SEPTEMBER 29, 2008--FINALLY, someone said "No"- to the criminal gang that runs the U.S. economy when the House voted down the Bush-Paulson $700 billion Wall Street bailout plan by a vote of 228-205.
Shame on the Democrats! Speaker of the House Nancy Pelosi, Majority Leader Steny Hoyer, and Majority Whip Rahm Emanuel delivered "yea"- votes from 60 percent of Democratic House members and thereby gave the bill the only chance of passage it had.
Hooray for the Republicans! The bill went down to defeat only because 67 percent of House Republicans voted against it.
The bailout bill is one of the most critical ever brought before Congress. The Republicans who defied President George W. Bush, Secretary of the Treasury Henry Paulson, and the House leadership did so because their constituents demanded it. Ideologically, they acted to let the free market do its work. If overextended financial institutions which had invested recklessly go bankrupt, so be it.
For Democrats who voted against the legislation, the rationale was more complex--not enough taxpayer protection and too little help for homeowners facing foreclosure who would lose their homes even with the bill. But they also bucked the leaders of a party which, since pro-business Democrat Bill Clinton won the presidency in 1992, has completely sold out to the financier elite. Since then, Wall Street investment firms have been the principal bankrollers of a party that in recent years has totally betrayed its New Deal roots.
However it happened, the result of today's vote was momentous. After rolling over and playing dead for the financial elite that has held the U.S. economy in a death grip due to the deregulation of the last quarter-century, a majority in Congress stood up and said, "Enough,"- even after the two parties' presidential candidates, Democrat Barack Obama and Republican John McCain discredited themselves by voicing support.
Of course the financiers and their many political lackeys attempted to blackmail the country by claiming the economy would seize up and the stock market crash without the legislation, and, in a self-fulfilling prophecy, the Dow-Jones went down 777.68 points today. Traders interviewed on CNN said that if a bill were not passed before the session ended in a week, the fall could amount to 2000 points.
But so what? Everyone knows that the peak of the stock market last year--over 14,100 points--was the result of the bubble economy. Now that the bubble is bursting why shouldn't the stock market find out where it really belongs, along with the prices of houses, as well as the worth of the banks and stock brokerages that got us into the mess?
So now what happens? It is unclear whether the House leadership will try to revive the bill or just let the voters decide in November who they want to step in to fix an economy which Bush, Greenspan, and their enablers in Congress have ruined.
What then can be done? Well, no one in government has much of an idea, and the huge number of commentators writing about the debacle in print and on the internet and talking about it on TV have offered literally thousands of suggestions. These range from returning to the gold standard to another New Deal. But few of these suggestions really get to the heart of the matter.
We do know one thing--unfettered finance capitalism as a national economic engine, which was the solution offered by Ronald Reagan and his supply-side, trickle-down "revolution,"- has totally, dismally, hysterically failed. And we might suspect the same thing of a return to New Deal Keynesianism--i.e., more federal deficit spending--which is what the "progressives"- are mainly offering.
In discussing the Keynesian alternative, we should remember that it wasn't until World War II that the Roosevelt administration was able to use Keynesian economics to produce full-employment. So do the new New Dealers want a World War III for the same ends?
They wouldn't admit it, but let's be honest. No nation on earth has yet implemented a stable industrial economy. In fact, there is one honest man writing about the crisis. His name is Robert Samuelson, and he is the economics writer for the Washington Post. What Samuelson is saying is absolutely true. This is that no one knows what is going on and no one knows what to do.
"What we are witnessing, in the broadest sense, is the bankruptcy of modern economics. Its conceit has been that we had solved the problem of stability. Oh, there would be periodic recessions, but the prospects of a major economic collapse were negligible because we knew how the system worked and could take steps to prevent it. What's been so unsettling about the present crisis is that it has not conformed to the standard model of business cycles and has not submitted to familiar textbook solutions."-
He goes on to point out the major economic issue of the industrial age is not "supply"- as the monetarists--a.ka. Reaganite trickle-downers--said ad nauseum, but demand: