiseworthy goal.
And guess what? When you lend trillions of dollars, some loans will go bad. Any banker will tell you that. So you focus on the bad loans, not on the good economic system that was opening up home equity to more and more people, to working families and minorities. Thank you Republicans; thank you Democrats. As for the few crooked lenders, “Book’em Danno.” (I’m on my way to Hawai’i.)
In banking, when you make more loans, you will sustain more losses. What is the surprise? Slightly riskier loans will have slightly higher rates of default. I don’t see 5% or even 10% of sub-prime loans in default as being bad, compared to the 90% who got to own their own homes and are current. I continue to believe regulators panicked in 2007, attacked a nonexistent crisis, and have tried to blame people who were trying to boost themselves into home equity as the villains. They were not villains. When will some politician stand up and speak the truth?
Please someone defend homebuyers who tried and failed to move up the economic ladder. They were our friends, family members and neighbors. Why not help them get through hard times instead of throwing them on the street? Hello Republicans. Can’t you see the opportunity in helping people instead of heartlessly saying “kick’em out?” They were Americans. I don’t blame any honest borrower that may have had problems. We told people to dream of home ownership, and they did. All to the good. Now we want to brand them as enemies of the state because some ran into hard times? Not me. We should be encouraging them to try again, as soon as possible. That’s the American way.
I blame regulators for pulling the carpet out all at once, without warning, and changing the rules of the game in the middle of the game. That regulatory perfidiousness is what has caused our phony “crisis.” The entire “crisis” is a figment of the imagination and reflects politicians trying to solve a problem that does not exist. Are lenders more cautious today, maybe slower right now? I sure hope so. So why do we want to open the spigots all over again, all at once with $700 billion in fast cash? Why not let the markets slowly sort out the bad paper, instead of trying to “unclog” (Bush’s term) the markets with a grand gesture? Grand gestures as often as not lead to grand failures.
The “payoff pitch” (baseball), or slap shot (hockey) in all this? The Democrats, who control Congress and can pass any law they want without Republican support, know they are on a dangerous course. That’s why Democrats are insisting that Republicans endorse the bad bank bailout law. If Democrats thought they had a solid program, they could pass their proposal and send the law to President Bush, thereby embarrassing and trumping the Republicans.
Instead of taking strong independent action, Democrats are taking the opposite approach. They refuse to act unless the Republicans join them in driving over the cliff. There is no stronger evidence that Democrats know the bank bailout is a bad law and would receive a hostile public reaction. I repeat: three cheers for the House Republicans.
Finally, McCain and Obama. Yesterday I suggested that McCain and Bush blundered in inviting Obama to the White House. Obama in turn may have blundered in taking a leadership role at the White House meeting. McCain was taciturn. Maybe Obama fell for McCain’s catnip. Now that Obama has stepped to the fore, he is going to become identified with the “Democrat” (properly “Democratic”) bailout, and he may not like the starring role that he arrogated to himself on Thursday.
McCain? Well I keep reminding people that McCain is still a fighter pilot. He is up in the air, trying to position himself behind Obama, preparing to fire his rockets up Obama’s tail pipe. Can McCain do it? We’ll see. Obama took the first bait. He was in the air Thursday, and he was acting as the squadron leader for the Democrats. “Point man” can be a vulnerable position in aerial combat against an experienced opponent.
Stay tuned. When the playing field and the battlefield are as confused as they are right now in Washington, interesting things can happen. Hey, that’s democracy. Don’t criticize Iraqis for acting the same way. Let’s hope that they do. Messy, ego-driven, contentious, contrarian, that’s democracy.
In the meantime, three cheers for the House Republicans.
My latest guesses: (1) the original bank bailout proposal is dead. Dead. There is no support for the bailout as written; I agree with McCain on that point. (2) Obama and McCain? Let’s see who lands and who crash lands. Too soon to tell.
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FULL DISCLOSURE: I have decided to oppose Barack Obama’s election and have become Executive Director of The Stop Obama Coalition, http://StopObamaCoalition.com and CommitteeofOneMilliontoDefeatBarackObama.com. By default, I have become the national leader of the anti-Obama movement. I am not acting as either a Democrat or Republican. I have had no contact whatsoever with the McCain Campaign. The views expressed are entirely independent of McCain. I am not a member of any political organization. I am acting as an American citizen who sincerely believes Obama is not the man we need in the Oval Office. We are running a very dynamic and aggressive campaign against Obama. We know how. We are the recognized experts in the field. I will, however, continue to write my columns for ContrarianCommentary.com. /s/ Andy Martin
Andy Martin is a legendary Chicago muckraker, author, Internet columnist, radio talk show host, broadcaster and media critic. He is currently based in New York selling his new book, Obama: The Man Behind The Mask. Andy is the Executive Editor and publisher of http://www.ContrarianCommentary.com. © Copyright by Andy Martin 2008. Martin comments on regional, national and world events with over forty years of experience. He holds a Juris Doctor degree from the University of Illinois College of Law.
His columns are also posted at ContrarianCommentary.blogspot.com; contrariancommentary.wordpress.com. Andy is the author of Obama: The Man Behind The Mask, published in July 2008, see http://www.OrangeStatePress.com.
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