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Ear to the Ground

Paulson Bailout Plan Could Reach $1 Trillion

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Posted on Sep 19, 2008
Paulson Congress
AP photo / Lauren Victoria Burke

Treasury Secretary Henry Paulson, shown here with congressional leaders, talks about how the Bush administration will solve a problem it has helped create for the past seven years.

If you thought the Iraq war was expensive, the Bush administration is also throwing an estimated $1-trillion bailout of major finance firms to prevent a meltdown of the U.S. economy. President Bush and Treasury Secretary Henry Paulson outlined such a “bold approach” Friday morning, yet detailed plans still remain forthcoming.

Politico:

Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.

Paulson announced plans Friday morning for a “bold approach” that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a “temporary asset relief program” to take bad mortgages off the books of the nation’s financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

“We’re talking hundreds of billions,” Paulson told reporters. “This needs to be big enough to make a real difference and get to the heart of the problem.”

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Shenonymous's avatar

By Shenonymous, September 21, 2008 at 3:41 pm Link to this comment

Sounds like a solid idea Counselor1 but would the Keynes also pay back the money borrowed from foreign lenders and their interest as no doubt there is a hefty interest rate for their graciousness.  Have you written your idea to Kucinich, et al?  Thank you for your post.  I find most of these enlightening.

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By Counselor1, September 21, 2008 at 3:18 pm Link to this comment

I thought a Tobin tax could help recover this money, if passed. But now I think it should be a broader tax.

Taxpayers don’t have to lose any money permanently in the bailout. A properly structured financial transaction tax (“Keynes tax”) with a big reward for turning in evaders, could reduce short term speculative trading. The narrower base (currency exchange) Tobin tax alone has been estimated as recovering to the Treasury up to $150 billion per year. The Keynes tax could recover from the very financial corporations that created the market crash, while not being unduly burdensome to millions of small investors. The recovered money could be used to reduce or eliminate or reimburse taxpayers bailout funds. Inclusion of a Keynes tax should be required in bailout legislation.

The idea should be injected into discourse through people like Bernie Sanders, Dennis Kucinich, amybe even Barney Frank.

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By troublesum, September 21, 2008 at 2:09 pm Link to this comment

msnbc also reported today that, as it is now, the US has to borrow $2 billion a day (yes, per day) from foreign sources to meet the balance of trade deficit, and there is concern that they will not continue to lend the US that kind of money if the value of the dollar continues to decline as expected.  From whatever angle you look at this the US is screwed, and still the hot air continues from Washington.

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By samosamo, September 21, 2008 at 1:59 pm Link to this comment

Next to the totally outrageous amount of this reimbursement to the criminals that put us in this situation is the this clown paulson’s claim this needs to happen quickly to ‘unfreeze’ this nation’s credit markets, the very goddamn bastards that have stolen the money. And now paulson wants to give these crooks all that money ASAP or faster, like yesterday.
Who will now deny that the foremost threat to our country now are the financial charlatans that are still trying to rob us at every chance, turn and event that they can. And we still stumble around blind as bats thinking the federal reserve is an essential part of our country’s economy when is it actually the open faucet that feeds the ‘elite’ their never ending supply of money that the fed is all too happy to ‘LOAN’ to us at their interest rates. Which means that just like a mortgage, we will have to pay back the loan and the interest which will equal and exceed the loan itself which if you are counting is the third time that amount is stolen from us; first the original fiasco, second the’borrowed’ bailout to be repaid and third payment of the interest that most likely be greater than the bailout amount .
The fed, even as strong as it looks, is just another one of those house of cards that if it were shut down and driven from this country, the climatic hurricanes of our economy would subside.

Here is the msnbc link to the article:

http://www.msnbc.msn.com/id/26820545/

Here is the first line from that article:

***WASHINGTON - Treasury Secretary Henry Paulson said Sunday that the nation’s credit markets remain frozen and Congress must move quickly to pass a $700 billion bailout package for financial firms.***

When has anything this crap administration done quickly helped this country or the world? Paulson should be locked up right now and so should anyone else that wants this same ‘payoff’ to happen.
Contact your congresspersons ASAP and say NO!!!

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Shenonymous's avatar

By Shenonymous, September 21, 2008 at 11:31 am Link to this comment

It was almost a whispered comment but I heard one of the MSM financial commenters say that this bail out was going to be covered by borrowed foreign money?  Obviously because this administration has already run this country into a debt that is so astronomical it will cripple the US economy for untold decades to come.  It is now going to be even worse than our worst nightmare.  Who would be loaning the US money?  Who shall become the new landlords of our country?

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By Expat, September 21, 2008 at 6:30 am Link to this comment
(Unregistered commenter)

We should be very,very worried.  All the Bush Administration wants from Congress (and, under its theory of government, all it needs) is to have the debt limit raised.  The Washington Post has the President’s proposed bill, and it is scary.  It asks for unlimited authority and frankly states the administration’s objective:
“Sec. 3. Considerations.

In exercising the authorities granted in this Act, the Secretary shall take into consideration means for—

(1) providing stability or preventing disruption to the financial markets or banking system; and

(2) protecting the taxpayer.”

No mention of the victims of the swindle of century, and, I suggest, the singular term “taxpayer” does not mean you or me.

If the Democrats cave, and I am sure that they will, George W. Bush will have accomplished one of the greatest crimes in history, and in only eight short years. 

First, he broke our Constitution by the way he took office and breaking treaties, then he endangered our persons by starting two wars and destroying our civil rights under the guise of homeland security, then he poisoned our pets and our food supply by failing to protect us against hazardous imports, then he allowed gas and home heating prices to rise without limit or end, and, now, he has stolen our homes and retirement security. And this did not happen to just any old country.  It happened to the richest, most free country in the world.

I have been saying that this was the Republican agenda ever since Ronald Reagan took office.  Nobody believed me; I only half believed it myself. 

But time has shown us all.  We anti-Republicans were right all along.  The reason why we have governments in the first place is to protect ourselves from people like George W. Bush and his fellow Republicans.

The satisfaction of being right will be all we have left after this president leaves office.

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G.Anderson's avatar

By G.Anderson, September 20, 2008 at 4:16 pm Link to this comment

Take a good look, and remember, because as of today, the United States offically became a plutocracy.

I don’t know why they even bother to appear before the Camera and make a speach, because they don’t care what the people think, nor do they believe we are capable of threatening their powerful hold over our economy.

Unfortunately, because no one will go to jail over this, Derivatives will keep on generating the criminal financial elite more wealth, and more power.

CEO’s need to be licensed, just like psychiatrists, Doctors, and all other professionals. This would allow us to take their license away when they violate us.

Instead they will take their millions back to their mansions, and make a toast or two to Bernake, and Paulson, and weaklings Pelosi and Reid.

And once the dust settles they will be back on Wall street, rolling the dice on our economy one more time.

In the mist of all of this President Bush, was pushing for a free trade agreement with Columbia.

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By felicity, September 20, 2008 at 9:36 am Link to this comment

Frank Cajon - good job.

Just heard that 53 members of Congress are heavily invested in AIG - one to the tune of about $5 million.  I’m befuddled.  Did they knowingly invest in a corp leveraging itself into collapse - therefore they’re stupid - or did they know it would get bailed out by us anyway so what’s the dif. 

Well, at least they’re good at renaming post offices - one-fourth of all the legislation passed by this Congress involved renaming post offices?

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By Byron, September 20, 2008 at 8:32 am Link to this comment
(Unregistered commenter)

What a windfall for the NeoCons.  This is but the latest by the Bush Gang to assure that the U.S. government is COMPLETELY AND UTTERLY bankrupt before the another President gets into office so as to make sure there is NOT ONE DOLLAR available for all those hated social programs or for any environmental protection whatsoever.  They have been endeavoring to destroy the U.S. government since they usurped the white house in 2000 and started their totally idiotic, what will ultimately be, $3,000,000,000,000 dollar war.  And to top it off, if anyone attempts to pin the blame for the demise of the United States on Bush and the NeoCons they’ll just continue to declare that it’s either Clinton’s or Obama’s fault.

Nice job Republicans! Mission acomplished!

Since the right-wing-nut-jobs in this country forced us into this position first with their massive de-regulations for businesses and then by forcing these facsist totalitarians on the majority in so many underhanded ways and supporting a ridiculous and expensive war for nothing I propose that we do the only right thing left and STICK THEM WITH THE BILL IN ITS ENTIRITY.  And then NEVER AGAIN vote a Republican into office.  Why should those who have opposed these vandals have to pay for even one cent of their machinations?

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By troublesum, September 19, 2008 at 9:13 pm Link to this comment

We’re a trillion miles from Roosevelt.  Imagine FDR saying something like, “Folks are hurting but we’ve go to help those bankers.”  That’s what meely mouth democrats are saying today.

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By troublesum, September 19, 2008 at 8:16 pm Link to this comment

When did the secretary of the treasury obtain legislative powers?  He invited Pilosi, Reid, Schumer, and Frank to a cute little photo op in which they sat with their thumbs up their asses while he announced that he was relieving the public treasury of a trillion dollars.

They tell us that the era of government as a solution to social problems is over but government as a solution to the problems of big business is never out of date, and in fact it sounds like it is just beginning.

At the beginning of his crusade of deregulation, Reagan used to sneer about “welfare queens driving cadillacs”.  Well now it’s true.  Welfare kings and queens do drive cadillacs and merecedes benzes.

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By Frank Cajon, September 19, 2008 at 7:50 pm Link to this comment

Math lesson: Steal $1.5 trillion from the working classes of the country to finance a war while giving corporate hacks the keys to the kingdom with zip accountability, add greed, equals a collapsing house of cards beneath a fascist dictatorship. We now must save his rich friends’ asses, at our risk. The time for class struggle is here, and when a totalitarian regime turns to socialism, we need to realize that sometimes wealth redistribution, and returning the natural resouces, means of production, and central financial planning of this country to the people and not an oligarchy of suited elitists has come. Every American is owed a job, medical care, a pension, and education by his country and if it means there are no billionaires, few multimillionaires, and no multimillion dollar bonuses for fucking shareholders, so be it. Every job in this country should be represented by good-faith bargaining and paid a living wage.
Every soldier in every country we occupy should be returned to our country, beginning with Iraq, tomorrow, and our ‘defense’ budget cut by two-thirds. The oil and other utilities should be nationalized immediately and all passenger vehicles need to be retooled with 4 cylinder engines, with electric hybrid goals at 50% in five years. We need a socialist solution, not a watered-down, temporary hand-holding that only bails out the rich bankers until they find a new way to swindle us. Neither major parties (both variations on the same tired theme that allowed us to be fleeced) will be willing to go to the lengths necessary; the splinter parties offer nothing better. We need a general strike to send these bastards the message from the streets and a real, grass roots movement towards a party that truly represents the will of the working class of this country. A Socialist Party with a message: no more wars for oil. No more arming both sides of a midEast bloodfeud of 1500 years. No more people with the most contributing the least. It might not happen right away, but it must happen, and if it takes another Great Depression to make it happen, maybe it will be worth the price for our children and theirs.

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By jackpine savage, September 19, 2008 at 7:01 pm Link to this comment

As Pat Buchanen said (roughly), “Notice how the political leaders are all absent.  The unelected financial elite have been tasked with getting us out of the mess that the unelected financial elite got us into.”

He also noted that this is how empires end.

I can’t wait to hear about how strong the “fundamentals” of our economy are, at which point some reporter should actually grow a pair and ask for a definition of “fundamental”.

If this works it will be the greatest scam in history; if it doesn’t we’re even more fucked than we were yesterday.

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By Steven, September 19, 2008 at 6:32 pm Link to this comment
(Unregistered commenter)

Great podcast on NPR science Friday that try’s to quantify a trillion dollars to the average Joe.  Americans have become so numb or so ignorant to the terms, billion and trillion.  It’s amazing how much money people in power can steal, unfortunately, nowadays we cannot round them up for the guillotine.  I say, if we can waterboard, why not chop a few Wall St. heads off (throw Phil Grahm in there as well)

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By MR, September 19, 2008 at 6:05 pm Link to this comment
(Unregistered commenter)

The most spectacular robbery in the history of humankind.

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By wish i knew, September 19, 2008 at 5:18 pm Link to this comment

Other things $1 Trillion could have done that could have benefited the american people AND the corporate sector:

- healthcare for the 44 million people currently without it… OR

- refinance foreclosures thereby securing the stability of the housing market… OR

- help the american people get out from under the crushing burden of consumer debt… after all, Bush told us it was our patriotic duty to “GO SHOPPING”...

BUT NOOOOO the we fat stupid lazy american people did this to ourselves. why should the government bail us out? if it wasn’t for us fat stupid lazy american people charging on those credit cards, or trusting that real estate professional we hired to advise us and buying that house, those corporations would have been just fine and wouldn’t need the government to bail them out.

AAAAGHGGHHHHHH THIS IS SO FRUSTRATING.
I need a cold one.

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By veronica mutans, September 19, 2008 at 3:19 pm Link to this comment
(Unregistered commenter)

at least i got a $300 economic incentive… so i could pay back those same banks that are about to get a trillion more…

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By Folktruther, September 19, 2008 at 2:03 pm Link to this comment

No, Cranberry, it’s not hopeless, merely desperate.  Cheer up, its going to get much worse.  Giving the corps a trillion dollars of the people’s money is just a drop in the bucket compared to the increase in military spending, which they conceal and lie massively about.

The US is now going to send military advisors to Pakistan, now the CENTRAL FRONT ON THE WAR ON TERRORISM.  The Pakistani people hate the US polity because its imposition of Mushareff, so the US has its eye on another general.  If the war in Iraq cost 3 trillion plus, and Pakistan has 6 times as many people, with nuclear weapons, just imagine the cost over the next eight years.

And both Gops and Dems, Obama-Biden,  support the give-away and the Pakistan and other wars.  Notice Reid and Pelosi in the front rank next to the Gop Paulson, reassuring the progressive population that they are behind the president.  It’s enough to make you puke.

But we have to take these things in stride, it’s really nothing compared to police state that both parties are installing in the US.  The police have already started to torture protesters, as Dennis Loo reported in a Counterpunch piece a few days ago.

So we have to mobilize the population and undergo real politics instead of the fake election politics used to divert the population.  People have done in throughout history and we can do it again.

tourjour gai.

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By troublesum, September 19, 2008 at 1:53 pm Link to this comment

What’s being asked of the bastards besides an open hand?

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By wish i knew, September 19, 2008 at 1:44 pm Link to this comment

Ah yes. The other side of the coin that is trickle-down economic theory.

Also known as “heads I win - tails you lose” for the american people.

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By Aegrus, September 19, 2008 at 12:19 pm Link to this comment

Bailing out Wall Street, banks and AIG Insurance with taxpayer money. 1 Trillion dollars….

Americans being told taxpayer money shouldn’t go towards health insurance….

Priceless Irony…

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By Alan, September 19, 2008 at 11:15 am Link to this comment
(Unregistered commenter)

How much of the bailout billions will flow
to the quants and the hedge fund CEOs who
engineered this debacle?  Any reasonable
bailout legislation should confiscate the
ill gotten gains of the quants and the
hedge fund CEOs

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