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US Congress Poised to Pass Paulson Plan as Sugarcoated Poison Runs through Global Markets

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opednews.com

The United States Congress is set to vote on a bipartisan financial bailout measure, the Paulson Plan, on Monday following another tumultuous week in world markets.

The $700 billion bill cedes less authority to the US Treasury by phasing in rescue dollars in increments---$250 billion, $100 billion, and $350 billion---controlled by the Congress. The first $250 billion installment would be available immediately and the president could separately certify the executive's intention of borrowing two additional payouts subject to a congressional resolution of disapproval. The president may veto the resolution requiring a legislative supermajority (2/3 vote of both the House of Representatives and the Senate) to override the chief executive's veto.

The Hamiltonian plan, proposed over a week ago by US Treasury Secretary Henry M. Paulson, Jr., is the largest government intervention on behalf of private financial interests in United States history.

Other provisions of the bill include a clause allowing the government to insure rather than buy some home loans, limits on executive compensation for companies that benefit from the plan, a provision for allowing the government to renegotiate mortgage terms for some homeowners, the issuance of stock warrants in exchange for federal funds, and a mandate that the administration submit a recovery plan after five years to detail how the government intends to recoup any losses connected with the bailout.

The bipartisan effort to craft a law that could win the support of all political factions on Capitol Hill resulted in the addition of numerous provisions: liberals demanded limits on CEO salaries, the ability to renegotiate unfair mortgages to keep people in their homes, and heightened oversight authority; conservatives sought to limit the federal government's exposure to bad debt, questioned how the government intends to value assets, and expressed uneasiness over the outlay of taxpayer money to cover the bailout; both parties demanded the legislation provide the government with the ability to benefit from future profits of financial institutions participating in the rescue program.

The plan is supported by the White House and the bipartisan leadership of Congress. Both presidential candidates, Senators Barack Obama (D-IL) and John McCain (R-AZ), signalled cautious support. The Speaker of the United States House of Representatives, Nancy Pelosi (D-CA), said the bill was not a bailout, but a buy-in to save the American economy. Senator Judd Gregg (R-NH), Ranking Member of the Senate Budget Committee, urged support for the measure. A renegade faction of conservatives in the Republican congressional caucus have voiced objections to the proposed legislation.

The congressional vote, tentatively scheduled for Monday, caps a year of turbulence, uncertainty, and volatility in global financial markets. While the bipartisan bill looked ready for passage on Monday, the economic outlook remains far from certain.

The $700 billion bailout is largely dependent on the goodwill and esteem of foreign governments and investors in China and the Middle East. The WSJ reports that most of the money will be generated by Treasury debt purchased by overseas interests.

Global regard for the United States, however, may be waning as toxic American assets circulate throughout world financial veins clogging the arteries of financial growth and market development worldwide.

In Hong Kong on Sunday 400 protestors demonstrated against local banks accused of deceptive bond sales backed by Lehman's which declared bankruptcy last week. The International Herald Tribune reported that demonstrators, some wielding placards that read, "Return my blood money" and "Crafty salesmanship, sugarcoated poison,"  marched through the financial district to government headquarters demanding redress of their grievances.

The territorial government was forced to inject $500 million (USD) into the Hong Kong banking system last Thursday, according to the BBC, to cover a run on deposits by anxious account holders.

According to The Australian online, Australia, China, India, Russia, and other emergent economies are poised to accumulate importance as world financial centers while the balance of economic power shifts away from New York City and London.

In the United Kingdom on Sunday, Her Majesty's Treasury and the Financial Services Authority sought to nationalize the British bank Bradford & Bingley after shares in the firm plunged last week.

The first outward signals of financial meltdown began in the UK over a year ago when the British government seized Northern Rock plc and nationalized the banking operation on September 14, 2007.

In other European affairs:

Fortis, the Belgian-Dutch multinational banking, insurance, and investment giant, one of Europe's largest, prepared to sell off assets to avert  further disruptions and restore confidence after its stock fell for five straight days. Later Sunday the governments of Belgium, Luxembourg, and the Netherlands fractionally nationalized Fortis and ordered their central banks to front a combined 12.2 billion euros.

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Constance Lavender is an HIV-Positive pseudonymous freelance e-journalist from a little isle off the coast of Jersey; New Jersey, that is...

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