Schumer's Economic "Plan": Dumb, Dumber, Dumbest?

This newly-discovered "bonddad blog" says Schumer's plan to rescue us from the brink of economic meltdown - oh, I thought we already melted down! - is "the dumbest idea yet".

The blog quotes Bloomberg on the plan, under consideration by the Fed and Treasury both:

Schumer advocated a Great Depression-era Reconstruction Finance Corp. model, different from the Resolution Trust Corp.- type plan others have floated. Another RTC, which was a 1990s agency that sold devalued assets in the Savings and Loan Crisis, would ``simply transfer excessive risk to the U.S. government without addressing the plight of homeowners,'' he said.

Bonddad's take?

Why is this a dumb idea? Let me count the ways.

1.) Where is the money for this going to come from? I've detailed the proposed spending plans we've seen so far. They total $900 billion. Now we're going to pump more money into the system from some as yet unknown source.

2.) Just what will the government do with these interests? They're going to wind up the majority shareholder in some of these institutions -- and a minor big holder in others. Who will decide the government's policy?

3.) What is the criteria for investing in a company? If ever there was going to be a highly politicized process this is it. I can see it now ... "Senator from big important district gets huge cash infusion not because it's a good investment but because the Senator is in a close reelection bid and needs votes.

4.) Will the government ever get out of these companies? Will there be a time limit?

5.) Will there be a time limit for this entity's duration? Will it go on forever?

6.) Will the government become intimately involved with the company's internal deliberations and policy? Will Congressmen sit on various boards?

I could go on, but you get the idea. This is a disaster waiting to happen.

Will Obama endorese this idea, as he has many others? Hopefully not, but... will somebody pass him this message?

Government's "Fed" Overhaul a Huge Con Job

The Federal Reserve sounds like a solid branch of the "Federal" government, doesn't it? So putting the banks, the markets, the economy in the hands of the "objective, fair" U.S. government of which the Presidentially-appointed Alan Greenspan was appointed Chairman for decades, ah, this should put things in order, right? Most Americans think the "Feds" are Federal as in Federal government. No. They are "Federal" as in "Federal Express." It's a private corporation. Welcome to government by the "New Corporate People".

Here's one take from Ellen Hodges Brown on the huge and significant Bush/Cheney plan to "consolidate" the sectors of our economy:

The Federal Reserve, which has been credited with creating the current housing
bubble and bust just as it created the credit bubble of the Roaring Twenties and
the bust of 1929, is now to be given vast new powers to oversee regulation of
the banking industry and promote "financial market stability."

Worse, there will be even less regulation than before, according to the Wall Street Journal:

Many of the [Treasury's] proposals, like those that would consolidate
regulatory agencies, have nothing to do with the turmoil in financial
markets. And some of the proposals could actually reduce regulation. ...
The blueprint also suggests several areas where the S.E.C. should take a
lighter approach to its oversight. Among them are allowing stock exchanges
greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are
being traded in foreign markets. ...
While the plan could expose Wall Street investment banks and hedge funds to
greater scrutiny, it carefully avoids a call for tighter regulation. The plan
would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings. . . .
And the plan does not recommend tighter rules over the vast and largely
unregulated markets for risk sharing and hedging, like credit default swaps,
which are supposed to insure lenders against loss but became a speculative
instrument themselves and gave many institutions a false sense of security.

So it is not designed to fix or even help the economy, the one that's heading into a recession or worse, but rather to allow banks greater leeway in order to be "more competitive" in the "global market". Somehow, devaluation of US currency and a downward economic spiral don't sound like good ways to be "competitive" in any market. It sounds like a snake-oil scheme designed to serve old, white, rich men in self-deluded power and wealth that doesn't really exist.

As Ms. Brown so eloquently summarizes:

And as the falling debris of the American economy still piles up around us,
the very agency that enabled disaster is now seeking to consolidate ultimate
authority and accountability to itself, and through centralization and
arrogation of power, eliminate all those pesky little Constitutional and State
regulations and agencies, recalcitrant governors and the last few whistle
blowers, so that the further abuse of power can be streamlined through one
agency only. That agency is to consist of an alliance of the banking powers and the executive branch, a perfect formula for the institutionalization of continual abuse.

Meanwhile, the cost of basic necessities like wheat, oil, corn, milk, meat, and everything else, spikes so fast people are reeling. And as usual, the poor get poorer, the hungry get hungrier, the rich get more disconnected from reality, and the military gets more wars to eat. Is it too late to turn this thing back?