Archive for September, 2008

Bail out Wall Street with no strings attached? No… That is not the answer…

Published
by
seanb
on 30 September 2008
in Society and Voting
. 0 Comments

700 Billion Dollars would go a long way toward helping our economy improve itself. The government buying “toxic assets,” as they have now become known, is not the right way to do it. Especially with no strings attached.

On September 21, 2008, Robert Reich, the nation’s 22nd secretary of labor, proposed in his Talking Points Memo, a way that I find acceptable, should any bailout actually be offered, namely:

  1. The government should receive an equity share in any company coming to the trough. This equity share would be substantially equivalent in size to the stake the company wants us, as taxpayers, to assume risk.
  2. The CEO (and the top executive ranks) should forego any compensation until such time that their company rights itself and shows an average profit over five years.
  3. No more campaign contributions from these Wall Street firms, and no more lobbying from them while their companies are held substantially by the US Taxpayers.
  4. New regulations shall be put in place to strongly regulate the activity of these firms.
  5. Bankruptcy judges receive the right to modify the terms of first mortgages.

This country’s government operates for us, it operates BY us. It’s time to take it back.

Free Market? Only when it works…

Published
by
seanb
on 17 September 2008
in Biden, Obama and Society
. 1 Comment

I’m not a proponent of markets completely unregulated. 

While an unregulated market may run efficiently and effectively, rarely does it operate with the broader society’s “best interests” in mind.

Why?

If one looks at a market, one understands that its purpose is for the seller of a good to sell that good at the highest possible price they can get for the good, while the buyer’s goal is to pay the lowest possible price they can get for that good.  This goes without saying, for it is the fundamental purpose of any market.  It’s also a very basic model of a market.  This model precludes any longitudinal forethought to be undertaken prior to decisions.  In other words, markets operate instantaneously. 

Money and goods change hands at that moment, without regard for what happened previously, or what will happen next.

Perhaps this is the origin of the phrase “caveat emptor,” roughly translated to “buyer beware”.

Was it right for the government to step in to take over Freddie Mac or Fannie Mae?  Was it right for the government to step in to shore up Bear Stearns?  Was it right for the government to provide $85 billion in loan guarantees in return for an 80% equity stake in an insurance company that may or may not survive?

These are definitely complex questions.  Questions that I have no business attempting to answer, because I don’t have the expertise to do so.  However, I do have the expertise to say that in a free market economy, of the sort that Bush has operated, and that McCain/Palin still propose operating (if not expanding), these organizations should have been allowed to collapse without taxpayer intervention, for we have no business being in these businesses AFTER they’ve made their bad decisions, if we weren’t there providing the regulation to try to prevent those bad decisions from being made in the first place.

I’m not suggesting that an Obama/Biden administration would have handled this crisis any differently; in fact, I suspect given the gravity of the financial black hole that would be created should these institutions fail, that they would have made exactly the same decisions to rescue.  What I am suggesting is that perhaps with more oversight, of the sort that would likely be proposed by an Obama/Biden administration, these situations would be rarer.

Somewhere between Jacksonville and Orlando…

Published
by
seanb
on 16 September 2008
in Biden, Elections, Justice, Obama, Political and Society
. 0 Comments

NPR’s Morning Edition is reporting today that John McCain stated at a rally in Jacksonville, Florida that “The fundamentals of the economy are strong,” but changed his tune when he was at a rally later that day in Orlando, Florida to “I know Americans are hurting.” The distance between these two cities, according to Google Maps, is 141 miles, or about a two-hour drive (probably a two-hour flight, too… maybe not, I don’t know if McCain sprung for a flight or travelled by bus.).

I’d like to know why he changed his tune. It could be that McCain has finally come to his senses that the current Executive has lead us down the wrong path, to a point where we now have investment banks – some of the largest in the world – failing, taking out insurance companies in their wake. It could be that McCain suddenly finds himself lamenting the binds in which the working class finds itself. However, I’m more inclined to believe that one of McCain’s advisors whispered to him, “Nice job John… you might want to change your message at the next stop…”

You see, the problem with the McCain-Palin ticket is that they don’t share any links with the working- or middle class voter, aside from Palin’s family (arguably) being from the middle class. McCain has been a staunch supporter of a market free of government intervention; Palin has been a staunch supporter of a “hands off” approach to Federal Government intervention in Alaska.

Barack Obama may not be an economist, but at the very least he knows that what we have now isn’t working – and he HAS known this for a long time.

It’s not something he just learned in his latest 141 mile trip, like McCain did.