copyright © 2008 Betsy L. Angert
Tis true. For days, if not weeks, months, or years the country has been in a state of financial crisis. Americans experience what it means when the President of the United States says he will act boldly. Economically, he has been brazen. Our current Chief Executive unabashedly embraces businesses, just as he had in his private pursuits before he entered the Oval Office. Bush policies allow corporations to run free. If need be, he says, as he did early on in his Administration, Let the bailouts begin.
Today the need to extend financial relief to American corporations is far more dire than it had been in the past. Estimates place the figure at 1.8 Trillion dollars; that is trillion. with a “T.”
Conservative calculations state the amount needed as $700 billion. However, several say that appraisal only refers to an aspect of the aid, the shaky assets now on the books of financial firms. As he reflected on the exact amount to be paid out and the delicate balancing act of bailouts, Thomas A. Renyi, former chairman of Bank of New York Mellon, said, “Psychologically, it’s very, very important.” What is said and done must be amenable to the people, big and small.
What George W. Bush and his Administration have done was in accord with the desires of the few; the millionaires and billionaires were pleased. Enterprise has always been the way of entrepreneurs. The others, the masses did not realize how the decisions might matter to them. As long as the plebs worked as economic slaves had for eons, no questions would be asked. Workers believed in the American dream. Doubt rose only when the size of bailouts grew. Now, in September 2008, what began as a bailout or two has emerged. Americans are faced with an enormous nightmare. However, this need not be a surprise. Citizens of this country might instead inquire, are they willing to compromise the future. Americans could also consider the question; can the United States economy continue to survive on credit.
As of last week, people pondered as they had not before. Countless considered American history and how each Administration altered financial stability.
It seemed the poor, the wage earners, and the salaried associates poured their hearts and souls into work. None realized substantive reward. Nonetheless, for the most part the populace was content. Everyday people paid taxes. Yet, the public received few services. Under the direction of President Bush, the blood sweat and tears of American labor went mostly to the levies that were and perhaps will be lent to those who earned billions in profits.
In recent years, rich business owners manufactured only liabilities. Still, their securities were preserved by a business friendly President Bush.
For decades, as deregulation flourished, more so since Bush, the American people lived on credit, as did the conglomerates. The difference being, with George Walker Bush in the Oval Office, businesses had a friend on Pennsylvania Avenue who would help them out. Those who reside on Main Street did not. There was no one to turn to if you were among the working people. Yet, a conversation has begun. Recent talk of greater bailouts for bankrupt businesses reminds Americans of what they hoped would pass without fanfare; recession, depression, financial despair.
Since George W. Bush and his corporate cronies came into power, average Americans have experienced one economic catastrophe after another. Budgetary surpluses realized in the 1990s were depleted. Monetary gains for the Middle Class are but a myth. Perchance, in the past an individual could realize an increased income. However, that was then, pre-President George W. Bush. Today, economically, the United States has failed. Earlier in the year, a Los Angeles Times poll concluded 75% blame Bush’s policies for an economy gone badly. The American Research Group, Incorporated states, at present, George W. Bush’s Overall Job Approval is at an all time low. Eighty-two percent (82%) say the national economy is getting worse. Countless cannot imagine that is possible.
As President Bush and his appointees protect the nation from monetary doom, banks file for bankruptcy. Bear Sterns, one of the largest global investment banks and brokerage firms, finally buckled under pressure, after two brushes with near death. Billions of dollars in toxic mortgage-backed debt could no longer be erased from the books. Liabilities could not be hidden from view. Arrears ultimately appear, if not in ledgers, in the effect it has on an affluent culture gone wild with irrational exuberance. The corporate love of cash has created what America now experiences as a crash.
Businesses benefited from the Bush budget. Decrees of deregulation allowed for imbalance. Income inequity became common. The public struggled to save greenbacks. Most, in what was once the Middle Class had adequate access to the dollars they needed.
Currently, Americans can barely count on a regular paycheck. Permanent employment is thought to be a luxury of the past. Companies are strapped for cash as are employees. Some, in the richest nation on the planet, are barely able to survive. The common folk are fearful of what might happen if the economy sinks further into a doldrums. People run to banks only to withdraw their holdings. They sense the fiscal boom has gone bust.
In July 2008, there was little time to indulge. The lazy days of summer did not calm those with substantive concerns. Only George W. Bush, his family, and friends found solace in the statement, “The fundamentals are strong.” Presidential candidate, John McCain’s use of the words only hours ago did nothing to quell the concern citizens in this country have felt for too long. A Nobel laureate, Joseph E. Stiglitz, envisions a generation will be lost in the struggle to recover. He writes in the The Economic Consequences of Mr. Bush, The next president will have to deal with yet another crippling legacy of George W. Bush: the economy.
Average Americans understood this. They knew they could not rest. The poor and those far from prosperous realized they had reason to act. In droves, people ran to retrieve their assets. IndyMac, a large mortgage bank, was seized by Federal regulators. The second-largest bank failure in United States history occurred after anxious customers attempted to claim their deposits. A massive run on the bank left the financial institution short of reserves. George W. Bush sat tight, safe in the sanctuary of the Oval Office.
One business after another collapsed. Conglomerates crumbled. Corporations tumbled. The people in the middle were taxed. Most of the news coverage focused on the fiscal devastation companies felt. Men and women without jobs, people who were fearful of an eminent foreclosure read of the monster mortgage firms, Fannie Mae and Freddie Mac. The Federal Reserve pledged to provide as much as $100 billion for each of these ill-fated establishments. Stunned, John and Jane Does said nothing. They only wondered why no one made funds available to them. Few thought the President would come to their aid. Visions of the victims of (name a recent calamity) raced through the heads of those hurt by an economic crisis.
Then, security firms stepped into the mix of mergers and mega-moneyed bailouts. Lehman Brothers, another global investment bank declared itself in a state of crisis. This firm also concluded they would file for bankruptcy. On this occasion, historians affirmed, this liquidation was the largest in United States history. The company founded in 1850 had flourished. Now, it was said to have perished. However, as death waited at the door, some associates did not feel they could rest in peace.
The staff in Britain was furious when they learned Lehman Brothers’ colleagues in the New York office were expected to share in a $2.5 billion bonus bonanza. Associates in the United Kingdom were told they would be paid just until the end of the month. Perhaps, wealth is not meant for everyday workers. A spokesman for the Trade Union Congress, the national trade union centre in the Great Britain, which represents the vast majority of organized workers surmised: “It looks like those that will suffer the most from the Lehman Brothers collapse are those at the bottom of the corporate chain while many of those at the top will be looked after.”
The Union representative went on to reflect; junior staffers would suffer. “Few may have sympathy for the red braced bonus receivers but there will be many more lowly staff facing real hardship.” A British employee of Lehman Brothers mused only those in the United States are saved from financial ruin; however, in truth, even in America, those without remain without.
For ages, personnel did not prosper whether they lived here in the States or abroad. Ordinary people feel the pain corporations complain of. If the cost of doing business climbs, the consumer is required to pay the price.
Health care premiums have increased by over 80 percent. . . . Premiums are rising twice as fast as wages and inflation. . . . The number of uninsured Americans has increased every year since President Bush took office, from 39.8 million in 2000 to a record high of 46.6 million in 2005. (1) . . .
Gas prices have climbed over $3 a gallon. Prices at the gas pump have jumped 107 percent from $1.47 per gallon the week President Bush took office in January 2001 (3) to $ 3.05 in the latest week of energy price data. (4) . . .
Housing affordability has reached a 15-year low. In 2006, housing affordability reached its lowest level since 1991. (9) According to the Washington Post, “the scarcity of affordable housing is a deepening national crisis, and not just for inner-city families on welfare. The problem has climbed the income ladder and moved to the suburbs, where service workers cram their families into overcrowded apartments, college graduates have to crash with their parents, and firefighters, police officers and teachers can’t afford to live in the communities they serve.” (10)
The tragedies did not end. On September 15, 2008, Merrill Lynch, expressed a fear. Might this company suffer the same fate as Lehman. Merrill Lynch tycoons moved quickly. The company sold itself to Bank of America for $50 billion. Many mused; the transaction was quite a steal. However, few were relieved. Americans, now savvy soothsayers said, what would be next.
Less than twenty-four hours passed before there was news. September 16, 2008, was a typical day for Americans. However, that changed when The Federal Reserve agreed to rescue the American International Group. The United States government was slated to control an 80 percent stake in the insurer. Yes, even Insurers seek assurance from the Administration when they cannot pay their bills. Only citizens cannot come to the White House with claims.
The American people are the Insurer under George W. Bush. The people are expected to bailout every business, and they do. Yet, now, the load, the loans have become too great a burden to bear. Americans are angry. Most feel powerless. For too long they have stayed silent. No one seems to know what to say anymore. Perhaps it is too late to protest or proclaim. Yet, fortunately some one has.
Senator Bernie Sanders reflected upon the Hard Truths About the Bailouts, or the ultimate bailout. This week, the Bush Administration pledged to pay seven hundred billion to one trillion in taxpayer dollars to businesses that engaged in dubious credit practices, and the Vermont Senator voiced his trepidation.
Sanders Op-Ed: Billions for Bailouts! Who Pays?
By Senator Bernie Sanders
September 19, 2008
The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.
The middle class has really been under assault. Since President Bush has been in office, nearly 6 million Americans have slipped into poverty, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, over 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled, and we have a national debt of over $9.7 trillion dollars.
While the middle class collapses, the richest people in this country have made out like bandits and have not had it so good since the 1920s. The top 0.1 percent now earns more money than the bottom 50 percent of Americans, and the top 1 percent owns more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president. In the midst of all of this, Bush lowered taxes on the very rich so that they are paying lower income tax rates than teachers, police officers, or nurses.
Now, having mismanaged the economy for eight years as well as having lied about our situation by continually insisting, “The fundamentals of our economy are strong,” the Bush administration, six weeks before an election, wants the middle class of this country to spend many hundreds of billions on a bailout. The wealthiest people, who have benefited from Bush’s policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.
In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles:
(1) The people who can best afford to pay and the people who have benefited most from Bush’s economic policies are the people who should provide the funds for the bailout. It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities. Further, if the government is going to save companies from bankruptcy, the taxpayers of this country should be rewarded for assuming the risk by sharing in the gains that result from this government bailout.
Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:
a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;
b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies’ stock goes up.
(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.
(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.
(4) We must end the danger posed by companies that are “too big too fail,” that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation’s largest depository institution, has absorbed Countrywide, the nation’s largest mortgage lender, and Merrill Lynch, the nation’s largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.
The words ring so true. Several, too many, or most have not spoken of what caused them great distress in recent years. The public accepts and allows this Administration to run rampant. The electorate acknowledges what is reality for them only when in seclusion. American people have become apathetic. However, the statistics scream out and a Senator shrieks. Perhaps it is time to ask, can citizens of this country permit this latest proposed policy to stand. Might it be time to face the financial crisis, or will more days, weeks, months, or years go by. Will the people remain passive and agree to another bailout, bigger than any other has been?
Might Americans again adopt the refrain, “Let the Bailout begin,” or will the people ponder their own fate first and declare it is time for a complete change. Could it be time to embrace other than a free market mentality and the plans of a President who put us into this precarious situation. Will the commoner and the conglomerate submit to the counsel of Senator Bernie Sanders and say, we must no longer rely on credit to survive. The United States is at a turning point. Might the average American chose to state, “Let the Bailouts end!” “Lets us balance our books!”
Sources For Financial Security and Strife . . .
- Congress haggles over Treasury bailout plan. By Kevin Drawbaugh and Richard Cowan. Reuters. Washington Post. Tuesday, September 23, 2008; 12:45 AM
- Bush Family Value$, By Stephen Pizzo. Mother Jones. September 1, 1992
- Pro-Deregulation Schumer Scores Bush for Lack of Regulation, By Joseph Goldstein. The New York Sun. September 22, 2008
- Press Briefing by Ari Fleischer. Office of the Press Secretary. ?September 18, 2001
- A $1.8 Trillion Bailout: Where the Money’s Going. Reuters. CNBC. September 21, 2008
- Bailout’s Tricky Balancing Act: How Much Is Too Much? By Neil Irwin and Binyamin Appelbaum. Washington Post.?Tuesday, September 23, 2008; A08
- pdf Bailout’s Tricky Balancing Act: How Much Is Too Much? By Neil Irwin and Binyamin Appelbaum. Washington Post.?Tuesday, September 23, 2008; A08
- Confronting Economic Challenges Head On. Office of the Press Secretary. ?September 19, 2008
- Times poll: 75% blame Bush’s policies for deteriorating economy, The figure includes large numbers of dissatisfied Republicans and represents a sharp increase in pessimism over the last year. Higher fuel prices have sharpened the criticism. By Maura Reynolds. The Los Angeles Times. ?June 26, 2008
- George W. Bush’s Overall Job Approval Matches ARG Low ?As 82% Say National Economy is Getting Worse. American Research Group, Incorporated. September 22, 2008
- Bush cites ‘unsettling times’ in housing market. Associated Press. MSNBC. September 20, 2007
- McCain: Fundamentals are (still) strong, By Ben Smith. Politico. September 15, 2008
- The Economic Consequences of Mr. Bush, By Joseph E. Stiglitz. Vanity Fair. December 2007
- Busts, bailouts and bankruptcies. Star Tribune. September 2008
- Bear Stearns second brush with bankruptcy, The firm wasn’t out of the woods even after its initial agreement to merge with JPMorgan, a filing shows. By Roddy Boyd. Cable News Network Fortune. May 2, 2008
- IndyMac Bank seized by federal regulators, The Pasadena-based thrift’s failure is the second-biggest by a U.S. bank. Doors will reopen Monday. By Kathy M. Kristof and Andrea Chang. Los Angeles Times. July 12, 2008
- Financial crisis: Lehman Brothers staff’s $2.5 billion bonus bonanza provokes fury, By Myra Butterworth. Telegraph. September 22, 2008 2008
- The Housing Crisis Goes Suburban, By Michael Grunwald. Washington Post. Sunday, August 27, 2006; Page B01
- Hard Truths About the Bailout. Editorial. The New York Times. September 19, 2008