Rachel’s Musings

I find it mind-boggling that some people think that now that our economy is going down the drain, we cannot possibly worry about things like global warming. Huh? Ever heard of the WPA? Maybe it’s easier to remember the WPA if you’re surrounded by projects built during that time. Here in San Francisco, there are quite a few around my favorite walking place: Aquatic Park. If we were able to work ourselves out of a depression, we surely could work ourselves out of a recession. And there’s so much that needs a lot of work: From the infrastructure that is falling apart all over the place to the need for more rails-to-trails and a new green economy. Instead of lining the pockets of bankers & financiers, the government should spend money on building a sustainable future. Yes, that would cost a lot of money but $700 billion is nothing to sneeze at either - and the return would be higher and more likely. Plus, it would put people to work, something needed as the recent unemployment figures reminded us.

So, I was excited to receive an email from The We Campaign. They are making the same connections (not too surprising to me since it seems so blatantly obvious). I decided to honor their call to write a letter to the editor. Here’s what I wrote - hopefully we’ll be able to read it in the San Francisco Chronicle on Sunday:

With the economy in trouble, some people are claiming that we cannot also deal with other issues we’re facing, especially global warming. This is a dangerous and short-sighted approach. Al Gore is proposing an approach to Repower America that would provide 100% clean electricity within 10 years (see the plan at repoweramerica.org). In addition to addressing global warming and our dependency on oil, this plan creates new jobs, reduces energy costs, and eliminates our need for fossil fuels while injecting our economy with much needed new projects. We not only can address more than the economy by working toward a sustainable future, we have to. Any other approach will simply continue our path along the vicious cycle of greed and destruction.

If you agree, please add your letter to the hopefully continuously growing pile of letter to the editors!

You can also read Al Gore’s op ed piece in the New York Times in which he outlines his Repower America Plan.

There is also an interesting guest post at the Wall Street Journal blog from the authors of the Baseline Scenario, all highly trained & experienced economists. They suggest that it’s time to reinvest in the “real” economy:

This [reality of the current economic] situation, while unfortunate in the aggregate and a tragedy for many vulnerable individuals, actually presents a major opportunity for the United States.

The opportunity is to transform the economy by moving resources (capital and people) out of financial services and into manufacturing, technology, and other activities based on “real” (i.e., non-financial) innovation. This switch plays to a number of strengths in the United States: people (and capital) move relatively easily compared to other countries; we have great depth in the development of technology (our engineering schools lead the world); we are very good at creating new companies (many have tried to replicate Silicon Valley; few have even come close); and, if managed well, we will continue to have the deepest and most flexible capital markets in the world.

Of course, this also requires a new emphasis on science education, something they don’t mention although they call for renewed emphasis “on spreading technology-related skills through the population.”

The scene was eerily familiar. Instead of “we don’t want a smoking gun to be a mushroom cloud,” this time the total collapse of the US economy was the fear specter raised. And again, Congress fell for it. They didn’t want to risk being blamed for anything that might happen. They hastily passed a bill that should have been carefully thought out and influenced by experts instead of special interests. Now, slowly, the problems are emerging. Some of them are probably good, like the ability for the Treasury to buy parts of banks that was apparently snuck into the bill to the delight of many economists. More disturbingly, though, is the lack of transparency that is starting to creep into the whole bailout effort. As Planet Money reported, Mark Cuban, none less as the owner of the Dallas Mavericks, has decided to start investigating. And as soon as he started looking, he found blacked out pages on contracts with the Treasury department. That sounds a lot like the no-bid contracts that went to Halliburton. These are signs that the Bailout is turning into what many of us feared: A way to shift money from the average taxpayer to the Wall Street financiers who got us into this mess in the first place. Cuban and his investigative team as well as other journalists will be watching, often brought together by the Planet Money team.

As the financial crisis deepens, it is becoming clear that two assumptions economists like to make are completely wrong: people act rationally and the free market exists.

The crisis might not have been created by panic but it certainly has been worsened by it. It does not help that there are people suggesting selling most stocks. The word “panic” keeps creeping into headlines reflecting knee-jerk reaction from the sellers on Wall Street. Selling certain stocks might be a rational thing to do but, for the most part, selling in a drastic downturn like this is the stupidest thing one can do. You’re locking in your losses. If you’ve set up a portfolio that is diversified, just stop looking at its performance and ride this thing out. But few people seem to be able to do this; otherwise stock markets wouldn’t keep going down.

One of the fundamental issues underlying this crisis is lack of information. The credit market froze because nobody knew what the other institution really owned and owed. Nobody trusted anybody, so institutions hankered down and stopped lending money. Information is the key ingredient to a free market, without it, nobody can evaluate other’s position objectively. Clearly, information was not (and is not) flowing freely. It only seems to flow if people are forced to give it up. That force ends a free market. Regulation is coming in that enforces the rules that a free market should automatically reinforce. Since that doesn’t happen, the idea of a free market should be shelved right next to the bible and other fairy tales.

If you like This American Life, you have probably listened to the Pool of Money and the latest show on the financial crisis. Two shows that go in depth into the background of the mortgage crisis and how it spread to the rest of the financial market. Since things are changing so rapidly, a spin-off blog and daily podcast is now available.

FactCheck has an interesting perspective on this as well:

The truth is, however, the Gramm-Leach-Bliley Act [,which was passed in 1999 and repealed portions of the Glass-Steagall Act, a piece of legislation from the era of the Great Depression that imposed a number of regulations on financial institutions] had little if anything to do with the current crisis. In fact, economists on both sides of the political spectrum have suggested that the act has probably made the crisis less severe than it might otherwise have been.

Last year the liberal writer Robert Kuttner, in a piece in The American Prospect, argued that “this old-fashioned panic is a child of deregulation.” But even he didn’t lay the blame primarily on Gramm-Leach-Bliley. Instead, he described “serial bouts of financial deregulation” going back to the 1970s. And he laid blame on policies of the Federal Reserve Board under Alan Greenspan, saying “the Fed has become the chief enabler of a dangerously speculative economy.”

Fact Check goes on debunking a few more election-year myths and then asks “So who is to blame?”

There’s plenty of blame to go around, and it doesn’t fasten only on one party or even mainly on what Washington did or didn’t do. As The Economist magazine noted recently, the problem is one of “layered irresponsibility … with hard-working homeowners and billionaire villains each playing a role.”

To see the full list, please see the FactCheck analysis under the headline “The Real Deal.”

I usually don’t like to post other people’s writing in its entirety but I don’t have time to summarize this, so here it is: Michael Moore’s email on the Bail Out. (Note: The link to phone numbers for members of Congress MM provided does not work all the time, so here are some alternatives: source. You can also find your Senator here and your Rep here. Be patient! These sites are getting a lot of use…)

Friends,

Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies — who must soon vacate the White House — are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door.

No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich. Just read the first four paragraphs of the lead story in last Monday’s New York Times and you can see what the real deal is:

“Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.

“Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

“At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

“Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”

Unbelievable. Wall Street and its backers created this mess and now they are going to clean up like bandits. Even Rudy Giuliani is lobbying for his firm to be hired (and paid) to “consult” in the bailout.

The problem is, nobody truly knows what this “collapse” is all about. Even Treasury Secretary Paulson admitted he doesn’t know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can’t figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this “bailout” package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Health insurance? Mike, why are you bringing this up? What’s this got to do with the Wall Street collapse?

It has everything to do with it. This so-called “collapse” was triggered by the massive defaulting and foreclosures going on with people’s home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it’s because too many working class idiots were given mortgages that they really couldn’t afford. Here’s the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage “crisis” may never have happened.

This bailout’s mission is to protect the obscene amount of wealth that has been accumulated in the last eight years. It’s to protect the top shareholders who own and control corporate America. It’s to make sure their yachts and mansions and “way of life” go uninterrupted while the rest of America suffers and struggles to pay the bills. Let the rich suffer for once. Let them pay for the bailout. We are spending 400 million dollars a day on the war in Iraq. Let them end the war immediately and save us all another half-trillion dollars!

I have to stop writing this and you have to stop reading it. They are staging a financial coup this morning in our country. They are hoping Congress will act fast before they stop to think, before we have a chance to stop them ourselves. So stop reading this and do something — NOW! Here’s what you can do immediately:

1. Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they’ve made. Tell him we know he has the smarts to slow this thing down and figure out what’s the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

2. Take to the streets. Participate in one of the hundreds of quickly-called demonstrations that are taking place all over the country (especially those near Wall Street and DC).

3. Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

When you screw up in life, there is hell to pay. Each and every one of you reading this knows that basic lesson and has paid the consequences of your actions at some point. In this great democracy, we cannot let there be one set of rules for the vast majority of hard-working citizens, and another set of rules for the elite, who, when they screw up, are handed one more gift on a silver platter. No more! Not again!

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

P.S. Having read further the details of this bailout bill, you need to know you are being lied to. They talk about how they will prevent golden parachutes. It says NOTHING about what these executives and fat cats will make in SALARY. According to Rep. Brad Sherman of California, these top managers will continue to receive million-dollar-a-month paychecks under this new bill. There is no direct ownership given to the American people for the money being handed over. Foreign banks and investors will be allowed to receive billion-dollar handouts. A large chunk of this $700 billion is going to be given directly to Chinese and Middle Eastern banks. There is NO guarantee of ever seeing that money again.

P.P.S. From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we’ll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century. You have to call them now and say “NO!” If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.

You might also want to read this excellent analysis of the situation. Or this one.