Republicans: "Let them eat cake"

Apparently, the Republicans have seized an opening in an otherwise dismal election season. Dissatisfaction with the bailout plan and its $700 billion price tag has filled up their e-mail bins and they would like nothing more than to direct these angry people to the polls, to vote for them. Populist commentators inveigh against "bailing out the big corporate interests" and screwing the taxpayer. Many political points can be scored on the basis of these populist stances with an ignorant public.

We have politicians and pundits helping to reinforce the public's belief that some rascal on Wall Street is solely responsible and certainly not their own virtuous behavior. Trading up their home, taking out home equity loans and going on vacations or investing in vacation property does not seem to be demonized as much as the "money lenders" who facilitated these things. In truth there is plenty of blame to go around everywhere. Once the dynamic of "Home Prices Always Go Up" and the fact that the government's tax policies favor real estate over mundane investments like savings accounts, dividends and similar stogy investments it was natural for the money to flow into housing.

As the credit markets dry up, large and small companies can not find credit to fund their operations. How will they buy material to build things, or to buy inventory to stock shelves, or to move inventory to stores? The American public does not care about these matters. They are used to the stores always being chock full in the land of plenty. With companies like Mc Donalds coming under pressure I wonder what the effect is right now on small businesses. If this continues much longer and the furloughs start and large number of their friends and family are sitting idle they may begin to think otherwise. How many bankruptcies will we see? If the public thinks this bailout is expensive they will be astounded when it costs ten times as much down the road if something is not done that is both effective and immediate. But, then we can invest our time watching show trials of some of these Wall Street villains from our new HD TVs while we sit on the couch and await our own foreclosure.

Instead we have the same pleading for drift and inertia that was heard in 1930-33. We hear: "It's not the government's job to interfere in financial markets", "These bad institutions should fail and quicker the better", "Why should the government purchase these securities?".

The Republicans alternate plan, capital gains tax cuts for corporations that are all red with capital losses! The second plan, an insurance system where I guess these distressed companies will pony up insurance money based on . . . what is it based on? How long will this take to sort through their risk and exposure. I guess we had better start pouring over all their assets. Here is a good explanation of the weaknesses in the Republican's plan. Meanwhile the clock is ticking and companies are under enormous pressure.

The Paulison plan is to remove these "toxic" assets from the books by the Federal Government taking them over. They are toxic because it will take a lot of time for the true values of these assets to become known and for them to sold at a proper price. Since nobody knows the value of these assets the market price is now $0. At the end of a trail of packaged, bundled securities are houses and real assets that are not really worth $0, they are worth less than they originally were. How much is that, who knows 60-80% perhaps. So the $700 billion will be used to purge these assets from the system buying and selling them at a loss if need be to get them off the books. The alternative is to have the US fanatical system freeze to a halt. They did not mind that situation in 1933 either when all the banks shut their doors and millions were left unemployed.

Since the Republican Party is more concerned with social issues than business ones there is an opening for the democrats to seize the affections of the business interests in this country as long as they could somehow reconcile it with their union supporters. Right now the "Grown Up Party" is acting more like administration of King Louis XVI and hoping they avoid blame for the economic catastrophe right now, despite holding the White House for 8 years and Congress for much of the last decade.

This is not the Republican Party I once knew.