Wednesday, September 24, 2008

Pay No Attention to the Man Behind the Curtain...

One of my favorite - and most useful to quote - lines from the classic film The Wizard of Oz comes when Toto the dog pulls aside the draperies in the throne room to reveal the old man manipulating the controls which produce the image of The Great and Powerful Oz. Seeing that he has been exposed, the man shouts into his device, "Pay no attention to the man behind the curtain!"


That's rather how I feel as I watch the Wall Street bailout take shape.

Treasury Secretary Paulsen and Fed Chairman Bernanke are urging rapid action to "stabilize the situation" and "avoid very serious consequences," the President is soberly pontificating about quick and bipartisan action, and - of course - Republicans and Democrats in Congress are pulling in different directions. Most of this is going on behind closed doors, because those of us in The Great Unwashed can't be trusted to understand the weighty matters involved, and should just trust our Betters to solve the problem.

Pay no attention to the man behind the curtain.

Which, of course, is why we're peering out of this pile of smoldering economic wreckage now...for years, nobody paid any attention to the men behind the curtains. And worse, Congress was very busy helping the financial industry hang ever more curtains.

This CNN article talks about Senator McCain's "five fixes" to the financial recovery plan (which, as far as I can tell, can't be fixed because it hasn't been agreed on yet). His five fixes include:

1. Greater accountability for the bailout, including an "oversight board." Who, exactly, will be responsible for deciding who gets how much help, and who will monitor how that money is being used and accounted for?

2. A plan to help the taxpayers who are paying the bill recover the $700 billion we're being asked to pony up.

3. Complete transparency in the process: Senator McCain is quoted as saying, "This can't be cobbled together behind closed doors. The American people have the right to know which businesses will be helped, and what selection will be based on, and how much that help will cost" (pay attention to the man behind the curtain for a change?).

4. A cap on the pay of executives of companies receiving federal bailout help. The suggested cap is the largest pay rate for a federal official - currently that of the President, or $400,000 per year. I don't know about most CEOs, but I could probably live on $400K per year.

5. No added earmarks or other pork barrel spending (because you just know that there are more bridges to build in Alaska and railroad museums you and I must fund in Pennsylvania).

I like these ideas. Of course, Senator McCain might have considered these ideas at the time he was championing the deregulation that helped bring us to this mess, but that train has sailed.

For his part, Senator Obama has said that it is "...wholly unreasonable to expect that American taxpayers would or should hand this administration or any administration a $700 billion blank check with absolutely no oversight or conditions, when a lack of oversight in Washington and on Wall Street is exactly what got us into this mess." He went on to say that taxpayers should be treated like investors if they are being asked to underwrite the bailout.

Good words. But then, he went on to advocate middle-class tax cuts as being "absolutely necessary to strengthen the economy." I like the idea of lower taxes as much as the next guy, but I have to ask myself this: if we cut everyone's taxes, where is the $700 billion for the bailout going to come from? This article from MSN Slate Magazine asks that question pretty well. When you and I buy something, we generally know how we plan to pay for it (even if it's with a credit card). But then, we don't usually spend $700 billion at a whack.

So where is that money coming from if it isn't coming from our taxes? You have to know that the Republicans will never let any of the businesses suffer the burden of paying more taxes.

Who pays?

Don't worry. Trust Congress and its advisors from the financial industry.

Pay no attention to the man behind the curtain.

Have a good day. More thoughts tomorrow.

Bilbo

P.S. - as if I weren't feeling sour enough, the first couple to be eliminated on Dancing with the Stars this season was Jeff Ross and Edyta Sliwinska. Forget Jeff Ross...I'm in lust with Edyta. Sigh. It's going to be a long season until the finals without her.

B.

6 comments:

The Mistress of the Dark said...

The problem is they assume that once the fix happens everyone will be investing and doing business responsibly again.

I don't believe in this nation of greedy buggers that this can happen.

Anonymous said...

Actually, the Mistress of the Dark has hit the real nail on the real head. This bailout will have the opposite effect on the markets from its intention. Bailouts encourage less responsible behaviorby removing moral hazard. The logical outcome of the plans I've seen in the newspaper is Nehru type socialism. For example, the bailout legislation includes a salary cap for executives. $400,000.00 isn't enough to get the top talent, and it won't keep up with the runaway inflation which often follows foolish government interference in markets. The bailout gives the government more and more control of markets, as a cure to the irresponsible behavior the government encouraged!!!! Therefore the government feels compelled to control the behavior it engendered. Enjoy your current standard of living; we will be the last Americans to live well if all the logical consequences of this bailout go the way I figure it will. It's the biggest step on the road to American socialism and the end of the dynamism of the American economy.

More important subject: The producers put Edyta with Jeff in the hope she could make up for his total ineptitude as a dancer. Bad choice, because Bilbo isn't the only person on earth who has a crush on Edyta. They should have known he'd get wiped out on the first day; if they gave him a competent but not memorable partner, we'd still be tuning in to see the terrific Edyta with somebody that she deserves!

You know who.

Mike said...

It's funny to look at what Bill Gates is worth and think that 40 billion looks like chump change now. I know I could get by on HALF that.

KKTSews said...

I agree with Mistress and Anon. Not only do I worry that a bailout encourages ineptitude from the businesses bailed-out, but the whole mess encourages the consumer to continue on their reckless streaks. Remember the reason there are all those bad mortgages? A whole lot of folks decided to buy houses to make a quick buck with little income to pay the bills, no understanding of the consequences / adjustable rates, etc, and they've now defaulted. I hate to sound elitist, but I pay my mortgage every month and don't want to bail out yahoos who sought to make a quick buck any more than we want to bail out the bosses of Fannie Mae/Freddie Mac, Lehman or others.

There. That's off my chest! I'm glad to be back reading the blog after 8 days without internet (4 without power) in the aftermath of Ike's strike in Ohio.

lacegem said...

I would like to ask the gov't to bail me out of my debts. I mean wipe out my mortgage, my HELOC, & even my credit card debts. Then perhaps they could also give me a loan that I obviously don't qualify for therefore when the interest starts going up, I have no way of paying. And so I default on the loan, but instead of holding me responsible, they'd blame somebody else and grant me amnesty. I think what's good for those CEO's and all should be good for someone like me. The gov't is good at playing the blame game & no one is stepping up to the plate & admit fault. Now they're trying to impress the American people by letting us know that they have a plan, but in reality there really is no plan & if there is it probably won't work because just like you said where are they going to come up with all that cash?
I just want to comment on you thoughts about your favorite dancer who you admit your in LUST. All I can say is you & the rest of the male population to include the seventh fleet. Anyhow I gave up watching Dancing with the Stars because it's nothing more than a popularity contest. Most of America only vote for the cute couple or the hot looking star or dancer & not necessarily the best dancer. I can't take it anymore because as a dancer myself I do appreciate the art of dancing & it's all about form, to include posture & appearance, style which includes grace & technique. I'd rather watch the true ballroom dancing on PBS.

zero_zero_one said...

Pay no attention to the man behind the curtain is a fantastic quote :)