Post by Tammara on Sept 26, 2008 8:28:39 GMT -5
Treasury Seeks Asset-Buying Power Unchecked by Courts - Alison Fitzgerald and John Brinsley, Bloomberg News, September 21, 2008
The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.
Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
"He's asking for a huge amount of power," said Nouriel Roubini, an economist at New York University. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."
As congressional aides and officials scrutinized the proposal, the Treasury late yesterday clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage- related assets and, after consultation with the Federal Reserve chairman, "other assets, as deemed necessary to effectively stabilize financial markets," the Treasury said in a statement.
The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program.
The plan would raise the ceiling on the national debt and spend as much as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. Paulson is asking for the power to hire asset managers and award contracts to private companies. Most provisions of the proposal expire after two years from the date of enactment.
'Free Enterprise for the Poor, Socialism for the Rich': Vidal's Claim Gains Leverage - Paul Gillespie, Irish Times, September 20, 2008
In the 1980s Gore Vidal observed of Reagonomics: "The U.S. government prefers that public money go not to the people but to big business. The result is a unique society in which we have free enterprise for the poor and socialism for the rich."
His epigram has been repeatedly recalled this week following the nationalisation of American International Group, the world's biggest insurer, coming shortly after the similar rescue of the Fannie Mae and Freddie Mac housing companies and of the Bear Stearns bank.
"Socialised capitalism" is Robert Reich's description.
"Gains privatised and losses socialised" was the more pointed comment by Nouriel Roubini, professor of economics at the Stern School in New York University. He is known in the economics trade as a "permabear" because of his repeated claims over the last six years that a financial system based on self-regulation, non-deposits, highly leveraged subprime housing debts and globalised derivatives trading was unsustainable and would collapse.
Now that he has been proved correct he has suddenly become known to wider circles of people desperate to get some expert perspective on these events. How does this crisis compare to previous ones? Is it a systemic failure or a conjunctural one arising from the Bush administration's deregulation policies (which continued those of the later Clinton administration)? Could it lead to another depression like the 1930s? What alternatives are there to the policies followed this week?
Roubini is unusual among economists in combining comparative, historical and mathematical analysis, giving him a broader appeal to policymakers and the mass public. In an interview with the New York Times magazine on August 18th, he described himself as more a realist than a pessimist. He argues that the AIG should have been bankrupted rather than nationalised, and the $85 billion of taxpayers' money loaned to the firm could have been used instead for debtor-in-possession financing. This would have allowed for a more fair process for allocating losses between shareholders and short-term and long-term creditors of the firm. Nationalisations like this are prejudiced in favour of those responsible for the trouble in the first place.
He is scathing about the Bush administration's actions. In his column for the online RGE Monitor, he wrote: "Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don't run the biggest economy in the world. But these laissez-faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.
"So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage."
As to historical comparisons, he says "calling it socialism (even socialism for the rich, the well-connected and Wall Street) is giving a bad name even to a failed experiment like socialism; this is more akin to the creation of a corporatist state (like the Italian fascism or the German Third Reich) where private sector interests are protected (gains privatised and losses socialised), where the government is taken over by corrupt and reckless private interests."
The notion of class division based on economic interests has of course been out of fashion during these years; but the stubborn facts of growing social inequality in the U.S. accelerated by financial deregulation bear out the differential impact of this crisis and put the economy back at the centre of the presidential campaign.
The share of aggregate income going to the highest-earning 1 per cent of Americans doubled from 8 per cent in 1980 to 19 per cent in 2004. In 2005 that figure increased to 21 per cent.
The bottom 50 per cent earned 12.8 per cent in 2005, compared to 13 per cent in 2000. In recent years more than half of students graduating from Harvard sought and got high-paid employment in the investment banks that are now collapsing. That era has come to an end.
Most lower and middle incomes stagnated during the Bush years. To that uncertainty there is added the much greater systemic one now on view.
Whoever wins (the U.S. election) inherits a debt of $10 trillion, which Roubini believes will now increase by at least another trillion -- much of it held by China and Japan.
Despite the worldwide effects of the U.S. financial collapse, not all capitalisms have a similar structure to the recent American model. Globalisation spread its toxic debt around the world, but varying regulatory regimes make a real difference. Commentators expect the EU to set new standards which would spread to the U.S. and others.
Thus there has been notably less impact on the German than on the British economy. Franz Muntefering's much maligned description of Anglo-Saxon style derivatives trading as "locust capitalism" in 2005 now resonates more widely.
Week in Review #38 - Bill Cara's Blog, September 21, 2008
The problem we face today [is] this emergency legislation in Washington.
I think the crisis is not on Wall Street, but in the White House.
Kim sent us this news about what Treasury Secretary Henry Paulson is up to:
Mike Morgan's Quick Notes: Behind Enemy Lines
King Henry is now officially taking over. If you don't write your Senators and Congressman immediately, this one man will have complete control over everything we ever stood for or ever hoped to be. If you think I am being dramatic, just read what he asked Congress and the Senate to approve in the Bail Out Act ...
This deals with what he can do and who can review his decisions or hold him accountable ... No One. He is demanding complete, ultimate and absolute authority. This is directly from the draft he sent to Washington:
Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
You had better start emailing and calling your Senators and Congressman. He already has enough votes to get this passed. If you don't act, King Henry rules.
Mike
The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets.
Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.
"He's asking for a huge amount of power," said Nouriel Roubini, an economist at New York University. "He's saying, 'Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy."
As congressional aides and officials scrutinized the proposal, the Treasury late yesterday clarified the types of assets it would purchase. Paulson would have authority to buy home loans, mortgage-backed securities, commercial mortgage- related assets and, after consultation with the Federal Reserve chairman, "other assets, as deemed necessary to effectively stabilize financial markets," the Treasury said in a statement.
The Treasury would also have discretion, after discussions with the Fed, to make non-U.S. financial institutions eligible under the program.
The plan would raise the ceiling on the national debt and spend as much as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. Paulson is asking for the power to hire asset managers and award contracts to private companies. Most provisions of the proposal expire after two years from the date of enactment.
'Free Enterprise for the Poor, Socialism for the Rich': Vidal's Claim Gains Leverage - Paul Gillespie, Irish Times, September 20, 2008
In the 1980s Gore Vidal observed of Reagonomics: "The U.S. government prefers that public money go not to the people but to big business. The result is a unique society in which we have free enterprise for the poor and socialism for the rich."
His epigram has been repeatedly recalled this week following the nationalisation of American International Group, the world's biggest insurer, coming shortly after the similar rescue of the Fannie Mae and Freddie Mac housing companies and of the Bear Stearns bank.
"Socialised capitalism" is Robert Reich's description.
"Gains privatised and losses socialised" was the more pointed comment by Nouriel Roubini, professor of economics at the Stern School in New York University. He is known in the economics trade as a "permabear" because of his repeated claims over the last six years that a financial system based on self-regulation, non-deposits, highly leveraged subprime housing debts and globalised derivatives trading was unsustainable and would collapse.
Now that he has been proved correct he has suddenly become known to wider circles of people desperate to get some expert perspective on these events. How does this crisis compare to previous ones? Is it a systemic failure or a conjunctural one arising from the Bush administration's deregulation policies (which continued those of the later Clinton administration)? Could it lead to another depression like the 1930s? What alternatives are there to the policies followed this week?
Roubini is unusual among economists in combining comparative, historical and mathematical analysis, giving him a broader appeal to policymakers and the mass public. In an interview with the New York Times magazine on August 18th, he described himself as more a realist than a pessimist. He argues that the AIG should have been bankrupted rather than nationalised, and the $85 billion of taxpayers' money loaned to the firm could have been used instead for debtor-in-possession financing. This would have allowed for a more fair process for allocating losses between shareholders and short-term and long-term creditors of the firm. Nationalisations like this are prejudiced in favour of those responsible for the trouble in the first place.
He is scathing about the Bush administration's actions. In his column for the online RGE Monitor, he wrote: "Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don't run the biggest economy in the world. But these laissez-faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.
"So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage."
As to historical comparisons, he says "calling it socialism (even socialism for the rich, the well-connected and Wall Street) is giving a bad name even to a failed experiment like socialism; this is more akin to the creation of a corporatist state (like the Italian fascism or the German Third Reich) where private sector interests are protected (gains privatised and losses socialised), where the government is taken over by corrupt and reckless private interests."
The notion of class division based on economic interests has of course been out of fashion during these years; but the stubborn facts of growing social inequality in the U.S. accelerated by financial deregulation bear out the differential impact of this crisis and put the economy back at the centre of the presidential campaign.
The share of aggregate income going to the highest-earning 1 per cent of Americans doubled from 8 per cent in 1980 to 19 per cent in 2004. In 2005 that figure increased to 21 per cent.
The bottom 50 per cent earned 12.8 per cent in 2005, compared to 13 per cent in 2000. In recent years more than half of students graduating from Harvard sought and got high-paid employment in the investment banks that are now collapsing. That era has come to an end.
Most lower and middle incomes stagnated during the Bush years. To that uncertainty there is added the much greater systemic one now on view.
Whoever wins (the U.S. election) inherits a debt of $10 trillion, which Roubini believes will now increase by at least another trillion -- much of it held by China and Japan.
Despite the worldwide effects of the U.S. financial collapse, not all capitalisms have a similar structure to the recent American model. Globalisation spread its toxic debt around the world, but varying regulatory regimes make a real difference. Commentators expect the EU to set new standards which would spread to the U.S. and others.
Thus there has been notably less impact on the German than on the British economy. Franz Muntefering's much maligned description of Anglo-Saxon style derivatives trading as "locust capitalism" in 2005 now resonates more widely.
Week in Review #38 - Bill Cara's Blog, September 21, 2008
The problem we face today [is] this emergency legislation in Washington.
I think the crisis is not on Wall Street, but in the White House.
Kim sent us this news about what Treasury Secretary Henry Paulson is up to:
Mike Morgan's Quick Notes: Behind Enemy Lines
King Henry is now officially taking over. If you don't write your Senators and Congressman immediately, this one man will have complete control over everything we ever stood for or ever hoped to be. If you think I am being dramatic, just read what he asked Congress and the Senate to approve in the Bail Out Act ...
This deals with what he can do and who can review his decisions or hold him accountable ... No One. He is demanding complete, ultimate and absolute authority. This is directly from the draft he sent to Washington:
Sec. 8. Review. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
You had better start emailing and calling your Senators and Congressman. He already has enough votes to get this passed. If you don't act, King Henry rules.
Mike
VOTE PEOPLE!!!