What to do about the Senate Bill and Wall Street?

Senator Bernie Sanders voted no on the Senate bailout bill. In his remarks he proposeda five-year, 10 percent surtax on families with incomes of more than $1 million a year and individuals earning over $500,00 to raise $300 billion to help bankroll the bailout”. He then pointed out many flaws with the senate bill and blamed the decline of the American Middle Class on President G. W. Bush.”

 

He went on to state that, “This bill does not address the major economic crisis we face: growing unemployment, low wages, the need to create decent-paying jobs, rebuilding our infrastructure and moving us to energy efficiency and sustainable energy.”

He then fanned the flames of class warfare by commenting, While the middle class has declined under President Bush’s reckless economic policies, the people on top have never had it so good. For the first seven years of Bush’s tenure, the wealthiest 400 individuals in our country saw a $670 billion increase in their wealth and, at the end of 2007, owned over $1.5 trillion in wealth. That is just 400 families, a $670 billion increase in wealth since Bush has been in office.

    In our country today, we have the most unequal distribution of income and wealth of any major country on earth, with the top 1 percent earning more income than the bottom 50 percent and the top 1 percent owning more wealth than the bottom 90 percent. We are living at a time when we have seen a massive transfer of wealth from the middle class to the very wealthiest people in this country …”

Here is my response to Bernie Sanders:

The problem with this thinking is the unintended consequences when corporations and/or their senior leadership simply relocate outside of the U.S. or otherwise hide their compensation behind their corporations and avoid the paying the new tax. Without businesses, the vast number of Americans will not have jobs.

 

I propose instead that we focus on getting the Fair Tax passed and then everyone will pay taxes and SAVINGS will be rewarded, not penalized by a Federal monetary policy that devalues the U.S. Dollar and thus, devalues our savings.

Returning the U. S. Dollar to the Gold Standard would be a far more sensible course of action for not only dealing with the mess on Wall Street, but reducing the cost of foreign oil at the pump. Ron Paul understands the need for this and has been banging that drum for years. Now is the time for people to help Congress, the Senate, and the media listen to the good sense in regard to our money that Ron Paul has been speaking for many years.

 

When the value of the U.S. Dollar falls due to a flood of too much American money being printed and too much government debt, then it costs more American dollars to purchase a barrel of crude oil then the day before when the value of the U.S. Dollars was higher.

 

I am no fan of Executives that are little more than slick talking, well educated, well dressed corporate pirates looting millions out of the corporations they are supposed to be helping to grow, HOWEVER compensation within the private sector is a private matter, not the purview of government. I do not resent the wealthy that earned their wealth due to their hard work, innovation, willingness to accept risk, and talent. Nor do I resent the wealthy that inherited their wealth from their parents. Those that earned the wealth are free to do with it what they wish – that is their right. It is their money. I do resent the massive looting (euphuistically called “Golden Parachutes”) by those that added little to the value of the corporations they looted. Or, as is the case in the current mess on Wall Street, profited while they destroyed their corporations.

 

Gordon Gecko (a character in the movie Wall Street) was evil and the poster child of what is WRONG with corporate compensation. Bill Gates is the example of what is RIGHT with corporate compensation.

 

As to this point Bernie Sanders made: “This bill does not deal with the absurdity of having the fox guarding the hen house.”

Amen to that. What the bill lacks is replacing the safeguards put into place following the economic collapse in 1929 that lead to the Great Depression. Where are the sensible laws the placed firewalls between banks and mortgages firms? What happened to having to put at least 20% down to buy a house? What the Bail Out bills voted upon so far have failed to do is to abolish Freddie Mac and Fannie Mae, two ill-conceived quasi-government businesses that should not have been created in the first place! Congress and the Senate need to admit their mistake and abolish Freddie Mac and Fannie Mae.

 

 We are hearing a great deal of rhetoric designed to create fear and panic about small businesses failing to meet their payrolls due to banks no longer honoring established lines of credit. Okay, then let’s pass a narrowly focused bill to deal with that short term problem – as a temporary measure to bridge the gap.

 

Instead we have a pork festival in progress with ill-conceived, vote-buying ear marks thrown in and over $700 Billion tax dollars in play – more DEBT for our future generations have to pay back, to be frittered away in a feeding frenzy of special interest money grabbing. In essence, what is being proposed is a massive blank check that will no doubt find its way to abuses on an epic scale. You thought the way FEMA mismanaged government funds following Hurricane Katrina and Rita was obscene? Wait until we witness what happens if we actually pass a bill authorizing this massive corporate bail out! Massive amounts of tax dollars will be in the hands of politicians and unaccountable government bureaucrats – it is like giving unlimited drugs to junkies. It’s simply a bad idea.

 

What we need isn’t a massive, open ended mammoth “fix’, but rather several small, temporary, and narrowly focused measures targeted to help the economy function until it corrects itself.

 

As to the blatant Bush Bashing tone of Bernie Sanders comments ~ give it a rest. The American Middle Class has been getting screwed by Corporate American and Wall Street long before President Gorge W. Bush took office. The American Middle Class is getting screwed by NAFTA. CAFTA, GATT, the WTO, the World Bank, the United Nations, and the Multinational Corporate support for unfettered expansion of “globalization”. Unfettered globalization that fuels the outward migration of high paying jobs leaving our nation. This has resuled in a shift of our economy towards an unsustainable, parasitic ponzi scheme known as a “Service Sector Economy”. The results of this change is to replace our once prosperous industrial manufacturing base with lower paid, non-skilled retail, restaurant, landscaping, and other “service” jobs.

 

The American Middle Class were sold out long before President Gorge W. Bush took office. And BANKERS are the primary advocates behind this mess.

 

The addiction to credit has replaced money as the root of all evil.

 

The current problems that lead to our over inflated housing bubble bursting were created mostly due to a failure of lending institutions and the real estate industry to act in an ethical, truthful, and honest manner. Greed over came sound business practices. This lead to a risky game of musical chairs, one that left whatever corporations holding bad paper when the music stopped – screwed.

 

And now those same corporations that willing played the game, but that lost – are looking to simply hand off their bad paper to the American taxpayers – in exchange for good money.

 

No thanks. They made their beds, they can sleep in them.

 

I close with the words of an obscure rock band from the 1970s. They were named Ten Years After. They warned us about the notion of doing what Bernie Sanders proposes. They sang:

 

“Tax the rich – feed the poor – ‘til there are no rich no more.” I am glad America is a still nation of opportunity were anyone can become rich due to their hard work, innovation, willingness to accept risk, and talent.

 

Perhaps the band Ten Years After was prophetic and they were singing about our Congress and our Senate today? Their sang:

 

“I’d love to change the world, but I don’t know what to do.”

It is obvious to me based on the legislative solutions put on the table so far that neither Congress nor the Senate has a clue what to do to fix this mess.

 

Sadly this includes both the Republican Party and Democratic Party candidates for President. They are both Senators and they both voted to pass the misconceived, multi-billion dollar, pork-laden Senate “rescue” bill.

 

If ever there was a time to vote Libertarian at the ballot box, it is this year’s Presidential election. In most states you are fortunate to have Bob Barr on your ballot. I suggest we do what Senator McCain’s campaign implores us to do, let’s PUT COUNTRY FIRST. Let’s vote Libertarian.

 

If enough American patriots do that then we will have what Senator Obama knows we really need, HOPE for meaningful and positive CHANGE in Washington D.C.

 

-Reid Greenmun

 

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11 Responses to What to do about the Senate Bill and Wall Street?

  1. Jason says:

    Wall Street didn’t cause this mess. It was the poor management of Freddie and Fannie.
    Mudd, Gorelick, Franklin Raines, and James A. Johnson. In the 80’s Freddie almost went out of business from investments in mortgage backed securities and investments in real estate. nomedals.blogspot.com

  2. Don Tabor says:

    Let’s keep in mind that Bernie Sanders is a self described “Democratic Socialist.”

    He was right to vote against the bill, but for all the wrong reasons. There wasn’t enough wealth redistribution for his tastes.

  3. richroberts says:

    Remember, what we call “wealth redistribution”, they call “fairness”

    Of course, I have never understood what is so “fair” about forcibly taking something from someone to give to someone else.

    I guess I’m not “progressive” enough to understand such things.

    I’m glad Thelma Drake voted no, unfortunately that just wasn’t enough.

  4. Reid Greenmun says:

    I am glad she voted “No.” too.

    Still, I have to wonder how she would have voted if she did not face a challenger this year?

  5. richroberts says:

    That’s one of the problems.

    Most people don’t keep track of what their elected officals are doing.

    Everytime a politian votes, they should be thinking, I better vote the way my constituents want me to vote or they will give me the boot. But we don’t force them to that standard, so they don’t.

    I’m just glad in this one instance, the microscope was one and my calls into her office we’re for naught. Well, I guess they were since this thing passes, but at least my congresswomen didn’t play along and I hope all those people who didn’t want this thing and their represantavie said yes to this thing, gives them the boot in November.

    But I know, they’ll send the same clowns they always do back into office

  6. Rich Roberts says:

    Well, the initial results of the “bailout” don’t seem promising.

    The House said they needed to pass it because the DOW dropped 777 points after they rejected it the first time. Now it has passed and the markets are still going south. Down over 500 in early trading on the DOW.

    From what i’ve been reading on the business news wires, banks are still not lending to each other. They are still skittish, one of the primary reasons seems to be because several European countries (Holland, Iceland, ect) have begun nationalizing their banks.

    There was a big calming last week when Warren Buffett started injecting capital into the system by taking large positions in Goldman Sachs and General Electric.
    But when the governement comes in with vastly higher sums to add liquidity, we freak out.

    Why? Well, because we know Warren is a smart businessman who knows what he is doing and we assume he is wisely using his capital. He has a solid track record. He was approached by other business and he said, no.

    Do we have the same confidence in the governement?

    Doesn’t look that way.

  7. Reid Greenmun says:

    Monday – Oct 6, 5:13 PM EDT

    Dow recovers to close down 370 after plunging 800 points!

  8. Rich Roberts says:

    I bought some calls on QQQQ and IWM when the dow was down about 600 and the Vix was up around 56.

    That close was awesome, should flip both of them tomorrow.

    I haven’t been holding any position for more than a day or two at most.

    I’ve been hanging out mainly in cash until the dust from all this stuff settles.

  9. Rich Roberts says:

    We’re not alone!

    Britian is spending 80 billion to bailout their banks.

    and the market continues its plunge.

    maybe giving money to the same guys who the need money because they lost all of their money, isn’t the best way to go about things.

  10. Don Tabor says:

    Uh, have you guys noticed what has happened to the price of oil? It has plunged to $89.

    Did any huge new supplies come on line? Drastic reduction in consumption? Nope.

    The value of oil remained the same, just the dollar got more valuable.

    Now apply that increase in the value of the dollar to the decrease in stock prices in dollars and what do you have? Its about a wash.
    Look at is as

    X shares of Dow Jones Index stock = $100 = Y barrels of oil.

    Drop out the dollars and what really matters, if oil has remained stable in value, is how many shares of stock it takes to buy a barrel of oil compared to last month.

    If the ratio remains close to 1/1 then the change in the stock market really means nothing in terms of buying power.

    This “crisis” is not what it seems and we do not need to do stupid things to try to fix it.

  11. Rich Roberts says:

    Very true.

    A few months ago my boss was complaining about oil prices, “oil is high because democrats won’t let us drill”

    I agreed we need to drill, build nuclear plants, research other forms of energy. And said the government needs to get out of the way. Stop blocking certain industries from building plants and stop subsidizing things that won’t work.

    But I told him the real story in oil prices was the drop in the dollar. He wouldn’t believe me. I think he just perfered to be mad at democrats than do any real analysis.

    The I went to my computer and printed out a 3 year chart of oil prices and of the dollar index. Amazingly, they were exact opposites. Oil went up at the same rate the dollar went down. But according to him, that was just a coincidence.

    I believe in coincidences, but I don’t trust them.

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