Bailout bill passes Senate
74 Senators voted Yes, 25 No
Article added on October 2, 2008 at 10:30 Riga time; correction "25 no" added
on October 3, 2008
In the evening of October 1, 2008 the United States
Senate voted on the Emergency Economic Stabilization Act of 2008. 74
senators voted Yes, 25 No. Ted Kennedy, suffering from cancer, was unable to
come to the Senate floor and vote.
39 Democrats, 34 Republicans and 1 Independent voted Yes, among them the
presidential hopefuls John McCain and Barack Obama. 9 Democrats, 15
Republicans and 1 Independent voted No.
Secretary Paulson first arrived in Congress with a three-page plan asking
for a blank cheque for $700 billion. The bailout, rebaptized
“Emergency Economic Stabilization Act of 2008”,
then grew to 110 pages, but was rejected by the House of Representatives.
The bailout bill approved by the United States Senate on October 1, 2008 has
grown to 451 pages. Sorry, but I had no time to read them all. I guess
neither did the Senators.
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“good” plan has not
only to be a big plan, John McCain's influence seems to have been limited
since the bailout is accompanied by a series of earmarks, ranging from wool
research to film and television productions, from railroads and Indian
tribes to auto racing tracks. Let's hope the House of Representatives has a
closer look at them. To call a bailout a rescue plan is not enough even if,
in fact, it is both, a bailout in the form of corporate welfare for
mismanaged companies and incompetent as well as badly advised individuals,
and a rescue for both companies and individuals who simply suffer from
collateral damage from the
mortgage and financial crisis.
America loves hearings. Normally experts give their opinion on everything.
For the $700 billion bailout plan, experts - in addition to Secretary
Paulson and Federal Reserve Board Chairman Bernanke - were apparently not
needed. The members of parliament are now all experts in finance.
It all started with Fannie Mae and Freddie Mac - as well as other companies
ready to make a quick buck - giving mortgages away like donuts. The junk
mortgages were later repackaged as secure securities and sold by Wall Street
luminaries, banks and
other financial institutions around the world. Individual and corporate
greed and incompetence joined forces. The ones who acted responsibly should
now pay the bill. The taxpayer is the ultimate save heaven for bad
mortgages. The outrage around the country is comprehensible, but too many
Americans have lived above their means for too many years. The quicker the
moment of truth comes, the better. If the initial rescue package had passed,
markets may have stabilized, but the problem would not have been resolved.
To live on credit, on borrowed time, is no longer an option. America has to
face the truth and adapt its spending to its financial means.
To do this under a Democratic administration with a Democratic Congress
seems highly unlikey. In order to avoid avoid a
“social-democratization” of the United States, voters should elect John McCain,
because he is more likely to stop Congress from running to the left.
The Bush administration bears part of the responsibility for the current
situation with its spending attitude. The budget is once again out of control.
Before the mortgage and financial rescue package, a deficit of $410 billion
was expected for 2008. Due to a mismanaged war, military spending went through the
roof. In other sectors too, fiscal responsibility was an illusion.
Out of ideological reasons -
“affordable housing” - Democrats blocked a reform of Fannie Mae and Freddie Mac
when accounting irregularities surfaced a few years ago. John McCain was one
of the senators asking for action to be taken. Nothing has happened. Both
Republicans and Democrats as well as taxpayers share the blame for the
current crisis. But the Democrats idea to add a $100 billion bill to the
rescue package in order to sweeten the bailout may prove unwise. Voters are
taxpayers. On November 4, they may cut down the expected large margin of
victory of the Democrats in the House and the Senate. The Democrats' hope is
that voters will blame the Bush administration. But they are not the only
culprits. Some voters should also have a closer look in the mirror. They may
find greed and incompetence there too.
If the current attitude persists, the $700 billion rescue will soon need its
own bailout. Incidentally, nobody has a clue about how many bad mortgages,
how many ill conceived loans are really around and how much it will cost
To flood the system with money is the right decision right now in order to
avoid a collapse, a depression and a world economic crisis. But the
underlying problems have to be resolved.
sheet music from the Great American Songbook.
We do not need gigantic companies that become too big to fail. Ordoliberal
supervision is needed. A strong state - not a big state - that makes sure
that no cartels and oligopolies emerge, that no price fixing, subsidies and
protectionist measures distort the markets.
The bailout bill that passed the Senate was accompanied by $18 billion in
incentives for alternative and clean energy, including wind, solar, electric
“clean coal”, biofuels and fuel-cell power. The world needs alternative and
clean sources of energy. The best way to achieve this would be massive funds
to allow fundamental research (Grundlagenforschung in German) which
has first to be made in order to improve existing technologies and to
develop new ones. The results of this research should be free to use be any
company around the globe.
As for the financial crisis, Swiss private bankers have an unlimited
liability, which makes sure they act in the best interest of their clients
because it is in their own best interest. If you are liable with your
business and personal assets, you will not buy junk mortgages for your
clients. So far, I have not heard from a private banker going bankrupt
because of the mortgage crisis. The future may prove me wrong, but if one
goes down, he simply deserves it. Personal liability, a simple way to avoid
excess of greed as well as future mortgage and banking crisis'.
sheet music from the Great American Songbook.