Monday, October 06, 2008

Democrats: Obama's Bailout "a Knife into the Back of the Working and Middle Class"

"Obama ... thrust a knife into the back of the working and middle class. He lobbied hard for the bill. He did so, according to some who met with him on Capitol Hill, because he feared that if he opposed the bailout and it triggered a market collapse it could cost him the election."

Monday, October 6, 2008
Dennis Kucinich on the Democrats’ Bailout Betrayal

by Chris Hedges

The passing of the $850-billion bailout pulled the plug on the New Deal. The Great Society is now gasping for air, mortally wounded, coughing up blood. It will not recover. It was murdered by the Democratic Party.

We are on our own. And don't expect any help from Barack Obama and Joe Biden, who lobbied hard for the bill and voted for it. Ignore their rhetoric. Look coldly at the ballots they cast against us. We, as citizens, have only a handful of representatives left in Washington, most of whom were left sputtering in rage and frustration on the House floor. The sad irony is that some of them were Republican.

"This was the largest single act of class warfare in the modern history of this country," Rep. Dennis Kucinich, D-Ohio, who led the fight in the House against the bailout, told me by phone from Cleveland. "It is a direct attack on the American people's ability to be able to stabilize their homes and their neighborhoods. This single vote will define the careers of everyone. We are back to taxation without representation, to markets that are openly rigged."

"We buried the New Deal," he said of the vote. "Instead of Democrats going back to classic New Deal economics where we prime the pump of the economy and start money circulating among the population through saving homes, creating jobs and building a new infrastructure, our leaders chose to accelerate the wealth of the nation upwards. They did so in a way that was destructive of free-market principles. They ripped away all the familiar moorings. We are in an uncharted sea where the traditional roles of the political parties are being switched. The Democrats have unfortunately become so enamored and beholden to Wall Street that we are not functioning to defend the economic interest of the broad base of the American people. It was up to the Republicans to protect not just a so-called free market but the American taxpayer and attempt to block this. This is an outrage. This was democracy's Black Friday."

Obama arrived on the Senate floor Brutus-like to thrust a knife into the back of the working and middle class. He lobbied hard for the bill. He did so, according to some who met with him on Capitol Hill, because he feared that if he opposed the bailout and it triggered a market collapse it could cost him the election. Better to placate the thieves on Wall Street than stand up for the masses of enraged and swindled citizens.

Obama's betrayal is the betrayal of the Democratic Party. The Democrats gave us the Financial Services Modernization Act of 1999, which ripped down the firewalls that were put in place by the 1933 Glass-Steagall Act. The 1933 act, designed to prevent the kind of meltdown we are now experiencing, established the Federal Deposit Insurance Corp. (FDIC). It set in place banking reforms to stop speculators from hijacking the financial system. With Glass-Steagall demolished, and the passage of NAFTA, the Democrats, led by Bill Clinton, tumbled gleefully into bed with corporations and Wall Street speculators. They achieved fundraising parity with the Republicans. They used institutions like Fannie Mae and Freddie Mac as a welfare gravy train. The Democrats, including Obama, are as compromised as the Republicans.

Obama's voting record in the Senate is in line with the corrupt Democratic mainstream, including Biden, who works on behalf of corporations and especially the credit card industry. Obama knows where power lies in the United States. It is not with the citizens, who with ratios of 100 to 1 pleaded with their representatives in Washington not to loot the national treasury to bail out Wall Street investment firms. Power lies with the corporations. These corporations, not us, pick who runs for president. You cannot be a candidate without their blessing and money. These corporations, including the Commission on Presidential Debates, a private corporation, determine who gets to speak and what issues candidates can or cannot challenge, from universal, not-for-profit, single-payer health care to Wall Street bailouts to NAFTA. If you do not follow the corporate script you become as marginal and invisible as Ralph Nader or Bob Barr or Cynthia McKinney.

Obama has always served his corporate masters. He opposed Rep. John Murtha's call for immediate withdrawal from Iraq and supported continued funding for the war. He voted in July 2005 to reauthorize the Patriot Act. He did not support an amendment that was part of a bankruptcy bill that would have capped credit card interest rates at 30 percent. He opposed a bill that would have reformed the notorious Mining Law of 1872, which allows mineral companies to rape federal land for profit. He did not back the single-payer health care bill HR 676, sponsored by Kucinich and John Conyers. He advocates the death penalty and nuclear power. He backed the class-action "reform" bill-the Class Action Fairness Act (CAFA)-that was part of a large lobbying effort by financial firms, which make up Obama's second-biggest single bloc of donors. CAFA would effectively shut down state courts as a venue to hear most class-action lawsuits. Workers, under CAFA, would no longer have redress in many of the courts where these cases have a chance of defying powerful corporations. CAFA moves these cases into corporate-friendly federal courts dominated by Republican judges.

Obama's support for the bailout, however, is his most egregious betrayal. He had a brief, shining moment to prove he could lead, to capitalize on a popular revolt that cut across the political spectrum. He never attempted to address or mobilize the aspirations and passions of the vast majority of Americans. He was as craven, servile and cowardly as the party he represents. He returned to the campaign trail after Friday's vote as a slick and polished sales representative for our corporate state, telling us to calm down and accept the inevitable.

"Some of the most powerful speeches against this were given by members of the Republican Party who are on the political right," Kucinich said. "They did a superb job in poking holes in the underlying assumptions of the bailout. They say what they believe. Give me somebody who says what they believe and I can figure out how to get them to a new place. When people say one thing and do another it is very hard to be able to move a debate."

So let us honor, in our moment of defeat, the handful of elected officials who valiantly defied their party leaderships in the House to stage a remarkable revolt that at first succeeded. Kucinich is one. There were others-Brad Sherman, Marcy Kaptur, Peter DeFazio, Lloyd Doggett and Robert C. "Bobby" Scott. They are about all that is left of the old Democratic Party, the party that once looked out for the poor and the working class. Send them a note of thanks. They deserve it. And if you live in their districts make sure you get to the polls in November. They did not sell you out.

"We had two take-it-or-leave-it propositions and the second one was worse than the first," Kucinich said, referring to the plan that came loaded with pages of tax cuts. "Tax cuts are antithetical to a bailout. We never solved the problem. There were never any hearings on the bill. This premise, that we could prop up the stock market with a $700-billion investment and create some liquidity, was flawed. The problem is that banks do not want to loan to each other. It is not a liquidity problem. Banks are afraid they are going to collapse in short selling. There is a war going on between security firms and banks. Banks are under assault. They are not loaning. The dynamic is driven by the Accounting Standards Board, the Securities and Exchange Commission and the Fed."

The root of the financial crisis, as critics of the bailout plan point out, is that millions of homeowners cannot pay their mortgages. The bailout, as the market decline on Friday following the vote illustrated, does not address the crisis. It solves nothing for the 10 million Americans who face foreclosure. It solves nothing for the growing numbers of unemployed and underemployed. It may well be the equivalent of tossing $850 billion of taxpayer money (including $150 billion in tax cuts) into a furnace and watching passively as our economy continues its plunge.

"We face a perfect financial storm," Kucinich warned. "The elements are the deficit spending for the war of 3 to 4 trillion dollars, the trillion and more tax cuts, the war itself and the lack of serious investment in the country. We are being hollowed out. We are going to see more unemployment and more people losing their homes. With $700 billion we could have made a real investment in the country, in jobs, in infrastructure and in homes. Instead, we got robbed."

Copyright © 2008 Truthdig, L.L.C.

Amen Denny! This is exactly what I was saying is the problem here. Ugh. I doubt the Bailout stops our steady march into recession. Why would it? It merely secures those at the highest rungs of the ladder, who are still not necessarily going to lend money out because the WORLD MARKET is in a down turn. All this has done is secure them! McCain and Obama both royally screwed this one and all of us not at the very top! Thanks A-holes!

BTW thanks to my friend J.J. for sending me this article.

Decreed by Pope at 11:28 AM

JOHN MCCAIN and Barack Obama go head-to-head in the second in a series of three presidential debates on Tuesday October 7th. Unlike the first event, which centred on foreign policy, the showdown at Belmont University, in Nashville, Tennessee, will be in the style of a town-hall debate, with questions coming from a group of uncommitted voters and covering both foreign and domestic issues. Both candidates are sure to get a grilling on the financial crisis and their support for a Wall Street bail-out that is far from popular with voters.

For background, see article

• INVESTORS will hope for a less traumatic week for the markets after the passage through Congress, at the second time of asking, of a huge bail-out for Wall Street’s embattled financial institutions. Other ways to keep banks afloat and ensure that the financial system does not suffer any further catastrophic failure will be discussed by finance ministers and central-bank governors from the group of seven rich countries. They meet in Washington, DC, on Friday October 10th to discuss ways to lessen the financial turmoil. The day before, in London, the Bank of England meets to set interest rates.

For background, see article

• BEIJING'S clogged thoroughfares are set for some respite. After rules to restrict traffic during the Olympics proved to be successful in reducing pollution, China’s authorities are set to introduce more permanent measures to cut emissions from car exhausts and reduce congestion. On Saturday October 11th a six-month trial will begin that bans different cars from the Chinese capital’s streets each working day; around a fifth of cars face the chop every day, depending on license-plate numbers. At weekends it will remain a free-for-all.

For background, see article

Posted by Ricardo Valenzuela at 8:19 AM 0 comments
Europe's governments struggle to cope with more financial turmoil | Beggar thy neighbour

Germany guarantees all retail bank savings, as European governments take more individual steps

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Posted by Ricardo Valenzuela at 8:17 AM 0 comments
Fed Boosts Cash Auctions to $900 Billion, May Do More (Update2)

Oct. 6 (Bloomberg) -- The Federal Reserve will double its auctions of cash to banks to as much as $900 billion and is considering further steps to unfreeze short-term lending markets as the credit crunch deepens.

``The Federal Reserve stands ready to take additional measures as necessary to foster liquid money-market conditions,'' the central bank said in a statement released in Washington today. Fed and Treasury officials are ``consulting with market participants on ways to provide additional support for term unsecured funding markets,'' the statement said.

Today's steps follow a hoarding of cash by banks that sent the premium on the three-month London interbank offered rate over the Fed's benchmark interest rate to a record. Industrial companies are also finding it harder to raise cash after the market for commercial paper shrank to a three-year low as investors flee even borrowers with few links to mortgages.

``It is pretty much all out war,'' said Christopher Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd., New York. ``They are pulling out all the stops to try and get borrowers and lenders to meet and do transactions once again.''

Implementing part of last week's emergency legislation to shore up the financial industry, the Fed said today it will begin paying interest on the cash reserves banks hold at the central bank. The step should give Fed officials greater power to inject cash into banks without interfering with their benchmark interest rate, which stands at 2 percent.

Bernanke Speech

Fed Chairman Ben S. Bernanke's speech on the economic outlook tomorrow in Washington should give an indication of whether U.S. central bankers are prepared to cut the main rate before the next meeting Oct. 28-29, Rupkey said.

As part of today's steps, the Fed will increase its auctions under the 28-day and 84-day Term Auction Facility operations to $150 billion each. The two forward TAF auctions in November will be increased to $150 billion each, the Fed said.

Money market rates are climbing worldwide on concern the deepening credit crisis will cause more financial firms to collapse. Three-month Libor climbed to 4.29 percent today, the biggest premium over the Fed's benchmark since the central bank began using a target for the overnight federal funds rate between banks as its main tool around 1990.

In Europe, governments rushed to shore up their faltering banks as the credit crunch worsened there. BNP Paribas SA agreed to buy Fortis's units in Belgium and Luxembourg for 14.5 billion euros ($19.8 billion) after a government rescue failed, while the German state and financial institutions put together a 50 billion euro rescue package for Hypo Real Estate Holding AG.

International Effort

President George W. Bush's working group on financial markets, a body that includes the Fed, Treasury, Securities and Exchange Commission and Commodity Futures Trading Commission, said today it's working with ``market participants and regulators globally to address the current challenges to restore confidence and stability to financial markets.''

The working group statement comes four days before a gathering of central bankers and finance ministers from the Group of Seven major nations in Washington.

The Fed gained the authority to pay interest on commercial bank reserves under the $700 billion financial-rescue legislation approved last week. The Treasury will purchase distressed assets from financial companies under the plan.

To finance the Treasury's new plans, officials are considering changes to federal government debt sales, including a reintroduction of three-year notes. Any changes will be released at the Treasury's Nov. 5 quarterly announcement on sales of long-term debt.

Treasury Issuance

The Treasury also said that some of its cash-management bills may be ``longer-dated.'' The expansion in issuance is needed to ``allow Treasury to adequately respond to the near- term increase in borrowing requirements,'' the department said. Treasury officials last month also started a special program of bill auctions to help the Fed expand its balance sheet.

Fed payments on required reserves will be made at the average targeted federal funds rate established by the Federal Open Market Committee over each so-called reserve maintenance period less 10 basis points.

In addition to the cash banks must hold at the Fed, lenders also sometimes place excess reserves. The central bank said today it will pay interest on those funds at the lowest targeted federal funds rate for each period less 75 basis points. That will put a floor under the actual fed funds rate each day and let the Fed `expand its balance sheet as necessary to provide the liquidity necessary to support financial stability.''

Managing Rates

The Fed created the TAF auctions of cash to commercial banks in December, and has continually expanded the program since then. To prevent a surfeit of funds in the system from pushing the actual overnight interbank lending rate below the Fed's target, the central bank withdraws liquidity through repurchase operations.

As the Fed pumped cash through the TAF and other programs at record levels last month, the New York Fed had difficulty controlling the daily federal funds rate. While the target is 2 percent, the effective rate was below that level every day from Sept. 19 to Sept. 29.

Posted by Ricardo Valenzuela at 8:11 AM 0 comments


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