ÿþ<html> <head> <meta http-equiv="content-type" content="text/html;charset=iso-8859-1"> <title>OnlineColumnist&reg;.com: Putin Punishes Georgia</title> <meta name="generator" content="Adobe GoLive 4"> <style type="text/css"> .style2 { font-size: large; font-weight: bold; font-family: Arial; } .style3 { height: 58px; } .style4 { font-size: x-large; font-weight: bold; } </style> </head> <body bgcolor="white" vlink="black"> <center> <table cool width="624" height="2719" border="0" cellpadding="0" cellspacing="0" gridx="16" showgridx gridy="16" showgridy> <tr height="79"> <td width="133" height="118" rowspan="2" valign="top" align="left" xpos="0"><a href="aboutdiscobolos.html"><img height="110" width="62" src="images/discobolos.logo.transp.gif" border="0"></a></td> <td width="7" height="118" rowspan="2"></td> <td width="482" height="79" colspan="2" valign="top" align="left" xpos="140"><img height="75" width="450" src="images/banner.GIF"></td> <td width="1" height="118" rowspan="2"></td> <td width="1" height="79"><spacer type="block" width="1" height="79"></td> </tr> <tr height="39"> <td width="182" height="39"></td> <td width="300" height="39" valign="top" align="left" xpos="322"><a href="aboutdiscobolos.html"><img height="14" width="267" src="images/divisionofNEW.GIF" border="0"></a></td> <td width="1" height="39"><spacer type="block" width="1" height="39"></td> </tr> <tr> <td width="624" colspan="6" valign="top" align="left" xpos="0" class="style3"> <table border="0" width="100%" bgcolor="black" cellspacing="0"> <tr> <td> <table border="0" width="100%" bgcolor="#99ffcc" cellspacing="0" cellpadding="4"> <tr> <td align="center"> <div align="left"> <a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong>HOME</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> &#149; <a href="articlesindex.html">ARTICLES</a> &#149; <a href="books.html">BOOKS</a> &#149; <a href="teflon.html">THE </a><a href="teflon.html">TEFLON</a><a href="teflon.html"> REPORT</a> &#149; <a href="mailto:letters@onlinecolumnist.com">REACTIONS</a> &#149; <a href="aboutdiscobolos.html">ABOUT DISCOBOLOS</a></strong></font></div> </td> </tr> </table> </td> </tr> </table> </td> </tr> <tr height="2"> <td width="133" height="2">&nbsp;</td> <td width="489" height="2576" colspan="3" rowspan="2" align="left" xpos="133" content valign="top" csheight="2573"> <p class="style2">Bailout or Bust</p> <p><b><font face="Arial,Geneva,Helvetica">by John M. Curtis</font></b><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b><a href="books.html"><br> </a></b></font><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><b>(310) 204-8700</b></font></p> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"><i>Copyright September 23, 2008<br>All Rights Reserved. </i></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </p> <p class="MsoNormal"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<span class="style4"> D</span>esperately seeking a fix to the nation s financial meltdown, Federal Reserve Board Chairman Ben S. Bernanke warned the Senate Banking Committee Sept. 23 that without passing his $700 billion rescue plan the economy faced almost certain recession.<span style="mso-spacerun: yes">&nbsp; </span>If there were ever an understatement, the former Princeton economics professor showed a gift for minimizing.<span style="mso-spacerun: yes">&nbsp; </span>Whatever the technical definitions, Bernanke knows better than most the economy s been in recession for some time.<span style="mso-spacerun: yes">&nbsp; </span> The financial markets are in quite fragile condition and I think absent a plan they will get worse, Bernanke told committee Chairman Christopher Dodd (D-Conn,), urging swift approval of his extravagant bailout.<span style="mso-spacerun: yes">&nbsp; </span>Both he and Treasury Secretary Hank Paulson came to Capitol Hill warning the Congress of dire consequences should the bailout not pass.<span style="mso-spacerun: yes">&nbsp; </span>Years of failed regulation finally caused the day of reckoning.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Paulson and Bernanke s plan calls for the government to buy up bad securities and investments currently paralyzing capital markets.<span style="mso-spacerun: yes">&nbsp; </span> I believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way, said Bernanke, offering no guarantees.<span style="mso-spacerun: yes">&nbsp; </span>What irks many skeptics is how U.S. credit markets faced imminent liquidation without the Fed s unprecedented bailout.<span style="mso-spacerun: yes">&nbsp; </span>Bailing out bad debt offers no guarantees to homeowners currently facing defaults and foreclosures.<span style="mso-spacerun: yes">&nbsp; </span>Retiring bad debt benefits financial companies but doesn t address taxpayers faced with exorbitant mortgage payments, unable to stop banks from foreclosing.<span style="mso-spacerun: yes">&nbsp; </span>Paulson and Bernanke want Congress to approve a blank check without consequences to incompetent, venal or criminal CEOs.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Neither Paulson nor Bernanke has offered any coherent rationale for why the nation s financial markets collapsed.<span style="mso-spacerun: yes">&nbsp; </span>Trusted Wall Street names like Bear Stearns, Lehman Bros., Merrill Lynch, Fannie Mae, Freedie Mac have all gone under, blaming the whole mess on bad real estate loans.<span style="mso-spacerun: yes">&nbsp; </span>But bad real estate loans had little to do with Bear Stearns or Lehman Bros, or, for that matter, the collapse of American International Group insurance, recently given an $85 billion bailout.<span style="mso-spacerun: yes">&nbsp; </span>No one really knows why Fannie Mae and Freddie Mac ran out of cash and closed their doors.<span style="mso-spacerun: yes">&nbsp; </span> What they have sent us is not acceptable, said Dodd, asking Paulson and Bernanke for more protections taxpayers.<span style="mso-spacerun: yes">&nbsp; </span>Without specific provisions for helping out troubled homeowners, the Fed s plan offers little help for working families.<span style="mso-spacerun: yes">&nbsp; </span> Taxpayers are expected to pay for Wall Street s incompetence and indiscretions.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Blaming the collapse of credit markets on mortgage defaults offers a good smokescreen but doesn t address years of benign neglect, allowing CEOs to fleece otherwise profitable companies.<span style="mso-spacerun: yes">&nbsp; </span> Many lessons were learned in the wake of the dot-com buddle, where some of the nation s biggest companies bit the dust.<span style="mso-spacerun: yes">&nbsp; </span>When Big-5 accounting firm Arthur Andersen closed its doors Aug. 31, 2002 in the wake of the Enron scandal, 80,000 employees lost their jobs.<span style="mso-spacerun: yes">&nbsp; </span>Andersen was accused of cooking-the-books for Enron that eventually filed for bankruptcy Dec. 2, 2001.<span style="mso-spacerun: yes">&nbsp; </span>When corporate titans like Enron, Global Crossing and Worldcom went down in 2002, executives were held accountable, resulting in prosecutions and convictions of upper management.<span style="mso-spacerun: yes">&nbsp; </span>Paulson and Bernanke s bailout plan places no restrictions on CEOs  golden parachutes, not to mention prosecutions.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Before Bernanke orders Paulson to print $700 billion there needs to be clear provisions for saving homeowners and prosecuting upper management of failed companies.<span style="mso-spacerun: yes">&nbsp; </span>Real estate meltdowns can t account for how high-flying companies recklessly manage investments and assets.<span style="mso-spacerun: yes">&nbsp; </span>CEOs of Fannie Mae, Freddie Mac, AIG insurance, Lehaman Bros., etc. must be held accountable for wrong doing.<span style="mso-spacerun: yes">&nbsp; </span>When Enron went under in 2002, the Congress passed new accountability laws to prevent future mishaps.<span style="mso-spacerun: yes">&nbsp; </span>Today s failures clearly show that the regulatory scheme is badly broken, protecting shareholders and bondholders from corporate mismanagement and malfeasance.<span style="mso-spacerun: yes">&nbsp; </span> We have to look at some alternatives, said Sen. Richard Selby (R-Al.) the highest-ranking GOP member of the Senate Banking Committee. Congress can t just approve $700 billion without some oversight.</p> <p class="MsoNormal"> <![if !supportEmptyParas]>&nbsp;<![endif]><span style="mso-tab-count:1">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </span>Paulson showed impatience with Senators seeking clarification or assurances for how his $700 billion rescue plan would work.<span style="mso-spacerun: yes">&nbsp; </span>Despite the urgency, Paulson has a lot of nerve pressuring senators to hand over the cash.<span style="mso-spacerun: yes">&nbsp; </span>Bernanke also played a less than neutral role warning of dire consequences without swift passage.<span style="mso-spacerun: yes">&nbsp; </span> I understand speed is important, but I m far more interested in whether or not we get this right, said Dodd, resisting Paulson and Bernanke s strong-arm tactics.<span style="mso-spacerun: yes">&nbsp; </span>Without some provision to deny CEOs their  golden parachutes, or, more importantly, a commitment to investigate and prosecute CEO fraud and abuse, handing over $700 billion will not fix the problem.<span style="mso-spacerun: yes">&nbsp; </span> Everyone wants the economy to thrive.<span style="mso-spacerun: yes">&nbsp; </span>Differences exist whether to help distressed borrowers facing foreclosures or to hand the biggest government windfall in U.S. history over to corrupt corporations.</p> <p><b><u>About the Author</u></b><br> </p> <p><b>John M. Curtis </b>writes politically neutral commentary analyzing spin in national and global news. He&#x2019;s editor of OnlineColumnist.com and author of <a href="books.html">Dodging The Bullet</a> and <a href="books.html">Operation Charisma</a>.<br> </p> <p></p> </td> <td width="1" height="2576" rowspan="2"></td> <td width="1" height="2"><spacer type="block" width="1" height="2"></td> </tr> <tr height="2574"> <td width="133" height="2574" valign="top" align="left" xpos="0"><img height="172" width="111" src="images/johninframe3.jpg"></td> <td width="1" height="2574"><spacer type="block" width="1" height="2574"></td> </tr> <tr height="1" cntrlrow> <td width="133" height="1"><spacer type="block" width="133" height="1"></td> <td width="7" height="1"><spacer type="block" width="7" height="1"></td> <td width="182" height="1"><spacer type="block" width="182" height="1"></td> <td width="300" height="1"><spacer type="block" width="300" height="1"></td> <td width="1" height="1"><spacer type="block" width="1" height="1"></td> <td width="1" height="1"></td> </tr> </table> <table border="0" cellpadding="0" cellspacing="2" width="597"> <tr> <td><font size="1" face="Arial,Geneva,Helvetica"> <hr noshade size="1"> </font><a href="index.html"><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong>Home</strong></font></a><font face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular" size="2"><strong> || <a href="articlesindex.html">Articles</a> || <a href="books.html">Books</a> || <a href="teflon.html">The Teflon Report</a> || <a href="mailto:letters@onlinecolumnist.com">Reactions</a> || <a href="aboutdiscobolos.html">About Discobolos</a></strong></font> <div align="left"> <p><font size="1" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">This site designed, developed and hosted by the experts at</font><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular"> <a href="http://www.cmeonline.net" target="_blank"><img height="30" width="138" src="images/cmelogoANIM.gif" border="0" align="absmiddle"></a></font></p> </div> <p><font size="2" face="Arial,Helvetica,Geneva,Swiss,SunSans-Regular">&copy;1999-2005 <a href="aboutdiscobolos.html">Discobolos Consulting Services, Inc.</a><br> (310) 204-8300<br> All Rights Reserved. </font></td> </tr> </table> </center> </body> </html>