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Reports

A Welcome Pause Before the Bailing Starts

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Posted on Oct 2, 2008

By Eugene Robinson

    We all owe a debt of thanks to the wingnuts and the populists, the soldiers of the far left and (gulp) the far right, the know-nothings and the know-it-alls, the income redistributionists and the free-market fundamentalists—all the skeptics who refused to be steamrollered by the Bush administration’s $700-billion financial bailout plan until we at least had some understanding of what we were doing and why.

    Since the risk of a Wall Street meltdown is still very real, and since nobody has come up with a better idea, the bailout should go forward. It will probably save the homes and livelihoods of millions of Americans. But it will do so by absolving some of our wealthiest citizens of the consequences of their shortsightedness, dishonesty and greed.

    Everyone knew we were in a housing bubble. Across the country, real estate prices were rising so fast that anyone thinking about buying a home had one logical course of action: Do it now. Anyone who already owned a home, especially in one of the red-hot markets, was building equity—or what looked like equity—so rapidly that there seemed no harm in pulling money out, even to pay for luxuries, since the property was going to keep appreciating. The nation was awash in cheap money, and everyone who owned a house was going to be rich.

    As long as housing prices continued to rise, all was well. Any individual homeowner who ran into trouble with an adjustable-rate or interest-only mortgage could be refinanced back to financial health.

    But bubbles inevitably burst, and here’s where the mendacity and greed come in.

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    Wall Street, in its collective wisdom, knew that housing prices couldn’t rise indefinitely at such an unprecedented rate. Yet Wall Street created a gargantuan market in securities and insurance, worth many trillions of dollars, based on the premise that the impossible—a housing bubble that expands forever and lasts forever—had become inevitable.

    The traders who invented, sold and resold these mortgage-backed instruments, making profits and commissions with every transaction, knew what legendary swindler Charles Ponzi knew: That those who got into and out of the market while housing prices were still rising would make a lot of money, and that when prices fell someone would be left holding the bag.

    To find out who that someone is, dear reader, look in the mirror.

    Unfortunately, telling Wall Street to clean up its own mess isn’t an option. Already, the nation’s largest insurer, the nation’s largest savings and loan, many of Wall Street major investment banks and the mortgage giants Fannie Mae and Freddie Mac have either gone belly up, been sold or been nationalized. Commercial banks are gasping for air. Somebody has to do something to get credit flowing through the economy again, and the only entity big enough for the job is the federal government.

    There may be more effective remedies than the one outlined by Treasury Secretary Henry Paulson. But I’m persuaded that it would be unwise to spend a lot more time looking for a better solution—and also that any solution is likely to be similarly expensive.

    It’s a good thing, though, that we’ve had a couple of weeks to take stock. Congress can call this a “rescue plan” and festoon it with all kinds of bells and whistles, but it’s still a bailout that lets Wall Street off the hook. And in the end, despite some limits on executive compensation and stirring words about oversight, it promises nothing but a temporary setback for the “greed is good” Wall Street mentality that created this awful situation. Gordon Gekko will just lay low while the heat’s on, then come back with a vengeance. The environment’s getting hot, in more ways than one; maybe the next phantom market will be in pumped-up securities somehow based on “clean” technology.

    Do we as a nation really care about those struggling homeowners who bought more house than they could afford because that was the only way for them to keep from slipping out of the middle class? Do we care that medical expenses, for the 46 million uninsured, are a chief cause of bankruptcy? Do we care that income distribution is worsening and we’re rapidly becoming a nation not of haves and have-nots, but of haves and never-gonna-gets?

    Reform has suddenly become a popular word in Washington. If it’s to have any meaning at all, Congress and the new president will have a lot more work to do.
   
    Eugene Robinson’s e-mail address is eugenerobinson(at)washpost.com.
   
    © 2008, Washington Post Writers Group


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By cyrena, October 6, 2008 at 11:47 pm #

Samosamo

Thanks for the link to this bill. I’ve not had the opportunity to seach for it, (part of the homeless story) so I was grateful to have it. (I think). I’m amazed to discover that this was initially drafted back in March of 2007!!! What does that insinuate???

I did get the link from Bernie Sander’s bill at Truthout last week. Thanks again.

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By Tokin Lib, October 6, 2008 at 6:43 pm #

I’m registered, and everything…

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By Tokin Lib, October 6, 2008 at 6:41 pm #

People are not to be blamed when they seem to get the chance of a lifetime to get their piece of the pie.

Poor people, especially, should not be blamed when they go for the brass ring.

If you wanna try to tell me/us that if you were poor, struggling, desperate for some piece of the Dream, you wouldn’t do what the bankers and brokers—all the ‘smart guys’—were telling you was gonna buy you your slice of the pie, you wouldn’t take it, you go ahead, and I’ll just quietly snicker in a knowing manner…

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By Wily Trax, October 4, 2008 at 4:19 pm #

Looks like the next one on the list will be O.J.

http://www.wilytrax.com

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By TAO Walker, October 4, 2008 at 3:53 pm #

The allamericandream has now entered the terminal stage if its long-time love affair with the black hole of “comfort and convenience.”  So the death-spiral into oblivion is well and truly “in-train.”

Having been once-and-for-all sold down the river (of no-return), theamericanpeople are also forced to “man” the oars of this “galley” of wage/debt slavery they’re now chained to….“even unto the seventh generation.”  They will look in-vain to their institutional overseers for “rescue.”

For the time-being things will be made to appear “normal,” as the privateers finish looting not only the treasuries of the nations, but also what little “liquidity” might somehow remain in the cuffed hands of “the middle class.”  That should be pretty well done by the end of this year.  Then the iron fist will come out full-force.

Tiyoshpaye Way, anyone?

HokaHey!

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By OGP, October 4, 2008 at 11:25 am #
(Unregistered commenter)

“...Since the risk of a Wall Street meltdown is still very real, and since nobody has come up with a better idea, the bailout should go forward…”

But they HAVE come up with better ideas. They just have not been on TV.

http://www.nytimes.com/2008/09/27/opinion/27partnoy.html?partner=rssnyt&emc=rss

http://www.thenation.com/doc/20081013/stiglitz

I guess if it wasn’t on TV it didn’t happen

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By yellowbird2525, October 4, 2008 at 3:24 am #

y’all heard of loan sharking: above & beyond that is what is known as predatory: and it is illegal; yet our Gov has been actively engaging in this & allowing this in every single area of finance & housing AGAINST the people of the USA; THIS is the reason we are “bailing” out NOT the banks, NOT the people, NOT the forclosures: the WEALTHY; this is correct; make no mistake; the “pork” was HOW they got the VOTE of someone to enable this particular bill to go through. NOW you know how our Gov works: politician means prostitute: for THIS I will do THIS. it is not run any other way sad to say; this is the reason the world is in the shape it is today; Give me an athiest who is true to his beliefs: rather than a man who attends a church for 20 years & says: you cling to your religion;****and they “talk” so sincerely about “values”; well, THIS demonstrates THEIR values well; and so does their past records; ALWAYS lies, deceit, deception; well the middle east calls them “devils”; cuz the devil is a deceiver; and oh, by the way, can be found in churches everywhere.

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By yellowbird2525, October 4, 2008 at 3:17 am #

now perhaps more folks than ever before are realizing the simple truth that the people of the USA are enslaved to Corps; folks: there is a GOV AGENCY that over looks & quite obviously “overlooked” with definite approval & consent by the USA Gov as to what was going on in Wall ST; book “license to steal” was written of this; learned well from Capitol Hill; did you catch the politician who when asked about a recession said: yes, some businesses may not make as much this year??? (WHAT OF THE PEOPLE?????????????????) I disagree totally with Biden: being patriotic means being true to the PEOPLE & the PLANET not to a Gov so corrupt it’s waging wars all over the planet to FORCE this same enslavement on everyone else. In Afghanistan, in Pakistan, in Iraq, in Iran, in Mexico there is civil war due to Clinton bribing THEIR Pres & the Corps flooding in to steal the water rights & land there; in Colombia, in Somalia; we sent 2 mercenary contracters to Georgia & trained them to go into Odessa; then claimed repeatedly contrary to the truth that Russia attacked for no reason; 2 US Ambassadors kicked out of S America when THEIR leaders refused to be bribed to allow the American Corps running the US Gov; so the ambassadors tried to overthrow the Gov & they claimed (this is to funny) that they were “trying to end poverty” in those countries.

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By libertarian, October 3, 2008 at 10:15 pm #
(Unregistered commenter)

Reed amd Pelosi have finally found their mark. Their birthpang push for this corporate handout little resembles their failure to end the Iraq debacle.
As con-artists go, they’re not quite up to the standard of Joe Montegna in “House of Games,” but they were pretty good, nonetheless.

In 4 or 5 months, a different group of “businessmen” will be looking for some love from Pelosi/Reed.

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By David Klassen, October 3, 2008 at 9:28 pm #
(Unregistered commenter)

To say that this bill had to go forward because there were no other options is not only wrong-headed, it is WRONG.

Bernie Sanders offered another option; Dennis Kucinich offered another option; Nobel Prize winning economist Joseph Stiglitz offered another option.  Any of these would have been MUCH better than the steaming pile of trickle-down crap that passed.

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By mackTN, October 3, 2008 at 7:16 pm #
(Unregistered commenter)

i am outraged by the behavior of house and senate politicians, all of them,  i still can,t understand the pork i’m responsible for and who asked for it.  this bill has nothing to do with u or me, except if u subscribe to the trickle down philosophy that has yet to materialize.

and, yes…i,m dissapointed in obama, too.  once again these folks gave bush what he wanted, no strings attache

please join me in daily complaining to yyour elected representatives and vote these suckers out!

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By Margaret Currey, October 3, 2008 at 6:12 pm #
(Unregistered commenter)

Seems all to political I really hope that this bailout is changed because mostly it rewards the crooks at the expense of honest people.

When congress comes back after the new president takes office this will cause changes.

I am betting that John McCain will not win the election unless it is stolen, there will not be a bailout this time, Obama will not go quietly and will demand a recount.

DEMOCRACY IS ON THE EDGE, THE K STREET GANG HAS RUN THIS COUNTRY INTO THE GROUND, THERE HAS TO BE A CHANGE AND REAL FAST.

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By angiee79, October 3, 2008 at 5:10 pm #

When the dollar collapses and inflation skyrockets, what then?

Speaking of our global economy, here’s a sobering view of what it’s like to go to the bank in Zimbabwe sinse their economy collapsed…

http://www.nytimes.com/2008/10/02/world/africa/02zimbabwe.html?_r=2&pagewanted=1&oref=slogin&oref=slogin

It could never get that bad here, Right?

Mark Schlee - You have my attention…

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By yellowbird2525, October 3, 2008 at 3:45 pm #

do you honestly for 1 second think that all the tax $ that was being collected; all the “aide” for other countries aid that was collected in addition to the regualar taxes; as soon as it was done for 1 country: addl taxes put on for “aid’ to yet another country: they kept 2/3s of all aid collected & promised aid for themselves; remember commodities? THAT is what they sent; addl cheese bought up by Gov & held back; to keep prices up in USA; same with frozen chicken legs; folks: there was so much $ collected in “aid” to countries that there should not even be ANY 3rd world countries: WHERE did all the $ go? LOOK at Sweden, Iceland, Denmark, England, & on & on & on: WHY do those countries have SO MUCH for their people? And the USA “supposedly” the “free” country: have NOTHING? why do folks there live BETTER & LIVE LONGER? cuz they aren’t “doing” their political jobs by being paid by whomever has the most $. THIS is the most corrupt Gov around: it is round robin folks: the CHEMICAL companies flood everything to HARM the people the most: & then their sister Pharma pushes pills down throats: 600,000 times their normal cost: your elec & gas has been fluffed up prices for years: as with your water; and we are dominated by LIES, DECEPTION, DISEASE, because the “laws” to protect are SHAMS; for “looks” only; cuz they “overturn” them “for the greater good” of THEIR POCKETBOOKS folks: everyone who KNOWS this deceitful criminal Corrupt Gov: was just WAITING for what they were going to do when the baby boomers reached retirement. Don’t think they were going to allow THEM to have $ to retire do you? Nazi mentality; THEY know what is best. Ready for the Fed Id #s? to IDENTIFY you supposedly?

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By NancyH, October 3, 2008 at 3:36 pm #
(Unregistered commenter)

Dinner and a movie?  What’s that?

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By KDelphi, October 3, 2008 at 2:45 pm #

Shouldnt they have, at least, taken us out to dinner and a movie, if they were going to f**k us??

I havent been able to afford that in a long time.

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By Big B, October 3, 2008 at 2:28 pm #

FREE MARKETS FROM NOW ON IN AMERICA MAY NOW REJOICE!
THE BILL IS PASSED, AND WE SHALL NEVER AGAIN HAVE TO WORRY ABOUT A BIG BUSINESS OR BANK FAILING IN THESE UNITED STATES! BECAUSE WE THE PEOPLE, AND OUR NEVER ENDING SUPPLY OF PRINTED MONEY AND STUPIDITY, WILL ALWAYS BE THERE TO BAIL YOU OUT OF ANY BAD FINANCIAL DECISION YOU WILL EVER MAKE!

The congress and senate have proved one point I made in a poly-sci class paper once, that unregulated, free market capitalism is doomed to fail. Always.

Thanks guys!

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By yellowbird2525, October 3, 2008 at 1:44 pm #

this bailout helps no one: not the banks, not the mortgage holders: all that this does is quite simply this: it will let the Gov have the power to do what its done all along: SCREW the PEOPLE once again: they will buy it all up & let the EXACT SAME FOLKS that they themselves operating outside of banking laws, laws of USA, & international laws: buy it again for pennies & start all over again just exactly like what was done in the S&L; which was again a SET UP with the full knowledge & consent of the “lawmakers” who are the lawbreakers: & do anything as long as it is AGAINST the majority of the people of the USA. THIS my friend is “democracy”; THIS is why it is the most despised & despicable name on Earth: EVERYONE in the whole world KNOWS EXACTLY what these folks are up to: they have been warning the folks of the USA for years now: to bad they so control the media which is illegal cuz what was done in Hitler’s day: oh, that’s right! They brought the top Nazi’s over to study & learn how they did it: reason why you have floride in your water today tho no other country does; poor Americans: being told they are free repeatedly they believe the lie: no one else does tho;

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By Anarcissie, October 3, 2008 at 1:14 pm #

What’s your plan, Marc?

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By reason, October 3, 2008 at 1:11 pm #

The best thing congress and the American people can do to address our country’s economic condition is, to try to be honest. I don’t have a lot to lose in savings and but I like every other American will be negatively effected by the banking situation. It is reasonable at this point to conclude that the current economic conditions are the result of the so called “Trickle Down” theory promoted as the elixir of all our country’s problems. Reagonomics served the very wealthy and corporations to the degree that it allowed the wealthy free reign while the politicians destroyed impediments like banking regulation and praised the “corporate entrepreneurs” as being the only true heroes.
Although 75% of the blame can be placed on corporate greed and government polices of the last 30+ years; we, the American people voted for politicians who allowed and to some degree participated in the idea that we could sell off our technology, out source manufacturing by relocating manufacturing first to the cheapest labor areas of the United States and then when labor in those areas wanted to participate in the profits of the manufacturing they worked for, the corporations aided by government policy relocated their facilities again, but this time to countries like India, China, Mexico, etc. Government and Corporate America now refer to this policy as participating in the “Global Economy”, though in reality it is just devaluating labor. It is obvious that though corporations enjoy huge profits by moving their operations to the cheapest labor markets, eventually labor will demand a reasonable share of the profits and the corporations will no longer find foreign workers and governments so accepting of their unbridled greed.
The only truth to all the crap the American people has been spoon fed for the last thirty or forty years is that we are partner of the “Global Economy”. Ethically and morally we should value and promote the prosperity of other countries because it mirrors the economic health of our country and promotes a peaceful foreign policy that establishes our intentions to the rest of the world.
As American citizens, we share in the blame for our present economic plight and the only way to eventually repair the damage is to accept responsibility and place the blame with the purpose of instituting regulations and policies that will reign in the unfettered greed that has hypnotized so many of us for the last fifty years.
WE HAVE PEED IN THE WELL, NOW WE ARE WORRIED ABOUT THE WATER

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By Marc Schlee, October 3, 2008 at 11:37 am #
(Unregistered commenter)

We are not powerless.

We don’t have to take this shit.

FREE AMERICA

REVOLUTIONARY (DIRECT) DEMOCRACY

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By truthsayer, October 3, 2008 at 10:38 am #

Hello Congress:

Please for once at least be very careful about how you vote today.  For many of you this may be your only or last chance to redeem yourself in front of the people, in front of your God, and to yourself.

You know very well what this bill, as it stands, will do.  You are an intelligent person and you have risen to represent the people, having been put there by the people – not just by the masters of the universe.  In return, you must pay attention to the people.  That’s the solemn oath you have taken in front of the people, to your God, and to yourself.

Now is the time to fulfill your oath. This bill basically kills people, giving money to the very rich people, the very people who created this chaos by making billions at the expense of the general people.  Please don’t kill the people.

Think of the consequences of your yes vote: People will die and you will be responsible for their death.  People will be thrown out of their house.  Children and women will face hunger, rape, and degradation and you will be responsible. Can you live with that?

If you are a God fearing person:  Don’t you think that God doesn’t know what you are doing? Is God ignorant of the lies you are spewing on behalf of your masters?  Is God so blind? Or, do you think that God has been hijacked by your masters, or do you think the masters ARE your God?

If you are in the Black Caucus:  This financial chaos created by the masters affect the poor, mostly Blacks and Latinos.  If you vote yes to this bill, your ancestors will be turning in their graves at your insolence.  Remember their sufferings, their inhumane deaths, and the atrocities committed on them by the ancestors of these masters.  It is your duty now to look after the people that look up to you for justice.  This sacred duty you must not fail.  Do not vote yes to this bill.

If you want to change your vote to yes:  If you are thinking of changing your vote to yes because of a call from Obama or McCain, please don’t use this excuse. You have to answer to yourself and the people when you vote.  Both the leaders are devoted servants of the masters and will willingly carry out their masters’ orders at the detriment of the people.  You must stand by yourself if need be in and answer only to your own conscience when you vote and you must vote NO.

Lastly, remember that the people will kick you out within five weeks if you vote yes.

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By samosamo, October 3, 2008 at 10:21 am #

Does anyone have a link to the actual bill to be voted on? Found it:

http://www.govtrack.us/congress/bill.xpd?bill=h110-1424

I am like Senator Bernie Sanders, the top priority is the taxpayers and our not having to pay a penny for this ‘deal’. And here is a classic case of ‘we have to do something NOW’ mentality our so called elected leaders have who should be intelligent enough to understand a bucket of water is not going to put out the fire:

***And Democratic Rep. Shelley Berkley of Nevada said she would back the bill after business leaders in her Las Vegas-area district made it clear how much it was needed. She said, “There isn’t a segment of the population that hasn’t been slammed and is not asking for some relief.”***

The key word is relief. We will indebt ourselves another $700,000,000,000.00 just for ‘some’ relief. This is preposterous. We go for this and even now there is another bailout being rigged up that will be another ‘ASAP to save our economy’ bubbling up out of ole foggy bottoms. These crooks have every intention of leaving the treasury empty BEFORE the end of this year.
The real solution is going to be painful because if the transfer of power does take place, how long before you see the next ‘bailout’ coming sponsered by the next administration, and it won’t matter who becomes the next president if w allows it, because both are beholding to keeping the fat bloated criminals alive and everybody else just ‘goes away’.
Senator Sanders is one of a few that really understands the situation and instead of trying to buy another term in office is giving the true basis of this bill. Here is is TruthOut link of his view of the bill:

http://www.truthout.org/100208J

Not holding the taxpayers liable for the payout which basically still goes to financial institutions, and not holding ceo s accountable and supposedly still leaves loopholds to allow them to still cash out handsomely WITH the money from this ‘economic relief’ package of $700,000,000,000.00. In essense, no one is held accountable and most likely with the loopholds get a fantastic portion of the $700,000,000,000.00 ‘bailout’.
Go to the link and read it if you have not done so because to get a real fix of this mess it will have to entail bringing down a bunch of institutions that are paying lobbyists to keep them in the free money giveaway program.
A lot of crooked people need to actually and visibly be rounded up, prosecuted, and punished with huge fines and long hard serious jail time.

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By Anarcissie, October 3, 2008 at 10:07 am #

angiee79:
‘Robinson states, “Since the risk of a Wall Street meltdown is still very real, and since nobody has come up with a better idea, the bailout should go forward.”

I’m hearing this crap everywhere I turn. The truth is, there have been several people in Washington offer better ideas but no one will listen and the media won’t cover it.’

Quite right.  But there has been some media coverage.  For instance, I have read that hundreds of economists have rejected the bailout swindle.

I am afraid it doesn’t matter: the fix is in.  Our politicians are too ignorant and too craven to resist the naked thuggery of Paulson and company, and our media—well, read the above.

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By moineau, October 3, 2008 at 9:56 am #

right on, angie. and right on, bernie sanders.

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By moineau, October 3, 2008 at 9:54 am #

locking yourself up in a room with your peers and your chosen ideologues for 10 days is NOT a breather, it’s selective tunnel vision! at least five of those days could have been spent listening to the many good ideas that are readily available from economists and people working in the field, for example, stiglitz and the swedish model, bruce marks and the foreclosure model. THEN, make your call. take much the same model, a few cosmetic changes (ceo pay). oh, and definitely $150 billion in pork to seduce at least ten more votes, and that makes them all hypocrites, doesn’t it?

not a breather… a stall to sucker a few more congressmen into voting for it. i’m not buying this.

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By angiee79, October 3, 2008 at 9:40 am #

Robinson states, “Since the risk of a Wall Street meltdown is still very real, and since nobody has come up with a better idea, the bailout should go forward.”

I’m hearing this crap everywhere I turn. The truth is, there have been several people in Washington offer better ideasbut no one will listen and the media won’t cover it.

Here is but one of the saner alternatives that was ignored:

http://sanders.senate.gov/petitions/?petition=Financial_Crisis_1

Now, what’s the REAL agenda in Washington???

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By Purple Girl, October 3, 2008 at 9:16 am #

Oh this Economic Fiasco is eerily similar to the Last big banking Bailout resulting for a Little group Called the Keating 5.What Did Mac Cost US that time- about 300 Billion in bailout money? what does that amount to in todays terms….About 700 Billion?gotta Go with the Yogism..“Deja Vu All Over Again”.At the Very least Mac is once agian guilty of bad judgement- which should contitute an reason to ask for his Resignation from the Senate! But far more likely and Justifyable is the Charge of Conspiracy with forethought and Malice. He either was to Stupid to learn lessons from the Keating 5 Scandal or he CHOSE to ignore Them- as a matter of Arrogance, or Greed!
As We have Seen Repeatedly Rev Wrights observation that the ‘Chickens have come home to Roost’ was far more accurate an analogy than Just in th einstance of 9/11!Mac’s Chickens have not only ‘come home and Roosted’ They Done so on Every one of his 7-9 Front doors - Not just the two bit hustling for Wall Street an dlobbists, but also in regards to his part in misrepresentation of Facts on the lead up Into the Invasion of Iraq.Where’s You Say the Anthrax Came From,Mac? according to your Knowledgeable Source..Which Was WHO?
If the Economic meltdown is the ‘Albatros’ around Mac’s Neck, The Illegal Invasion on Iraq is the Cement around his Feet.Mac should be NOT facing an Audience, He should be at least facing a Jury (Not of HIS peers).Far more appropriate a sentence for a High crimes.

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By clint, October 3, 2008 at 8:08 am #
(Unregistered commenter)

“in its collective wisdom, knew that housing prices couldn’t rise indefinitely at such an unprecedented rate” and yet main street thought year on year price increases would last forever?  You shouldn’t be in a house if that’s your belief.  Main street was just as greedy as wall street.  Now main street gets a chance to purchase their own toxic mortages for 50-60 cents on the dollar with the possibility of them eventually coming around and turning a profit.  Get money back in the economy, people are just as much to blame as wall street.

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