Written by Cliff Kincaid
October 8, 2008
By Cliff Kincaid
It is terrifying to see our financial system crumbling because of corruption on Wall Street, aided and abetted by government policies of too much federal spending, debt, and intervention in the economy. But it is also troubling to see our economic system of free enterprise slipping away as the candidates of both major political parties propose more federal intervention, spending and debt as solutions to these problems.
At this point, with the financial crisis continuing to grow, isn't it apparent that the "bailout" plan was in no real sense a "rescue," as both the liberal and conservative media were calling it?
On Glenn Beck's CNN show on October 6, Stephen Moore of the Wall Street Journal editorial page at least had the integrity to admit he was just wrong. He said he is "embarrassed" over endorsing the "rescue" plan. "I want to apologize," he said. "I drank the Kool-aid." There are many more in the media who should feel embarrassed and issue apologies, and I discussed them in several columns for Accuracy in Media.
On Fox News, for example, "conservative" Fred Barnes called House conservatives "crazy" and "idiotic" for opposing the plan. Now who looks like the idiot?
On CNBC, the plan was considered so vital and important that correspondent Michelle Caruso-Cabrera led a discussion of how to bypass Congress and the Constitution when the House initially failed to approve it.
Rather than rescue anything, these airheads have endorsed a socialist-style takeover of the financial sector, paid for with more federal spending and debt. To make matters worse, they won't label it for what it is-socialism.
The situation is now so bad that Republican presidential candidate, John McCain, tried to move to the left of the Democrat, Barack Obama, during Tuesday night's debate by proposing that he would "order the secretary of the treasury to immediately buy up the bad home loan mortgages in America..." McCain didn't explain where this authority would come from. But this proposal, which is estimated to cost $300 billion, followed his statement that "We obviously have to stop this spending spree that's going on in Washington."
On top of this monumental gaffe, in a tragic but humorous example of Washington doublespeak, the McCain campaign issued a statement calling this socialist proposal the "American Homeownership Resurgence Plan."
This debate performance followed McCain's announcement that he would "tap" people such as former Democratic vice-president Al Gore to work in his administration on developing a new and much tougher U.N.-sponsored global warming treaty. Gore is considered a menace among conservatives for falsifying the causes and dangers of global warming in order to increase government control over our lives. "I have great respect for Al Gore," McCain said. Once again, Barack Obama would agree.
On the Washington Wire blog of the Wall Street Journal, the responses to the McCain "resurgence plan" on housing were interesting and informative. They included:
In a statement on the plan, issued after the debate, the campaign claimed that the next president would already have the authority to buy up these mortgages under the socialist-style "bailout" plan approved by Congress. That is a matter of dispute. But the statement does admit, in its final sentence, that "It may be necessary for Congress to raise the overall borrowing limit." That means more debt.
Another McCain proposal was to recommend an increase from $100,000 to $250,000 for FDIC insurance on deposits. This, too, was supported by Obama, and it was incorporated in the "bailout" bill. But as financial analyst and adviser Peter Schiff has noted, this proposal was not coupled with extra money budgeted to fund the increased taxpayer liability. "Only in Washington would a bill pass which simultaneously makes banks more likely to fail while increasing taxpayer exposure when they do!" he commented.
McCain also proposed that "we use the exchange stability fund that the Treasury has available-$250 billion-to shore up these [U.S. financial] institutions." But the Exchange Stabilization Fund was never intended for such a purpose. It was established to defend the value of the U.S. dollar. However, it was used during the Clinton Administration, without a vote of approval by Congress, to prop up the Mexican peso. This U.S. taxpayer-backed bailout scheme was arranged by then-Treasury Secretary Robert Rubin, who had been co-chairman of Goldman Sachs, which was heavily invested in Mexico.
This is the same Goldman Sachs which spawned the Bush Secretary of the Treasury Henry Paulson, who sparked the current financial panic and quickly offered a three-page proposal to make himself a financial dictator of the United States in order to solve it.
Now that he has assumed this power (after the three-page proposal mushroomed into more than 400 pages, complete with pork barrel spending to get the necessary votes for passage), Paulson has named a former Goldman Sachs banker, Neel Kashkari, to run the Treasury Department's program to buy troubled assets. Kashkari is the new Treasury Department Assistant Secretary and will run the new "Office of Financial Stability."
This appointment has drawn fire from Rep. Thaddeus McCotter, Republican of Michigan, on the right, and Rep. Dennis Kucinich, Democrat of Ohio, on the left. "His appointment seems like appointing a fox to protect the hen house," noted Kucinich.
National security expert and former Pentagon official Frank Gaffney warned two years ago about Bush's appointment of Paulson, calling him the "Armand Hammer of China," a reference to the businessman who built up the power of the old Soviet Union in exchange for favors from the communists. At a time when Paulson was up for Senate confirmation, Gaffney asked, "Will any of his Senate interlocutors even bother to explore the nominee's troubling fifteen-year ties to Communist China and the potential for serious conflicts of interest they pose, with national security as well as economic implications for our country?" The answer was no. Paulson's nomination was confirmed by unanimous voice vote.
As we noted in a column, Paulson's plan, which was passed by Congress, includes a provision to enable him to bail out banks in China and other countries holding U.S. financial assets. This is one of many conflicts of interest involving Paulson and China.
In a little-noticed dispatch from Beijing on September 25, the Reuters news agency reported that Chinese regulators had told its domestic banks "to stop interbank lending to U.S. financial institutions to prevent possible losses during the financial crisis..."
What did Paulson know and when did he know it? Congressional "leaders," as well as Bush, McCain, and Obama, seem to have no interest in getting to the bottom of this.
In terms of the media, where are the Woodwards and Bernsteins when we really need them?