Either Way, The Marxists Win

Let's re-set the table on this whole "Wall Street Meltdown" business. 

In a nutshell: Democrats, under the direction of the Clinton administration in 1999, took the Carter-originated Community Reinvestment Program, a boondoggle intended to subsidize home ownership for the poor, and essentially privatized it by fascistically ordering the mortgage industry to carry out the program's mandate using their own resources.  The conduit for this scheme was Fannie Mae and Freddie Mac, which were both helmed by Democrats.

In practice this meant that mortgage lenders were forced to write a ton of bad loans that were highly likely to end up defaulted and then "securitized" them and collateralized them and traded them as though they were worth something.  They became the hollow foundation for an orgy of bread and circuses that enriched said Democrats and filled the campaign coffers of their elected comrades.

In the meantime, the bottom line remained the bottom line.  Since private sector entities have to earn their income, unlike the government which simply confiscates it, this meant a vast cash outflow and vast losses, which said Democrats simply cooked the books to keep hidden as long as possible.  Since this foundation WAS hollow, when it collapsed, as it was inevitably going to, it took with it not just a large swath of the mortgage sector but many of the finanacial concerns that had bet on that mound of worthless paper.  And since businesses, unlike governments, cannot simply run huge deficits and keep on operating, the result is what has transpired over the past week: gargantuan bankruptcies that shook the financial sector and sent seismic waves through the broader economy beyond.  All because of Democrat greed and lust for power.

And guess who now sits poised to reap the benefits of this deliberately engineered economic maelstrom: those same Democrats.  And the man delivering that prize to their metaphorical doorstep?  Bush Treasury Secretary Henry Paulson.

Paulson, along with Federal Reserve Chairman Ben Bernanke, presented to Congress last weekend a $700,000,000,000 (as in BILLION) bailout plan.  Not of one firm, like Bear Stearns a month ago, or American International Group last week, or even Fannie Mae and Freddie Mac, but of THE ENTIRE MORTGAGE LENDING SECTOR.  Under Paulson's unchecked and unreviewable (by either Congress or the courts) direction, the U.S. Treasury Department would use close to a TRILLION dollars of taxpayer money to take off the hands of the surviving mortgage firms every last worthless subprime loan.  Supposedly then to be sold off in turn to any suckers Paulson could find in an attempt to defray the staggering cost of this gigantic financial mulligan.

Just on general conservative, free market principle I would bitterly oppose this jaw-dropper, but for one mitigating detail: the driving force behind the whole subprime lending craze, which was NOT "Wall Street greed" but Democrat-led government fascistic meddling in financials markets where they did not belong (oh, yes, and Democrat greed).  It was Bill Clinton and Christopher Dodd and Barney Frank and Jim Johnson and Franklin Raines and Barack Obama who forced mortgage lenders to give away a trillion and a half smackers to poor borrowers who couldn't repay it; they were the ones who used the police power of the state to compel banks to abandon sound business practices and sane risk management and then block repeated Republican attempts to rein it in.  Since the federal government ultimately bulldozed Wall Street into this disaster, it is not entirely inappropriate that the federal government clean up the mess they made.

That, though, harkens back to two basic questions: (1) does something have to be done, and soon, to keep the WSM from pulling the larger economy into a crippling recession - the rallying cry of Paulson and Bernanke - or is that just self-serving fearmongering?  And (2) if the former, just exactly what should be done?  Really, all there is is the former, because all "doing nothing" really means is the same as the Paulson plan only piecemeal and at an eventually even greater cost.

We KNOW what SHOULD be done, because former House Speaker Newt Gingrich told us on Sunday:

Four reform steps will have capital flowing with no government bureaucracy and no taxpayer burden.

First, suspend the mark-to-market rule which is insanely driving companies to unnecessary bankruptcy. If short selling can be suspended on 799 stocks (an arbitrary number and a warning of the rule by bureaucrats which is coming under the Paulson plan), the mark-to-market rule can be suspended for six months and then replaced with a more accurate three year rolling average mark-to-market.

Second, repeal Sarbanes-Oxley. It failed with Freddy Mac. It failed with Fannie Mae. It failed with Bear Stearns. It failed with Lehman Brothers. It failed with AIG. It is crippling our entrepreneurial economy. I spent three days this week in Silicon Valley. Everyone agreed Sarbanes-Oxley was crippling the economy. One firm told me they would bring more than twenty companies public in the next year if the law was repealed. Its Sarbanes-Oxley’s $3 million per startup annual accounting fee that is keeping these companies private.

Third, match our competitors in China and Singapore by going to a zero capital gains tax. Private capital will flood into Wall Street with zero capital gains and it will come at no cost to the taxpayer. Even if you believe in a static analytical model in which lower capital gains taxes mean lower revenues for the Treasury, a zero capital gains tax costs much less than the Paulson plan. And if you believe in a historic model (as I do), a zero capital gains tax would lead to a dramatic increase in federal revenue through a larger, more competitive and more prosperous economy.

Fourth, immediately pass an “all of the above” energy plan designed to bring home $500 billion of the $700 billion a year we are sending overseas. With that much energy income the American economy would boom and government revenues would grow.

In other words, let the market heal itself by setting more of it free.  Works every time, and it'd work this time as well.

Except for several dozen missing prerequisites: the number of additional Republican votes on Capitol Hill that would be necessary to give the Gingrich proposal a chance in hell of even being considered, much less enacted.  Those votes were there up until a couple of years ago, when tighty-righties myopically decided to "punish" their own by staying home on Election Day and letting the party of Marx and Alinsky slither back into power.  But not now, and even less so after this November when several dozen more Pachyderms are slated to join their cashiered predecessors in retirement.  Consequently we don't have a "good" choice, but a range of bad options ranging from horrid to God-awful to nightmarish.

One does not even need to examine the Paulson proposal because there's no way on Earth that the Dems would hand a blank, string-free check to a Republican Treasury Secretary that will be gone in a few months regardless.  Which is another way of saying that as far to the Left as the Bush Administration has started this negotiation, there's still only one direction in which it's likely to go.

I take that back - there is a need to at least briefly touch on the Paulson plan, if only to show how bad the aforementioned starting point really is.  From Mr. Newt:

Implementation of the Paulson plan is going to be a mess. It is going to be a great opportunity for lobbyists and lawyers to make a lot of money. Who are the financial magicians Paulson is going to hire? Are they from Wall Street? If they’re from Wall Street, aren't they the very people we are saving? And doesn’t that mean that we’re using the taxpayers’ money to hire people to save their friends with even more taxpayer money? Won't this inevitably lead to crony capitalism? Who is going to do oversight? How much transparency is there going to be? We still haven't seen the report which led to bailing out Fannie Mae and Freddie Mac. It is "secret". Is our $700 billion going to be spent in "secret" too? In practical terms, will a bill be written in public so people can analyze it? Or will it be written in a closed room by the very people who have been collecting money from the institutions they are now going to use our money to bail out?

Did anybody seriously believe that the Democrats wouldn't take a bloated, corrupt mess like this one and try to make it even worse?

This is just the appetizer:

Congressional Democrats are pushing for a new $50 billion economic-stimulus plan as a way not only to jolt the economy but also to help themselves politically in November’s elections. The plan would include new spending for infrastructure, an extension of unemployment benefits, energy assistance to lower-income families and aid to states to help pay Medicaid health-care costs for the poor. Democratic presidential nominee Barack Obama touts the plan almost daily.

“This plan can’t just be a plan for Wall Street,” he told a Charlotte, N.C., audience Sunday. “It has to be a plan for Main Street. We have to come together, as Democrats and Republicans, to pass a stimulus plan that will put money in the pockets of working families, save jobs and prevent painful budget cuts and tax hikes in our states.”

Most Republicans sharply disagree. They note that negotiators from Congress and the Bush Administration already are eyeing a financial-rescue package that’s estimated to cost $700 billion.

With this fiscal year’s federal budget deficit already headed over $400 billion, and next year’s likely to top that, “sooner or later there will have to be a reckoning,” said Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.

Of course, if Democrats had ever been concerned about Main Street, they wouldn't have used Wall Street - which does, after all, host the retirement nest eggs of the entire "investor class," which, last I checked, resides predominantly on "Main Street" - as their own personal piggy bank.  They would also acknowledge that the only "economic stimulus" plan that ever actually creates an "economic stimulus" is the sort that provides incentives that encourage additional economic activity - in short, TAX CUTS.  Simply spraying money around indiscriminantly does nothing other than to transfer it from the pockets of the taxpayers into the pockets of the tax-consumers.  THAT is the "zero-sum game."

But this was just the Donks' ante for even letting Secretary Paulson in the front door.  Behold, for your horrified perusal, the Dodd alternative:

Senate Banking Committee chairman Chris Dodd has proposed an alternative to Paulson’s plan that would essentially nationalize the U.S. banking system. Under Dodd’s plan, companies selling assets to the government would also have to give up an equity share, agree to limited executive compensation and submit to whatever other conditions Dodd can think up between now and when the bill reaches the floor. This is the same approach the Fed took with AIG. The Treasury Department has rejected this approach because it would discourage firms from selling bad assets until they were on the brink of failure, thus prolonging the current period of uncertainty and crisis. [emphases added]

And there it is.  The endgame of this entire Democrat plot (if you credit them with that much Machievellian cunning) or cynical opportunism (if you don't).  Outright, permanent nationalization of the entire financial system.  Not facilitating acquisition by other banking entities, a la Bear Sternes, not just Fannie Mae and Freddie Mac, which were quasi-governmental entities anyway, but the whole kit & kaboodle.  Just like AIG.  The United States government holding, potentially, every mortgage in America.

And remember that this "counterproposal" comes from the same man who was the #1 recipient of partisanly incestuous Fannie Mae and Freddie Mac campaign contributions - with Barack Obama being second in line in a fourth the time.

So which side holds the better hand in this game of socialist poker?  Between now and the election (which is all anybody in Congress is thinking of right now), it's tough to say.  The public at large is either opposed to or in favor of a massive Wall Street "bailout," depending upon the survey.  Neither side, and neither presidential candidate, wants to guess wrong on the potential consquences of doing something versus doing nothing.  If John McCain leads the GOP minority into opposing a bailout, he can then run against the PR trifecta of Democrat culpability, "Wall Street greed," AND an unpopular outgoing president.  Which, politically speaking, would be a lot savvier than his feckless floundering on the question thus far, highlighted by his touting of a Resolution Trust Corporation-like oversight board in place of Secretary Paulson to inventory the feds' vast new financial holdings and a Rumsfeldesque demand for the head of SEC Chairman Chris Cox on a platter.  But if the Chicken Littles are right and doing nothing results in the cascade effect that could already be in motion from the wide distribution of all this worthless mortgage paper - which, contrarily, the three previous bailouts (Bear Stearns, Fannie/Freddie, AIG) haven't even slowed down - triggering a general economic collapse, then Sailor ends up looking like Herbert Hoover before even getting to Election Day.

There is some risk for the Dems as well.  They're already on the hook for this mess as it is, and if they hold out for a GOP fig leaf to cover this unprecedented convulsion of Marxism and Republicans don't bite, they'd be left holding the PR bag if the Chicken Littles prove to be....well, Chicken Littles.  Whereas if they broke all precedent and cooperated with President Bush in giving him a "clean (i.e. 'de-Doddified') bill", they'd be cutting against the public grain again, and if a collapse happened anyway, that bag would be Hefty-sized, and full to the brim.

After the election?  It won't matter either way for congressional Dems, since their numbers are guaranteed to grow regardless.  But if Barack Obama wins, and even a de-Doddified Paulson plan is in place, that de-Doddification will not be long for this world.  And even a "clean" bill won't be distinguishable from abysmal.

Maverick hasn't committed to the Paulson plan one way or the other, which doesn't exactly burnish his "decisive leadership in times of crisis" halo.  Both Paulson and Senate Majority Chisler "Dirty Harry" Reid want him on board for fig-leaf purposes.  Perhaps he realizes what a "damned if I do/damned if I don't" position he's in. 

Or maybe he recognizes that the legislative tides are making his decision for him:

It may be time for the Bush Administration to start looking for a Plan B.  Two Republican Senators have now come out in opposition to the Paulson bail-out plan, and with Democrats like Chris Dodd allying themselves to the conservative rebellion in Congress, the White House has begun looking very isolated in its attempt to resolve the credit crisis.  Richard Shelby and Jim DeMint have begun a conservative pushback to rescuing Wall Street from a situation that they claim is all Wall Street’s doing.

And which they don't trust the same government that created that situation to "fix".

In a sense, it's no different than what The Chosen One is doing - hanging back and seeing which direction the wind ends up blowing.  Which makes this McCain ad wincingly ironic:

Yeah, McCain knew what to do then.  But does he know what to do now?  His "congressional allies" seem to be making up their minds, though since they're going to get decimated in November anyway, it's not like they have much else to lose.  But taking that stand may be gaining them momentum at least to stop the bailout gravy train, if not get the Gingrich plan enacted in its place.

So, then, the best hope for conservative free marketeers is not doing what should be done, but somehow trying to stop the government from making it even worse, and gambling that the damage already done to the financial sector by the Democrats won't be enough to pull down the economy and guarantee a bona fide "crisis" and the complete communization of America of which the New Deal was but the miniscule downpayment.

In other words, we will become the United Soviet Socialist States of America slowly by degrees, or we can escape that fate at the risk of incurring it all at once.

It's a crying shame this Friday's presidential debate isn't the economy-focused one, isn't it?

UPDATE: Evidently Barack Obama will be debating an empty rostrum - which might actually give him a chance of winning the first encounter:

John McCain asked the Presidential Debate Commission on Wednesday to postpone Friday’s scheduled debate with Barack Obama so that he can work on the financial crisis bailout plan now on Capitol Hill.

The Arizona Republican senator said he will suspend his presidential campaign on Thursday to return to Washington to help with bailout negotiations. He urged Obama to do the same.

That's leadership of a sort, I guess.  Of course, we don't know what McCain's presence in the Senate will add to the Paulson debate, or which side he'll take.  Although the fact of a growing conservative rebellion led by two of Lord Queeg's GOP Senate colleagues tends to suggest that Ensign Ed's take is dismayingly prescient:

If McCain takes ownership of the bailout effort and manages to get his suggestions on limiting executive compensation and so on as part of the finished product, he will be able to trot McCain-Dodd on the campaign trail as yet another reform he’s accomplished by working across the aisle.

Does Morrissey not have a clue as to what he's saying here?  McCain-Dodd?  The Dark Lord of the Sith riding in with the RINO cavalry to beat down his conservative party-mates on behalf of a hard-left "solution" to a hard-left-created "crisis" that will only make it worse?  That IS what the GOP nominee considers to be "going to work for the nation".  How does that help his presidential hopes, exactly?  Just how far is Palinmania supposed to stretch?

Yeah, Dirty Harry flipped from begging McCain to do precisely what he's done today to begging him to stay away instead.  Which suggests several possible angles: (1) he wanted to trap McCain into backing Paulson-Dodd as a human shield against the PR blowback from this unpopular bailout; or (2) he wanted to be able to blame McCain later for his "lack of leadership" if the bailout bill failed and the economy promptly folded like a K-Mart deck chair; or, now, (3) he doesn't want McCain to get any credit if the bailout bill passes and a "New Great Depression" is averted.  Which, of course, there'll be no certain way of knowing is the case, but for which McCain could take credit anyway.

Meanwhile, The Chosen One has his beeper with him if his Senate colleagues find themselves in need of divine intervention:

Obama supporter and chief debate negotiator Representative Rahm Emanuel, D-IL, told MSNBC that "we can handle both," when asked about his reaction to McCain's call to postpone the first debate because of the Administration's bailout plan.

He believes they are making good progress on Capitol Hill on the bailout and his initial reaction is that the work on the Hill should not preclude the debate from taking place.

An Obama campaign official told ABC News the Democratic presidential candidate called McCain this morning to suggest a joint statement of principles.

McCain called back this afternoon and suggested returning to Washington.

Obama is willing to return to Washington "if it would be helpful." But reiterated Obama intends to debate on Friday.

Hugh Hewitt, as you might expect, is gushingly calling this Obama's "Katrina moment," comparing his "What's the big deal?" attitude to the Left's depiction of President Bush's alleged indifference to the 2005 hurricane disaster that ravaged New Orleans.  Without, I'm assuming, the Wall Street equivalent of ten thousand phantom corpses piled up on the floor of the SuperDome and roving rogue National Guardsmen randomly carrying out freelance ethnic cleansing of African-Americans and CIA-planted explosive charges blasting open levees.

Mayhap so and mayhap not.  My observation of the past decade and a half of American politics is that Republicans never get much credit for "putting country first," and that Democrats tend to benefit a lot more from putting partisan politics at the forefront.  Which puts me in the unaccustomed analytical company of AP:

He’s trying to siphon off some of Obama’s strength with voters on the economy, obviously, but er … at the expense of a debate on foreign policy that would have played to his own strength? What does McCain gain by steering the campaign towards an issue for which the public blames his party?...

Well, the campaign is pretty much already obsessed on that issue, and McCain probably thinks that by springing into action like this, he can get himself and his party perceived as part of the "solution."  Even though his party is rebelling against it, and he'll only diminish his own base's enthusiasm by cutting them off at the knees in order to partner with another neoBolshevik on another piece of neoBolshevik legislation.  Meanwhile, Lucifer is left with an el primo opportunity to turn Friday's debate into an unopposed solo national address that systematically hacks to bits McCain's foreign policy manifesto - or subtley co-opts it.  Unless he perceives that Sailor's return to Washington is hurting him, in which case he'll follow along in McCain's wake yet again, as J-Ger suspects.

Fittingly, I am left once again feeling like I have no dog in this fight.  I think McCain is hurting himself by suspending his campaign (including pulling down his advertisements) and abandoning the field to Obama, and will hurt himself even worse by putting his stamp, fingerprints, and name on legislation that will nationalize at least most of the banking industry.  It diminishes his chances of getting elected, and guts whatever presidency he could have if by some miracle he does.

Leadership that leads in the wrong direction, and forgets the task at hand, is no leadership at all.  If we're doomed to becoming the United Soviet Socialist States of America anyway, why, pray tell, do we need a "Republican" fronting it?

UPDATE II: Wow, it took all of an afternoon for False Messiah to blink....on attending tomorrow's photo-op at the White House.

On the other hand, having returned to Washington, D.C. for that, wouldn't it be that much more...awkward for him to jet back to Mississippi and debate empty air?

UPDATE III: Is Mr. Newt being an optimist or just a spinning party hack?:

Today john McCain showed what it meant to put country first.

He put everything on the line to try to put together a bipartisan sizable economic package to replace the failed Paulson bailout package.

This is the greatest single act of responsibility ever taken by a presidential candidate and rivals President Eisenhower saying, ‘I will go to Korea.’

Every House and Senate Republican should join him in seeking the best ideas and the best solutions from across the country.

This is the day the McCain-reform Republican Party began to truly emerge as a movement which puts country first, solutions first, and big change first.

If House and Senate Republicans can help McCain put together a three part economic package history could be made.

We need: an economic growth component; an energy solution; and a work-out (not a bail-out) for the financial sector.

If McCain can develop this plan, bring enough Democrats to support it to get passage, and then convince President Bush to sign it, this will be one of the most amazing achievements in the history of presidential campaigns.

In short, if John Sith McCain can convince enough Democrats to act directly against the ideology and partisan interests of their own party, he will be a miracle-worker.

Those are some awfully big ifs.  Suppose, just suppose, that he can't get Donks - who will have enormous majorities after this election and absolutely no reason to bolster McCain's image as a leader, patriot, and deal-maker six weeks before Election Day - to cave and go along with tax cuts and drilling and not taking over the entire financial sector?  Indeed, what if Sailor can't disabuse them of the core belief that a Second Great Depression would entrench them in power for the next century? 

Answer: He'll cave to THEIR demands and produce a bill even worse than the Paulson proposal.  Because, after all, he's now staked all his prestige, all of his "maverick" reputation, and his presidential ambitions, on producing a "consensus" bailout deal in a matter of hours.  In so doing he has handed the entire negotiating advantage to the Democrats, who have a lot less at stake than McCain does and can simply wait him out until he either folds or the economy implodes, either outcome of which will be just fine with them.

McCain-Dodd is coming, folks.  And it'll make McCain-Feingold, McCain-Kennedy, et al look like a Ronald Reagan nostalgia festival.