Ok.  I hope you’ve read Beth’s post.  Pretty slick for her first post, huh?  Let’s talk about this bail out.

My question is pretty simple.  Why are we (the taxpayers) bailing out Wall Street?  Here are three quotes from W’s speech last night (you can read the full transcript here):

Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.

Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.

As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.

In today’s mortgage industry, home loans are often packaged together and converted into financial products called mortgage-backed securities. These securities were sold to investors around the world.

Many investors assumed these securities were trustworthy and asked few questions about their actual value. Two of the leading purchasers of mortgage-backed securities were Fannie Mae and Freddie Mac.

Because these companies were chartered by Congress, many believed they were guaranteed by the federal government. This allowed them to borrow enormous sums of money, fuel the market for questionable investments, and put our financial system at risk.

The decline in the housing market set off a domino effect across our economy. When home values declined, borrowers defaulted on their mortgages, and investors holding mortgage-backed securities began to incur serious losses.

Before long, these securities became so unreliable that they were not being bought or sold. Investment banks, such as Bear Stearns and Lehman Brothers, found themselves saddled with large amounts of assets they could not sell. They ran out of money needed to meet their immediate obligations, and they faced imminent collapse.

Now, is it just me or does it seem like there were some pretty lame decisions made?  I get that many consumers got into some mortgages that they couldn’t afford.  If we leave out those that were victim to predatory lending, then we can follow what some have suggested by allowing those who got into the wrong loan to deal with the consequences.

So shouldn’t we let the businesses do the same?  If “investors assumed these securities were trustworthy” and if they “believed they were guaranteed by the federal government” – an assumption at best which I’m sure could have been checked out by calling their CPA – shouldn’t these companies suffer the consequences just like the consumers?  Are we really going to put the welfare of a company over the welfare of the people?

Here’s what W says about that:

I’m a strong believer in free enterprise, so my natural instinct is to oppose government intervention. I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America’s financial system are at risk of shutting down.

To be frank, I don’t really believe he would do that.  But let’s say for argument that he’s being sincere here (no laughing).  Let’s say that bailing out these corporations is really the right thing to do.  Should the taxpayers really be the ones to foot the bill?  How ’bout a great big NO!

Progressive talk show host Thom Hartmann offered an interesting idea on his show yesterday.  Spurred by an article written by Dean Baker, Hartmann suggests bringing back Section 31 fees.  What are these?  These are a tax (don’t get excited yet…  hear it out) on stock transactions.  According to Hartmann, Section 31 fees were originally put in place in 1933 to fund the SEC and were repealed in 2007.  When they were originally instituted, the tax was 1/300th of one percent.  In other words, a transaction of $100 resulted in a tax of $.03 (that’s 3 cents).  Hartmann suggests a Section 31 fee of .25%.  Using the same illustration, a transaction of $100 would result in a tax of $.25 (a quarter).  This is in place in other countries today.  Here’s a quote from Baker’s article:

In fact, we should look to borrow another policy from the United Kingdom that can help set our financial markets in order. The U.K. imposes a modest stock transfer tax of 0.25 percent on every purchase or sale of a share of stock. This sort of tax would make almost no difference to a typical middle class shareholder. However, a tax of this size, with comparable taxes on various other financial instruments, like options and futures, would put a serious crimp in the money shuffling business that has wrecked so much havoc on the U.S. economy.

Furthermore, such a tax could raise a great deal of money, easily in the neighborhood of 1.0 percent of GDP or $150 billion a year. Imagine that we could finance national health care insurance with a financial transactions tax, or provide quality child care and pre-school education, or build up a green 21st century infrastructure, or maybe just have a nice middle class tax cut of $1,000 per family.

There is no shortage of good uses for the money that could be raised through a financial transactions tax. This is the conversation that the country should be having. Instead of funneling tens or hundreds of billions of taxpayer dollars to the failed wizards of Wall Street, we should be talking about what they can do for us.

Sounds good to me!  Let’s let Wall Street bail out Wall Street and not the taxpayers, not you and me.

So after many months of being nagged to blog on his fabulous site and listening to all the fantastic things my husband has had to say in his blogs, I fianlly am popping the cork on blogging rhodesnetwork style.

In all that has been going on in politics in the last few months, the one thing that has really rocked my boat and has me ready to try walking on water, is the idea that George W and his Wall Street CEO turned Treasury Secretary buddy would even suggest that we should foot the bill for bailing out the failing financial firms on Wall Street.

If you know anything about business, you know that businesses fail.  Sometimes really big businesses fail.  This happens everyday.

When a manufacturing business in small town, podunk nowhere fails and takes down the whole city with it you don’t see the government swooping in with the fraction of the money it would take to repair the damage.

When the housing market crashes and takes down 100,000 families with it month after month, the Bush administration swoops in to “rescue” the coorporation that made the bad loans in the first place in stead of the American people for whom  they are supposed to be working.

The other thing to note about business is that NOTHING happens by suprise.  This did not happen overnight and you can bet the Wall Street numbers junkies saw it coming years ago.  They spend millions of dollars every year tracking every cent of their profits and losses.  Even if they were cooking the books for the public, they knew damn well what was happening AND THEY LET IT HAPPEN.

I think the timing is just a little too convienient.  The Republicans see that they are losing the election and offer up a ridiculous plan in the middle of the night and attempt to bully those even in their own party into voting for it with out proper discussion.  All this to create so much debt and crisis that the newly elected Democratic President would have no choice but to raise taxes. Then they could point to the Democrats and say look…they raise taxes every time! Only because the Republicans make such a mess of our country  they have to come in and clean it back up.  But they are in for it with Barack Obama… the corporate giants and wealthy are the ones who will suffer.

So, if we don’t bail them out, what should we do?

Our elected officials in Washington who are busy predicting fire and brimstone should be focused on legislation to protect the American people from the repercussions of letting the businesses fail not trying to stop them from failing.  Let them fail! 

Their responsibility is to the majority of the population not to the shareholders of major corporations and banks and their executives.

First of all, I want to take a minute to talk about the negative ads.  While it’s true that I’m an Obama supporter and that I argue that McCain’s ads are far more insidious than Obama’s, I have seen a disturbing trend as both candidates continue to go more and more negative.  I’ve been frequenting two web sites (PolitiFact and FactCheck) who are offering what I think is good information on how candidates and other supporting organizations have been misleading.

The key to this issue is this.  These kinds of ads are produced because they work!  If we as Americans choose not to pay attention to this tripe and choose to educate ourselves, these ads won’t work and won’t affect the poles thereby removing both campaigns’ motivation for producing them.  This is something we as Americans can influence.  So we need to get educated and vote in November.

Ok.  Now on to the second thing.  I just heard the news that Senator McCain is suspending his campaign because of this economic crisis and because “it has become clear that no consensus has developed to support the administration’s proposal.”  I recognize the importance of this issue and very strongly support the Senators’ return to Washington to be part of the solution.

But my gut reaction is that this does not in any way necessitate the suspending of campaigns nor the postponing of the debate.  To be even more blunt, I really think that Senator McCain is using this issue as a political tool to change the timing of the debate because the current economic crisis is harmful to his campaign.  In other words, I think this is a smokescreen.  I’m tired of political games.  To me, this is the same-old-same-old.  I’m done with Bush politics.  I want real change, and that’s not John McCain.

I wish I had more time.  I wish I had more time to expound on my ideas on this election season.  I really and truly think that Senator McCain pales in comparison to Senator Obama.

In the issue I think is most important today, Economics, John McCain subscribes to the trickle-down philosophy made “popular” by Ronald Reagan.  The idea is that making business cheaper for businesses will cause those businesses to create more jobs and reduce prices for their products.  The assumption this makes is that these businesses will go this route instead of keeping the profits!!  As an example, let’s look at the Oil companies and their record profits as the American consumer continues to struggle with gas prices that were under $1.50 / gallon eight years ago.  So is continuing the Bush tax cuts (that have been in place for years now…  How’s it going so far?) really a very good idea?

Of course, John McCain says that Barack Obama will raise taxes.  Wrong again.  Independent sources say that taxes will be cut for roughly 80% of Americans.  Who is it who stands for change?  And who is it who claims change while giving up his campaign to some of the same lobbyists who (arguably) are responsible for our current economic mess?

And don’t get be started on Governor Palin…

Alright, I’ll be brief.  She says she has executive experience including command over Alaska’s National Guard.  Then why is it that the head of that National Guard spoke luke-warm about Palin at first.  Suddenly he reversed course followed within days by (surprise!) a promotion directly from Governor Palin.

She’s not a fiscal conservative.  As both a Mayor and Governor, she turned surplus into massive debt.  And she hired a lobbyist to bring in the highest amount of earmarks (that’s “pork-barrel spending” kids!) per capita in any state in the US.

No, she didn’t say “thanks but no thanks” to the Bridge to Nowhere.  She supported it in her gubinatorial campaign and only flip-flopped after it became a political no-winner.  But she kept the $230 million.  I’m pretty sure that was an earmark.

She didn’t sell the jet on Ebay.  She listed it, but it didn’t sell.  She sold it to a campaign contributor.  At a loss.

Ultimately, regardless of what I have to say, please check out the candidates for yourself.  Check out their websites.  Read the specifics on each site about the candidates’ position on issues.  Watch the debates.  And most importantly, VOTE!!