Did you ever vote for something that turns into a monster..??
This monster; far too big now to control. And all that you can do is step back and get out of this monsters way.
It has happened to me and my political party.
I firmly voted for and supported the FIRST bailout bill ($600- 700 billion bucks) under President Bush. In a minute I will tell you WHY I supported this bailout, because I feel it is important to explain “how I got to that thinking.”
I find it hard to really criticize the current Stimulus bill when republicans conceived of the dam process in the first place.
Yes, I’m talking about the FIRST bailout bill, however it starts much further back than that.
When George Bush took office in 2001, the federal government had a surplus of cash. (Translation- President Clinton had taxed the American people too much and the government didn’t spend all of it.)
NOTE- the national dept was still there, that didn’t disappear. However, for the fiscal year of 2000, there was a surplus.
President Bush cut taxes and wrote all tax payers a check.
Americans opened their mailboxes and found a $300 dollar check from the government and they were excited. Americans bought Chia Pets and “Snuggie” blankets and the economy was flowing.
Even the horrible attack on 9/11 was survived by a steaming economy and President Bush telling Americans to “go shopping.”
(Which, in the most simplistic form, was exactly what the economy needed after that massive attack on the World Trade Towers.)
Congress took notice of what this little “check” did for the economy and early last year; congress wrote another check to send to your house. This time it was closer to $600 bucks.
However, this time the “stimulus” check didn’t work.
The economy didn’t get “stimulated” by THIS check.
Banks started to fail and it looked like our way of life was about to fail.
(All of the American government: IE; President Bush, democrats and republicans in congress and the senate, both John McCain and Barack Obama- all believed that we must pass a “bailout” bill.
A “stimulus check” of gigantic proportions.
Hence: the FIRST bailout. The bailout that I believed we needed to do to fix the economy.
Again, I will explain why I was onboard for this first “bailout”, a bit later.
First: here is what I (and millions of others who supported the bailout) didn’t know…
That President Bush would allow Henry Paulson to just “toss” the money “out there”, with no checks or balances on WHAT $350 BILLION WOULD BE USED FOR.
Clearly, this money was wasted, right..??
It never went to “stimulate” the economy. Banks didn’t loan out money as we all hoped, instead they restructured, laid workers off, and had BIG parties with huge bonuses for CEO’s.
I was just as sick as the rest of you after learning about all of this. And I supported this bailout..!!
Today, President Obama has a bigger “stimulus” bailout bill that is clearly chuck full of pork spending. Not many in politics can argue that most of this bill will actually “stimulate” the economy- today.
The bill has been trimmed from $900 to $750 billion (actual, not counting interest) and has been renamed by President Obama as a “spending bill.”
There is nothing “special” about a spending bill. Every year congress creates a “spending bill.” Spending money is what congress does best. However, Obama; renaming this bill from “stimulus” to “spending” is a tad bit more honest.
So, I find it hard to criticize liberals on this current bill, when it was republicans who created this monster. (And I was one of them.)
I have watched many conservative “talking heads” get slapped in the face with this little fact.
When a conservative on TV or radio begins to rant about the HUGE spending in Obama’s stimulus bill, the “token” liberal guest replies: “..Wasn’t it President Bush who formed the FIRST bailout bill..??”
This is a cold slap of reality in the face and leaves the conservative host with nothing more, but to point out stupid spending in the current Obama bill, such as: millions for the study of STD’s, or building a frisbee golf course.
Folks, it is best to just admit that things went wrong.
Just come clean..!!
Why did President Bush allow Henry Paulson to toss $350 billion dollars out into the financial community with no check on where or how this money would be used..??
We may never be able to answer that question?
However, the bigger question is…
We may never know if we stopped the “Next Great Depression” with the things that we did today..??
Yes, there are a few people reading this who can pat themselves on the back, and state: “..I was against this bailout stuff from the start, and I was right..”
Hold on there Bubba…
You might NOT be right.
As I said before, we may never know if we stopped the Next Great Depression with what we have done?
We may never know if there really was a huge problem, or how close we came to a great depression?
Which leads me to why I supported the first “bailout.”
At the risk of writing a long post which no one reads, let’s start at the beginning.
I supported Mitt Romney for the presidency because I believed America was heading for tough financial times. Maybe I was listening to Glenn Beck, or maybe I saw evidence in my own business; with the rising cost of fuel, (spring 2008) I felt that Romney, with his business experience, was best suited to run this country. (Remember, this was BEFORE the banks began to fail.)
I’m not trying to blow smoke up my ass, (though- why would ANYONE blow smoke up there?) I am just trying to point out that I was “in tune” with the changing economy.
John McCain won the nomination, the US economy went into the crapper, and here we are today.
The first thing I noticed was that every government official was calling for this FIRST bailout.
It wasn’t just republicans, or just democrats; it was ALL of the American government. (With the exception of Ron Paul and a few others.)
Ok: I am an optimist. I do not believe that EVERY politician in Washington is a crook. That is impossible.
When I saw dam near every politician support this first bailout, I knew something was very desperate about this situation.
I knew at that point that I needed to educate myself with “the Great Depression” because I didn’t have all the facts.
If you are a liberal, then you were taught that President Hoover CAUSED the Great Depression.
If you are a conservative, then you were taught that President FDR prolonged the Great Depression and WW2 is what ended it.
Both of you were given BAD information.
(And, at the same time, you are both correct.)
Both Presidents did things that saved our asses from total destruction. Yet, both did things that they shouldn’t have done.
FDR created federal banking insurance which saved us today. When banks started failing in 2008, you didn’t rush to the bank and take out your money. This panic would have CAUSED a depression because banks do not have enough money in the vault to give us our money back.
However, FDR raised taxes on big business during the depression, which caused them to lay off workers. Companies cut back on expansion and no one had cash to buy stuff. (Or they sat on their money.)
Hoover began public works projects (Hoover dam, infrastructure, etc) which quickly put thousands to work. However, Hoover had a “hands off” approach to helping business during the depression. Hoover felt the best thing to do was let these failing businesses fall. This was a massive mistake.
The US economy can withstand a couple of large companies failing. But not many all at once.
When you have a dozen financial institutions, and all three auto makers, and the housing industry heading for the toilet…
It is too much to just HOPE that things will work out on their own.
When rich people get nervous and stop spending, when average people lose their jobs, when the poor cannot find work…
It can take years to recover from this. (Maybe never. Empires have fallen over less than this.)
Capitalism is the greatest engine a country can have. However, even this engine needs a tune-up from time to time. (IE the break up of Edison Power, NBC Radio Network, Bell Telephone, etc.)
At the risk of sounding like a liberal here…
Was it socialistic for the government to get involved in the mail service..??
Or was it a way to insure that a letter could be sent from New York and arrive in California?
Was it socialistic for the government to get involved in electric companies..??
Or was it a way to make sure that every American could have electricity? (Because Edison wasn’t going to run power lines out to the family farm. There was no profit in it..!!)
Capitalism is the greatest engine the world has ever seen. The proof being what America has accomplished in just over 200 years. However, even this engine needs a tune- up, now and then.
Most historians believe that the governments “hands off” approach during the Great Depression is what caused it’s magnitude.
So, after studying the Great Depression and watching modern politicians, (democrats and republicans alike) all plead for the need for this Bailout; I knew that they had also studied the Great Depression.
Politicians were calling for exactly what historians and economists said needed to be done to fix a Great Depression.
And thus, I was on board with the first bailout.
What this bailout did was say to Americans and American companies: “..we are going to DO SOMETHING. We will stop this bad economy..”
We may never be able to show on a financial ledger that what we did today actually stopped a great depression.
But what we can prove is that we stopped the “panic” about a great depression.
The “panic”, as many historians will tell you, is what caused the Great Depression to be huge.
So, I was, and I am still in favor of that first bailout.
(We may never know how close we came to meltdown?)
However, this new “stimulus” bill is as President Obama now claims: a spending bill. Nothing more.
President Obama is correct…
“Stimulus” is spending.
And this democratic bill is chuck full of “spending.”
Will spending money stimulate the economy? It should. It always has.
This harkens back to that fateful time, in 2001 just after the terrorist attacks, when President Bush smiled and told Americans: “Go shopping.”
This current bill is congress “going shopping.”
On a very GRAND scale.
Written by AR Babonie for The Angry Republic
How “close” is close?
As I said in the above editorial; we may never know how close we came to a “Great Depression” today?
Someday, a report might be delivered which will show how close we came to economic meltdown. For now, we can only use history and speculation.
When looking at today, it is important to understand how the Great Depression started, back in the 1920’s.
Many historians point to the housing crisis in Florida as the start of the Great Depression.
In the 1920’s, people discovered that Florida would be a great area to develop. Investing firms poured tons of money into Florida property and could double their money overnight by selling smaller “lots” to people up north.
Two massive hurricanes in- around 1925 killed thousands of people and caused millions of people to run like hell from Florida.
Investors lost billions in land deals in Florida.
Couple that with the Wall Street practice called: “Leveraging” (which ran mostly without regulation) and you have the recipe for a large recession.
Leveraging: (the best way to define it; is to describe it)
Say you have a successful business that has a value of one million dollars. We will call this business: “The Factory.”
OK, a brokerage firm (which we will call: “Firm A”) buys 51 percent of the stock in the successful “Factory” business.
Brokerage “Firm A” then lists itself on the stock market and sells off 49 percent of it’s shares.
“Firm B” (which is actually “Firm A” with a different name) buys up some shares of “Firm A” and causes a run on the stock. This “run” on stock causes an influx of cash. Firm B lists itself on the stock market and sells off 49 percent of its stock while holding on to 51 percent; to keep a controlling hand.
“Firm C” (which is actually Firm A and Firm B: with a different name) buys up stock in Firm B. This causes a run on the stock from Firm B. “Firm C” lists itself on the stock market and sells off 49 percent.
“Firm D” (which is actually Firm A, Firm B, and Firm C- with a different name) begins to buy up stock from Firm C, which causes a “run” on the stock, which gives cash to the…
(And so on, and so on; you get the picture.)
Leveraging caused a one million dollar company to be worth $50 million down the line. (If you count all the brokerage firms that were riding on this companies back.)
But it was all on paper.
49 million dollars was just paper.
The actual company: “The Factory”: (the machines, the building, the sales, and the land; was only worth one million dollars.)
Many of the “leveraging” brokerage firms had invested in Florida land deals. When the housing crisis happened in Florida, this caused the stock to fall on these brokerage firms.
As the stocks were falling on these leveraging firms, those who got out lost millions. Those who stayed in- lost it all.
Worse yet, the original company: “The Factory” (which may have been profitable) was sold off or “chopped up” for cash. Which caused massive unemployment.
I have just given you one example. However, this practice of leveraging was taking place all over the market.
Some traditional banks had invested in these “leveraging firms”, and they too lost millions.
When some banks closed, it caused Americans to rush to the bank to withdraw their cash. Banks didn’t have enough money and closed their doors.
Yada, Yada, Yada: we entered the Great Depression.
Now, I realize that this is a very simplistic version of the Great Depression. There were so many other factors involved.
But from this rudimentary description of the Great Depression, we can place it side- by- side with today to gauge how close we came.
The practice of leveraging reminds me a lot of today with Freddie and Fanny Mae “bundling” bad mortgagees with some good ones and selling them around the world.
As I said above…
We may never know how close we came to a Great Depression of 2008..??
But, when I saw the look of terror in President Bush, Nancy Pelosi, John McCain, and Barack Obama’s eyes…
I knew that something was up.
(These people never agree on anything..!!)
But they all agreed on one thing.
To quickly throw cash into the private sector.
It didn’t matter whether we borrowed it, or printed it up.
We tossed a trillion dollars at the private sector, and we did it fast.
Which is what many historians and economists believe FDR and Hoover should have done.
Democrats and Republicans are fighting over what spending is taking place, in the current “stimulus” spending bill.
(Which tells me that things are back to normal.)
The Great Depression of 2008 defeated..??
We may never know how close we came.
Written by AR Babonie for The Angry Republic
Stimulated by Stimulus?
February 7, 2009