Okay rednecks, let’s think a little bit about this bailout thing before we jump out of the car into the hailstorm
Posted by admin on 2008 September 25
“I’m tryin’ ta think, but nuttin’ happens!” - Curly Howard
There was an incident here in Dallas some years ago, it was a hailstorm, a big one out over the western part of the county I think. Golf ball sized hail destroyed hundreds of millions of dollars worth of cars at dealerships close to the highway, and softball sized hail fell in some parts.
On the news there was a family that got caught up in in it, right up in it, and there was a little girl about 5 years old, shaking, cut and bruised, and wet. They panned back to show a ’70s model Chevy Impala, a huge car with a thick steel body like they used to make, and Daddy was telling the story about how “The hail started a bustin’ up the windshield and I just tol’ ever’body to bail out - ‘BAIL OUT! BAIL OUT!’ I said to ‘em. And we all bailed out. It was sumthin’!”
So ever after that all of us in our group of friends would talk about the Bailout Family, whenever such an occasion arises, where people bail out without thinking about the consequences.
How the money supply and how financial markets work are about as easy to understand as the Tao, or quantum electrodynamics - only it’s quantum physics in reverse: easy to comprehend at the micro level, but abstruse and counterintuitive at the larger level of global economies.
This is why it seems like we’re about to make a huge mistake on the financial markets bailout, one way or another. Because so few people really understand how the financial markets work, it would be easy on the one hand to do exactly the wrong thing, as has happened many times before. Or it would be easy for someone to pull the wool over our eyes and rob us blind without us even knowing how they did it, or even if they had done it.
But here’s an article THE BIG LIE: The Supposed Paulson ‘Bailout’ Plan by Robert Wenzel in the Economic Policy Journal that may explain it better than most. It so happens I do hold a degree in Physics and I used to be a Taoist in good standing, but I’m still not going to say I really understand financial stuff. I’m pretty sure there are a lot of articles out there now that purport to be telling the real story behind the financial crisis we’re in now, each of which contradicts the other partially or entirely.
Basically what I think Wenzel is saying is that Treasury Secretary Paulson wants $700,000,000,000 of taxpayer money to go to his buddies in banking and finance. Wenzel says it’s obvious that money isn’t going to save troubled banks, so Paulson says “Ummm… we need it to like, unfreeze the credit markets by adding huge amounts of new liquidity to the system.” And Wenzel goes “Whoa, dude! Injecting money into the economy is what the Fed is all about! They don’t need any help from Congress or the taxpayers for that.”
Wenzel says Bernanke is a dillhole who needs to get his head out of his ass and stop holding down both the money supply and interest rates. One at a time, please! He says Volcker knew what he was doing, and brought us out of the economic crap we were going through since Nixon laid price and wage controls on the US economy back in the ’70s.
Oh, what? Republicans with their financial socialism even way back then? What did I say about it not being clear why rednecks should vote for Democrats?
Anyway, back to Wenzel. To make a long article a little shorter, I’ll go straight to Wenzel’s bottom line:
In summary, there is nothing “bailout” about this $700 billion Paulson plan. It would be more aptly called, Feeding Pigs At The $700 Billion Trough.
The public uproar over this $700 billion money grab is completely justified. One question remains. Does Congress have the balls to resist their insider masters and do something noble for a change and kill the Big Lie?
With that much money, Paulson could give 700,000 people a million dollars, or he could give 70,000 people 10 million dollars, or 7,000 people 100 million dollars. So how many friends does Paulson have, and how rich is he going to make them?