The Column

Toxic Times

How we owe rich idiots $700 billion

Whoo boy.

It is safe to say that we are well off the beaten path now. In all of American history there is absolutely no precedent for any of this: I just got an invitation in my e-mail to have casual sex with some of Chicago's hottest singles!

OK, for real, this is nuts. In the most ground-breaking presidential campaign in our history—that features a black candidate who was a state senator just four years ago and a female VP who cites as one of her primary qualifications being the mayor of a blip on the map in Alaska—we are now facing the most radical economic proposal in our history by a lame-duck administration that is almost exclusively known for its gut-churning incompetence.

Jesus, this is fun.

Let's break it down into more easily digestible chunks.

Economics sucks. It's boring, full of words like "mortgage-backed securities" and "deleveraging," and complicated to the point of incoherence. However, in order to understand why we are so royally screwed right now, and why this plan to bail out the financial sector to the tune of $700 billion to $1 trillion should be front and center on your radar, we need to have a basic idea of what has happened. To do so in the most simplistic terms, I will use the cast of The Simpsons.

Homer and Marge Simpson, along with many other Springfield residents (like Flanders and maybe the Van Houtens) take out sub-prime mortgages so they can buy homes that they can't really afford. (It's debatable whose fault this is, although I tend to enjoy the term "predatory lending practices" to describe the manner in which lenders hunted down economically fragile families like the Simpsons and tricked them into bad deals; I also blame President Bush and his inane "ownership society" in which everybody should get a house seemingly by default. For our purposes, though, we will just say the point is moot and address the situation at hand).

The First Bank of Springfield takes these sub-prime mortgages, bundles them, and then sells them off in unwieldy pieces to other financial institutions (like Mr. Burns), who in turn, sell them in even more unwieldy pieces to other entities, including those overseas (Bumblebee Man?). The Simpsons, it turns out, can't pay their mortgage and go bankrupt, as do many other Springfield residents. Suddenly, Mr. Burns, who has been buying up all of these bad mortgages in various forms has no capital left to cover all of his debts.

Mr. Burns is fucked. The First Bank of Springfield is fucked. And most importantly, the Simpsons are fucked.

Now, after having to bail out financial institutions like AIG, Bear Sterns, and Fannie Mae and Freddie Mac, the federal government has gotten tired of putting out really expensive brushfires and decided to buy up all of this toxic debt in the market, which will cost nearly a trillion dollars. To put a trillion dollars in perspective, try this: Take a dollar bill, and eat it.

No, seriously, eat it. It's the only way you won't have to give it to the government so they can save the asses of greedy, idiotic capitalists.

Yes, we probably need some sort of action to save these morons and keep our incestuous, interlocking economy afloat, and we probably need it fast. If it's all the same to you, I don't really want to have to cut a scar across my face, start wearing a tattered loincloth fashioned from an old Ohio State football T-shirt, and carry a lead pipe around with a human skull affixed to one end as my war weapon. I'd just as soon not bludgeon my enemies to death in the streets over the last remaining drops of petroleum in a Chrysler Sebring's gas tank as my militia (also known as the "Army of the Blood of Last Days") beats old women to death in the street for the precious tomatoes they were growing on the rooftops of vacant apartment buildings.

No, this does not seem like fun. However, at the same time, I am deeply untroubled by how quickly this is happening.

Here is my problem with the bailout plan: We are now going to trust the administration that missed the glaring clues in the lead-up to September 11th, that lied us into a disastrous war in Iraq, that bungled the prosecution of that conflict so badly it created a violent sectarian nightmare, that botched the worst catastrophe following September 11th and left people in New Orleans to drown in their own living rooms, that encouraged the very kind of winner-take-all, deregulated playground on which this entire crisis was born to fix this?

We are going to give one of the most incompetent, unaccountable governments in the history of Western democracy the single largest transfer of money and power in U.S. history? And it's going to land in the lap of the Treasury Secretary, Henry Paulson, to dole out money as he sees fit? An unelected, unaccountable cabinet member, who has been under the scrutiny of the public and media for all of a week? Shut up.

No, seriously, shut up. Every serious economist warns of the gravity of what we're doing (and I'm practically drowning in the irony that the most masturbatory free-market administration since the Gilded Age will be responsible for the largest intrusion ever of government into the market). Every serious economist says that policy like this should probably take a year to be crafted and debated, not a week.

It's not important that you or I don't understand all this. It doesn't matter that an elitist like me, who's primary pleasure in life comes from drinking nine beers and thinking of inventive ways to yell at Bill O'Reilly on an HDTV, doesn't understand all this. The problem is that no one understands it. No one knows if this bailout will work because thanks to the lack of oversight and transparency, not even the smartest financial minds in the world know what kind of toxic debt is out there and what it's worth.

Which brings me to our presidential candidates.

Here is why I want Obama to win this election: After meeting with his economic advisors, he met the Paulson proposal with every concern that I and other people who've been paying attention to this share. He called for bi-partisan congressional oversight, a taxpayer stake in the companies that participated in the bailout, relief for homeowners rather than just the rich pricks to whom we will be shipping this money, and a cap on CEO compensation so there will be at least some limit to how much they'll benefit from this handout. In other words, he actually cares how we're going to pay for it, who's going to get it, and if it will help the many of us rather than the few that economic policy has completely stroked over the last decade.

In other words, he acted like a President reacting to a crisis with as much sense as the insanity of this entire situation will allow. His caveats should help shape the Democratic response to the bailout plan and hopefully the eventual legislation.

McCain, for his part, has sounded essentially the same worries while hewing to vague themes rather than policy specifics. It is amusing to watch a man whose entire economic record has revolved around the kind of deregulating principles that got us into this mess suddenly bemoan the lack of oversight and accountability involved, but whatever. He has smart enough people around him to say, "You can't let the Democrats own this issue and write the narrative."

His stunt to "suspend" his campaign and the debate is a particularly glaring ploy to showcase his theme of "Country First." As if his landing in Washington will single-handedly turn this mess around. If McCain actually cared about the country first, he would've contacted his opponent privately rather than creating a "Look at me! Look at how much I care about my country!" media non-story.

All the same, hopefully, the politics involved here will actually help create better policy—a deviation from the norm so wild, I think I just saw a pig fly by my window chucking snowballs at a bear taking a shit on a standard commode in Hell while the pope stood nearby wearing just a regular baseball cap.

The real beef I've got with McCain is not that he has just seen the light within the last two weeks and only then because American capitalism is essentially facing utter implosion, but because his choice of Sarah Palin looks even more absurd in the midst of this economic nightmare.

Oh, country first? Really, John? Country? Maybe country 1.3rd, right after cheap political ploy?

The McCain campaign has hidden Palin from the press so much, she's effectively campaigning with only her staff and ardent supporters. This is pretty much unprecedented in the history of American electoral politics: To have a candidate the media cannot question. When Palin did emerge to make a statement regarding the current situation, she made it clear that she didn't even know what it was that Fannie Mae and Freddie Mac do. It wasn't a gaffe; she flat-out said the problem with the two major lenders was that they got "too big and too expensive to the taxpayers."

I mean, Jesus Christ, even I—a dyed-in-the-wool humanities major struggling to comprehend any of this—knew that Fannie and Freddie are lenders that operated as private companies. God knows what would come out of this woman's mouth if she had to face a pool of reporters without her handlers.

We're getting off topic, though. The larger point is that one time someone explained her support for Republicans by saying. "I believe in capitalism."

Believing in capitalism is as stupid as believing in communism. What we and other democratic free-market governments practice is not capitalism in the sense that we have the government interfering in all kinds of ways—whether that be in the form of environmental protection, labor rights, anti-trust laws, you name it. Time and again, history has proven that government does indeed have a role in the market, making sure everyone's playing nice, so to speak, and it's no surprise that after this age of the second coming of the Robber-Barons, we'll be returning to a more active government role in the economy.

It's just that no one thought it would come in the form of a $700 billion welfare program for rich investors.

Speaking of Sarah Palin, check out the link to RadarOnline below.