Wednesday, October 08, 2008

The Bailout and the Presidency

So we had another draw in the latest Presidential debate on Tuesday night, with neither candidate really willing to stick their neck out on any of the major issues and with most of the same offensive finger pointing from McCain, the underdog in the polls, followed by defensive finger-pointing in return from Obama, the frontrunner. The 2008 Presidential campaign in the U.S. is all but over, with McCain having had his chances but failing to capitalize at every step of the way and at this point, with the economy and the markets doing what they're doing, the guy has absolutely no chance to win.

As I said, McCain had plenty of chances to win this election, including up to just a few weeks ago when all this huge bailout crap first started hitting the wires. As soon as this massive $700 billion bank bailout was suggested by Treasury Secretary Hank Paulson and further championed by George Bush, McCain had his moment. He could have come out and stood staunchly against this bailout plan. He could have publicly stood up for the very causes he wants us to believe are most dear to him -- namely, curbing excessive spending in Washington and ending all the pork that politicians and members of the government constantly try to send their friends' and supporters' way. I know the American public is strongly against this $700 billion bank bailout, and I solemnly guarantee you that if you took a vote now given what the markets have done over the past week, that vote would probably come in more like 90% to 10% against. The people of this country, the average joe's to the wealthy to those on welfare and under the poverty line, absolutely hate this thing. The price tag, the reasoning, the lack of thought given to the entire thing. If McCain had just stood up for what he claims to really believe in, right when this bailout was announced, I absolutely guarantee you he would be leading in the polls right now. That's who the American people would be excited to be voting for -- the guy who stood up for them, who took on Washington and Wall Street in true "maverick" fasion and put his foot down and said a resounding No! to the plan to take our money -- $700 billion dollars of it -- and buy up all the bad assets and bad decisions that the Wall Street banks have gotten fat off of for the past ten years.

Instead, McCain did nothing of the sort. He joined Obama in avoiding the issue entirely for as long as he could, and when the time came to discuss the bailout at the first debate, he dodged the issue of for-or-against along with his opponent. Then when the Senate put the revised bill to vote one week ago today, there was McCain, casting his vote in favor, right along with Obama and 69 of the other 97 senators voting on the bill. So McCain let the people of America down. He let us down, after all his talk about cleaning up Washington and stopping the needless, excessive spending, and denying all the pork very publicly known to have been attached to this bill by the Senate in the days following the House's surprise rejection of the initial bill two days earlier. As I've written about here many times, from its very essence this bailout bill is flawed, and I told you why just this week in Tuesday's post. We should be recapitalizing the banks by taking equity stakes in them in exchange for huge cash infusions to re-ignite lending in this country. Warren Buffett likes this idea, and you know who else likes it? The United Kingdom, who just on Wednesday morning announced essentially the exact plan to shore up its own banks that I outlined here yesterday. The U.K. Prime Minister specifically called out the U.S. bailout this morning in clarifying that they are not taking the Paulson approach of directly buying the distressed assets off of their banks' books, because this plan will achieve the same objectives but will be much better for the taxpayers who ultimately have to fund these purchases, and it also promotes a better sense of fairness as a result of decisions made by these banks over the past several years of little to no oversight or regulation from the government.

So as I pointed out yesterday, the U.S. bailout plan is fundamentally flawed, being designed by a banker with the specific intent to help the bankers in the way that benefits them the most, instead of helping the people of this country in a way that benefits us the most. As I also mentioned previously, I'm not trying to take any credit for this plan -- Warren Buffett said it long before I did, and I know I heard other pundits discussing the possibility of recapitalization of the banks instead of troubled asset purchases. The largest democratic country in Europe also agrees with this approach, I'm sure not coincidentally because their national leader is not a lifetime C-student lemming who is mentally unable to discern a good idea from an abominable one, or an unbiased, fair idea from one clearly designed to benefit a special interest group at the expense of the citizens of his country. And that was John McCain's chance to win this election, and win it he would have. He would be up big time right now, especially after the raging failure of this bailout plan to do a dam thing to help the markets or the economy over the past week. People would be calling for Obama's head and they would be chanting McCain's name in the streets for trying to stand up for us all. But McCain blew it, and now we are reduced to watching McCain try to belittle Obama as hard as he can while Obama just plays defense, relying on his solid lead in the polls to avoid himself having to resort to McCain's offensive-minded insults and other similar tactics.

And the most shockingly horrible thing about the entire debate, and what's left of the McCain ticket at this point, was McCain coming out in abject desperation at the beginning of his introductory speech in Tuesday night's debate suddenly talking about a sweeping new plan to help troubled homeowners in this country. And, surprise surprise, it is exactly what makes the American people at large -- and Republicans in particular -- want to vomit all over their breakfast. Now McCain suddenly proposes spending $300 billion to enable the troubled borrowers of this country to rewrite their ill-conceived mortgages into ones that they can now afford. Oh. My. Everloving. God. So not only is McCain now desperately proposing essentially the very same idea that he has even recently railed strongly against -- probably because it's the worst idea of all time -- but now Mr. Republican wants to be the one to reward all those people in America who carelessly took out foolish mortgages that they never had any shot of paying for.

Great thinking, Senator. As I've written previously, the majority of people in this country are still making their mortgage payments. Sure, a large number of people did take on loans far too big for what they could really afford. But the majority of us still did the right thing. As I mentioned, I still rent a home instead of owning one, here more than 11 years into my career as a lawyer, because I never quite felt I could afford the payments on the kind of house I would really want to live in. So, rather than go and recklessly sign up for a 2-year ARM, an interest-only loan or any of the countless other shyster scams that were being offered by the imprudent mortgage market over the past several years, I chose to do the right thing. My friends who chose the wrong thing all took out mortgages on homes that were in some cases twice as expensive as what they could truly afford. And for those who bought in the early or mid 2000s, they got to see their investments appreciate, in some cases quite dramatically, while I and all ther other prudent, realistic people in the country didn't get to participate at all in the housing bubble of the past several years.

And now John McCain wants to bail all those people out of those reckless decisions, using another $300 billion of taxpayers' money to boot. Now, after publicly shooting down this obviously highly redonkulous idea for months leading up to this Tuesday, suddenly McCain wants to be the savior of the reckless Americans whose imprudence led them to take on mortgages they couldn't even come close to affording. Thanks a lot, John. I know you're desperate, but tell me again how making the stupidest suggestion imaginable, the one that directly and obviously screws over the majority of Americans, and in particular the ones who made the right decisions in favor of those who made the wrong ones, is going to help save your compaign now? You just lost whatever already-dwindling support you might have had left among the people in the swing states, John-boy. What a foolish and ill-conceived move, from a desperate man who I can only assume realizes finally that he blew it by not standing up for the Americans he wants to vote for him by opposing this redickulous bankers' bailout in the first place. Well, the result of that mistake with the bailout should (and will) be that John McCain will lose the election, but to compound it now by him trying to reward the people who made reckless decisions at the direct expense of those who did the right thing, well that's just as bad as this ill-conceived bailout plan in the first place.

What a joke. John McCain and Sarah Palin are done. Barack Hussein Obama will be our next President, you can write it in stone and seal it with blood. S'ovah.

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Blogger carvingCode said...

Bush, in 2002-03 worked with Fanny and Freddie to create the sub-prime lending scheme. Republicans have supported deregulation of banking and investing and the policies. Current admin and Republicans have created the financial problem.

Dude, I enjoy your poker posts, but you lost me as a reader when you resorted to spouting the Obama hate.

8:28 PM  
Blogger Hammer Player a.k.a Hoyazo said...

Lolllercoasterzzzzz. Have I not been clear enough about my feelings for Bush and McCain?

Btw Bush affirmatively did not "create" the sub-prime lending scheme. In fact, to refer to "the sub-prime lending scheme" is a silly notion since one does not exist as such. But what I assume you are referring to clearly started under Bill Clinton's watch, if you can call chasing blowjobs instead of working as President a "watch". That much is not debatable.

Please don't read here if you don't like what you see. And it's especially not worth it if your reading comprehension is as terrible as yours seems to be.

8:34 PM  
Blogger Bayne_S said...

Such an Obama hatah.

McCain's reworking mortgages is a desperate ploy to appeal to the many voters who got in over their heads. If he had done it last week before the bankers bailout I would have more respect for it as a Maverick ploy helping out the little guy.

UK is smart enough to adopt same route as Warren Buffett. SHame US not that bright.

12:35 AM  
Blogger Blinders said...

You are right that the race is over, but Mccain rejecting the bailout would not have mattered. The American people don't understand the economy, just like they don't understand that Dem president + Dem congress has ALWAYS been the worst possible for the economy.

Mccain only hope is to buy the votes now. How about a tax cut for 100% of Americans paid for with government cuts. Obama can't top that with his 95%

6:18 AM  

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