There Is No Crisis-Where's My Pitchfork?

by: Chris Bowers

Tue Sep 23, 2008 at 14:38


Deputy Press Secretary Ton Fratto tells us that the banks we are bailing out are actually good firms with a lot of profitable assets:

You have to remember, these are not all weak or troubled firms that own mortgage-backed securities. A lot of them are very successful banks and investment houses that have done very well, have been responsible, are holding performing assets that have value. They were not necessarily irresponsible players, and so you have to be careful about how you deal with them.

Um, then why are we bailing them out? I thought there was a crisis. Now the government has to step in and help out hugely profitable firms just because one aspect of those banks is as profitable as the rest? Whenever rich people make a mistake, taxpayers have to plug the gap, even if those rich people are still making huge amounts of money?

This is all a lie. They are lying about how much trouble these firms are in. They are lying about their desire for oversight. It is just a big frakkin' lie. I doubt there is a crisis at all. They have done such a good job lying, however, that a majority of the country thinks a bailout is needed.

They are just lying, and looking to make the biggest single rip off in history. If there was a pitchfork and torch event taking place anywhere right now, I'd join in. This seems a helluva a lot like Louis the XVI demanding more money from the Estates General. When does the march on Versailles begin? It might seriously be time for a few hundred thousand people to start sleeping in two shanty towns, one surrounding the Capitol and the other surrounding the White House. If they can get away with this, then they can get away with anything.  
Chris Bowers :: There Is No Crisis-Where's My Pitchfork?

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There Is No Crisis-Where's My Pitchfork? | 40 comments
Run on pitchforks and shovels (4.00 / 1)
Very useful tools in the event of a collapse. We already had a run on canning jars around here. When I tried to buy some last Tuesday the clerk at the Farm and Fleet told me of folks buying carloads over the weekend.



This is a Test of the Emergency Free Speech System. This is only a Test. In an actual Free Speech Emergency, I'll be locked up.
No bailout (0.00 / 0)
I would like to be senator for a day just so I could stroll into the chamber and give my vote as "fuck no" - that might begin to convey my anger and resentment.  
Marcy Kaptur (0.00 / 0)
delivers a little gem of a speech. A must see.


[ Parent ]
Kaptur: "Real Reform Now or Nothing" (4.00 / 1)
To Wall Street: "You think you can away with it because you are extraordinarily wealthy....but you are about to be brought under firm control. First, America doesn't need to bail you out. It needs to secure our real assets and properties, not your paper."

"Those who created and profited from this game of games must be brought to justice. The assets they stole must be returned to the American taxpayers right down to the tires on their Mercedes."

"Real Reform Now or Nothing."

[ Parent ]
Thanks for posting that David (0.00 / 0)
Just watched it. Excellent speech. We could use another hundred like her in the house!
[ Parent ]
$720 gets me to DC from Seattle.... (4.00 / 1)
....are we marching?
Talk, not action (4.00 / 1)
Ok, this actually inspired me to register.
Everyone here, on Daily Kos and the other netroots blogs is going on and on about these pitch forks and torches. If you're so genuinely angry about this, why aren't you figuring out how to get bodies on the streets of Washington and New York to do show exactly how you feel about this? Why not organize these money bomb things to financially reward sitting candidates who take public stances against the bailout plan? Froth on the blogs is all well and good but I think you're going to have to take more visible action if you want to stop this.
What makes you think people here aren't active? (4.00 / 1)
Posting on a blog does not preclude a person from all other activities, you know.  
[ Parent ]
Im unaware of any actions planned in NYC (0.00 / 0)
usually i do know about these things.

that said, if any others want to start organizing Im in and can help out greatly in NYC.

Michael Bloomberg, prince of corporate welfare

[ Parent ]
Taking Action (0.00 / 0)
Here's a diary from a candidate that could use some help getting more exposure for his "hell no" message on the proposed bailout (what he calls a surrender to financial terrorism).  

I'm helping him and we could use any help that you all can give.  Thanks.

Voter Genome Project

[ Parent ]
Action-y Action? ;) (0.00 / 0)
I'm not saying no one is taking action. I'm saying that there isn't institutional action being taken, ie: open left isn't trying to get a marching going on, they're just expressing pitch fork based outrage, I'd rather instead of alluding to pitch forks they started talking about getting warm bodies in the streets shrugs It's also possible that in just looking at the front page stuff I'm missing behind the scenes work that is doing exactly this, and I admit my ignorance on that score. But, I have a low opinion of "Internet Rage" :)
For the record, I'm with Krugman on this and would rather focus on getting the Dodd version passed. No bailout without Equity.  
[ Parent ]
We appreciate the concern? (0.00 / 0)
Lots of people are posting on the blogs (maybe during some free time at work?), then spending time in the evenings doing actual field work.

Assuming that blog commenting is the sum total of someone's political involvement would be like assuming that critiquing blog activity is the sum total of another person's political involvement.  And that'd just be silly, wouldn't it?

[ Parent ]
Is This Sarcasm? (0.00 / 0)
Do you really doubt there is a crisis?  Really?

Do you not trust Krugman?  He's already called this the worst financial crisis he's ever seen.

Well, accepting that it's a crisis (4.00 / 2)
is one thing. Accepting that the crisis demands a massive and immediate government bailout is another.
[ Parent ]
Krugman has Accepted Both (0.00 / 0)
And I trust him over the pitch forked masses.  Read his blog for his thoughts on the Dodd bill; it's a good bill.  Paulson's plan is terrible, but a big bailout is absolutely needed.  Let's focus on getting Dodd's version passed.

Coming onto these message boards and seeing people so vehemently deny the severity of this situation is like listening to Jenny McCarthy talking about autism and vaccines.  It's straight-up dangerous to be peddling this stuff.

[ Parent ]
Listening to all the "crisis" talk about this issue (4.00 / 2)
is like listening to Colin Powell lie to the UN, or GWB and his enablers in the US Congress tell us how important it was to invade Iraq, and DAMN QUICK!

Maybe they have cried "wolf" too often, eh?

"It sounds wrong...
     ...but its right."

[ Parent ]
Who is "They"? (0.00 / 0)
Paul Krugman??

Listen to Paul Krugman!  I feel like I'm taking crazy pills.  Paul Krugman is not a Bush administration lackey hell bent on deceiving the American people.

[ Parent ]
Can you show me a post (0.00 / 0)
where Krugman said we need a bailout this big.
[ Parent ]
OK (0.00 / 0)
I don't know that he's commented on the actual size of the bailout, but on Bill Maher he explain the severity of the situation:

This is really scary.  This is really bad, This Could be 1931 - The collapse of EVERYTHING, so you have to do something big.  There are no athiests in foxholes and no liberterians in a financial crisis.

...

Quite Seriously, Like, I was looking at the numbers on Wednesday and I thought "The World is coming to an End", and apparently the people at the Treasury Dept. thought the same thing.  This was - boy - this was the worst thing I've ever seen.

Then earlier this week he outlined his criticism for the Paulson proposal, while still maintaining support for a bailout:

So what should be done? Well, let's think about how, until Paulson hit the panic button, the private sector was supposed to work this out: financial firms were supposed to recapitalize, bringing in outside investors to bulk up their capital base. That is, the private sector was supposed to cut off the problem at stage 2.

It now appears that isn't happening, and public intervention is needed.

Whether we end up with a $150 billion plan or a $700 billion plan, the crisis isn't a "frakin' lie"; there is a crisis.  Let's take it seriously.

[ Parent ]
Seriously (0.00 / 0)
I don't get the same sense of urgency from Mr. Krugman, nor do I get the sense of extortion that I get from Mr. Bernanke, "give me the money, or the economy gets it!".

Without the urgency, the "crisis" begins to look more like a "problem" and we are less likely to feel as though we are being railroaded (yet again) by fear.

Were Mr. Krugman the voice of the Administration, I might understand your position, but he's not, nor does he seem to support much of their fear-mongering rhetoric, so why use him to justify the rush to fork over all the money and let Mr. Paulson, who until very recently worked in the very "industry" that created this problem, decide who gets a hand-out and who does not?

What's the hurry?  

"It sounds wrong...
     ...but its right."

[ Parent ]
We Don't Have to Give in to Paulson/Bernake (0.00 / 0)
But how do you not get a sense of urgency from Paul Krugman saying "the world is coming to an end"?  

This is a very serious problem (so serious I think it's fair to call it a "crisis") which needs a very serious solution.  The Paulson plan is not a very serious solution, but that doesn't mean the situation any less dire.  

We shouldn't deny the crisis, we shouldn't just force ourselves into some sort of rebellious ignorance.  This is the perfect opportunity to take the dire situation at hand and enact the government reforms that would have prevented the situation in the first place.  

Don't let the Bush administration monopolize the ability to use a crisis to enact sweeping political change; if anything, we should be able to use this problem, this crisis, in order to kill Reagonomics once and for all.

[ Parent ]
World coming to an end (0.00 / 0)
I took that as a bit of hyberbole, rather than a serious critique.

Perhaps, in the end, we may end up agreeing here.  I'm not trying to deny that there's a problem, but I don't want to compound the problem by rushing the response when the rush may not be necessary.

I don't think that any "plan" should include those that were sitting around watching the "crisis" build.  The resignations of Paulson, Bernanke, and Cox should be part of the deal, as well as a public apology from President Bush and the congress members that chair the "oversight" committees.

"It sounds wrong...
     ...but its right."

[ Parent ]
paulson's plan is not a plan (0.00 / 0)
It's sort of like when caesar took over and Rome stopped being a republic.  Who came up with this idea of "no judicial oversight" on ANYTHING?

Anyway, the whole thing should be disregarded so we can start from scratch.  I think Dodd's bill is okay, but I don't see it helping people who are in debt - and there are ways of putting liquidity into the economy and addressing the root problem - namely that people can't pay off their debts - that might be slightly better than taking on shares of the companies.  I have an alternative suggestion below and there was a frontpaged post about the government taking on the mortgages.

These aren't mutually exclusive - Dodd's bill basically puts the bad mortgages (and other bad debt) in the hands of the government, but I haven't read it in its entirety so I don't know if it requires adequate disclosure provisions and penalties for firms to make sure that they disclose EXACTLY how much risk the government is taking on, nor do I see any guarantees for help for people who are in debt - I only see promises about HOPE and and whatnot.  And I don't trust people who come from a place called hope on this issue.

[ Parent ]
I am sure economists know more than I do (0.00 / 0)
but does that mean I can't say no? Seriously, where the fuck do we draw the line? If we bail this shit out (second major financial bailout in 20 years) where does it stop?

To be honest I would rather deal with the consequences of a complete collapse and hope that it wakes people up to the truth about how shit works.

If anything, we would have a chance to build a more progressive system, and it would give me stories to pass down to my grand children about how shitty things were.

And why aren't people going to jail? It is obvious there were folks knowingly manipulating the system for their own gain. Why aren't these people in jail?

[ Parent ]
It's straight up dangerous (4.00 / 1)
to be buying the premise of the other side without getting all the information and listening to a wide-range of voices, especially those outside the establishment, not least because Obama is already talking about shelving social programs like health care reform because of the bailout.

I like Krugman, but he's not God. In any case, he says Dodd's plan is a "big improvement" because of the equity sharing--nowhere does he say it's ideal, or that 700 billion is a magical figure. Already Schumer and Dodd are talking about  putting a 150 bill down payment toward 700 bill, which at least is a step in the cautious direction.

Something this massive done in haste is a terrible idea.  

[ Parent ]
You're Right (0.00 / 0)
Caution is absolutely necessary, and giving in to Paulson's demands up front would be a rehash of Fall of 2002.  But where are the credible voices saying the crisis is a "big frakin' lie"?  It's not a lie; this is a crisis.  

We should be able to accept that there is a crisis, it's a big one, and something needs to be done.  Then can we proceed with caution towards an equitable and effective solution.

But not believing there is a current economic crisis is dangerous and irresponsible.

[ Parent ]
Of course its a crisis (0.00 / 0)
Who better to know the "facts" other than Minister Paulson? After all, he was working in the investment banking business while all these Ponzi schemes were being implemented - clearly he knows this "crisis" from the inside.  Who better to decide which of his former colleagues and co-conspirators get the biggest hand-outs?

What possible motivation could the good Minister have for being anything less that completely forthcoming on this issue?


"It sounds wrong...
     ...but its right."

Yeah, we need to question the premise (4.00 / 3)
The biggest danger is a "compromise" bill that accepts most of the GOP's premise (which of course is what Democratic leaders do as a matter of habit.)

I saw this at TPM:

In covering the proposed $700 billion bailout of Wall Street don't repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don't assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don't assume there is a case just because officials say there is.

The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

Ask this question -- are the credit markets really about to seize up?

http://poynter.org/forum/view_...

I should've mentioned (0.00 / 0)
that that was written by the excellent David Cay Johnston, former Times reporter who wrote:

"Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill."

[ Parent ]
hmmm (0.00 / 0)
i don't agree that there isn't a crisis, but i do agree and really really appreciate the enormous dose of skepticism that you're introducing into this.  I think we could all do with a little more of it.

On alternative solutions - if you accept that there's at minimum a crisis (a real one! in people's lives!) for severely endebted people, how about creating an agency like Social Security that will serve to assist people wtih debt payment, consolidation, negotiation, management - universal, but redistributive.  And tie into that a one time check for several thousand dollars to people with the requirement that they use it pay back debts if they have them.  Isn't that just as good at injecting liquidity into the market and at the same time addressing the root cause of these problems?  Unlike, say, just transferring the problem and its unknown size onto the government and risking god knows what up to t he point of a default on the debt of the U.S. government.

I  would also like to know if anyone has seen any analyses that look at the possibility of a default.  I've read that although the debt CEILING is being raised to 11 trillion, the potential debt that the U.S> government is taking on could end up being much greater than that.

Devil's advocate (0.00 / 0)
I suppose an argument can be made that there are good companies that are paying the price for what bad companies did to the markets. Bad money drives out good. All assets are being trashed because nobody can separate the undervalued from the overvalued. I have not idea whether there's any truth in this, but it seems more probable than not.

The problem, of course, is that we have absolutely no reason to think that the good companies will get the help and the bad companies will be excluded. Given the way this country works the exact opposite is going to happen. Which once again demonstrates that a government of the people works better than a government of the 5%.

Crisis on Main Street (0.00 / 0)
Oh there is a crisis alright, or crises. The root of the Wall Street "crisis" is because of the bursting of the housing bubble, which's led to the home foreclosure crisis. It's because all these mortgages have gone bad that all the financial experimental products based on them at who knows how many levels removed are going bad, too. The root of the problem is the housing crisis. Taking the bad debts off the Wall Street Casino players' books is not going to solve the fundamental problems of an economy with no real wage growth for decades (hence no real increase in the ability of ordinary people to get sensible and affordable mortgages).
forget the pitchfork. Where is the damn guillotine! n/t (0.00 / 0)

the crisis isn't the firms (0.00 / 0)
the crisis is that bad debt and uncertainty about how much bad debt is making companies and investors reluctant to extend more debt - so basically you have a credit crunch.  As it becomes impossible (or far more costly) to borrow, more and more firms go bankrupt.  Basically, when people set up enormously risky speculative actives, they were the only ones who got the profits, but when they unwind those activites, the costs may spread more broadly.  (e.g. if company A that produces t-shirts has to pay a much higher percentage to borrow money (i.e. access credit) or simply can't get it, that would theoretically produce job loss or the failure of the company or a freeze in hiring or what not).  Now consider that company A is potentially company A through Z.

How you feel about it just depends what your assessment is on the connections between the real economy and the speculative economy.  It's a bit unclear, but I sure as hell see an opportunity to repeal the Bush tax cuts.

I listened to the whole testimony (0.00 / 0)
Paulson was complete BS the entire time. Every time he was asked why accountability was a threat to his plan or why they had to prop up banks that are not in trouble he would wave his arms around muttering "horror" "market collapsing" "danger". it lacked any credibility. he played games with words, deflected questions, and blame. he couldn't even blame the banks for getting themselves into this mess. it was anything but honest and frank.

Michael Bloomberg, prince of corporate welfare
Chris, different numbers on the bailout... (0.00 / 0)
Rasmussen has numbers saying that a plurality oppose the bailout:

http://www.rasmussenreports.co...

I'm not sure why there's such a difference in the numbers... Perhaps it's just the wording between the polls... CNN polls whether government intervention is required, and Ras polls whether the bailout is required...

This is actually sort of good news... Most people think that the government has some responsibility to help out here, but most ARE getting that the proposed plan sucks.  

What I don't get (0.00 / 0)
is why are people "happy" with oversight on this?

We have oversight on a good many things already, yet we can subpoena people all day long and they don't show up. What makes us think this will be any different?

Fratto has a lot to say... (4.00 / 1)
Over at firedoglake they report (from Roll Call article):

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

What was the administration waiting for?  The timing, what with a campaigning recess coming up, seems rather peculiar.  

Here's A Completely DIFFERENT Take On What To Do (0.00 / 0)
From an apparent insider, via a link in quick hits from Will.  Will writes (slightly reformatted):

John Hussman of the Hussman Fund points to the obvious place to find solvency for banks, but you don't hear Congress or the administration talking about: The Bank Bond Holders.

He breaks down a plan that would make bond holders accept responsibility, and thus minimize tax payer risk and involvement. This is going well beyond Dodd's flimsy warrants idea.

http://www.hussmanfunds.com/wm...

Here is a snip:

    "The key is to recognize that for nearly all of the institutions currently at risk of failure, there exists a cushion of bondholder capital sufficient to absorb all probable losses, without any need for the public to bear the cost.

    For example, consider Morgan Stanley's balance sheet as of 8/31/08. Total assets were $988.8 billion, with shareholder equity (including junior subordinated debt) of $42.1 billion, for a gross leverage ratio of 23.5. However, the company also has approximately $200 billion in long-term debt to its bondholders, primarily consisting of senior debt with an average maturity of about 6 years. Why on earth would Congress put the U.S. public behind these bondholders?

    The stockholders and bondholders of the company itself should be the first to bear losses, not the public. That is the essence of what a free and fair market, and a responsible government would enforce. The investors in the companies that produced the losses should be accountable for them, and the customers and counterparties should be protected."

This is not my field of expertise.  But I am a journalist, and journalists are supposed to have sources. So I checked with an economist with knowledge in the field, and he said it made sense to him.  There's no hidden angle here that lay people like me are just missing.  It's a legitimate approach.

That being said, it makes a heck of a lot more sense than the Paulson approach even with Democratic bells and whistles.  INHO, this is what we should be pushing for.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

Anonymous Liberal thinks there <I>is</I> a crisis (0.00 / 0)
And says why here.

I'm no expert, and I'm not sure what I think, except:

1) Paulson's "$700 bn. cash on the barrelhead" plan is a non-starter,

2) A plan that leaves the government with an equity stake in the firms that participate is better than one that just buys the dodgy assets at a made-up, inflated price (and other forms of insurance for the taxpayers may well be even better than that),

3) Democrats must insist that any plan to be voted on will have a majority of Republicans (including McCain) as co-sponsors, and

4) Executives at participating firms must by publicly flogged (at least in financial terms) so the voters won't punish Dems for passing the bill.

There Is No Crisis-Where's My Pitchfork? | 40 comments
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