The Bailout Seheme Sold As An "Emergency" Has Become "Hurry Up And Wait
One of the tactics of high pressure selling is to set a deadline, and make it clear if you don’t chose the offer by the date set, you lose it. The strategy fuels a sense of urgency to get buyers to make decisions without seeking advice or doing too much thinking. Some time, a bribe or a threat adds pressure to create a sense of disorientation. Recall President Bush’s ultimatum to Saddam Hussein and his sons. They were given 48 hours to get out of town. Or else! Does anyone really think that had they left, they would have been left alone?
The strategy to get the bailout passed came from this same playbook. First, the President warned of an armageddon. ""This is the first time in the history of the United States that the president has sought to provoke a financial panic to get legislation through Congress," says economist Dean Baker." "While this has proven to be a successful political strategy, it marks yet another low point in American politics. It was incredibly irresponsible for President Bush to tell the American people on national television that the country could be facing another Great Depression. By contrast, when we actually were in the Great Depression, President Roosevelt said that, ‘we have nothing to fear, but fear itself.’"
Then Secretary Paulson and Federal Reserve Bank Chairman brought their power points to the hill in an unsually alarmist nighttime hush-hush meeting to "prove" that unless Congress acted, the whole system would melt down. They argued something had to be done and they just happen to have that "something" with them: a three page EMERGENCY PLAN for a mere $700 billiom that had to be passed now!
When Speake Nancy Pelosi wanted to add a role for Bankruptcy courts to adjudicate foreclosures, she was shot down. Paulson, even went down on his knees to beg her to withdraw the idea because it was complicating his "clean" proposal.
Has anyone looked into who was pushing this, at the role of China which demanded to be "made whole" on its loans and investments, or who would benefit the most.? Nah. Did the media hold debates featuring the more than 400 top economists, including two Nobel Prize winners who opposed this "Emergency Economic Stabilization Act of 2008." Nope.
To add extra anxiety to the process, ir was suddenly announced that a military unit trained in crowd control was being brought back from Iraq to prepare to contain expected civil unrest.. Congressman Brad Sherman of California’s 27th congressional district told the House that he personally knew of several Congressional representatives who have said they were threatened with the prospect of all out martial law should they vote in opposition to the $700 billion bailout.
Well, we know what happened the first time around. The House divided as grew the bill to l06 pages. Some Republicans characterized Wall Street’s own Hank Paulson as a secret Communist who wanted to socialize the economy. Some Dems raved at the injustice of it all. The bill went down in defeat.
Then the full court press was on. The White House and its political operatives went to work to find out what the "rebels" wanted to change their votes,. The "Maverick" McCain was pressed into action to rope in his supporters. Obama was given the job of pacifying the Black Congressional Caucus. Favors were traded and promises of generous earmarks followed. The Senate then, in an unusual maneuver was ordered to vote first to persuade the House. Their Bill suddenly grew to 451 pages with some $150 BILLION in tax cuts and special add-ons.
Writing in New York’s Daily News, a disgusted Juan Gonzalez said "you can’t make this up." He reported, " senators packed the bill with scores of lavish goodies to please favored groups and win support from opponents in today’s House vote.
Take, for instance, Section 305 of the 450-page bill, "Modifications of Energy Efficient Appliance Credit."
It runs several pages long and contains separate sections for "dishwashers," "clothes washers" and "refrigerators."
The bill says manufacturers of energy-efficient appliances will qualify for up to $250 in federal tax credits for each machine they produce over the next three years. Total cost to taxpayers: $322 million over 10 years.
In case your refrigerator is on the blink, you should note the bill says nothing about passing any savings on to the consumer."
Now members of Congress in tight races has goodies to brag about. Others said they voted while holding their noses but only because they didn’t want to be accused of fiddling while Rome burned. You didn’t get a sense that most members believed the measure was needed or workable. But that didn’t stop them from voting as instructed. A few believed in the bailout; others knew they had sold out.
What an "emergency, " The House was persuaded, lobbied, cajoled and then bought to pass the bill. There were no hearings, no testimony. No sooner was it passed than President Bush signed it before sundown in his latest shock and awe maneuver. A day later, he acknowledged that nothing would happen immediately-despite the urgency that drove the process. In his weekly radio address, he admitted., "While these efforts will be effective, they will also take time to implement,"
There was another reaction, and not the one we had been told to expect. The grateful markets did not go up as we had been led to expect they would. No, they went DOWN. A report showing another big job loss led to a 157 point drop.
So what happens now, do the architects of Paulson’s panacea expect that we will move forward with all deliberate speed? Think again. AP reports:
"Experts say the most important thing that needs to happen before the $700 billion bailout even has a chance of working: Home prices must stop falling. That would send a signal to banks that the worst has passed and it’s safe to start doling out money again.
The problem is the lending freeze has made getting a mortgage loan tough for everyone except those with sterling credit. That means it will take several months or longer to pare down the glut of houses built when times were good – and those that have come on the market because of soaring foreclosures – before home prices start appreciating."
So, we have gone from hurry up to business as usual. The rush is over. John McCain who threatened to veto all earmarks went along with the charade. Barack Obama said this is not the time to assess blame and played the role of a "responsible" leader-ie get along by going along, The tax payers are out a likely trillion dollars plus before this is done and there goes all the promises of new programs. The "Leave No Bankers Behind" Bill is now law.
Is the ""emergency" over? No way. In fact, mortgages are not the only problem even as the number of foreclosures grow with little relief in sight. There are a series of new crises lining up to implode: credit default swaps, mounting credit card defaults, commercial real estate, the auto industry etc. The housing market is still melting own, unemployment is up along with inflation and our members of Congress are back on the campaign trail boasting that they "did" something.
Danny Schechter, editor of Mediachannel.org wrote PLUNDER: Investigating Our Economic Calamity (Cosimo) now at online book stores. Comments to [email protected]