October 13, 2008

1. IT IS NOT REFORM: Like the 500 billion already spent for "bailouts" this treats the symptoms and does NOT cure the disease. There are serious imbalances in credit markets and in U.S. economic public policy, which are not fixed, but only bandaged. The plan builds on insane government regulations. Failed, reckless banks and "government-sponsored embarrassments" (the FM twins) are "rescued" by buying their junk: "troubled assets." What is needed? Government policies that END interference with the credit and capital markets, to make private capital available and allow economic growth.

2. IT IS A POWER GRAB: The proposal, even as amended, gives the Administration and an appointed official, the Secretary of the Treasury, power as not held even by Soviet Premiers and Roman Emperors. It will make the government a major (if not THE major) owner of "private" firms, both financial and other. It guts the Constitution.

3. IT HAS AN UNBELIEVABLE PRICE TAG: Seven hundred billion dollars is $2,300 for every man, woman, and child in America: it is larger than the budget for the Defense Department, even with the spending in Iraq and Afghanistan, and any two other federal departments.

4. IT EXPLODES OUR NATIONAL DEBT: Congress will go out and borrow every dime from overseas. The national debt will go OVER $11 trillion dollars ($37,000 for every person in the United States). If this is such a crisis, why is not at least SOME of this paid by cutting other government spending?

5. IT BAILS OUT THE WHOLE WORLD: American taxpayers would be buying junk not just from American banks but from foreign banks. It isn't for "Wall Street and Main Street" but to give international bankers an "Easy Street" with OUR money.

6. IT PUNISHES GOOD BANKS - HURTS RESPONSIBLE AMERICAN BANKS: The plan punishes responsible U.S. banks by keeping reckless, insolvent investment banks in business. As BB&T CEO John Allison wrote in a letter to Congress on Sept. 23rd, "....this is primarily a bailout of poorly run financial institutions.... Corrections are not all bad. The market correction process eliminates irrational competitors."

7. IT IS AN EXAMPLE OF BAD LAWMAKING AT ITS WORST- FLAWED PROCESS: Members of Congress and the public will have less than 24 hours and no hearings to discuss and understand the impact of this sweeping plan. This rush to pass a wildly unpopular plan without benefit of significant public debate and input will also undermine its legitimacy and effectiveness.

8. OF WALL STREET, BY WALL STREET, FOR WALL STREET: Treasury Secretary Paulson, the architect of the plan, was formerly the head of Goldman Sachs, one of the firms responsible for the mess and a direct beneficiary of the bailout. Further, the advisers managing the bailout auctions and assets will be Wall Street firms and will likely receive billions of tax dollars in fees.

9. IT IS NOT THE LAST-DITCH ACTION IT IS PORTRAYED - OTHER OPTIONS NOT EXHAUSTED: The idea that taxpayers will make money on the bailout is not credible. There are ready buyers for these "troubled assets" -- Merrill Lynch sold its entire portfolio of mortgage backed securities in July-- provided the price is low enough. If a profit was possible, private speculators would readily buy these troubled assets.

10. IT REWARDS GREED: The greed of "financial managers" and investors and everyday spendthrift Americans created much of this problem. Now, THEY will dodge the consequences of their actions, while 300 million American consumers and 150 million American taxpayers pay instead.

11. IT REWARDS STUPIDITY: Congress created this mess (with a bit of help from the UN and presidents starting with FDR and continuing through JFK, LBJ, James Earl Carter and and Bill Clinton; for once it is wrong to blame Bush - he at least tried. But it is Congress that now claims to be the savior; to be the only body capable of fixing it. Like alcoholics, they cannot get off the sauce, and claim that all they need is another bottle (or keg) of the "good stuff."

12. IT INFLATES OUR MONEY TO WORTHLESSNESS: Do we want to see inflation like Zimbabwe, Argentina, or pre-Hitler Germany? When you create "new money" by debt and inflate the monetary supply, you have more dollars chasing the same (or even fewer) goods and services, and prices explode. We could see a dollar that has to be spent the same afternoon it is paid, because it will be worth 1/10 or 1/100 of what it was, the next day.

13. IT IS MORALLY OFFENSIVE: The plan destroys the fundamental principles of capitalism. It wrecks what is left of honest government. It will allow, indeed encourage, "private profits, public losses" by its transfer of money from taxpayers directly to Wall Street investment banks. Without the opportunity to fail and lose money, profits are nothing more than theft. There is no capitalism and no free market if people and their companies are not held accountable.

[Editor's note: Even though the bank bailout is now history, these points remain clearly relevant. They will remain true of the next "bailout" proposed, and the next and the next. Will it take a total collapse of the worldwide economy to stop this monster, run away train? God help us all.]

Nathan Barton is writing this from a wonderful place in the West, which might be in the Black Hills of South Dakota or Wyoming, or might be in one of the Four Corners States. Exactly where it is, the breezes blow with the scent of liberty, and the sound of the pines or the pinions is the sound of freedom. For thousands of years, people have fought and died for the liberty that Americans in the great spaces of the West enjoy, and he writes these commentaries in the hopes that continued generations will be able to do so, until the end of Time. Visit the blog: The Gospel Sower

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