Road to GOP redemption: Roll back the bailouts, draw a line in the sand
While Republican strategists and Beltway blowhards convene VIP retreats and meetings and save-the-party parties, the road to GOP redemption starts right now. There is opportunity to be seized right now. There is a line in the sand to be drawn.
Right now.
The first step toward GOP redemption is to stop the automakers’ bailout and roll back the creeping conversion of the Crap Sandwich 2.0 into an all-purpose bailout bonanza for every last American industry and corporate special interest in financial peril. The second step is barbecue Naked Emperor Hank Paulson and the Federal Reserve over their refusal to disclose how they are dispensing billions of dollars in loans.
John McCain screwed this up. The out-of-touch Republican leadership in Washington screwed it up. And let’s be honest: Too many of the same tired old faces now trying to reclaim seats of power — like Newt Gingrich — crumbled on the massive banking bailout and capitulated to Reid/Pelosi/Paulson/Bush when steel spines were needed most.
President-elect Barack Obama’s got Rahm-bo spearheading the push to fork over a piece of the banking bailout pie to the auto industry. This comes on top of the $25 billion loan package (supported by both Obama and McCain) to the car makers in September. And it comes at the same time that the feds are acknowledging that the multi-billion-dollar AIG bailout was not enough and is not working.
Has there ever been a starker case of throwing bad money after bad?
The auto industry’s troubles began well before the subprime crisis started. Is using the Crap Sandwich to rescue every “vital” industry from failure what House Republicans signed on to? Ask your congressional representative.
Stalwart fiscal conservatives like Rep. Mike Pence and Sens. Jim Bunning, Richard Shelby, and Jim DeMint were right from the get-go. They have proven their leadership. While pundits babble about the need to stand up for conservative principles, the anti-bailout conservatives who withstood scorn of their “ideological purity” have walked the walk.
We’ve seen where ideological pollution on core free-market issues takes us:
Time to turn back. The fiscal conservative counterinsurgency starts now.
***
Lasting words of wisdom from Rev. Robert Sirico of The Acton Institute, who recently spoke on “The Way Forward” (hat tip: rossputin):
Most often Wall Street, functioning as a surrogate for the free economy, is denounced for all the wrong reasons: for seeking and making a profit, as though running in the red was somehow a moral virtue and every attempt to be productive was greed. No, if we are going to offer a moral critique of Wall Street, let us not do it because free markets allocate and produce capital, without which people’s homes and savings evaporate, or to be more precise, never get created in the first place. Rather, let us offer a moral critique because all these previously private businesses are now waddling up to the governmental trough begging to be nationalized or subsidized and demanding their share of the dole. Isn’t it obvious that once we concede the principle of a bail-out for those “too big to fail,” we invite a queue that will wrap around the globe?
But if tonight I appear to be a generous distributor of anathemas, let me now turn my attention to the institution which initiated, enabled, enhanced and will deepen and sustain this economic and moral hazard. I speak of that institution which has been doing this for the last several decades, and that is the Invasive State as opposed to a limited government. Tocqueville taught us long ago the lesson we are about to re-learn, namely that a society where the moral tie is weakened and where no one accepts responsibilities and consequences for their actions will quickly morph into an authoritarian, State-centered society.
The only society worthy of the human person is a society that embraces freedom and responsibility as its two indispensable pillars which is a society that understands that our individual good depends on our common good and vice versa. Let us reflect upon some crucial facts that are too often overlooked.
The institution of government—what many view as the first resort of charity—is the very thing that unleashed and encouraged those vices of greed and avarice and reckless use of money that got us into the current financial imbroglio. It did so by first placing a policy priority on a worthy goal, increased home ownership, but pursued it with a fanaticism that neglected other goods such as prudence, personal responsibility and rational risk assessment.
Moreover, its official banking centers enjoyed subsidies which distorted that most sensitive of price signals—the price of money—to delude both investors and consumers into believing that capital existed to support vast and extravagant consumerism when in fact no such capital and savings existed.
It’s an obvious point but one the mainstream media appears intent on missing: The financial crisis did not occur within a free market, a market permitted to work within its own indigenous mechanism of risk and reward, overseen by a juridical framework marked by clarity, consistency and right judgment. Quite the contrary. The crisis occurred within a market deluged and deluded by interventionism…
…As a priest, part of my calling is to defend that Tradition. As a child of America and the West, I have a second birthright to defend—the free and virtuous society. Please help us in the critical task of demonstrating why it is not merely the technical proficiency of markets that will enable us to surmount the economic crisis we face. Help us to continue our effort to convince people that economic and moral excellence is of a piece.
***
Every Senate Republican should get behind Sen. Inhofe’s accountability plan:
Dear Colleague,
I write to inform you of the actions I will be taking during the lame duck session of Congress regarding the funding status of the Troubled Asset Relief Program (TARP). Given the recent news about Secretary Paulson’s execution of the TARP program, I firmly believe action is required by Congress. I plan to push for legislation that will require Secretary Paulson’s plan for the remaining $350 billion in authorized TARP funds to be ratified by an affirmative vote in the U.S. Congress.
In my statement opposing the Paulson Plan last month, I laid out two primary reasons why I voted ‘no.’ The first is that I wasn’t convinced that asset-purchase program was the right way to do this, and the second is that it would lead to increased lobbying for handouts and bailouts by any industry facing financial trouble.
I stated at the time that my vote was against the Paulson plan – not against taking extraordinary action to provide necessary confidence to financial markets. I stated that “The Paulson plan would have Washington take $700 billion worth of toxic Wall Street assets from financial firms’ balance sheets and put them on the balance sheet of the federal government…. I’m not confident in its success.”
The critics were right. On October 14th, in a significant shift, Treasury outlined a plan to directly purchase equity stakes in of major financial institutions. The Wall Street Journal noted that “critics…say Treasury should have formulated a comprehensive plan earlier in the crisis.” This past week, Secretary Paulson announced that he has completed a remarkable about face, as summarized by November 13th Investor’s Business Daily front page headline, which read, “In Major Reversal, Treasury Won’t Buy Bad Mortgage Debt.” This is a complete reversal. Why did Paulson reverse course? Thursday’s Los Angeles Times provides the answer. “Treasury Secretary Henry M. Paulson’s decision to abandon plans to buy troubled bank assets shows that he has come to two conclusions about what was once the chief focus of the government’s $700-billion bailout: The first is that it wouldn’t work.”
I know many of you have serious concerns about how Secretary Paulson has executed the financial rescue program and I share them with you. Congress abdicated its Constitutional responsibility by signing a truly blank check over to the Treasury Secretary. However, the lame duck session of Congress offers us a tremendous opportunity to change course. We should take it.
During the lame duck session, I will be taking the following actions. First and foremost, if Secretary Paulson submits his plan to Congress in order to access the remaining $350 billion while we are in session, a doubtful prospect, I plan to immediately introduce the disapproval resolution pursuant to Section 115 of the EESA and push for its enactment. I will also introduce and actively pursue enactment of legislation to do two things: First, it will amend Section 115 of the Emergency Economic Stabilization Act of 2008 (EESA) to require an affirmative vote on the part of Congress to approve Treasury’s plan for the remaining $350 billion, instead of the current statutory process which gives Secretary Paulson far too much latitude. Second, it will require a freeze on any remaining funds of the first $350 billion. It is imperative that we not allow that amount of money to be added to a deficit approaching $1 trillion this year without any input from the legislative branch.
Secretary Paulson stated in a CNBC interview at 2:00pm on Friday, November 14th that “the financial markets have been stabilized.” If that is the case, it is Congress’s duty to have a say in what happens with the remaining authorized amount of $350 billion. It is clear that it was a mistake to sign a blank check to one man for such a tremendous amount of money. Though there are still significant challenges in financial markets, it appears that the threat of a catastrophic financial crisis, which was the justification for the grant of such sweeping authority, has subsided. Perhaps the additional $350 billion should not be added to the deficit. Congress should have a debate.
I appreciate your time and attention to this matter and look forward to working with you in the coming week.
Sincerely,
Senator Jim Inhofe
And every GOP governor should be sending a letter like GOP SC Gov. Mark Sanford’s letter to the Naked Emperor Paulson:
Governor Mark Sanford today called on South Carolinians to make their voices heard to Congressional leadership about the “gaming of the nation’s taxpayers” being spurred by Congress’s lack of oversight of the recent federal bailout bill.
In a letter sent Friday to U.S. Treasury Secretary Henry Paulson, the governor urged the Secretary to take whatever steps he could to prevent taxpayers being exposed to additional and unnecessary liability from the bailout, writing that, “The federal government, and by extension taxpayers, are being gamed. I think it’s dangerous over the long run the way that taxpayers are being sapped, and this dynamic is playing out in South Carolina.”
The governor cited a number of examples today and in Friday’s letter, including:
- The sooner-than-expected retirement of Carolina First CEO Mack Whittle. Some have surmised that Whittle’s retirement date was moved up so that his bank could apply for federal bailout money while Whittle retained his “golden parachute.” The estimated value of Whittle’s retirement package is $18 million, a deal that would have been compromised if the bank had asked for a taxpayer bailout before Whittle left.
- A growing number of banks are applying for federal bailout money despite not having engaged in risky lending practices, to make sure they receive a portion of federal “free money” and not be put at a competitive disadvantage.
- The Federal Reserve is now putting $150 billion in AIG after an initial bailout attempt failed to stem massive losses, $27 billion more than previously extended. After an initial bailout with taxpayer money in September, AIG treated some staff to spa retreats in California ($440,000) and a hunting trip in England ($500,000). The Wall Street Journal reported last week that some $40 billion is being paid to executives of banking giants that are getting bailout payments. On top of that, Bloomberg reported today that the Federal Reserve is refusing to identify who is even getting $2 trillion in emergency loans.
“In the rush to ‘do something’ about the turmoil in the credit markets, Congress has failed miserably in keeping an eye out for the taxpayers and watching for unintended consequences of this bailout,” Gov. Sanford said. “To put it simply, taxpayers are getting gamed. While we continue to believe that the bailout was an incredibly bad idea in the first place, it’s being made worse by loose rules and oversight that are putting taxpayers on the hook for billions more. I’d urge every South Carolinian to make their voices heard to Washington D.C. about the need for real oversight of the bailout going forward.”
***
Take action: Contact the Treasury Secretary. Demand accountability. Where is your money?
Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Telephone: 202-622-2000
Fax: 202-622-6415
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- Repealing the Bailout | Axis of Right
- Rolling back the bailout is not the key to GOP success » A Couple Things » A couple things about politics, sports, travel, and other stuff.
- Hot Air » Blog Archive » Sanford: Don’t bail me out, bro!
- “More than just a combover” at The K. Ryan James blog
- Webloggin » GOP Senator: Freeze The Bail Out!
- Jules Crittenden » GOP Angst
- Detroit to Taxpayers - Cough Up! « Kerfuffles and Flourishes
- Bailout « Don’s Conservative Politics
- Send The Crap Sandwich Back To The Chef « Curtis Lowe
- Scroll For Updates: United Auto Workers President Ron Gettelfinger: Screw You If You Think Our Memebers Are Giving More Concessions | Right Voices
- Michelle Malkin’s Call to Conservatives: Draw a Line in the Sand « Jane Q. Republican
- De-moral-ization Leads to Totalitarianism « I Took The Red Pill (and escaped the Matrix)
- 91 Republican Congressmen Voted For Bogus Bailout - HR 1424 | BigMouthFrog
- The Other McCain: Yglesias making sense
- Guns, Bailouts, Gitmo and Soap | The Anchoress
- A Small Corner of Sanity - An Online Oasis for Conservative Thought
- Are they finally getting it? | skewred.com
- Barry O in Bail Mode: The Road to Zimbabwe? | BobMaistros.com
- The Repubs MoveOn | Cold Fury
- Everyone lines up for a bailout | Conservative247
- GOP’s Way Forward « Garage Think Tank
- WO’s Daily Roundup | Without Objection
- 15 Republican Senators That Voted For The Citizens And Against Bailout - HR 1424 | BigMouthFrog
- MishMashZone » No Bailout For Auto Industry
- Bailout Solutions: A Case Study of Liberals and Libertarians — The Opposite of Jim Bunning
- South Carolina governor: No to bailout! « The Daley Gator
- Bail Out of the Bailouts | America Needs Me
- Road to GOP redemption: Roll back the bailouts, draw a line in the sand « Conservative Thoughts and Profundity
- Close the barn door | Think Forward
- No more bailouts! « Right Minded Online
- Welcome to the Voice of Resistance « Voice of the Resistance
- Dear Detroit: Drop Dead | THE TYGRRRR EXPRESS
- There's My Two Cents
- Michelle Malkin » Sen. Inhofe’s first YouTube channel vid: Show your TARP rage!
- Boycott Bailed Out Businesses and Banks « Pronk Palisades
- MYTH BUSTED: Conservatives disagreed with Bush « AMERICA TIMES
- FactReal
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Categories: GOP, Subprime crisis
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» Surrender, he whispered
ALONE!!!!!
It’s time to separate the wheat from the chaff. Senate Republicans where do you stand? You’ve sided against the people one too many times. You now have the opportunity to redeem yourselves, will you?
Some of think Paulson does not know what he is doing. Others, like me, think he knows exactly what he is doing.
Either way, he should be fired.
And the Federal Reserve won’t even tell us where they’re spending the money? Wow. At point do we actually bother to revolt? I know we’re all busy, but jeepers! Our apathy is pathetic.
I’mmmmmm nottttttt telllllllingggggg.
and they aren’t getting it.
I can’t even get my senators and congressman to respond to my e-mails. Not even a form letter. WHY?. Do I need to start marching in the streets? What’s it going to take to get their attention?
Oh, look!!! The RNC already has someone they can get behind in the next election.
RUDY
We will all pay our bills until we find ourselves on unemployment in 2 years. At least I can get Obingo (thanks Bear) to bail me out and pay my two mortgages and my car loan.
I’ve been relentless contacting Mary Bono’s office over this after she voted yay on the first one, hopefully she has come to her senses now. Can only wait and see at this point. Usually I hear back from her but haven’t for some time now……
and your Gas soap… lmao.. uh huh.
Jim Inhofe makes me proud to be an Okie.
I do not think a dime of that money went where it was supposed to. I do believe that China and Japan and other Creditors recieved MOST OF IT!
Anyone else find it ironic that after years of moaning about corporate welfare, the Democrats are all set to bailout the automobile corporations?
I agree with McCLOUD9.
lol, where was it supposed to go???? no-one knows diddly.
T.H.E.Y.A.R.E.C.R.A.P.W.E.A.S.E.L.S.
I had a private conversation with one of our local Democratic leaders on Friday. I expressed my concerns about the bailout. I attempted to educate him with some basic economic theory. His response was to insult me by saying my three college economic courses were dangerous and I should leave the financial decisions up to those in Washington who have had a real education. What arrogance. What a pathetic liberal.
Michelle,
I am an American.
My Family came here and helped shape what became America.
I have no desire to be a part of “crap sandwich” lingo solutions.
Seems to this DAR that any motivational
plea does not have to be vulgar.
Surely you can do better…….
Crap Burger?
Fam,
Did you at least get a meal or a cocktail from the guy? Surely you expected little more than what ya got.
TARP …
anagram is TRAP …
which rhymes with CRAP …
the natural result of Congressional spending …
let’s save time and FLUSH THE TARP-TRAP-CRAP NOW …
Coffee. I paid. It was one of those TALK UNTIL YOUR BLUE IN YOUR FACE moments. I tried to point out the cause of the sub prime loan mess and the Democratic party member involvement in it. His retort was some type of conspiracy with big corporation, big bank Jewish thing. Nothing he said made any since.
Of course – the current president is prime mover #1 in this fiasco. His “go along to get along” style has allowed and encouraged the bad behaviors.
Then he’s in the last week had the audacity to say he supports capitalism. Methinks the man has no idea what capitalism is.
Fam,
May God continue to Bless you as He has.
You gave the man a chance, his muck won’t be yours/ours. Good job air them out, every single one of them.
Exactly! Over the Amnesty push and now this we are told the same patronizing thing–leave it to the Washington Experts who screwed it up in the first place.
I was please to see Arizona’s OTHER Senator, John Kyl, speaking out against the auto bailout. It is good money after bad and delaying the eventual restructuring the Auto Industry MUST go through one way or the other. But perhaps it will lead to the Collectivist near term goal of INDUSTRIAL POLICY–Nancy Pelosi is making such noise. These people really believe you can repeal and change the law of physics.
—
Celebrate Diversity:
Carry a Revolver and an auto loader-you too ladies.
America First
America Alone
Americans Come Home
GM may not make it through the end of the year without an infusion of cash. I say, let it burn. Burn baby, burn.
c-rus,
Agreed. When Bush pushed for CS 2.0 the Donks got behind it quick. Clue #1 it was a bad plan.
F-man,
I emailed Martini-ez in Florida and told him he was fired. He wrote back and bascially told me I did not understand CS 2.0. See, you email them and they tell you that you are an idiot. Even Bill Nelson didn’t vote for CS 2.0 and he prays to the god Pillosee.
I am saddened and disgusted with the lack of understanding our representatives have. They don’t grasp the original intentions of our Constitution nor the fundamentals of the free market. Our Michelle is right.
DRAW A LINE IN THE SAND.
NOW
IOW, the idiots who caused the crisis in the first place?
Anyone who insists on blaming Dubya will not be a part of the team going forward, THEY are not American. For those who seem to have whiney dem and or a total lack of history traits.
DUBYA HAD ONE JOB TO DO POST 9/11 and he did it.
WHAT DID YOU DO????????????
You wouldn’t even last in Rome let alone
America.. focus on the enemy and GEORGE W. BUSH aint our enemy.
Was it not Franklin who said “Either we hang together or we will be hanged separately.”? As they say: MAN UP!
This could use a bailout. THIS is a THREAT: Let us see if Islam is a Religion of Peace Bush or BroBama can handle it.
November 17, 2008
Somali pirates hijack Saudi oil tanker with Britons on board
Just one more group of peaceful muslims threatening our very existence. Oh we we have work to do. I mean beside rearranging the deck chairs on the Titanic.
Well, I’d almost shut off this PDA & went to bed… then I sa this thread and had to make 2 cooments, one wimsical and one serious (you decide…):
(1) Rev. Robert Sirico of The Acton Institute, better watch out! When I say the exact same thing (albeit in a less flowery tongue), Irish Stinkweed calls me, (depending, I guess on whether she’s had her meds yet,) bully, @sshole, idiot, and moron, etc… and she’s common of many of the people who claim the “conservative” label now-a-days. I hope the Rev has a food taster, if Stinkweed is near!
(2)
Yes! I am in whole-hearted w/that! But, undestand what you’re getting into, (and 6yrs ago I’d never have believed this might be…,) Our masters, led by Th Great Pumpkin w/Dumbo’s Ears, will start keeping a “little list”, as in The Mikado:
So, while I’m going to write every one of our “masters” I get info for, I’m an old guy and if sometime in 3 or 6 yrs, if some ninja-suited guys breakin my house at 02:00h, I and my 4 dogs (BIG dogs…) will meet on the otherside, w/o a 2nd thought. A decade ago, that would have been melodrama, but after I read abt the Civilian “Security” Force, I can see where this is going.
And, I’ve taught my dogs (not 1 less than 175lbs…), security (I have friends in the industry [wink]). It should be fun!
Night Everyone!
Here is an interesting email I got this morning from Martin Weiss
Money and Markets
A Fictional Scenario of the Future: The Final Bailout
by Martin D. Weiss, Ph.D.
Dear Subscriber,
We have come to a major crossroads in the history of our nation, a time when you must understand all the relevant events in far greater depth, and see the likely future with far greater clarity.
Indeed, I feel this need is so critical and urgent, I am providing you this morning with the most elaborate gala issue in the history of Money and Markets.
Let’s begin by assuming that, despite all the government bailouts, many of America’s largest corporations still go bankrupt, U.S. unemployment continues to surge, and a new, larger wave of home foreclosures sweeps the nation.
How will our leaders respond?
I have no pretense of knowing the answers. Nor can anyone forecast what individuals in power will decide under the stress of pending doom. But following up on a similar fictional scenario that I drew for you many months ago, here’s what I see ahead …
The Final Bailout
The time is sometime in the future; the venue, a hastily assembled meeting at the White House.
The President’s Chief of Staff invites the Treasury Secretary, the Federal Reserve Chairman, the CEOs of bankrupt or at-risk corporations, and former Federal Reserve Chairman Paul Volcker. The Treasury Secretary obtains unanimous vows of confidentiality and opens the discussion.
Treasury Secretary: Gentlemen, I know the events swirling around us seem like Armageddon. But let’s begin by stressing the positive: Not all banks have failed. Not all big companies have gone down. The financial markets, even after their great decline, are still alive.
The grave challenge we face is that — despite the trillions we’ve spent, lent, invested or guaranteed — we have not yet been able to restore confidence. So our goal is to come up with a revolutionary new set of actions that meet the challenge.
But first, I want to get everyone’s views and stress the importance of coordinated communication. In normal times, I wouldn’t presume to tell you what to say or how to say it. But in this unsettling climate, the last thing we need is dissenting voices from the administration, from former government officials or even from industry. We must present a united message that resonates, that’s credible, that can inspire consumers to consume, investors to invest, lenders to lend.
Chief of Staff: First, I want to apologize for the President’s absence; he is dealing with another financial emergency that we will also have to address, at least briefly, before the end of this meeting. It was too late to combine that meeting with this one.
Treasury Secretary: I’m joining them as soon as we’re finished here.
Chief of Staff: Yes, I am also. Second, although many of us are already familiar with it, let me remind everyone of the President’s strategy regarding messaging: Get the bad news out into the open right up front. Don’t sugarcoat it. Then segue very quickly to the positive — what steps we’re taking, what we believe the outcome will be.
What he wanted me to ask you is: What economic pressures are driving this phase of the crisis? What’s at its core?
Fed Chairman: At the core of the crisis are two forces feeding on each other — (a) debt liquidation and (b) price deflation. Although we saw them coming and although we had contingency plans in place to deal with them, what caught us flatfooted was their volume and, above all, their speed.
The debt liquidations — in every credit sector — have struck so quickly, they have overwhelmed our efforts to restore credit creation. The price deflation — impacting a gamut of goods and services — has been so dramatic, it has neutralized our rate cuts, money infusions and other stimulus measures.
Let me refer you to Chairman Greenspan’s memorable comments regarding this crisis.
Chief of Staff: His testimony before the last Congress.
Fed Chairman: Yes. About the tsunami; about the once-in-a-century crisis we were facing. Well, let me tell you what I’m hearing now — from some of my staff and from other hushed voices. What I’m hearing is that, with the events that have unfolded since then, this is not a 100-year storm for the American economy; it’s a millennial rite of passage for all mankind.
Treasury Secretary: Millennial?
Fed Chairman: I didn’t say I agree with that. I merely said that’s what’s being said.
Treasury Secretary: I accept the 100-year storm concept. But let’s not get carried away by the public mood of gloom. Yes, I know debt liquidation and price deflation continue to be at the heart of our economic challenges and remain our most significant downside risk. I know real estate prices are down as much as 50% in some sectors and stock market barometers are down nearly 70% from their former peaks. And I know all about the tsunami of home foreclosures.
But let’s also give people hope, damn it! Let’s not do like some people — I won’t mention names — who talk about the housing market as a “bottomless pit” … or the automotive industry as a “black hole” … or Wall Street like “ground zero of a neutron bomb.” Let’s not talk about a run on bank deposits or insurance policy loans. And for God’s sake, let’s not name names of banks on the verge of insolvency!
Fed Chairman: None of those statements were mine. But from everything I can see, they may not be that far from the truth. So I’m pleased that Citigroup and JPMorgan have accepted our invitation to join us today.
I’d like to take this opportunity to ask Citigroup about its credit card and consumer loan portfolios. Is it true that, if you value them properly, the bank is, in effect, insolvent? And I’d like to ask JPMorgan a similar question: If you value your derivatives based on actual, current market conditions, is there truth to the view that Morgan is also de-facto insolvent?
Before you answer, let me stress that the Federal Reserve, in coordination with central banks globally, has done everything in its power to avert this situation, and with some success. We were able to revive the short-term interbank lending market. We were able to stave off a calamity in the commercial paper market. We were even able to restore some sectors of the consumer credit market.
But it was — and still is — obviously impossible to maintain adequate activity levels in all credit sectors on a continuing basis, due simply to the confidence factor the Secretary stressed at the outset. If borrowers are reluctant to borrow and lenders are afraid to lend, there’s only so much we can do. How do we twist the arms of millions of consumers and thousands of banks? We can’t. That’s why, ultimately, in the final reckoning, every credit stimulus we’ve tried has failed its primary objective — the restoration of confidence.
Citigroup: If this is the day of reckoning, and this is the time to start confessing, I will be the first to volunteer. I can no longer stand here before you and refute the fact that Citigroup is effectively insolvent.
Treasury Secretary: I, ah, I … I find that hard to believe.
Citigroup: At our peak, we had 185.1 million in credit card accounts, with 147 million of those in North America. Peak value: $200.7 billion. Now, more than a quarter of that entire portfolio is impaired — over 90 days past due or in default. God knows we’ve tried everything in our power to hold back that tide. But we could not act fast enough. And where we erred, I believe, is actually doing too much to ease the crisis.
Fed Chairman: In what sense?
Citigroup: Under pressure from the administration, we gave slow credit card payers more time. With subsidies from Congress, we then reduced their liabilities. But what message did that send? It merely sent the message to all nondelinquent accounts that the only way to qualify for aid was to become delinquent. It rewarded bad financial behavior. It promoted delinquency. In the end, nearly all of the steps we took to ease the burden for consumers inadvertently increased their burden.
Treasury Secretary: But what other choice did we have?
Citigroup: Tough love. Instead of a haphazard pattern of government-induced laxity here and industry-enforced toughness there; instead of giving some debtors a break, while forcing others into personal bankruptcy; instead of a mixed message that created confusion, we should have all been on the same page together — even-handedly tough across the board.
Treasury Secretary: That would have been totally inconsistent with the goals of this administration.
Citigroup: Let’s be honest here; let’s face up to the truth. Debts are debts; charity is charity. Instead of pouring good taxpayer money after bad into delinquent credit cards, why don’t we just set aside a fraction of that money for organizations dedicated to recovering debt addicts? I can’t guarantee it will work. But I can guarantee it will be a heck of a lot cheaper, without the boomerang effect.
Treasury Secretary: Which was …
Citigroup: The fact that we made it easier for more people to fall behind on their credit card payments. So guess what! More people fell behind — far more than they would have done otherwise, according to our surveys.
Fannie Mae: I must confess this was the same message we gave to the indebted homeowners of America: “To qualify for government debt relief,” we said, “you have to be delinquent. If you’re cutting your food budget, if you’re pawning your wedding rings, and if you’re doing all that to stay current with your mortgage payments, you don’t qualify. Sorry, no mortgage relief for you!” And that was supposed to be our way of cleaning up this mess?!
Now, look at the numbers that just came out! You’ve got a new, larger wave of Americans walking away from their mortgages and abandoning their homes with little sign of remorse.
Treasury Secretary: I know. It’s very ugly.
Fannie Mae: Yes. But what has us truly dismayed is the fact that, in the vanguard of that trend, there are some of the very same groups which, in an earlier stage of their payment history, were identified as the categories most qualified for mortgage relief. Instead of lightening their debt burdens, we merely prolonged them; instead of countering the culture of default, we merely enhanced it.
Treasury Secretary: Can we get back to the situation at Citi?
Citigroup: Yes. The tie-in to our consumer loan division is that the housing disaster feeds on the credit card disaster. We saw this coming. That’s why, quite some time ago, we warned investors that credit-related losses, such as payouts on loans we guarantee, were going to rise for the foreseeable future. But then the market crumbled far faster than anyone dreamed possible. Even the Jeremiahs and Cassandras inside Citigroup — and believe me, there are more of them coming out of the woodwork every day — even they underestimated how fast the consumer credit market could come unglued; how fast credit cards, auto loans, and student loans would go sour. That’s why some Wall Street analysts are saying, rightfully so, that we may not have enough capital to offset those losses.
Treasury Secretary: Why, then, do your statements show that you have adequate capital? Even the Comptroller of the Currency has testified before Congress that you have adequate capital. What are they looking at?
Citigroup: Outdated data. Even we are looking at outdated data. Things are happening so fast, by the time we get credit card and other consumer delinquency data compiled, it’s as if a whole year has gone by, compared to what would have been the typical data lag in more stable times. So we have to estimate what’s actually happening in real time. But even without taking those projections into consideration, we’re still coming up short on most capital measures. The big picture is simple: Asset values are plunging all over the country. Consequently, our asset values are plunging in tandem. That’s it in a nutshell.
Fannie Mae: Our situation is similar. We get reports from 5,000 real estate brokers all over the country handling our foreclosure sales. And out of those reports, we pulled one for a case study — in Flint, Michigan. The broker was trying to sell a particular home for a price that will shock you.
Citigroup: Under $30,000 or so?
Fannie Mae: Way less than that! He first tried to sell it for $6,900, but had no takers. Then he cut the price to $5,000, and still no buyers. This was a three-bedroom home in a residential neighborhood we’re talking about — not a two-door Chevy on a used car lot!
My point is that we were not picking up this type of thing in our databases, due to the same kind of data lag Citigroup is experiencing.
Meanwhile, new foreclosures are off the charts. Just last quarter, we got saddled with four times the number of homes through foreclosure than we could sell. We’ve tried to get rid of them quickly. But we keep falling further and further behind.
General Motors: You talk about home price deflation. But auto price deflation is equally severe. At the end of a two-year lease, one of our most popular SUVs was supposed to be worth $22,000. As it turns out, the best price we can get for it in the used car market is less than $4,000. And we’re not the only ones. I had my staff give me a list of other auto products and services that have suffered the worst declines — it’s a mile long.
Treasury Secretary: What about wages?
General Motors: The minimum wage is a joke. I haven’t seen this at GM particularly. But nearly everywhere else, workers and their employers are finding ways to get around the minimum wage. They’re working double time or clocking in for half-time hours. They’re busting labor laws and union rules, and the authorities are looking the other way. In other words, deflation is destroying our country. The Fed must inflate us out of this — with rate cuts and more.
Fed Chairman: I appreciate that. But I’d like to keep this focused on the GSEs for now. How much do Fannie and Freddie have in foreclosed homes on their books?
Fannie Mae: I don’t have exact Freddie Mac figures. But, roughly speaking, at the last reckoning, over $40 billion worth. Right now, probably more.
Fed Chairman: That’s a lot, but in proportion to the $5 trillion-plus in mortgages that you and Freddie own or guarantee, it doesn’t sound like that much to me.
Fannie Mae: The $40 billion is just the foreclosed properties we currently have in inventory, which are just a small fraction of the properties we’ve already cleared out … and, unfortunately, which are an even smaller fraction of the foreclosed homes we see coming down the pike.
We’re at the center of this mess. Right now, there are 8,500 banks and thrifts in this country holding about $60 billion in foreclosed homes. But between Fannie and Freddie — just two companies — we’re stuck with at least $40 billion. So if you look at all the money tied up in foreclosed homes in the United States, you’ll see that more than $4 of every $10 is our burden.
Fed Chairman: What are you doing about it?
Fannie Mae: Until last year, our stated goal has been to always seek the highest possible price for our foreclosed properties, even if that meant hanging on to them longer. But with the huge backlog we now have, that approach is no longer viable. Now, we’re pricing our foreclosed properties a lot more aggressively.
Trouble is, once we sent a directive to our 5,000 brokers across the country — to broaden some auction parameters and remove certain restrictions — there was no way we could keep that directive under wraps. Everyone in the local markets heard about it, and since we’re such a big player, nearly everyone is following our lead, dumping properties virtually regardless of price.
Treasury Secretary: Could it be that you are overstating the price declines and the losses that they have caused? Take that house in Michigan, for example. It must have been a dump to begin with. Do you know how much it sold for originally?
Fannie Mae: It’s a dump all right. It needs a new roof. It needs new carpeting. The plumbing has been ripped out. But back during the peak of the housing boom, it was not a dump. Back then, it sold for $110,000. So even assuming we can find a buyer for $5,000, its price has fallen by over 95%. Naturally, most of our foreclosed homes for sale haven’t fallen that far, that fast. But this gives you an anecdotal illustration of what we’re up against. And it gives you a sneak preview of the much deeper home price declines that are possible in the future, especially when entire neighborhoods are blighted, which is now becoming far more common, even in some higher end communities.
Treasury Secretary: But how widespread is this, really?
Fannie Mae: What definition are we using for “widespread”? If I told you that among the supposedly “AAA” rated subprime mortgage securities issued in 2006, the default rate is now about 98%, would that qualify as widespread?
Treasury Secretary: Ninety-eight percent?
Fannie Mae: You shouldn’t be so surprised. In 2008, it was already not far from current levels — 86%. And I’m not referring to a small, little subset of our portfolio. At our peak, we had about $70 billion in subprime and Alt-A securities in our portfolio. Freddie Mac was even more at risk, with nearly $150 billion. And that’s not even our primary concern any more. As you well know, our primary concern is the surging foreclosure rate in prime, supposedly high-quality mortgages, which represent the bulk of the paper we hold or guarantee.
Treasury Secretary: What is your outlook for nonperformance of prime mortgages going forward?
Fannie Mae: We used to say this crisis was “contained” to one sector or another. But that idea fell by the wayside in 2008. More recently, our view has been that it’s so bad, it can’t get any worse. But we can’t maintain that fiction much longer either. The fact is, we have no way of estimating how high delinquency rates can go on prime mortgages. Just a few years ago, who would have dreamed that the subprime delinquency rate could ever exceed 20%? Now look! Nearing 100%!
What we have to do now is learn from that mistake: To make no more promises. To tell the public what’s going on. As bluntly and clearly as we can.
Treasury Secretary: Why now and why so bluntly?
Fannie Mae: One reason is that, until recently, the rating agencies were playing along with us on this, postponing downgrades, keeping the fantasy alive. But now they’re downgrading all of this mortgage paper to deep junk levels in one fell swoop. They’re forcing everyone — including all of us here around this table — to face reality. Wall Street is telling us that, until we face reality, this crisis is going to be an endless soap opera. Another reason is that we’re soon going to run out of the $100 billion federal bailout money that Congress committed to Fannie Mae, and we’re going to have to explain to Congress why we need more.
General Motors: I think it will add value if I can contribute our experience to this discussion. Like Fannie Mae, we’ve also been through the ringer on this already — along a different path perhaps, but with a similar end game. At yearend 2008, as you will recall, the debate was whether or not to bail out GM with taxpayer money or let us file for Chapter 11.
Treasury Secretary: During the transition between administrations.
General Motors: Right. Looking back, however, we can see that the debate was splitting hairs. With a federal bailout, the conditions were to make massive cuts to turn the company around. And with a Chapter 11 filing, the mandate was also to make massive cuts to turn the company around. Six of one; half a dozen of the other. The only aspects that seemed to differentiate those two scenarios were the timing — a bit sooner or a bit later — plus the name on the door. It was going to be either someone appointed by the bankruptcy court if we filed for bankruptcy or a Treasury-chosen auto czar if we got the bailout.
At the time we wanted the bailout, of course. But looking back, I can see we would have wound up essentially in the same place we’re at right now — a shell of our former self, the epicenter of a jobless nightmare.
Treasury Secretary: From what I recall, though, there was heightened concern about a bankruptcy’s impact on shareholder value and on customer loyalty.
General Motors: That was our argument, yes. But in retrospect, we can see that was a classic case of shutting the barn door after the horse is gone. Shareholders were already practically wiped out, with only pennies left on the dollar. Customer loyalty and sales were already shot to hell, due to the bankruptcy chatter on the Internet and in the media. This is not like the old days when public messaging was about “divide and conquer,” telling one group one thing and another group something else.
Paul Volcker: Gentlemen, I’ve been listening to this discussion patiently, and I think the time has finally come for me to stop pulling punches and to put all my cards on the table.
First, although we started this meeting focusing on how to control messaging, the actual discussion which has evolved has been driving us to confessional. I heard Citigroup use that word. I heard Fannie Mae do it as well. And there was mention of the same refrain coming from Wall Street sources. So this meeting, under the cloak of confidentiality, is already a collective confessional. Now it’s time to shed the cloak and make it a public event.
Don’t be overly concerned with the impact on markets. As was also said, and correctly so, they are already in a state of chronic panic. Taking the lead on that front will help restore trust in our leadership and, later, in the economy.
Chief of Staff: You want the administration to be the leading source of any new bad news. You want us, in effect, to regain control of the news cycle. Is that it? If so, I see the wisdom in that. But …
Treasury Secretary: But what is the reaction going to be in the markets?
Volcker: It’s going to be cathartic. It could trigger a final, climactic wave of selling. They call it “capitulation” — when investors dump whatever they’ve been planning to sell all along; when they sell out with little regard to price.
Fannie Mae: Much like I was saying earlier regarding the recent trends in foreclosure sales.
Volcker: Yes. Not just in real estate and stocks, but also commercial paper and corporate bonds; not just marketable assets but also business inventories and receivables, consumer collectibles and valuables. It’s already happening. So we must be prepared for the possibility that, once we take the action I’m going to propose, a lot of that material still in the hands of nervous sellers is going to be flushed out.
Treasury Secretary: I’m having great difficulty buying into this.
Volcker: I suspected you would be, and when you hear the other side of my proposal, the more substantive side, I expect you’re going to be even more opposed. But if we don’t do it, I fear you’ll be forever …
Chief of Staff: … playing whack-a-mole.
Volcker: What?
Chief of Staff: Putting out brush fires.
Volcker: Right. Let’s review, one last time, what has happened and what we have done. For many decades, we have progressively built up a massive pool of private and public debts; and we did so while continually diminishing the savings that typically are required by modern economies to underpin such debts. After World War II, that’s the situation each successive administration has inherited, greatly enlarged, and then passed on to the next administration. And that’s why each administration has sought to build — with government guarantees, bailouts and backstops — a larger and larger dike to guard against any debt collapse.
In 2008, however, we came to the end of the line. The debt quality was so poor and the quantity so large that toxic paper began to spill over into the real economy. The dike sprang larger and larger leaks. And in response, all we thought of doing was to plug them with taxpayer money. First, subprime mortgages; then prime mortgages … the interbank market … commercial paper … consumer credit. First, Bear Stearns; then Lehman and AIG … Fannie Mae and Freddie Mac … Washington Mutual and Wachovia … GM and Ford … and now even Citi and Morgan. Each bigger than the previous, each taking us closer to the threshold of the absurd.
We dare not cross that threshold; we must change course. Now, rather than plugging the leaks reactively, we must guide and divert the flood waters proactively.
Treasury Secretary: Can you translate these metaphors into policy?
Volcker: It’s precisely what Citigroup was saying for credit cards, but writ large: Tough love — for debtors and lenders.
I’ve dug up some old, rarely-cited sources about the banking crisis during the 1930s, and having devoted many a sleepless night to their study, I now see things quite differently from virtually everyone in this group. We used to believe that, after the Crash of ‘29, the Fed’s hands-off approach either played a pivotal role in causing the Great Depression or at least made it a lot worse than it would have been otherwise. From that, we not only concluded that the Great Depression could have been prevented, but we also derived the theory that all depressions — present and future — were preventable.
You’ve heard this quote from Mark Twain, I’m sure, but let me recite it for you anyway. “When I was a boy of 14, my father was so ignorant I could hardly stand to have the old man around. But when I got to be 21, I was astonished at how much the old man had learned in seven years.” Similarly, over the past months, the more we have floundered from bailout to bailout, the more I have realized how we underestimated the intelligence of our Fed forefathers. Men like Roy A. Young, Eugene I. Meyer, Eugene R. Black and others who presided over the worst of times in the 1930s.
Back then, there was also an attempt to patch banks up and sweep bad assets under the rug — not nearly as much as today, of course, but in the context of those times, a very significant effort nonetheless. Then, they too changed course, much like we will have to sooner or later.
Instead of propping up bad banks, they proactively shut them down. Instead of shotgun mergers to move toxic paper from weak banks to strong banks, they segregated the good assets and quarantined the bad ones. When that wasn’t enough, they shut the banks down in statewide holidays. And when that still wasn’t enough, Roosevelt shut them all down in a national holiday.
It wasn’t planned ahead of time; they also had to react to unexpected events, especially bank runs. But they eventually responded with an army of tough bank examiners. Unless banks could pass a tough exam, they were not allowed to reopen. It was banking triage en masse. Bad banks — shut down forever. Good banks — reopened promptly. On-the-fence banks — not for many months.
Treasury Secretary: Didn’t that deepen the Depression?
Volcker: Yes, it probably did. But the deepening effect would have happened anyhow, albeit in a more haphazard fashion. Moreover, without the bank closings and debt liquidations of those years, the subsequent recovery — including possibly the 60-year growth between 1946 and 2006 — could have been anemic. Indeed, depending on the vagaries of history and the rise of competing powers, much of that growth may never even have happened.
Treasury Secretary: So is that what you’re advocating? Proactively shutting down major banks that don’t meet your elevated standards?
Volcker: That’s what they did. What we must do is adapt that experience to the current realities.
Treasury Secretary: Such as?
Volcker: Such as the big risk areas that did not exist then. We need immediate data on derivatives portfolios and their true valuation. We need detail-level intelligence on the current credit exposure of derivatives players and the true risk of counterparty default. We need higher standards for risk-based capital to back it and efficient enforcement of those standards.
Treasury Secretary: I see the problem. Who doesn’t? What I don’t see coming from you today is a solution other than a defeatist one. You yourself used the word capitulation. That’s not a solution. It’s surrender.
Volcker: Retreat? Yes. Surrender? No!
Look. We’re fighting the wrong war — against debt liquidation and price deflation.
It’s the wrong war because we’re losing. And it’s the wrong war because debt liquidation and price deflation are the economy’s natural mechanisms for cleansing itself — a process we need to manage proactively.
Treasury Secretary: Please explain.
Volcker: What were — and still are — the great, insurmountable, intractable problems of our economy? They were (a) excess debt and (b) high prices, making homes unaffordable, hampering education, making it impossible for our workers to compete internationally. Now, with this crisis, all that is naturally being flushed out and reversed. Debts are being liquidated. Prices are falling. American workers are suddenly willing — even anxious — to work more for less.
Granted, this cleansing process is progressing far too quickly and too traumatically. We must cool down its feverish pace. But that’s all part of managing the crisis.
Treasury Secretary: OK. Suppose we retreat. What then is the new battle line?
Volcker: The war we can win, and do so inexpensively.
Treasury Secretary: Against foreign competition?
Volcker: That too, but that’s not our first priority. Our first priority is right here at a home — to ready ourselves for the battle that is now being fought on a secondary plane, sometimes neglected entirely.
Treasury Secretary: Which is …
Volcker: Think ahead. Connect the dots. Three hundred million people. Banking system in shambles. No jobs. No money.
Citigroup: We’re all a bit perplexed here. What are you getting at?
Volcker: It’s staring us in the face. It’s the hidden underbelly of this crisis. We’ve been so intensely focused on saving the big institutions, we’ve failed to anticipate the magnitude of the human tragedy ahead — let alone make the needed preparations.
Citigroup: I believe he’s talking about unemployment.
Volcker: No one can predict exact numbers. But imagine temporary periods of on-again-off-again industrial shutdowns — periods when fewer people are on the job than out of work. Not necessarily on a national basis, but certainly in blighted industrial regions like Michigan. Imagine 20% or 30% unemployment nationwide; bread lines and soup kitchens for the hungry; tent cities for the homeless. And that’s assuming we do take the urgently needed steps to prepare ahead of time. If we do not prepare, consider the real possibility of mass migrations of the middle class, starvation of the poor, pandemics of diseases that are eminently curable.
Chief of Staff: I mean no disrespect. But is this your idea of a made-for-TV documentary? On the History Channel or the Sci-Fi station?
Volcker: Neither. It’s the real thing, and I have the stats to prove it. It’s Katrina-like conditions in all major metropolitan areas, including large segments of the middle class. Except it’s caused by financial storms — the kind that can make natural storms and civil wars seem small by comparison. I am not predicting this. I just want to open everyone’s eyes to the ultimate consequences of complacency in the wake of a massive economic disaster.
Treasury Secretary: Don’t we already have depression-era institutions to handle all that?
Volcker: In name only. They’re grossly outdated, underfunded and understaffed. But even the most ambitious relief efforts are going to be far less expensive than the least ambitious financial bailouts. We have the surpluses. We have the technology and the know-how. That’s the battle we can easily win. But if neglected, it’s also the battle we could easily lose, like Katrina.
Treasury Secretary: So you win the battle against hunger and sickness. You create a super welfare state. And at the same time, you lose the battle for the private economy. This sounds like a socialistic dead end to me.
Volcker: No more so than protecting New Orleans from a second Katrina! No more so than protecting the homeland from foreign attacks! And I never said we’d give up the battle for the economy. What I said was that we would manage the economic crisis more rationally. Once a substantial portion of the bad debts are liquidated, once the deflationary forces are mostly exhausted, then we can pour more money into stimulating a recovery.
Never forget: The U.S. government is the largest single investor in the entire economy. So you must think like a big investor, like a Warren Buffett or a George Soros. Do you buy near the top, when your buying power is overwhelmed by selling, when your capital is chewed up to pieces? Or do you apply your buying power nearer to the bottom, when your capital is far more effective?
Right now, we are already powerless to stop the decline anyhow. We have already cut rates to practically zero. But that didn’t do the trick. We rushed out the biggest bailout packages of any government at any time in history. But that didn’t do the trick either. And now look! Citi and Morgan. Technically insolvent.
My recommendation: Wait for the right time. Then buy.
Treasury Secretary: Buy what?
Volcker: The surviving companies that have the best solutions for our society. Give them the access to innovative technology and talent. Give them the low interest loans, if needed. Give them the capital infusions if you must. Not the white elephants of a bygone era!
Treasury Secretary: I cannot accept this defeatism. I will never accept it. We must do whatever it takes to keep the credit flowing. I don’t care what you call them — bankrupt or not bankrupt, solvent or insolvent. We must do whatever it takes to keep them fully capitalized. That’s the case we must make before Congress again and again … until we lick this.
Volcker: I beg to disagree.
Treasury Secretary: Then what do you propose?
Volcker: Before I build up to a proposal, I want to lay down the foundation with a basic principle. Ultimately, the fork in the road ahead is between (a) deflation and depression or (b) hyperinflation and destruction of our currency. But there can be no debate whatsoever as to which is the lesser of the evils.
The deflation road is extremely arduous, but ultimately leads to recovery. The hyperinflation road can provide a temporary palliative, but it ultimately leads to the destruction of our society and culture.
Treasury Secretary: Was it not the deflation of the 1930s that led to World War II?
Volcker: No. The true roots of World War II lie in the hyperinflation of Germany in the 1920s. But let’s not debate history. Let’s look at our choices here and now …
Choice number one: A strong currency — the nation’s social and political anchor. It gives workers a reason to work and be team players; families a reason to save and come together; entrepreneurs a motive for innovating.
Choice number two: A failed currency — a nation’s albatross. It gives speculators, market manipulators, scam artists and the worst criminal elements the upper hand — not just on the sidelines of power, but in the upper echelons of government and enterprise.
Treasury Secretary: Please give us your proposal.
Volcker: Step number one: Tell it like it is, the bad news we discussed earlier.
Step number two: Make a solemn vow to the public that the government will set the standards, enforce the law, help ensure fairness, and provide emergency aid to the sick, hungry or homeless.
Step number three: Tell the American people that the government can no longer be the lender, spender and investor of last resort. Leave no doubt that, going forward, the U.S. government is exiting the bailout business.
Step number four: Make it absolutely clear that it is now time for all citizens to step up and make the needed collective sacrifices to save our country.
Step number five: Take immediate action to stop the cancer that is now threatening to tear down our country.
Treasury Secretary: I thought you said we should exit the bailout business.
Volcker: This is the last bailout, the primary topic of the other emergency meeting which some of us must now join. But if we have just 10 more minutes, I can give you a thumbnail sketch of what the emergency involves. It involves the fact that the major government security dealers are having serious difficulties placing U.S. government bonds for sale.
The truly dangerous cancer that’s spreading in the world today is the cancer of mistrust. First, it was mistrust in subprime mortgages. Then, mistrust in higher quality mortgages. Next, mistrust in Fannie Mae and Freddie Mac. Then, mistrust in almost every private financial institution in the world.
Let me fast-forward now to the final, fatal stage of this cancer, the stage we are coming to soon. It is mistrust in the U.S. government itself, the phase when investors all over the world no longer trust the debt of the United States Treasury Department.
Gentlemen, I know this monster well. I looked it squarely in the eyes decades ago. In those days, we did not have collapsing financial institutions or trillion-dollar bailouts.
Chief of Staff: I was not around then. Please help me understand it better.
Volcker: It was 1980. We were meeting at Camp David. Present were President Carter, myself, the Treasury Secretary, plus others. In some ways, this meeting today reminds me of that meeting then — the same sense of siege, similar philosophical disagreements. But there was one aspect we all agreed upon: The reality of the spreading investor mistrust in U.S. government bonds.
That mistrust was so intense and so widespread, we could not sell long-term government bonds. No one wanted them and the entire market for them was as close to a total shutdown as it’s ever been in the history of our country.
Fed Chairman: But that was because of inflation. Now we have deflation.
Volcker: Relevant in theory, but not in practice. In practice, although the reasons for selling were different, the consequences were the same. Then it was fear of inflation. Now it will be fear of exploding deficits, fear that we will go wild with more bailouts. In both cases, the end result is crashing bond markets.
Chief of Staff: What is the nexus of the crisis?
Volcker: The dealer network for U.S. government securities. The U.S. government is like General Motors. It issues bonds like GM makes cars. And like GM, it rarely sells those bonds directly to the public; it distributes them through a dealer network. The dealers buy the bonds wholesale. They hold them in inventory. They mark them up. And they sell them retail to customers.
Now, imagine what would happen if GM’s dealer network were to shut down! How would GM be able to sell its cars? That’s the same kind of situation the U.S. government was facing for its bonds in those dark days of early 1980 — and the same kind of crisis that seems to be brewing now.
Back in 1980, nearly all the government security dealers were shutting down their government bond operations. They had no other choice. They could not afford to hold bond inventories sinking dramatically in value. By February 1980, they had lost so much money from falling bond prices, they refused to buy them at auction and hold them in inventory.
Salomon and Merrill were the only ones still trading. Salomon would call Merrill to sell what’s considered a small lot of, say, $100 million in 30-year Treasury bonds. At the same time, someone else at Merrill would call Salomon to place a similar trade. It was like two kids on the street corner trying to trade each other the same marbles. There were no buyers. Virtually all the other dealers had packed up and gone home.
Three-month Treasury bills? No problem. Investors trusted us for three months. But 20- or 30-year Treasury bonds? No! The market for Treasury bonds had dried up. And without it, the U.S. government simply could not continue to fund its own operations, couldn’t meet payroll. Hard to believe, but true: We faced a shutdown of the U.S. government.
Our only answer was to kill the source of the mistrust, which, at that time, was inflation. But to do that, we had to jack up interest rates. We had to cut off credit to millions of Americans. And in the process, we knew, or we should have known, we were going to squash the economy.
Carter was up for re-election. So you can imagine his initial resistance to the Draconian steps we were proposing. But he had no choice. He could either (a) risk the possibility of losing the election in November or (b) face the certainty of a government shutdown in March.
Treasury Secretary: Can we bring this back to the present?
Volcker: Absolutely. Let’s bring this back to the present by asking this question: Is this the direction you want to take the country? If anyone in this room is willing to take that risk, say so now or forever hold your peace.
Because that’s the fork in the road we are now approaching — the end of the fast lane we’ve been on. I’m referring to the fast lane of open-ended government bailouts. The fast lane of “consistent messaging” to cover up the true cause — and the true consequences — of these bailouts.
Mr. Secretary, never forget: Millions of investors, mostly overseas, have put their faith in U.S. government securities. They’ve loaned you their money because they trusted you, the U.S. Treasury Department. If you continue to pour their money into these bailouts, what do you think their reaction will be?
What makes you believe that they’ll respond any differently than they did in 1980, when they disappeared from the U.S. government security market or, worse, dumped their bonds in fear? What makes you believe you can stop the cancer of mistrust from spreading to 1500 Pennsylvania Avenue — to the U.S. Treasury Department itself?
Now that day is approaching. Now we must make absolutely sure that U.S. Treasury does not, itself, become the next victim of the greater subprime crisis. Fortunately, it is not too late. We can still save our country’s credit if we act today, right now, while we still have a country, while we still have the resources as a nation to make the needed sacrifices.
This is the last government rescue, and it must be to save the government itself.
GEEEESSSSSS!!!!!!!!!!!!
man-O-man just post a link.
Irish Stinkweed? That works–but you know you are a hateful, Right Wing Wacko Raaaacist for saying so?
Good night mike.musculus , sleep well.
Finally reached the bottom of the page after that long post up above…
Since Paulson changed the “contract” he proposed, the legislation that was passed should be null and void and new terms made. Terms like, “no bail out. We made a mistake and won’t make the same one twice.”
I smelled a rat when a former CEO (who lost billions) of Goldman Sachs was put in charge of the henhouse. He wasn’t bailing the country out but his friends in the banking and investment industries. The liberal Senators and Congressman like Frank and Dodd were only too happy to accomodate because he would be saving their skins for their complicity in the whole mess.
I’d recall all the money that’s been handed out and figure out a new strategy. A strategy like, “let’s let the markets determine what happens and get the government out of the kitchen”.
The dems are in full control now. You can basicaly forget about any checks and balances till after 2010 or maybe even 2012.
If you think the rino’s spending was bad, wait a year.
I have always had a hard time when people use the power of the presidency to improperly hide information. This is not a national-security issue (unless we are paying someone not to attack us).
I do not like it when a Cheney-advised (-led?) administration hides from the people and their desire to know what the government is up to. Is this what you want for a legacy, W? Time to shine the light on the cockroaches.
DEMAND FULL ACCOUNTABILITY, NOW!!!!!!!
This would be the losing team correct?
Hows this for an Obama effect. Since the day he was elected, the dow has droped 1128 points. It was going up again up to that point.
did this blog just get spammed what the hell was that?
Note to webmaster: get the clock change right next time and limit size of post.
I can understand why Michelle and other fiscal conservatives are upset about having to bail out the auto industry, because I’m a fiscal conservative. Believe me, I wish that we could avoid having to do this too… but I’m not going to be so myopic about fiscal conservatism that I refuse to look at the larger picture.
Michelle is right, the American auto industry is a dinosaur… but it’s not the only dinosaur.
I live in Michigan and I’ve seen what the thugs in the UAW have done to the auto industry here first hand.
Every year, new strikes from the UAW. Every year, new picket lines full of greedy (mostly young) auto workers demanding more, and more, and more and more even during a time of severe economic recession. It’s been going on for decades, and every time these bastards go on strike they drive more and more small businesses into the dirt.
The UAW doesn’t give a damn, they publicly gloat about their agenda to break the backs of the “greedy” auto makers. They publicly state that they know that their strikes are driving smaller business into bankruptcy and leaving thousands of non-union workers unemployed, and they don’t care. They’re Union members, and they’re going to get theirs.
The UAW has perpetuated an ongoing cycle of greed among auto workers that seems to have no end in sight. There is absoutely NO doubt in my mind that if the US auto industry is going to survive this, they have to restructure from the ground up and break the back of the UAW. The days of paying someone 25 dollars per hour to drive screws are long gone.
However, I don’t agree with the myopic folks who are screaming “let ‘em fail!” I don’t agree with them because I honestly don’t believe that Ms. Malkin and many others here have a real understanding of just how many jobs and small auxiliary businesses are tied to the automotive industry.
When you scream “let ‘em fail!” you’re not just screaming that message to the “big 3″, you’re also screaming it to thousands of small businesses with thousands upon thousands of non-union employees who have families to support. If the big three declare bankruptcy and go under, the ripple effect is going to be devestating.
So what, you may say?
I urge you to really think about what you’re advocating. I understand the need for fiscal conservatism, but is this the way we really want to approach it? Driving thousands of small businesses into bankruptcy and forcing thousands of families onto the breadline?
I do think that some kind of assistance is needed to help the big three retool, and become competitive again. We have the most innovative workforce in the world, and we have a strong manufacturing infastructure in this country that is currently sitting idle.
But I think that any bailout of the auto industry MUST come with some severe conditions and limitations on how the money is used, and it should come with some very strict oversight from Washington.
And most importantly, it MUST include measures to either clip the wings of, or break the back of, the UAW which is the real dinosaur here. If nothing is done about the UAW, it WILL be a matter of throwing good money after bad.
There are no easy solutions for this problem, but I understand that there are many issues at play here and a lot of jobs at stake. Letting the “Big Three” suffer a catastrophic failure in order to “teach them a lesson” would have a catastrophic effect on the American economy that will take decades to reverse, if it even can be reversed.
My two cents.
Good idea however look who is running congress. Thier paymasters are the UAW.
Not. Going. To. Happen.
This is what will happen. The auto industry will get thier bailout. A few years from now, they will still go bankrupt. Only it will be worse.
bailing them out will NOT work. as we have seen with the bailout of AIG, they’ll just need more. we have pumped so much money into this economy and run up our debt so fast we have NO IDEA what the result will be…I would be inflation, devalued dollar, and a depression.
we’ll never stop bailing out the auto business…congress is going to wave their magic wand and all of sudden detroit will be fixed…ain’t gonna happen.
yeah I don’t know why he hasn’t just waved his holy hands and healed the stock market like he’s going to do with the ocean, planet, etc.
I was watching Paul Krugman, the 2008 economics Nobel Prize winner, talk about the GM bialout on “This Week with George Stephanopoulos”. He said it was to dangerous to allow them to go into chapter 11 bankruptcy. He said it would endanger the suppliers to the other auto makers. There was no elaboration on the subject but only his assurance by his award winning commanding intellect.
GEEESSSSSSSS!!!!!!!!!
A side note, I saw 4 shooting stars on the way to work. 2 at almost the same time. Cool.
On November 17th, 2008 at 9:09 am, mike.musculus said:
You seem to enjoy trashing me whenever you have the opportunity, even when I’m not participating in the conversation or here to defend myself.
Are you still running copies of my comments here to hang up on your “family bulletin board” so that your family members can laugh at me, Mike?
You have a very unhealthy obsession with me Mike, an obsession that goes beyond conversations on this forum into the realm of the personal. It feels somewhat stalker-ish, and IMO it’s indicative of an unbalanced personality at the very least, and possibly even a psychiatric disorder.
You seriously need to drop it, before I complain to someone who can do something about it.
That’s the essence of the situation. Or as Babs Boxer said after November of 2006: “Elections have consequences.”
Michelle led the Kamikaze strikes against the bailouts before November of 2006, and two things happened:
1. The bailouts went ahead anyway; and
2. The donkeys became even more powerful.
Now her proposed solution is for Republicans to engage in more Don Quixote vs. the Windmill tactics. Too late.
The donks are in full control now. Republicans are a sideshow for at least the next two years, probably longer. Railing at Republicans in Congress to “draw a line in the sand” now will be just as effective as standing astride the railroad tracks in front of a runaway train, thrusting one’s hand out in a defiant gesture and shouting, “Stop!”
Bailout Fever is going to have to run its course until the taxpayers break. No amount of cajoling Republican representatives is going to change that now; the only possible good it might do is to serve as a reminder for said Republicans that when the electorate finally revolts against the donkeys, not to try to redeem their failure.
Until then, hang on to your hats. We’re all on a carnival ride that’s going to collapse, and there’s no getting off until after the disaster happens.
WHAT!! I submit my prev. comment & I see THIS!
Are you nuts! Yes, give GWB the kudos for keeping us safe,
And there’s a LOT abt that that I’ve seen frm the inside that says it was more people like Generals who walked in “gray areas” of their orders, especially in ROEs: the ones sent down from the WH were, quite honestly, braindamaged. It was the LOUD LOUD SWAUKING of the 1stars & 2stars that got them to atleast where we could carry decent ordinance into the field! YOU WANT TO SHINE METALS for “people at the top” to pin-on, DO IT for the Brigadier Generals, Major Generals, and yes, even a (very) few non-political Lt. Generals! Some were tld that to buck the word from “on high” would be a career-ender, others did it knowing that by the end a LOT of “friendly” knives would be protruding from their backs. But they did it anyway! They did it anyway.
The job of POTUS has several equally important components. “..Protection from enemies *BOTH* foreign *AND* Domestic…”. Not just those originating (incl.planning &corganizing) from people outside our borders.
GWB *COMPLETELY & UTTERLY* abrogated ANY responsibility in anyother arena than the “shooting” part. Like a 3-legged chair, he sawed off 2. Not Good.
*IF* we don’t ID the problems, properly assign blame and take action to assert corrections, we’re driving on sand: Alot of effort, alot of spinning wheels, minimal forward motion and ALOT of overheating.
What you are saying, in essence, is the same in principle as those who don’t score little league games, or correct English papers. Don’t say negative things! It’s too hurtful to point out cheating, error, or dishonesty!m
No, I contend that people who won’t look honestly at what happened, incl GWB’s culpidity in this mess ARE the problem.
Who would that be? I mean besides getting him banned from here.
Here’s another chapter in the fiasco –
It is alleged that as reward for being in the tank for Obama, G.E., being the parent company of the Obamton Networks of NBC & MSNBC, is getting a piece of the pie worth $139 billion.
Republican leaders are so busy talking about what to do with the GOP and how to “brand” it correctly. Here it is! Right in their lap: STOP THE BAILOUT.
Let’s go back to smaller government, less intervention in the market and personal responsibility. Turn on Bush who has shown himself to be a RINO in the last 1.5 years and go with common sense conservative principles.
They can’t. All they can do is
Its the dems show now.
The little wheel in my mouse needs replacing now.
One idea that might work: require EVERY congressman and Senator that votes for further bailouts of companies (cars, banks, etc) to buy a LARGE block of each company’s stock with THEIR OWN MONEY prior to the bailout. THEN, if the bailouts work, they’ll make money. If they DON’T, then, like everyone else, they’ll LOSE money. Instead of playing with our money, they’d be playing with theirs too. Might make them think twice about throwing good money after bad.
Looks like the UAW is going to get this payoff. Don’t really understand the charade of going through the auto companies like handing to a delivery service.
Pelosi keeps talking about another stimulus payout to taxpayers. If that is the way out, what is so hard about just don’t take it out of our pockets in the first place. I know, I know, I don’t have 44 degrees or work for the NYT.
I see that the Auto industry wants another 25 Billion dollars from the taxpayer. I am suggesting the following:
Sell off thier interests in Mazda,Saab,Jaguar ect. Move your manufacturing BACK to America,hiring American workers. Raise the tarriffs on ALL Foreign made autos and Tax the crap out of the ones already here.
General Motors does NOT manufacture one brand of Vehicle on Japanese soil, they do have Research and Development plants there. How many Japan Autos are PRODUCED ON OUR SOIL?
American Auto SHOT THEMSELVES with the Help of American Politicians… If they want the Market back, they have to give a damn about Americans and America.
Otherwise…. THE HELL WITH THEM!!!!!!
Today… YES it is SAD the majority of auto parts are manufactured overseas. I do not know your age, but I can remember when ALL those same parts were manufactured RIGHT HERE! American Made use to stand for something. I suppose we could use that 50 Billion for Start Up Costs and start manufacturing those SAME PARTS back in America. Let those other countries FEND FOR THEMSELVES JUST ONCE!
So the Irish Rose lives in Michigan? Another good reason to let the Big Three sink. Americans will continue to buy cars-someone will build them. If not the UAW thugs then someone else. Studebaker, Cord and a dozen others are gone and we did rather well. Michigan’s Congressional Delegation is as much at fault for the problem as any- did they try to stop the CAFE standards? Did they ever standup to the UAW?
The Patriotic Resistance has begun.
HAHHHAHHAA – Bush set this whole deal up and Obingo used it to buy his way into the office of the POTUS and the payoff’s begin. The sheeple bought “Peace, Love Dope ‘n Change ‘08″ and now are going to come to the realization we now have to pay for this. D’oh!
While there are a FEW good republicans, why do I have absolutely NO trust that they will do ANYTHING right?
And one more thing b/f I hit the sack:
We, almost all of us, share culpidity in this. We went abt our lives working and not paying attention,and let them steal the store.
Our Founders stated many times that “Eternal Vigilance” was the only way to preserve our freedom.
The prime error, the pebble that started everything was where we allowed the law-crafters make the laws too complex for the Busy Citizen to follow. This gave caused too many Citizens, because we are busy w/our families, jobs, businesses, lives; ie, not trying to accue power & mastery over our fellows, to simply tune out. That gave them cover to expand the laws, making many overlapping in scope and contradictory in effect so that no matter what you’re doing, you are breaking a law that has juridiction[sp] over you. It then falls to those who want mastery over you to pick the broken law to use to compulse obedience.
This pattern is tried-and-true. It has been used by every despotic nation in history, excl. those were “the Headman” made them up & changed them as he went along, ( …conflicting laws were unnecessary…[grin]).
Well, I’ve just spent a couple days living in full-MOPP gear, and so I’m getting sacktime – hopefully the full 72hrs of my pass!
Night, All!
Regulus, that is true, but not all dems voted for this thing. I think there are some that are still reachable. If we say and do nothing, we are complicitly agreeing.
Faulty evidence, but we must act RIGHT NOW!!!… Missiles of Mass Economic Destruction…
The bailouts are esentualy this. An attempt to correct 30 plus years of defict spending through spending more. It is the national equivalent of paying off one credit card with another. This plan ensures bankruptcy. Problem is the only way to sustainably get out of this mess is to cut spending dramaticly and pay down the debt. This path the dems are on will only make the inevitable crash worse. It ensures a great depression.
The Democrats have spent years pandering to the environmental groups and the unions. They arenow reaping the harvest.
Senator Shelby is correct. The battle to save the automakers is OVER. They are dead. The Feds have force the industry to yet again retool to the tune of 100 billion and the unions make the automakers even more uncompetetive.
This situation is like the game officials adding 5 more minutes to a basketball game, because they are hoping the exra time will allow Trnity College with four players a chance to defeat Duke at Duke.
Time to let the Big Three die and then reconstitute the industry with non-union or responsible union labor and not allowing the Congress to touch them for ten years. Do that and watch the Japanese and Koreans get buried by American know-how and ingenuity.
Irish Rose (#41), I think that the economy overall is better off with the Big Three carmakers going into Chapter 11 re-organization–especially if it breaks the UAW. I say this as a (very, very small) stockholder in GM, although my stocks are part of my retirement planning.
Yes, I understand that it will affect many other business and even more people. However, my understanding of chapter 11 is that breathing room is provided, not that all is ended. My hope is that a reorganization and great lessening of the influence of the UAW’s power will result in a healthy–or at least less sick–company that will continue to be the engine for small companies in the the automotive industry, and also pay dividends for shareholders.
I object to government bailout money for two reasons. The first is that I think it may be unconstitutional and will serve to nationalize the industry, which is definitely not the US I grew up in. The second is that I’m afraid that the bailout money will only serve to hide problems, and when the crash comes, the mess will be worse.
Who in the HELL ever thought Juan McAmnesty was a good choice to represent conservative values… what a tool.
Goodnight, mike.musculus (#62). I hope you’re back to your better posting standard when you get up. If you’re still up, just pretend that I am your first sergeant (or chief if you’re Navy), and hit the rack now.
I read Rev. Sirico’s account-
It is good to see freedom loving clergy come forward once again…
1776 they were known as the ‘Black Regiment’ because they wore black robes when they preached to their congregations……..
C-CS
I’m sorry – GWB had more than one job to do.
I applaud many of the things the president has done (9/11 response, Iraq, Afghanistan, not federally funding stem cell research, Alito, Roberts to name a few), but on other fronts, (no child left behind [all children left behind], medicare, almost anything economic) he has been a failure.
All the President had to do – take out his veto stamp which isn’t especially difficult.
The Crap Sandwich was the decisive factor in my decision to vote for Rep. Tim Holden (D-PA). He had the resolve to vote against Versions 1.0 and 2.0, which makes him more conservative than the RINOs who helped pass this atrocity.
I agree with most of your post Rose, as a former Metro-Detroit area resident, I see what the UAW has done to a wide swath of SE Michigan.
I would agree to help the big 3, only if they broke the union….ain’t gonna happen! The union must go, or be completely restructured before any money should be given to the UAW
big 3.http://www.superpoop.com/102008/bailout.jpg
What is Paulsen’s email?
IR – your statement that you are fiscal conservative and then your subsequent post indicate a sever mis-understanding of fiscal conservatism.
I understand many of your arguments – but they are all emotional. You are right, the UAW is to blame – but since when did management let the union run roughshod over them. That is the job of management. If not that, what is it?
Further – since when it is the job of government officials to pick “winners” and “losers”. Isn’t that the job of the capitalist markets? Won’t the market (consumers AND investors) choose whether Toyota or GM is a better or worse investment than Ford or Volkswagen? For you to say you support capitalism, conservatism ( I know they are not the same) but then to espouse positions in opposition to that is intellectually dishonest.
Do you know who did have a steel spine and stood strongly against the bailout?
Mike Huckabee.
If Huckabee had been our nominee, those in Congress who followed our nominee’s lead would have voted against the bailout, instead of for it.
Conservatives didn’t lose the election on November 4th…we lost it on March 4th when McCain “clinched” the nomination.
Very well said.
Bailing out the obsolete auto industry is ridiculous, but the Democrats are likely to do it (or attempt to do it) to save their dinosaur union constituents. If the companies were allowed to bankrupt, the union contracts (and enormous payouts in retirement and medical care for life) would end, and the car companies could go back to building cars, instead of providing social services for an obsolete work force. Over 2,200 different car companies have existed in the last 100 years in the USA, so three more biting the dust wouldn’t be news. Hard times did them in, and still will.
Other companies unburdened by union idiocy will prevail, in spite of any “bailout”. The news today says General Motors is burning through 3.1 million dollars a hour, at that rate, they’ll be back to the public trough in less than a year asking for even MORE money. Cut off the faucet now, save everyone money in the short AND long run. One more thought: make every congressman and senator that votes for this crap buy a large block of car company stock with THEIR OWN MONEY prior to voting. THEN, when the companies go under, they’ll lose too, and might think twice before spending money that isn’t theirs.
So while most are fawning over Gov. Palin, they’re forgetting about these more qualified leaders who are actually in the fight. It’s happening all over again: we’re allowing the tail to wag the dog by relinquishing our thinking abilities to the media. (No, I’m not calling Gov. Palin a dog…)
These are the men (Pence, Poe, DeMint, Inhofe, Jindal, Sanford, and others) we need to back, the ones we need to support with our votes. We need to send the message, “be like these guys or else we won’t vote for you.” That is how you prevent politicians like McCain and Lindsay from reforging the Republican party in their likeness.
I applaud Hucks position there – but I’m baffled by many of his other positions – such things as immigration and several of his fiscal positions as Gov of Arkansas.
I do agree totally hough with your last paragraph.
IrishRose,
I respectfully disagree with your contention that
will fail as a result. I know that was not a direct quote but that was the idea, no? People did not used to replace cars every couple of years. Cars will not cease to exist if the big 3 go into chapter 11. Yes, car dealers will suffer but that is about it; And they can restructure as well to sell whatever survives. Do you not believe that if GM, Ford and Chrysler have to reduce production that Toyota, Honda, etc., will gladly fill the void?
Sorry but I’m just not seeing disaster here. If they can not compete in the market, they deserve to go the way of horse and buggy. America will be stronger, long-term, if this union dominated model reaps what it has sown.
I’m an independent, and I would sign up for the Republican party if they would actually adopt this plan.
Send_me,
Problem with those other politicians was they were not running. You gotta be in it ta win it. The fawning jibe sounded a little too much like resentment. She was a fresh new, definitely conservative voice that resonated with the true conservative base. We should build on that, not deride it.
rhetorical question…
can someone please explain to me why I heard on the radio that 65% of Americans support bailing out the automakers and I read on Yahoo!news of all places that most Americans ARE NOT?!?!?!?!?
STOP SPENDING MY MONEY!!!!!
On November 17th, 2008 at 10:36 am, dan708 said:
That’s what adds insult to injury about the bailout. The whole thing was orchestrated by Democrats to influence the election. They knew citizens were massively against the bailout. In tight races, the Democratic leadership let Democrats vote against the bailout, to help them get re-elected.
Those Democrat votes against the bailout should have made it easier to defeat it, but stupid Republicans bought the lies they were sold, instead of calling Paulson’s bluff.
Pelosi blamed the whole thing on “failed Bush policies” when the truth is that Democrats created the Fannie/Freddie destablization and Republicans fought (unsuccessfully) for greater regulation of Fannie/Freddie.
Politicians and MSM lied, and the Trojan Horse McCain didn’t fight back with the truth. Instead, he lead Republicans to the slaughter.
And dan708, you took the bait and helped re-elect a Democrat. I don’t know who Holden’s challenger was, but I’d guess that the challenger would have also voted against the bailout, too. So, what did voting for Holden accomplish?
You helped keep the House of Representatives in Pelosi’s hands.
ajmontana and bansharia.
First, I apologize if you felt that my post of that email was inappropriate.
I visit here several times a day and share the Conservative principles that many of you have here.
I value this place tremendously.
There was no intent in spamming the blog.
I copied and pasted because it was an email in my inbox,not a link
I only posted because it seemed appropriate and newsworthy based on the topic of this thread.
Once again, I apologize if this was wrong.
RedPill,
I agree completely. Sheesh.
On November 17th, 2008 at 10:52 am, conservativesRus said:
As Governor of a state, Mike Huckabee had no control over Federal policy on immigration. As a Presidential candidate, he made it clear what stand he would take on the issue, and it is the right stand.
He was also right in supporting the Fair Tax.
A man who spent more time with Ronald Reagan than you or me (and probably 99% of the readers of this blog) did, said:
Redpill, most of the time (99%) I agree with you. But not all Dems are the devil. Perhaps this guy was more of a Bob Casey, or Zell Miller. I definitely blame the Repubs who capitulated on the bailout (thankfully, mine stood strong), but that doesn’t mean that all dems (secretly?) supported the thing, either. I need more evidence to believe that. In the meantime, all dems and repubs who voted against the bailout should be called and congratulated and encouraged, and those who flip-flopped or voted for it twice (gulp) should be called on the carpet. We can’t give up.
Since the UAW refuses to make any concessions, I say let the Big Three declare bankrupcy (like the airlines did), restructure, and renegotiate the union contracts to remove the shackles that bind them. Until the UAW relinquishes their choke hold, the auto manufacturers won’t be able to compete in the open market.
Or, like Hitler did, Obama could socialize the auto industry and have the United State produce an automobile similar to the Volkswagen Beetle. Maybe we could call it the Obamabile. Problem solved!