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Paulson: Foreign Banks can use US rescue plan

Published:

If you weren't mad already that you and your children just got stuck with $3,700 each of bad debt from bad businesses, now we're told that foreign banks can line up at the US taxpayer trough as well.

Just as the Iraq invasion and the Patriot Act were rushed through without debate on the basis of FEAR and LIES, so may be this economic solution.  I know nothing about the economy but I have enough street smarts to know when I'm getting screwed.  Since 9/11, I don't believe one word that comes from the mouths of this administration, its cabinet members, its Justice Dept., its spokesmen, its military, its intelligence services, its cohorts in congress, or its news channel.  Lying to the people has grown to be the norm.  Scaring the people is their not-so-secret weapon and is so overused that it is destroying the fabric of society.   

Don't even think about grabbing your pitchforks and taking to the streets burning our leaders in effigy as the original Revolutionaries did.  They have those annoying tactics taken care of already with the Patriot (???) Act and the Military Commissions Act.  Martial law can now be declared for an "economic crisis".  Voting can be canceled and congress can be dissolved.  Anyone dissenting can be arrested without charges and held indefinitely.  The US military can be called in to preserve order.  Folks, we're not taking baby steps towards tyranny any more, we are taking giant leaps. 

I think we're watching the biggest swindle in history unfold.  When the people realize they've ALL been ripped off big time, then we'll understand why these draconian laws were put in place...to quash the rebellion that is sure to follow.

http://news.yahoo.com/s/nm/20080921/bs_nm/financial_bailout_paulson_dc;_ylt=A0wNcwLIR9ZInOEAlz9Z.3QA

Entry #159

Comments

1.
time*treatComment by time*treat - September 21, 2008, 2:50 pm
"Paulson said the sudden crisis was stunning but he expressed hope in U.S. economic resilience." Anyone who believes this "crisis" was sudden doesn't belong in any office, appointed or elected.
Six months ago, lying Bernanke and stooge Kudlow were telling us it was all 'contained' to the subprime market. People were warning about this thing in 2003 (some even managed to get their concerns read into the congressional record) but they were ignored. Now we are supposed to believe that the world has suddenly changed in the last 2 weeks. $3,700 won't be the final tab. The not-so-big 3 automakers are lining up next.
2.
Rick GComment by Rick G - September 21, 2008, 4:09 pm
I'm just waiting for the other shoe to fall. Usually it happens in quick succession...and usually the second shoe is the one that really hurts.
3.
ToddComment by Todd - September 21, 2008, 9:03 pm
A lot of this "crisis" is merely designed to raise taxes again. After all, that's where all this "bailout" money is coming from.

It is a vicious circle formed between Congress and the financial institutions. Members of Congress are given big bucks in campaign contributions in exchange for their unwavering support of these greedy executives. Then the members of Congress responsible for oversight not only look away, but actively defend the banking practices that led to this disaster: giving thousands of no-doc mortgage loans to people who have no ability to pay them.

Do you know what a no-doc mortgage is? It's where the person pays a little higher interest rate, and in exchange there is *no verification* of their income. They can say they make a million dollars, and the lender *never verifies* that it's true. No-doc loans were *hugely popular* at Freddie Mac and Fannie Mae.

Freddie Mac and Fannie Mae wee allowed to get away with murder because of the simple fact that the only government body able to stop them was bought and paid for by campaign contributions.

I'm not going to even say which specific Congress members are chiefly responsible. Anyone doing a little digging can easily ascertain that information.

It is sickening.
4.
ToddComment by Todd - September 21, 2008, 9:14 pm
By the way, I don't think this issue favors either candidate.

- Barack Obama was the *second highest* recipient of FreddieMac/Fannie Mae campaign contributions for the last nine years combined -- and Obama was only there for three years out of the nine.

- McCain never appears to be overly strong with the economy. Even though he is correct that the fundamentals are strong, it never sounds good when the next day one of the nation's biggest investment banks gets sold on the cheap.

I suppose Obama technically gets a little help from the sense that a Republican is President, and people tend to blame the party of the President (logical or not) for troubles with the economy. However, I think the vast majority of Americans understand that raising taxes in a troubled economy is a disaster (think: Carter), so I'm not sure what kind of bump Obama gets from this.

My gut says people understand it is a bad situation, and they are not tying it directly to a presidential candidate.
5.
Rick GComment by Rick G - September 21, 2008, 10:30 pm
I agree with Todd. This is not really a current political issue. It's a faulty monetary policy that's been in place for many years. The Federal Reserve is at the heart of the problem and should be abolished.
6.
konaneComment by konane - September 22, 2008, 11:37 am
Couple of articles I've cut and pasted showing the crumb trail.

" How the Democrats Created the Financial Crisis: Kevin Hassett
Commentary by Kevin Hassett
Source Bloomberg.com Sept. 22 (Bloomberg) --

.........." Turning Point

Take away Fannie and Freddie, or regulate them more wisely, and it's hard to imagine how these highly liquid markets would ever have emerged. This whole mess would never have happened.

It is easy to identify the historical turning point that marked the beginning of the end.

Back in 2005, Fannie and Freddie were, after years of dominating Washington, on the ropes. They were enmeshed in accounting scandals that led to turnover at the top. At one telling moment in late 2004, captured in an article by my American Enterprise Institute colleague Peter Wallison, the Securities and Exchange Comiission's chief accountant told disgraced Fannie Mae chief Franklin Raines that Fannie's position on the relevant accounting issue was not even ``on the page'' of allowable interpretations.

Then legislative momentum emerged for an attempt to create a ``world-class regulator'' that would oversee the pair more like banks, imposing strict requirements on their ability to take excessive risks. Politicians who previously had associated themselves proudly with the two accounting miscreants were less eager to be associated with them. The time was ripe.

Greenspan's Warning

The clear gravity of the situation pushed the legislation forward. Some might say the current mess couldn't be foreseen, yet in 2005 Alan Greenspan told Congress how urgent it was for it to act in the clearest possible terms: If Fannie and Freddie ``continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,'' he said. ``We are placing the total financial system of the future at a substantial risk.''

What happened next was extraordinary. For the first time in history, a serious Fannie and Freddie reform bill was passed by the Senate Banking Committee. The bill gave a regulator power to crack down, and would have required the companies to eliminate their investments in risky assets.

Different World

If that bill had become law, then the world today would be different. In 2005, 2006 and 2007, a blizzard of terrible mortgage paper fluttered out of the Fannie and Freddie clouds, burying many of our oldest and most venerable institutions. Without their checkbooks keeping the market liquid and buying up excess supply, the market would likely have not existed.

But the bill didn't become law, for a simple reason: Democrats opposed it on a party-line vote in the committee, signaling that this would be a partisan issue. Republicans, tied in knots by the tight Democratic opposition, couldn't even get the Senate to vote on the matter.

That such a reckless political stand could have been taken by the Democrats was obscene even then. Wallison wrote at the time: ``It is a classic case of socializing the risk while privatizing the profit. The Democrats and the few Republicans who oppose portfolio limitations could not possibly do so if their constituents understood what they were doing.''

Mounds of Materials

Now that the collapse has occurred, the roadblock built by Senate Democrats in 2005 is unforgivable. Many who opposed the bill doubtlessly did so for honorable reasons. Fannie and Freddie provided mounds of materials defending their practices. Perhaps some found their propaganda convincing.

But we now know that many of the senators who protected Fannie and Freddie, including Barack Obama, Hillary Clinton and Christopher Dodd, have received mind-boggling levels of financial support from them over the years.

Throughout his political career, Obama has gotten more than $125,000 in campaign contributions from employees and political action committees of Fannie Mae and Freddie Mac, second only to Dodd, the Senate Banking Committee chairman, who received more than $165,000.

Clinton, the 12th-ranked recipient of Fannie and Freddie PAC and employee contributions, has received more than $75,000 from the two enterprises and their employees. The private profit found its way back to the senators who killed the fix.

There has been a lot of talk about who is to blame for this crisis. A look back at the story of 2005 makes the answer pretty clear.

Oh, and there is one little footnote to the story that's worth keeping in mind while Democrats point fingers between now and Nov. 4: Senator John McCain was one of the three cosponsors of S.190, the bill that would have averted this mess."

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSKSoiNbnQY0
________


"DEMOCRATS NOT TO BLAME? NONSENSE

Source Boortz.com

2. The Democrats, under Clinton, strengthened a government-created monster called the "Community Reinvestment Act." This law was then used by "activists" and "community organizers" (like Obama?) to coerce lending institutions to make these bad loans ... millions of them.

3. Now we see what happens when political "wisdom" supplants good loan underwriting. When private financial institutions are virtually forced to make loans to people with a bad credit and job history .. this is what you get. Enjoy it. ......"

http://boortz.com/nuze/200809/09192008.html
7.
Rick GComment by Rick G - September 22, 2008, 12:47 pm
As I said before I'm not getting into the blame game on this subject, but the "Democrats did it" reaction deserves a fair response.

McCain and his economy "guru", Phil Graham were behind repealing a law for stock market regulation in 1999 that was put in place in 1933 to prevent another catastrophic market collapse.

Here's the video: http://thinkprogress.org/2008/09/21/mccain-deregulation/


8.
time*treatComment by time*treat - September 22, 2008, 5:40 pm
The D-vs-R game is like two crooks who go out and rob a bank. When they get caught, each one tries to make himself look 'less guilty' than his accomplice. We've had a permanent central bank since 1913. Since then, each party has had presidencies where they controlled the House, Senate, *and* Executive branch. Neither party has ever seen fit to rid us of the central bank. Now, they break their fingers off pointing at each other when things go bad. Like the two crooks, they should both be found guilty. I distrust both Global-tax Obama and Keating-five McCain to provide a *fix* that isn't worse than the original problem. :-)

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