This is a post about two headlines and one scary story.
Bailout is financial equivalent of the Patriot Act
The passage is stunning:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency," the original draft of the proposed bill says.
And with those words, the Treasury secretary - whoever that may be in a few months - would be vested with perhaps the most incredible powers ever bestowed on one person over the economic and financial life of the United States. It is the financial equivalent of the Patriot Act, after 9/11.
Treasury Secretary Henry Paulson Jr.'s $700 billion proposal to bail out Wall Street is both the biggest rescue and the most amazing power grab in the history of the American economy.
McCain Campaign Can't...Won't...Rule Out Gramm As Treasury Secretary
For those of you who have developed a fondness for Tucker Bounds-themed bondage and domination videos, here's another YouTube where David Shuster chortles his way through a segment in which Bounds cannot or will not bring himself to assure the American people that Phil Gramm - who recently called America a "nation of whiners" but who led the effort for the repeal of the Glass-Steagall Act that paved the way for the economic collapses of today - will not, under any circumstances, become Secretary of the Treasury in the McCain administration. If Bounds keeps at these sorts of "explanations," the world's supply of false equivalencies may run out by the first week of October.
Now, learned nothing from the last seven-plus years, it should be that it's never a good idea to hand anyone -- anyone at all, Republican or Democrat -- that kind of unlimited, unchecked power. Especially in matters that will affect the lives of just about every American now and for some distance in the future.
We've just seen what "self-regulation" in the financial sector did to the economy. Why on earth would the answer be to give even more unchecked power to one person, who will effectively answer to no one?
Look, I don't care who it is, how smart he or she is, or how much experience he or she has. There's no one smart enough or experienced enough to "save" us this time any more than any others. Henry Paulson can't "fix it" for us. However much some of us may desire a "savior" to make it all better, this is a mess we're probably all going to have to work to pull ourselves out of.
"Savior desire." I think that's a pretty good term for it. We saw it after 9/11, when people were scared and insecure, and needed to believe (despite all evidence to the contrary) that the president was a man of immeasurable intellect, wisdom, virtue, and integrity, and surely if we simply handed all the reins of power over to him (with no questions asked, of course) he would make everything alright.
Not to get all biblical, but being an old Sunday School teacher (yes, believe it or not) I was reminded of this story that seems to illustrate the overwhelming desire for a savior or a king to "fix it" for us.
4 So all the elders of Israel gathered together and came to Samuel at Ramah. 5 They said to him, "You are old, and your sons do not walk in your ways; now appoint a king to lead [a] us, such as all the other nations have."
6 But when they said, "Give us a king to lead us," this displeased Samuel; so he prayed to the LORD. 7 And the LORD told him: "Listen to all that the people are saying to you; it is not you they have rejected, but they have rejected me as their king. 8 As they have done from the day I brought them up out of Egypt until this day, forsaking me and serving other gods, so they are doing to you. 9 Now listen to them; but warn them solemnly and let them know what the king who will reign over them will do."
10 Samuel told all the words of the LORD to the people who were asking him for a king. 11 He said, "This is what the king who will reign over you will do: He will take your sons and make them serve with his chariots and horses, and they will run in front of his chariots. 12 Some he will assign to be commanders of thousands and commanders of fifties, and others to plow his ground and reap his harvest, and still others to make weapons of war and equipment for his chariots. 13 He will take your daughters to be perfumers and cooks and bakers. 14 He will take the best of your fields and vineyards and olive groves and give them to his attendants. 15 He will take a tenth of your grain and of your vintage and give it to his officials and attendants. 16 Your menservants and maidservants and the best of your cattle [b] and donkeys he will take for his own use. 17 He will take a tenth of your flocks, and you yourselves will become his slaves. 18 When that day comes, you will cry out for relief from the king you have chosen, and the LORD will not answer you in that day."
19 But the people refused to listen to Samuel. "No!" they said. "We want a king over us. 20 Then we will be like all the other nations, with a king to lead us and to go out before us and fight our battles."
Not a perfect fit, but it seemed apt. We got our "king." and look where it got us.
Again, I go back to Pema Chodron.
The difference between theism and nontheism is not whether one does or does not believe in God. It is an issue that applies to everyone, including both Buddhists and nonBuddhists. Theism is a deep-seated conviction that there's some hand to hold: if we just do the right things, someone will appreciate us and take care of us. It means thinking there's always going to be a babysitter available when we need one. We all are inclined to abdicate our responsibilities and delegate our authority to something outside ourselves. Nontheism is relaxing with the ambiguity and uncertainty of the present moment without reaching for anything to protect ourselves. We sometimes think that dharma is something outside of ourselves -- something to believe in, something to measure up to. However, dharma isn't a belief; it isn't a dogma. It is total appreciation of impermanence and change. The teachings disintegrate when we try to grasp them. We have to experience them without hope. Many brave and compassionate people have experience them and taught them. The message is fearless; dharma was never meant to be a belief that we blindly follow. Dharma gives us nothing to hold on to at all.
Nontheism is finally realizing that there's no baby sitter that you can count on. You just get a good one and then he or she is gone. Nontheism is realizing that it's not just babysitters that come and go. The whole of life is like that. This is the truth, and the truth is inconvenient.
For those who want something to hold on to, life is even more inconvenient. From this point of view, theism is an addiction. We're all addicted to hope -- hope that the doubt and mystery will go away. This addiction has a painful effect on society: a society based on lots of people addicted to getting ground under their feet is not a very compassionate place.
It can be an even less compassionate place when you consider that even if you start out with one king you eventually end up with another, perhaps a bit meaner than the previous one, but with just as much power.
Keep in mind that the bailout is going to be in effect after the election, folks. We'll get a new administration, and a new Treasury secretary, who will inherit all the power Henry Paulson seeks. (Note: don't trust people who want a king, and definitely don't trust anyone who wants to be king.)
This most recent cover of Newsweek might be amusing.
Until you consider the man who could be King.
And consider how much we already owe him.
Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.
...But Gramm's most cunning coup on behalf of his friends in the financial services industry-friends who gave him millions over his 24-year congressional career-came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead-even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.
It's not exactly like Gramm hid his handiwork-far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps-and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."
...Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill-which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers-a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.
In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important-and more lucrative-than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the CFTC's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."
And how much he then benefited from it.
With the U.S. economy now battered by a tsunami of mortgage foreclosures, the $30-billion Bear Stearns Companies bailout and spiking food and energy prices, many congressional leaders and Wall Street analysts are questioning the wisdom of the radical deregulation launched by Gramm's legislative package. Financial wizard Warren Buffett has labeled the risky new investment instruments Gramm unleashed "financial weapons of mass destruction." They have fed the subprime mortgage crisis like an accelerant. While his distracted peers probably finalized their Christmas gift lists, Gramm created what Wall Street analysts now refer to as the "shadow banking system," an industry that operates outside any government oversight, but, as witnessed by the Bear Stearns debacle, requiring rescue by taxpayers to avert a national economic catastrophe.
While the nation's investment bankers are paying a heavy price for their unbridled greed (in billions of dollars of write-offs), Gramm has fared quite nicely. He currently serves as a vice president at UBS AG, a colossal, Swiss-owned investment bank, the post, no doubt, a thank you for assiduously looking out for Wall Street interests during his 23 years in public office. Now, with the aid of his longtime friend Arizona Sen. John McCain, Gramm may be looking at a quantum leap in power and influence.
Now ask yourself, what might Phil Gramm do if he were king. Because he could be just that.
Fortunately, no one's asking for a king right now. There's plenty of outrage over the outrageous proposal for a bailout. But we could get one whether we like it not, if Congress votes for a "clean" bailout plan, and John McCain gets elected.
Fortunately, there's still time to prevent both. There's still time to say loud and clear "Don't give us a king!" Now, and at the ballot box.