[Vision2020] Debate about the bailout

[Tom Hansen]

Bruce -

I agree with you (and the article) 1,000,000,...%

Tonight's debate MUST go on.

In approximately 40 days one of these two candidates will become the 
president-elect.  The American people need to know what direction our 
government will take with the next administration.

This debate is an absolute MUST if the peoples' faith, trust, and 
confidence in our government is to be restored

FYI, McCain may have stated that he has suspended his campaign.  Rest 
assured he has NOT.  The ads are still running.  Contributions are still 
being sought.

ENOUGH!

Let's have the debate and for God's sake, let the people decide.

Tom Hansen
Moscow, Idaho

> 
> The nation has tried to rush to a bailout solution based on the
> seeming consensus that the financial markets, credit in particular,
> will collapse or freeeze to our great and lasting detriment if a
> "deal" is not obtained this week.
> 
> 
> Senator McCain "suspended" his campaign and refuses to participate in
> tonight's scheduled debate unless the deal, or at least an agreed
> structure of the deal, is reached before it is time to fly to
> Mississippi for the debate.  He, too, seems to accept the concept,
> touted by bureaucrats and Wall Street economists alike and reiterated
> by politicians of all stripes, that an immediate agreement upon a deal
> is absolutely crucial.
> 
> Â 
> 
> We are trying in one week to structure and agree upon the largest
> financial deal in our history.  George Will aptly termed this
> phenomenon as acting like "lemmings in reverse," as everyone rushes
> pell mell away from the proverbial cliff, from which lemmings
> supposedlyleap  as they blindly follow the lemming in front of
> them.  It seems to me that getting a deal of this magnitude done well
> in a considered fashion is more important than getting it done this
> week.  That idea of "getting it right" seems to be taking root. 
> Note the article reprinted below, which talks at length about the
> split in "expert" opinion on how to structure the bailout.  
> 
> 
> All that being said, it appears that a deal may not be reached this
> week due to the complexity of the situation and well meaning
> politicians, conservatives and liberals alike, now struggling to "get
> it right."  In my opinion, debate on this issue and "getting it
> right" is paramount.  
> 
> 
> For me, the importance of "debate" on the issue also means getting
> the two presidential candidates discussing it openly in public for the
> nation to hear, tonight.  
> 
> 
> If a deal in Congress is reached today in time for the debatetonight,
> wonderful.  If a deal is not reached, I think Senator McCain ought to
> hop on that plan and attend the scheduled debate, notwithstanding his
> offer to "put the nation first" by sitting in Washington.  Certainly,
> getting the deal done right in Congress is important.  But skipping
> an hour and a half presidential debate -- when the financial
> markets will be closed for the next two days -- makes no sense to
> me.  Skipping the debate does not materially advance getting the deal
> done right in a time frame that matters.  We need to hear
> what Senator McCain has to say, and why his ideas are better or
> worse than Senator Obama's.  As debate grows about the wisdom of the
> structured bailout deal being proposed, the need for debate by our
> presidential candidates likewise grows.
> 
> 
> Bruce Livingston
> 
> 
> Away from Wall Street, Economists Question Basis of Paulson's Plan
> 
> 
> By Neil Irwin andCecilia Kang
> Washington Post Staff Writers
> Friday, September 26, 2008; A01
> 
> 
> 
> The Bush administration's pitch for a sweeping bailout of the
> financial system has centered on two simple premises: that the economy
> could suffer a crippling downturn if action is not taken very quickly
> and that this action should consist of the government buying troubled
> mortgage securities from banks and other institutions.
> 
> But many of the nation's top economists disagree with one or both of
> those ideas, even as many top political leaders have swung behind
> them.
> 
> Wall Street economists have mostly endorsed Treasury Secretary Henry
> M. Paulson Jr.'s plan, or a variation thereof.
> 
> But almost 200 academic economists -- who aren't paid by the
> institutions that could directly benefitfrom the plan but who also may
> not have recent practical experience in the markets -- have signed a
> petition organized by a University of Chicago professor objecting to
> the plan on the grounds that it could create perverse incentives, that
> it is too vague and that its long-run effects are unclear. Sen.
> Richard C. Shelby (Ala.), ranking Republican on the Budget Committee,
> brandished that letter yesterday afternoon as he explained his
> opposition to the bailout outside a bipartisan summit at the White
> House. The petition did not advocate any specific plan, including that
> offered yesterday by House Republicans.
> 
> Economists tend to agree that the nation's economy is at serious risk
> as the flow of credit threatens tofreeze. Just yesterday, the interest
> rate at which banks lend to each other rose steeply, as it has every
> day this week, suggesting that lenders are hoarding cash. History
> shows that when this happens, a broad economic crisis can follow, for
> instance, the Great Depression and Japan's decade-long recession in
> the 1990s.
> 
> "If nothing is done, the potential for these markets to seize up in a
> big way is definitely there," said Frederic S. Mishkin, an economist
> at Columbia University who was a Federal Reserve governor until last
> month. "When you look at the history of these crises, when things spin
> out of control, the cost to fix it later goes up exponentially."
> 
> But many others with a deep theoretical knowledge of finance and
> experience in government are skeptical ofthe structure of Paulson's
> plan -- and the speed with which it has been crafted.
> 
> The critics can be roughly divided into two camps. One group thinks
> money should be directly infused into banks, which should allow it to
> trickle down through the financial system to borrowers. A second group
> thinks the government should buy individual mortgages, thus helping
> ordinary Americans more directly, with the benefits trickling up to
> the banks.
> 
> The plan promoted by Paulson and Fed Chairman Ben S. Bernanke is
> somewhere in between: buying up packages of mortgages and hoping that
> the benefits spread both up to banks and down to households.
> 
> "The plan is a trickle-down approach from banks to Main Street," said
> Alan S. Blinder, a professor at Princeton University. "But if you
> reducethe flood of foreclosures and defaults" -- which he would have
> the government do by buying loans directly and then renegotiating the
> terms -- "it will make mortgage-backed securities worth more."
> 
> That might help ordinary Americans but would be extremely difficult to
> administer. The government would have to make decisions on the
> foreclosure and resale of individual houses all over the country.
> Still, many economists with left-of-center political views favor some
> variation of this approach to the plan endorsed by Bush.
> 
> "There is a kind of suggestion in the Paulson proposal that if only we
> provide enough money to financial markets, this problem will
> disappear," said Joseph Stiglitz, a Nobel Prize-winning economist.
> "But that does nothing to address the fundamental problem of bleeding
> foreclosures and the holes in the balance sheets of banks."
> 
> Coming from the other direction, more conservative economists worry
> that by having thegovernment buy mortgage securities, the Paulson plan
> would manipulate prices in that market without getting at the nub of
> the problem: that banks do not have enough capital and are having
> difficulty raising any on private markets.
> 
> In a sign of how the debate over the economy has shifted in recent
> weeks, some conservatives, even as they argue for a relatively limited
> government role, are calling on the government to invest public money
> in private banks.
> 
> "The root of the issue is recapitalizing banks," said Glenn Hubbard,
> dean of Columbia Business School and a former chairman of President
> Bush's Council of Economic Advisers. "That could be done more
> efficiently through the government injection of preferred equity. Then
> the market could figureout the prices of the assets."
> 
> Many of these critics don't care for the assumption behind the
> administration's plan that the market is now pricing these mortgage
> securities incorrectly, a problem that the government intervention
> aims to fix.
> 
> "The premise appears to be that the market is irrationally
> pessimistic," wrote Greg Mankiw, a Harvard University economist and
> another former Bush economic adviser, on his blog this week. "That
> might be so. Nonetheless, one has to be at least a bit skeptical about
> the idea that government policymakers gambling with other people's
> money are better at judging the value of complex financial instruments
> than are private investors gambling with their own."
> 
> Some conservatives are now arguing, notably, that the government
> should be investing in banks.
> 
> Many economists fault the Bush administration and Congressfor moving
> so quickly on the bailout package without allowing more time for
> debate. That sentiment was reflected in the petition organized by John
> Cochrane of the University of Chicago. (None of the economists quoted
> here were signatories.)
> 
> "I totally disagree that this needs to be done this week. It's more
> important to get it right," Blinder said.
> 
> Moreover, some economists said the proposed $700 billion may not be
> enough to address all the problems stretching across the financial
> landscape. "You only show up if you can win, and this is not that
> package," said Simon Johnson, a professor at Massachusetts Institute
> of Technology and former chief economist at the International Monetary
> Fund. "This cannot be the ultimate, decisivesolution if you are not
> addressing the underlying cause."
> 
> The plan is short on details, instead giving the Treasury secretary
> wide latitude to determine how to execute the purchases of mortgage
> securities.
> 
> "I'd like to see how they see the evolution of an end game. There are
> still many questions," said Myron Scholes, a retired professor at
> Stanford University and Nobel Prize winner. He said how long the
> government holds the assets and how they are later resold would be the
> keys to determining whether the plan works.
> 
> Â 
> 
> 


"Jesus was a community organizer and Poncius Pilate was a governor."

- Marilyn Trail, sister of Representative Tom trail (September 8, 2008)

----

"We're a town of about 23,000 with 10,000 college students. The college 
students are not very active in local elections (thank goodness!)."

- Dale Courtney (March 28, 2007)


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