Before Obama: The Socialism of Bush and Paulson

[_MeDotOrg]

With all the talk about Obama being a Socialist, I think it's instructive to look at the actions of Henry Paulson, Secretary of the Treasury under George Bush, and former head of Goldman Sachs, fervent free-market disciple. In the fall of 2008. Paulson was worried that if he bailed out Lehman Brothers it would send a signal that investment banks would not have to be responsible. (What free-market advocates call 'moral discipline'.) He allowed Lehman to fail. Lehman declared bankruptcy on Monday, September 15 2008.

By the evening of the next day the Federal Reserve, at Paulson's behest with the approval of President Bush, was involved in negotiations that would ultimately extend an $85 billion dollar line of credit to A.I.G (American International Group, not a bank) in exchange for a 79.9% equity stake. The United States Government bought an Insurance Company.

Why had Henry Paulson changed not only his mind, but one of the cornerstones of his economic philosophy literally overnight? The short answer is that "Moral Discipline' met 'Too Big to Fail", and 'To Big To Fail' won. AIG had huge exposure in (unregulated) credit default swaps it had issued to investment banks, and the dissolution of all that insurance could have triggered a financial panic the likes of which had never been seen.

So Paulson, literally overnight, became a socialist in order to save capitalism.

Throughout history, unregulated capitalism has suffered from a bi-polar disorder. It swings between bull and bear, boom and bust, mania and depression. Regulation is like medication, it helps smooth out some of those mood swings. You don't get the same euphoric highs, but neither do you get the suicidal lows. Risk taker personalities that are drawn to the adrenaline of Wall Street hate regulation because it robs them of some of that high, but is more often than not the other 99% that have to live with worst effects of the lows.

[_Brackite]

This Thread reminds me on this Congressman's statement.

***Press Statement*** Rohrabacher Votes "NO" on Flawed $700 Billion Bailout
Rejected “Socialism For The Rich”
http://rohrabacher.house.gov/News/Docum ... tID=104030


However, if we never had the bank bailouts, we likely would've never had the auto bailouts. The auto bailouts has helped the economy in the States of Michigan and in Ohio.

[_MeDotOrg]

This Thread reminds me on this Congressman's statement.

***Press Statement*** Rohrabacher Votes "NO" on Flawed $700 Billion Bailout
Rejected “Socialism For The Rich”
http://rohrabacher.house.gov/News/Docum ... tID=104030


However, if we never had the bank bailouts, we likely would've never had the auto bailouts. The auto bailouts has helped the economy in the States of Michigan and in Ohio.

No question about it, the auto bailouts saved tens of thousands of jobs.

[_Kevin Graham]

Thank Obama for that.

Romney said he would have let them go bankrupt!

[_ldsfaqs]

1. It's not "socialist" to HELP people one time, and "initial" help, as Bush did.
Obama however took things much further, made things much worse etc.

2. The Auto "Bailout" didn't save jobs. Many stores closed, GM's only profit maker was sold to the Chinese, and because of the Obama and liberal economy created by liberals in the House and Senate and then when Obama took over, many have lost their jobs.

Further, if GM had been allowed to go bankrupt, the company would have restructured or been bought out, etc., or if it went completely belly up, those "jobs" would simply have went to other company's that most of the people would have moved too. After all, people wouldn't have just stopped buying cars..... thus, no job loss. What little job loss their might have been, would have been MUCH LESS if liberals and Obama weren't doing things.

You people are clueless of what the liberals and Obama have done.
I know people in Real Estate, and Obama has implemented several laws and regulations which literally DOUBLED people loosing their homes and investment properties.
Before Obama, the Dept. of Transportation alone had ONE employee making over $500,000 a year. Now it has over a 1,000 employees making the same. And the same has occurred with multiple agency's. That's money out of the economy, out of peoples pockets, out of people not creating business and prosperity.
A liberal policy in California is that Ice Cream shops are banned from selling ice cream cones.
I mean, I don't have all these things in my head, but Liberals, Obama and the rest have created laws, regulations, and government bureaucracy in 100,000's of ways that is strangling the economy.

You liberals need to wake up and actually learn something.

[_Bond James Bond]

1. It's not "socialist" to HELP people one time, and "initial" help, as Bush did.
Obama however took things much further, made things much worse etc.

2. The Auto "Bailout" didn't save jobs. Many stores closed, GM's only profit maker was sold to the Chinese, and because of the Obama and liberal economy created by liberals in the House and Senate and then when Obama took over, many have lost their jobs.

Further, if GM had been allowed to go bankrupt, the company would have restructured or been bought out, etc., or if it went completely belly up, those "jobs" would simply have went to other company's that most of the people would have moved too. After all, people wouldn't have just stopped buying cars..... thus, no job loss. What little job loss their might have been, would have been MUCH LESS if liberals and Obama weren't doing things.

You people are clueless of what the liberals and Obama have done.
I know people in Real Estate, and Obama has implemented several laws and regulations which literally DOUBLED people loosing their homes and investment properties.
Before Obama, the Dept. of Transportation alone had ONE employee making over $500,000 a year. Now it has over a 1,000 employees making the same. And the same has occurred with multiple agency's. That's money out of the economy, out of peoples pockets, out of people not creating business and prosperity.
A liberal policy in California is that Ice Cream shops are banned from selling ice cream cones.
I mean, I don't have all these things in my head, but Liberals, Obama and the rest have created laws, regulations, and government bureaucracy in 100,000's of ways that is strangling the economy.

You liberals need to wake up and actually learn something.

Every time you post assume a CFR has been issued. (My bold).

[_MeDotOrg]

1. It's not "socialist" to HELP people one time, and "initial" help, as Bush did. Obama however took things much further, made things much worse etc.

Please tell me exactly WHY it is not socialist for the Government to buy 80% insurance company. When you buy more than 50% of a company you buy controlling interest. Buying 80% of the company is not help, it is a buying a company. When the Government buys a company, it is socialism.

I'm afraid that my central argument is getting Ignored in all of this. What happens when MORAL DISCIPLINE meets TOO BIG TO FAIL? Henry Paulson, Alan Greenspan and many advocates of free market capitalism have consistently said that MORAL DISCIPLINE in the marketplace was the reason we didn't need regulations. The concept of free-market moral discipline says that the fear of taking to much risk will morally inhibit a company from making reckless investments, because they risk failure and bankruptcy.

What free-marketers seem to ignore is that when a company gets so big that its failure threatens to wreck the entire system, or if a company is insured by the government, moral discipline goes out the window. Why not take on risky investments if you know the government will bail you out if you fail? It happened with the S&Ls in the 80's didn't it? Privatized profit and socialized failure, the best of both worlds if you're running such a company. No so much if you're a taxpayer.

The answer proposed by liberal economists is that if you're too big to care about moral discipline, or if your insured, and the government has to step if you fail, then the government should have the right to regulate you to minimize that chances that you will fail. If you don't want to be tightly regulated, then don't expect to be federally insured, and you can't grow so big that your failure will jeopardize the entire economic system.

The problem is that since the repeal of Glass-Steagall, the firewall that existed between risky investments (investment banks) and regulated and insured investments (commercial banks) was broken. Now we have gigantic institutions, which are insured but inadequately regulated.

Until we address the root problems of inadequate regulation that precipitated the 2008 crash, our financial system is an accident waiting to happen. And given the increased size of the institutions involved, bailing them out would be even more expensive.

I mean, I don't have all these things in my head, but Liberals, Obama and the rest have created laws, regulations, and government bureaucracy in 100,000's of ways that is strangling the economy.

You liberals need to wake up and actually learn something.

Learn what, exactly? the '100,000's of ways' that the economy is being strangled, when you can't bother to remember just one?

[_ldsfaqs]

Until we address the root problems of inadequate regulation that precipitated the 2008 crash, our financial system is an accident waiting to happen. And given the increased size of the institutions involved, bailing them out would be even more expensive.

Inadequate regulation did not cause the crash, liberal regulations did, which forced banks to lower their loan standards so "everyone" could get a home, namely the poor, those who couldn't actually afford homes or where stable enough to keep affording them. And because banks were forced to do this, they had to come up with ways to deal with the bad loans, but because they were dealing with CRAP already, you can't make crap smell better, and ultimately it's going to get all over you.

It was Government regulations that caused the crisis, created by liberals, not banks or otherwise.

You are looking at the symptoms, instead of the actual causes, as all liberals do, not thinking deep enough to see the actual truth.

Learn what, exactly? the '100,000's of ways' that the economy is being strangled, when you can't bother to remember just one?

As usual, you liberals only see what you want to see. I mentioned a couple of examples. Now stop lying. If you want to know more, an easy Google search will give you results. Type in something like "listing of Government Regulations that have harmed the economy".

Here is just a small listing.... http://spectator.org/archives/2012/04/2 ... -be-longer

[_Kevin Graham]

Inadequate regulation did not cause the crash, liberal regulations did, which forced banks to lower their loan standards so "everyone" could get a home, namely the poor, those who couldn't actually afford homes or where stable enough to keep affording them. And because banks were forced to do this, they had to come up with ways to deal with the bad loans, but because they were dealing with CRAP already, you can't make crap smell better, and ultimately it's going to get all over you.

That is a bigoted Right Wing myth that was refuted as quickly as it was created. We now know that banks for not "forced" to do any such thing. As usual, the Right is always looking to blame those lazy poor folks. It seems your education on this subject is no better than your education in Mormonism.

[_krose]

I know people in Real Estate, and Obama has implemented several laws and regulations which literally DOUBLED people loosing their homes and investment properties.

I was going to point out that this looked like a huge whopper, but then it occurred to me that I don't know how a person would go about "loosing" a home, so it required extra thought.

At the moment I'm picturing the house in that movie, Up, with thousands of balloons lifting it up, which would "loose" the house from its foundation. And these people being "literally doubled" would be helpful, since they will now have twice as many hands to tie the balloons to their houses.

I'm still working out how a presidential candidate might set loose an election, which faqs said repeatedly in another thread. That one's got me flummoxed. How can an event be set free?

Of course, with the double mental handicap of being both a liberal and an anti-mormon, surely I can never expect to understand such erudition.