Don’t be fooled. The $700 billion bailout is not what we needed to fix the financial markets and it’s just the beginning. We’ve been fed the line that “Wall Street” wanted this bailout. But just who is “Wall Street?”
Experts like to differentiate between Wall Street and Main Street, but the fact is the two are very much intertwined. If you have a 401(k) you’re part of Wall Street. If you have stock in your company or stock of any kind you’re a part of Wall Street.
The so-called experts can try to paint this as they like, but those who were buying stocks during the time the bailout package was being debated made it clear they didn’t want the bailout. It’s not so much that they didn’t want the money; they didn’t want to reward stupid behavior and they didn’t want the government getting involved in the market.
Stocks plummeted leading up to the first House vote on the bailout. The next day, after the House had rejected the plan, the stock market rallied. As the Senate considered the measure, the stock market began to slip again. Once the Senate voted for the bill, the market tanked. After the House confirmed the Senate’s mistake, the market dropped again, capping off one of the worst weeks on Wall Street we’ve seen in a long time.
So, what was so bad about the congressional bailout? First and foremost what made the bill bad was the sheer amount of money going to pay debts created by bad decisions. Predator lenders and idiots who bit off way more house than they could handle both benefited. The fundamentals of what caused the problem were ignored. Fannie Mae and Freddie Mac have not been dissolved. The Community Reinvestment Act, the law at the epicenter of the whole mess, has not been rescinded.
And then there’s the pork.
Shameless senators lined up to pile on pork when it became apparent the senate would pass the measure. Among the unconscionable earmarks were $2 million for the makers of wooden arrows for children, $100 million in tax breaks for racetrack owners, $192 million in rebates on excise taxes for the rum industry and $148 million in tax relief for wool producers.
The House collapsed under the constant browbeating of the White House and the dire predictions of utter economic destruction if they didn’t act. The very fact that they did may seal our economic fate.
John McCain blew a golden opportunity to endear himself to the American people. He had a chance to go with the 80 percent of Americans who opposed the bailout. He had a chance to prove he’s a real maverick and go against the Washington grain and stand up against the excesses and blatant pork contained in the bill. Instead, he proved himself just another politician, going along to get along. He could have catapulted himself to the presidency by standing up for the people instead of standing aside the special interests in Washington.
He hasn’t lost the election yet, but he has dug himself a deep hole he may not be able to pull himself out of before Nov. 4. Of course, Obama was no different. He voted for the boondoggle bailout, too. But that was to be expected. The candidate of change, so called, may have helped put in motion the largest economic change since the founding of our country?not the good kind of change, either. Here, again, we had a candidate who professed to speak for the people and didn’t. Who does?
Phil Valentine is an author and nationally syndicated radio talk show host with Westwood One. For more of his commentary and articles, visit philvalentine.com.
