“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Tuesday, September 23, 2008

Et Tu Bernanke?

Don't try to figure out what the relevance of the video. I was looking for something on Judge Roy Bean, the hanging judge...

Bernanke: Approve bailout or risk recessionBy JULIE HIRSCHFELD DAVIS and JEANNINE AVERSA, Associated Press Writers 23 minutes ago

Federal Reserve Chairman Ben Bernanke bluntly warned reluctant lawmakers Tuesday they risk a recession with higher unemployment and increased home foreclosures unless they act on the Bush administration's $700 billion plan to bail out the financial industry.

Despite the warning, influential lawmakers in both parties demanded changes in the White House-backed proposal, and conservative Republicans recoiled at the prospect of federal intervention into private capital markets.

Six weeks before the elections, both major party presidential contenders also insisted on alterations in the administration's prescription for the worst financial crisis in decades.

Bernanke's remarks about the risk of recession came in response to a question from Sen. Chris Dodd, D-Conn., who seemed eager to hear a strong rationale for lawmakers to act swiftly on the administration's unprecedented request.

"The financial markets are in quite fragile condition and I think absent a plan they will get worse," Bernanke said.

Ominously, he added, "I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way."

GDP is a measure of growth, and a decline correlates with a recession.

Dodd later spoke disparagingly of the administration's proposal. "What they have sent us is not acceptable," he told reporters after presiding over a lengthy Senate Banking Committee hearing at which Bernanke and Treasury Secretary Henry Paulson urged swift action by Congress.

Sen. Richard Shelby of Alabama, the panel's senior Republican, added, "We have got to look at some alternatives" to the administration's plan.

The legislation that the administration is seeking would allow the government to buy bad mortgages and other troubled assets held by endangered banks and financial institutions.

Getting those debts off their books should bolster the institutions' balance sheets, making them more inclined to lend and easing one of the biggest choke points in the credit crisis. If the plan works, it could help lift a major weight off the sputtering national economy.

The White House and key lawmakers have been in negotiations since the weekend on terms of the legislation. It was not clear what impact the new congressional complaints would have on the discussions.

"Nobody is happy" about the bailout request, said House Majority Leader Steny Hoyer, D-Md., although he spoke of possible passage of legislation by the weekend.

"Nobody wants to have to do this," agreed Rep. John Boehner of Ohio, the Republican leader. He said he was hopeful of a quick agreement.

Presidential politics have become part of the debate.

Sen. Barack Obama, the Democratic presidential candidate, called a news conference to urge changes in what he called the administration's "stubborn inflexibility."

He said Wall Street executives must not be allowed to walk away from the mess with multimillion-dollar severance packages, taxpayers who are bearing the risk of the bailout must benefit if it succeeds and homeowners should be able to get relief from unaffordable mortgages.

Obama's Republican opponent, Sen. John McCain, has also said he wants steps to limit the compensation of CEOs who leave financially wrecked firms.

The stakes were unmistakable.

"I understand speed is important, but I'm far more interested in whether or not we get this right," Dodd said at the hearing.

Later, he told reporters he hopes for legislation soon.

"But it is not going to be a blank check or a simple signing on to a bill that sends a blank check to this secretary or any other secretary." He noted that either Obama or McCain would probably be appointing a new treasury secretary after he takes over in the White House.

Across the Capitol complex, Vice President Dick Cheney and Jim Nussle, the administration's budget director, met privately with restive House Republicans, some of whom emerged from the session unpersuaded.

"Just because God created the world in seven days doesn't mean we have to pass this bill in seven days," said Rep. Joe Barton, R-Texas.

Added Rep. Darrell Issa, R-Calif., "I am emphatically against it."

Still, prospects for legislation seemed strong, with lawmakers eager to adjourn this week or next for the elections.

Differences include a demand from many Democrats and some Republicans to strip executives at failing financial firms of lucrative "golden parachutes" on their way out the door.

The administration balked at another key Democratic demand: allowing judges to rewrite bankrupt homeowners' mortgages so they could avoid foreclosure.

Paulson, seated next to Bernanke at the committee hearing, objected strongly when Sen. Chuck Schumer, D-N.Y., asked if $150 billion might be enough to get the program started, with a promise of more to come.

Paulson said that would be a "grave mistake," and would fail to give the markets the confidence they need to rebound.

Paulson repeatedly fielded questions from committee members asking why taxpayers should accept the burdens of a bailout.

"You worry about taxpayers being on the hook?" he replied at one point. "Guess what — they're already on the hook." Paulson suggested that the fallout from the credit crisis would hit everyone's pocketbook unless forceful action was taken. Moreover, a flawed and outdated regulatory system, which didn't catch abuses, needed to be overhauled, he said.

Despite the unresolved issues, President Bush predicted the Democratic-controlled Congress would soon pass a "a robust plan to deal with serious problems." He spoke before the United Nations General Assembly.

In his testimony before the Banking Committee, Paulson told senators that quick passage of the administration's plan is "the single most effective thing we can do to help homeowners, the American people and stimulate our economy."

But even before Paulson could speak, lawmakers expressed unhappiness, criticism of the plan and — in the case of some conservative Republicans — outright opposition.

"This massive bailout is not a solution. It is financial socialism and it's un-American," said Sen. Jim Bunning, R-Ky.

So far this year, a dozen federally insured banks and thrifts have failed, compared with three last year. The country's largest thrift, Washington Mutual Inc., is faltering.

The U.S. has taken extraordinary measures in recent weeks to prevent a financial calamity, which would have devastating implications for the broader economy. It has, among other things, taken control of mortgage giants Fannie Mae and Freddie Mac, provided an $85 billion emergency loan to insurance colossus American International Group Inc. and temporarily banned short selling of hundreds of financial stocks.

It sounds as if our Masters in Congress are saying the right words but I don't believe them. What a sad state of affairs.

Watch, we'll hear a lot of the "right talk" then, they will all vote to bailout the Wall Street grifters. I agree with Rufus, there are plenty of good regional banks around to pick up the slack. Banks are in the business to make money. Those without risk will make loans as long as the government makes the money available to them to lend. Let the gamblers take their losses. Bernanke says if we don't bail them out we're going into recession. Well, does anyone want to bet against a recession regardless of whether we bail out Wall Street or we bail out on them.


  1. Like the calm in the eye of a hurricane, a stunned silence has settled over the bar...

  2. As to the Rich Lowry link, bob.
    It was the 2000 Budget Act that Gramm inserted his 256 page amendment into, the one that outlawed regulation of derivitive trading, that is the nigger in the woodpile. One which Mr Lowry ignores, completely.

    The most expensive earmark, ever.

    Misdirection, amigo.

    Apology accepted j willie,
    but I never took offense.

  3. Get your n words in while you can, Linear:
    Your time's growin short!

  4. Lars Larsen just had a some truly great quotes from a 2003 article--New York Times I thik he said--where Bush was saying trouble's a brewing at Freddie and Fannie, and we got to get a handle on it, and do something, and Barney Frank, he of the at home male whorehouse, and some guy named Watt from N.Carolina I think, saying oh no no no we can't monkey with Fran and Fred, it would make it harder for the poor folks to get loans, etc.

    We need a better memory of what's gone before on some of these things.

    Anyway, I stick by my one outlook, I don't think we can blame this all on George, he's been blamed enough anyway.

  5. Ahmadinejad Says He Is Willing to Meet With Obama Without Preconditions

    Iranian President Mahmoud Ahmadinejad will be a guest on "Larry King Live" tonight on CNN.

  6. That was then, this is now.

    I always knew what I was doing back then. Not as sure anymore.

  7. If I make $10 an hour, why shouldn't I be in a $400,000 home? I got my rights and irresponsibilities too!

  8. I can't remember, which goes first, the long term, or short term, memory?

  9. Finally the Truth... Obama & Ayers Pushed Radicalism on Schools

    The Obama Camp for weeks now has been trying to silence Stanley Kurtz.Now we know why.

    Today, Kurtz finally gets the story out on Obama's relationship with terrorist Bill Ayers in an article for The Wall Street Journal. No wonder the Obama Camp wanted to keep this man quiet.

  10. Let's bail out student loans and automakers and airlines and Vegas and...while we're at it.

  11. I can't tell anymore when Doug is joshin' or not. I thought Buddy was dead.

    Iranian President Mahmoud Ahmadinejad will be a guest on "Larry King Live" tonight on CNN

    You got to be kidding, he ought to be on The View.

  12. Well put rat. The whole comment.

    It's short term goes first, Bob.

  13. I don't pass the sniff test.

  14. Show me a plan that's based on the tangible value in the physical properties, alleviates the impact on the lowest on the totempole, puts the financial market place in some semblance of transparent ordered recovery.

    Put the derivative inventors, venders, buyers, and all their attorneys in Yankee Stadium and tell 'em to stay there until they get their own mess resolved. No phone lines to the outside. Allow the demolition contract for the stadium to proceed on schedule. Real incentive.

  15. Bob, have you realized this thread is inverted in time?

  16. Finally found it.
    Too bad W and John are too f..... Up to defend themselves.
    Wouldn't want to criticise the Sacred Dems, would we?

    Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings

    PALIN '08

  17. Hey, we don't need you joining LaBob in La La Land, Linear!

  18. Wouldn't work, Linear. They'd figure someway to stop deconstruction with a promise of future profits to the wrecking crews, and rent the place out for low cost hip hop concerts featuring the group "A Hope and a Song" subsidized by 'unca sam the money man'; also for political conventions and new age get togethers, all for college credit.

  19. Thank you, Doug! Confirms what I've bin sayin' these last, or future, 3 or 4 days. W isn't to blame. Cruel hearted bastard, is the worst can be said.

  20. I'll betcha ol' Henry Kissinger has his blood circulating today, getting to tutor Sarah Palin on the finer points of foreign policy. Kind of strokes his ego, and she's a good looker, and he's 80 something, and dreaming of youth.

  21. A little jealous are we, bob?

  22. If (when) the taxpayer is asked to fork over the money, every penny paid by every individual should be accounted for and every dollar repaid to that taxpayer or his/her estate. Not to the Federal Government to go into the black hole of Washington, D.C.

  23. Sarah should be able to demolish the Obama "no preconditions for talks" line. Henry prepped Nixon for the China diplomatic opening. Exhaustive briefings and drilling of Nixon on every possible point/counterpoint. They went to China quite well prepared.

    Obama's "Talking" Cure, Commentary, Sept-08

  24. Here's some more castor oil for Galveston and all the other at risk coastal and river towns. Do not expect the federal taxpayers to underwrite your risk. No more.

    If you want to live in New Orleans, Galveston, Miami, Destin, Pensacola, Clearwater or similar locales, do so at your own expense and risk.

  25. Bobal: If I make $10 an hour, why shouldn't I be in a $400,000 home? I got my rights and irresponsibilities too!

    You're not of approved ancestry, son.

  26. HEY ASH, Lars Larsen just said your man Obama wants to raise capital gains--but ALSO DO AWAY WITH THE HOMEOWNERS EXEMPTION ON SAME --could this be right?, if it is I didn't know that.

    I call this a direct frontal attack on the middle class.

    You know your candidate, what's the answer?

  27. Absolutely Whit, they want to live there, they do so at their own risk. If they can find an insurance company fine, if not, fine, if they want to take the chance.

  28. Do away with the capital gains exemption on your primary home--now there's one hell of a bad idea, if true.

    Every home owner in America would be against that.

  29. $700 billion and no new taxes!

    Ignorance is bliss, sam.

    Maverick is a happy man.

  30. Or will the US continue to borrow its' way to security and prosperity?

  31. The FBI is in the act now, investigation everybody and their grandmother for fraud. :)

    Fannie and Freddie may join Bernie in prison.

  32. C'mon guys, we've got a 14 trillion dollar economy, a trillion isn't even a month's worth.:(

  33. Well, bob, maybe we can get a few hundred million for your fishin' hole.

    Sell the InterState Hiway system to that Spanish toll road firm, At a million a mile it's gotta be worth a few billion or maybe even more.

    We can have a Federal fire sale.

  34. "What ever happened to Pay-Go?"
    Pay Went.

    Replaced by a bunch of high-falutin soundin BS explaining all away.

    ...until the Piper Makes his final call.

  35. Wonder what the Iranians would give, for a Carrier Group or a few old Minuteman or Atlas missiles?

    Instead of scapping our old B-52s, we can sell 'em to the Russians, a real win - win deal.

    The Chinese want a Blue Water Navy, we can sell 'em one.
    The Iowa class USS Missouri could fetch a pretty penny.

  36. We could be viewing the "End of Empire"

    On Mr Bush's legacy.

    Like it or not.

  37. Got a Damned Nice Concession with that ship @ Pearl Too.

    May as well include that with the deal so they can rake in those Japanese Tourist Dollars w/the best of them.

  38. Wonder what we could get for Hawaii?

    Maybe the Russians will buy Alaska back.

  39. Sarah Palin met her first world leaders Tuesday. It was a tightly controlled crash course on foreign policy for the Republican vice presidential candidate, the mayor-turned-governor who has been outside North America just once.


    Presidential rivals Barack Obama and John McCain warily addressed the nation's financial crisis and a proposed $700 billion response Tuesday, demanding changes in the Bush administration's plan without specifying exactly what would trigger their outright opposition. The financial meltdown is bedeviling both candidates, who know the Nov. 4 election could turn on voters' sense of who can best keep the country from a deep recession.


    Republican John McCain said Tuesday that legislation is needed to bail out financial companies, but hinted he might vote against the Bush administration's $700 billion proposal unless it includes five measures he said would make it more palatable for taxpayers. "Further inaction is simply not an option," McCain said in brief remarks to reporters, his first news conference in more than a month.

    News Brief

  40. ...and maybe the government will bail me out too.

    I want my bail out. First in line from the EB.

    Mortgage, car loan, line of equity excuse it all.

    It's for the good of the country and the world. But you must act quickly!

  41. McCain makes Stumps look Brilliant.

  42. He could stroll into the WH by simply telling the truth about 3 or 4 things.
    If he knew what that was.

  43. Heard Kristol on Bennet last nite.

    Two DC Bodies that don't know as much about credit mess as the dumbest drinker here.

    Inside the Bubble, unconnected in any meaningful way to the Internets.

  44. C'mon guys, we've got a 14 trillion dollar economy, a trillion isn't even a month's worth.:(

    What you've got is a 14 trillion dollar economy, of which 7 trillion dollar is unproductive, and a good part of the rest is of questionable productive value. You've got 9 trillion dollar national debt growing at a compound rate of 10-15% yearly. What you got is not much time left. Linearthinker thinks that's funny.

  45. Robert Litan, a regulatory expert at the Kaufman Foundation and former Carter administration official, said the bailout could leave a raft of long-run side effects, from a regulatory backlash that stifles healthy risk taking, to damaged U.S. credibility. "People abroad are aghast at what this has done to our economy," Litan said.

    He also worried that it will unleash runaway spending. "This changes the whole mindset for future government spending," Litan said.

    "The standard mantra for everyone seeking a funding program will be, 'Well if we just spent $700 billion in one week, we can at least spend $5 billion, $10 billion, or fill in the blank on my program. You're going to se this multiplied many times over.

    Rock and a Hard Place

  46. What powers that there laser, Mattie?

  47. Linearthinker thinks that's funny.

    Must be that short term memory issue. Help me out, Mat.

  48. What powers that there laser, Mattie?

    Me thinks it's the old boys network. What do you think?

  49. Must be that short term memory issue. Help me out, Mat.

    Mon Sep 22, 01:14:00 AM EDT

  50. China just called. We can't pay back all the money Bush borrowed from them, so they're foreclosing on America. All you guys have to be out in 90 days!

  51. Yup. Said it, Mat.

    Stand by it. In context. Or out.

    No quibbles.

  52. Mat's got a memory like my ex-wife.

    Mine's mercifully short.


  53. It has often been said that presidential elections are all about the economy. That just isn’t true.


    Ever since 9/11 U.S. foreign policy has focused on the Islamic world. Starting in late 2002, the focus narrowed to Iraq.


    In 2006, it appeared that the situation in Iraq was both out of control and hopeless. Sunni insurgents were waging war against the United States, Shiite militias were taking shots at the Americans as well, and Sunnis and Shia were waging a war against each other.


    The nuclear issue has divided the United States and Iran for several years. The issue seems to come and go depending on events elsewhere.


    The U.S. president also will have to come up with an Afghan policy, which really doesn’t exist at this moment. The United States and its NATO allies have deployed about 50,000 troops in Afghanistan.


    When the United States invaded Afghanistan in 2001, the Russians were allied with the United States. They facilitated the U.S. relationship with the Northern Alliance, and arranged for air bases in Central Asia.


    The United States therefore must attempt a diplomatic solution with Russia with very few sticks. The new president will need to try to devise a package of carrots — e.g., economic incentives — plus the long-term threat of a confrontation with the United States to persuade Moscow not to use its window of opportunity to reassert Russian regional hegemony.

    Global Landscape

  54. How are we givin' economic incentives without an economy?

  55. Mine's mercifully short.

    So is mine. Thankfully, no wife to complain 'bout it. :)

  56. Help! I'm on the floor and I can't get up!

  57. I've suspected my memory is being taken advantage of by my wife, but I can't prove it, or remember why I suspect that.

    It's like I'm gettin' screwed in a friendly sort of way someway, but can't figure out just how.