The Green Papers
The Green Papers

The Financial Crisis, Bailout Plan
and the '08 Presidential Campaign

by Richard E. Berg-Andersson Staff
Fri 26 Sep 2008

The bastards broke the People's back with their usury and now they want to unload on the Government. No, no! Let them die: the People will survive!--
Congressman FIORELLO H. LaGUARDIA (Republican, Socialist, Progressive [in various elections]-New York [1923-1933]- later, 'Fusion' Mayor of New York City: 1934-1945)- on government aid to banks in the wake of the Stock Market Crash of 1929 and the ensuing economic crisis leading to the Great Depression of the 1930s.

[F]or all intents and purposes, 'Dub-ya' is on the verge of becoming DPW- as in 'Dead President Walking'... [O]nce President Bush plays his role as titular Party leader at the Convention in Minnesota... 'Dub-ya'- at least politically- pretty much, as the proverbial "lame duck", all but disappears. America- and the World- will, once John McCain has accepted his Party's nomination, care far more about what John McCain and Barack Obama are all about than what George W. Bush is up to (except, again, in a crisis that requires presidential leadership: even in such a case, there will be just as much- if not more- talk about 'what might McCain have done in this situation?' and 'how would Obama have handled this?').--
RICHARD E. BERG-ANDERSSON, Commentary of 31 August 2008 as posted here on

If there was one thing that showed, more than anything else, that President George W. Bush is, indeed, a "lame duck", it was the headlines on many an American newspaper yesterday morning: Bush pushes Bailout Plan, the headline (or some variant thereof) would read-- but the photos accompanying the articles underneath these were not of the incumbent President but, rather, the two Major Party candidates- Republican John McCain and Democrat Barack Obama.

Seems the "torch" has already been "passed"-- we just don't know yet to whom, however!

While standing in front of the Reflecting Pool before the United States Capitol earlier this very week while on a post-Convention/pre-Debates "rest and recreation" trip down to Our Nation's Capital, I looked at the high West Front of that famous building atop what was once Jenkins Hill and thought 'Hmmm-- in less than 4 months now, someone is going to have to take the Presidential Oath of Office while standing up there!'

And how each candidate for that High Office politically "plays" this Financial Crisis and proposed Bailout will go a long way toward determining just who will be standing up there come Noon Eastern Time (1700 UTC) next 20 January.

Here's the problem for each candidate: while each group differs significantly on the reasons why (though there is some "meeting of the minds" within this as well), conservatives and liberals "out there" "beyond the Beltway" seem to generally agree on one thing- that this whole Bailout Plan fairly reeks!

A quick lesson in 'Free Markets 101' here, folks:

Company A has been around for over 150 years providing goods and/or services (say, as regards the present crisis, financial services); it has had its ups and downs throughout its history and now it is really down. Company B, meanwhile, is a recent startup which has only been in existence for about a decade, more or less, but it provides the same services as A- albeit locally or regionally, though not yet nationally- yet, it has been growing. Say Company A is now finally on the verge of collapse: the way free market Capitalism is supposed to work is that many a 'Company B' across the length and breadth of this country will quickly fill the local and regional niches left vacant once more national in scope Company A goes 'bye-bye' (or, perhaps, is broken up into separate regional/local Companies A-prime, which will thereafter have to compete with the various and sundry Companies B pretty much on the "home field" of the latter).

Put bluntly: Company A is a dinosaur and, where companies such as A are now, seemingly, facing "mass extinction"- even where such a company is in the financial services industry- do you mean to tell me there are no smaller Companies B that could now move in much like early nocturnal mammals so moved in in the wake of the end of the Age of Reptiles?

If, indeed, as Senator McCain himself rather recently (where not also embarrassingly in retrospect) opined, that the American Economy is fundamentally sound, then this is what will- and, indeed, should- happen.

"Let them die: the People will survive" indeed!

Instead, however, the American taxpayer is being asked to fork over the better part of a trillion dollars to help out-- well-- the dinosaurs. "Please, just let the Mesozoic last at least a little bit longer!" ;-)

Yes, I know that most, if not all, of this bailout money is supposed to come out of the Federal Reserve's own lending resources and not out of the general Treasury and, yes, the Federal Reserve does make money in the tens of billions each and every year... so, yeah... OK-- maybe the taxpayers are, then, potentially (assuming this whole scheme doesn't, in the end, actually work) only on the hook for a little under half a trillion dollars and, after all, what's a half a trillion dollars between friends? ;-)

Seriously, though: we are being told, by our "lame duck" of a President, that credit will completely dry up if we don't do this and bail out the "dinosaurs".

But aren't there, in any economic system worth its salt, potentially other sources of credit?; simply asked: why is such credit only available through these larger financial services institutions that are now asking for government aid? (And, by the way, please always keep this mind: there is no such thing as neutral "government aid"-- for the Government is, in the end, ever "us"- as in "U S", the United States itself; and, therefore, what we like to call "the Government"- as if it were always a thing apart from ourselves- is, in reality, that very "We, the People of the United States" of the U.S. Constitution. We, after all, live in a Republic [whether we are here considering our home State or the entire Nation]- a res publica "thing of the People": therefore, we are- ultimately- the Government: for it is our- the People's- sovereign power to make our own laws that is what is expressly delegated to Federal and State Government via their respective Constitutions; thus, it is we- not some ethereal "they" known as "the Government"- that would be the ones bailing out these various and sundry financial institutions... we have met the Government and they are us! [;-)])

Having said- as well as asked- all this: the above is, to be most fair, the ideal presented by 'Free Markets 101'; the reality, however, may, in fact, actually be much more dire-- or, as a friend of a friend of mine so recently (and so well, to boot!) put it: "If you are going to have Capitalism, you are also going to have to have capital".

In other words, if even the smaller Companies B are no longer willing to engage in credit exchange (that is, if McCain's now-rather embarrassing earlier pronunciamento that the Economy is sound should, in fact, have been proven wrong), then there is no way to even raise capital in the first place: in which case, even "We, the People" might not then survive. Thus, although it is a case of "We, the People" being held hostage (at least in the economic sense), we may have no choice but to bail the "dinosaurs" out: the trick then- and this seems the very cause of the current, as I type this, political stalemate in Congress over the Bailout Plan itself- is to not then, in the process, harm the smaller, nocturnal (economic) mammals living in the diurnal (financial) dinosaurs' midst.

Still, it is altogether disgusting that it is the average American- the one who has tried his or her best to have followed the Rule of Law, the one who is not getting so bailed out when they might face potential financial ruin- who is left "holding the bag" in this whole thing; in addition, there is a distinct sense- by that same average American- that the "credit drought" predicted by President Bush, Treasury Secretary Hank Paulson and Federal Reserve Chair Ben Bernanke (if it is not already upon us) is all too much the proverbial "self-fulfilling prophecy": that, by purposely restricting credit, the money-lenders have now brought us to the very point where credit is (surprise, surprise!) so restricted and that it is these very money-lenders (LaGuardia's "bastards.. with their usury") who will most benefit from a Bailout underwritten by those who will not ever so benefit.

Now, how does all of this play into the politics of the 2008 Presidential Campaign now ongoing?

First of all, as to John McCain: he took a very big risk (as one would expect of someone who has been billed, by his supporters, as "the Original Maverick"), the other day, by so summarily suspending his campaign and flying back to Washington in response to Senator Obama reaching out to Senator McCain suggesting a Joint Statement of agreement on certain principles behind the proposed Bailout (McCain's own "I see you, Barack Obama, and raise you..." in this high-stakes game of Presidential Political Poker). The problem is that it could, so easily, be seen as just so much "Action confused with Accomplishment" on the part of the GOP standard-bearer; after all, such risk-taking is only laudable if the risk is, in the end, seen as having all been worth it in order to thereafter claim the reward.

Put another way: suspending one's presidential campaign and hurrying back to the very vortex of attempts at a political solution to an economic crisis only looks really good- only appears to be quintessential Leadership- where having done so might actually mean something! It cannot merely be the mere appearance of such leadership.

In this sense, Senator Obama- whose responses to the crisis have been far more measured (it has been left to Senator McCain to so "go populist" with such proposals as "firing the SEC Chairman" [a real crowd-pleaser, that-- except for the fact that the Chair of the Securities and Exchange Commission does not totally serve at the President's pleasure])- actually benefits by simply standing by and allowing McCain to so "twist in the wind"-- and on his own rope (complete with a noose that McCain seemingly has tied himself!). Meanwhile, that "political tightrope" I have often opined, in recent pieces of mine for this website, McCain must continue to walk as he heads toward the General Election on 4 November gets ever narrower with this one!

In addition, Senator Obama seems to have, of late, been playing the "FDR card". Until he was inaugurated President on 4 March 1933, Franklin Delano Roosevelt refused to commit to anything dealing with the beleaguered Economy of that era proposed by President Herbert Hoover during Hoover's final months in office: FDR was unwilling to be so publicly tied into anything that might have come out of the previous Administration. Likewise, Obama is- so far, at least- much less willing to address specifics- on the Bailout proposal, as well as anything else related to the Economy- than McCain has been and this strategy seems to be suiting his presidential prospects just fine (depending, of course, on just how the first presidential debate being held the evening of the day I am typing this turns out for each presidential candidate).

At the same time, however Obama's gambit is altogether risky in its own right: after all, FDR waited to play this game until after he was already elected President; Obama, meanwhile, is now playing it before the Presidential Election itself.

In the end, both candidates are (as candidates for political office in Republican Democracy almost always are) slaves to outside events beyond their respective control: although both are United States Senators (again, this is the very first time in American History that sitting U.S. Senators are facing each other as nominees of the Major American Political Parties), neither is a key player in the passage- or not- of the Bailout Plan by Congress and, in fact, the interference of these two presidential candidates (more reluctant on Obama's part than on that of "gung-ho" McCain) well promises to be more problematic than helpful in what is otherwise- despite the magnitude of the crisis- made up of the usual more arcane elements of Legislative Process off the respective floors of each house of Congress and concomitant Parliamentary Procedure on them.

John McCain, as the nominee of the Party who- more than the Democrats (whether this be fair or not)- are seen as having gotten us into this mess (by virtue of it being a Republican who currently lives in the White House- lame duck or no), has to- more or less- "fish or cut bait", for he has two choices, and two choices only: he can try to make sure passage of the Bailout Plan does not falter (though McCain's influence in this regard is, as I've said, rather limited) or, if- on the other hand- he's convinced that, yes, the whole concept of a Bailout Plan does, as I've said, fairly reek and, therefore, in his self-proclaimed "maverick"-ness, he can make a complete break with the Bush43 Administration on this whole thing.

But the Arizonan has got to do one or the other (precisely because he is the one who has- instead of having simply agreed to a Joint Statement with Senator Obama the other day- made this the issue of moment in his own campaign for the Presidency) and each choice carries huge political risk for him going on into the General Election.

Meanwhile, Barack Obama can continue to wait him out and simply react to whichever choice McCain might ultimately make. As with McCain's choice of Governor Sarah Palin as his running mate, McCain is either a political genius-- or just plain asinine... how the votin' goes down come 4 November will surely tell us which.

Meanwhile: on with the first Debate!

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