|Monday, September 22, 2008
Newsmax’s Ben Stein is angry that the Treasury Department is bailing out the banks and Wall Street.
Now, that’s a new twist. Are there others of you–especially taxpayers–who feel a bailout is not in order?
Apparently Stein, an economist, author, former presidential speech writer, and occasional actor, is angry about the current “economic earthquake” that he says has rattled U.S. and global markets and he wants everyone to know.
Newsmax says Ben is particularly peeved with the $700 billion proposed Wall Street bailout and its architect, Treasury Secretary Henry Paulson, but it appears he’s most peeved about the fact that Paulson in 2006 as CEO of a large Wall Street firm, Goldman Sachs, took an eighteen million bonus. But nowhere do I see where the government is contemplating the bailout of Goldman. They haven’t even been mentioned, and we all hope they are in the clear. So what’s all this shouting by make believe school teacher Ben Stein about? Apparently, it’s his way of getting his writing career off and running with Newsmax, but it isn’t selling.
Bloomberg.com has weighed in with an article headlined “Wall Street’s Woes May Be Wall Street’s Fault, U.S. Chiefs Say.” Written by Christopher Donville and Chris Burritt, the article says that the
financial institutions that will receive $700 billion of government rescue money may have been the source of their own undoing. This is from the people who pay the industry’s salaries: its clients.
“At the end of the day we are here because we have moved from sound fundamentals of doing business to shady get-rich- quick programs,” Dan DiMicco, chief executive officer of steelmaker Nucor Corp., said in an e-mail Sept. 19. “It is very discouraging that we have come to this point through gross mismanagement and greed and the wrong kinds of regulatory rules changes over the last several years.”
As we reported in earlier blogs, Treasury Secretary Henry Paulson devised a proposal over the weekend aimed at averting a credit freeze that would bring the financial system and economic growth to a halt. The plan, which is being considered and elaborated on by lawmakers, follows the bankruptcy of Lehman Brothers Holdings Inc. and the government takeover of American International Group Inc. last week.
A collapse of the financial industry might leave U.S. corporations unable to raise money to build new plants, invest in research or even pay salaries, and might threaten to throw the country into an economic depression.
The Securities and Exchange Commission banned short selling — the sale of borrowed shares by investors betting on a drop in the stock — on shares of 799 financial companies through Oct. 2 to limit declines. Meanwhile, Paulson, who headed Goldman Sachs Group Inc. until two years ago, called for the use of public funds to buy $700 billion of bad mortgage investments by financial institutions.
In a CNN interview, Stein said Paulson should be “fired yesterday.” If Stein had a brain he would tell us why, when all the evidence points at his being able to keep the company he led out in front and profitable despite other firms that have gone under.
“Paulson is a disgrace to the Republican Party and to his country,” said Stein. Another target of Stein’s ire is Wall Street itself.
Stein says he’d like to see President Bush on national TV “with Mr. Obama to his left and Mr. McCain to his right and say we are going to make sure that you Americans are going to stop being looted by Wall Street.” Now, this is something I can agree with him on. It’s high time the Administration takes a strong stand against using taxpayer money to bail out business.
This bail-out stuff is not a Republican principle, and it sure as heck isn’t what we learned in college “Private Enterprise 101” because the next step is printing a big red sign on the Statue of Liberty calling “America, The Land of Political Takeovers and Bailouts.”
“It’s a first-class disaster. The worst Treasury regulation of the economy in my lifetime…” says Stein. “The effect of this on the ordinary investor and pre-retiree … is just catastrophic for the free enterprise system.”
John Gapper, the Financial Times columnist, has a simpler solution: Get Henry Paulson to give some money back.
Well, Gapper, that would be appropriate if Paulson had done anything to break a law or make the bailouts unnecessary. But he didn’t. He ran a tight ship at Goldman Sachs. The worst we can say is that he isn’t a prophet and didn’t see this coming. But, then, neither did Congress, the president and millions of Americans.
“Mr. Paulson now declares himself shocked,” says Gapper, “shocked that structured finance was going on Wall Street but he was there at the time, and the $18.7 million bonus he received for the first half of 2006 presumably reflected it.” That’s what Gapper wrote on his FT blog, but I don’t think he knows what he’s talking about. He’s just like a lot of other Americans, angry, and wants to lash out at anyone in sight.
Yes, Paulson was “there” for two years. But this didn’t come about overnight. We were heading into it during the administration of Bill Clinton and Secretary of Treasury Robert Rubin who, with Alan Greenspan’s help, printed up all that money to make the dollar worth next to nothing, to make the stock market soar out of control.
Then there were Congressmen Barney Frank, Charlie Rangle and their ilk with their left-wing liberality, their shouts that down echoed down the halls of Congress calling for looser loan requirements for the “poor” and Bush fell for it. That’s really what caused this problem. And it all stems from the Democrats’ innate desire to get re-elected at all costs and to patronize poor black folks, many of whom felt they couldn’t get those bank loans more qualified people were getting bcause of racial discrimination. At least that’s what Frank and Rangle pounded into their heads.
Listen to Gapper speculate: “I wonder if, as a public gesture, Mr. Paulson might consider handing that bonus over to the Treasury’s fund and lowering the U.S. taxpayer’s bill by $18.7 million?” Now, Mr. Gapper, that would be very fine and I’m all for it, but to be fair, every person who made profits on Wall Street the past ten years–especially since 2005–should do likewise and then we the taxpayers wouldn’t have to shell out anything, now would we?