Sunday, September 28, 2008

Message to the Press: Ask tough questions about the bailout


Are we being railroaded into believing there's a phony crisis to force the public to pony up to rescue the wrong people? Is the "crisis" the weapons of mass destruction of today? I think I got this right when I heard on CNN today that Goldman Sachs had $20 billion in risk that would be saved by the bailout. Remember that is where Paulson comes from. Goldman Sachs execs actually sat in on talks to design the bailout.

I am repeating a call I made a few days ago to bailout the American worker who provides the fuel for the economy by creating New Deal style WPA jobs for all the things this country need so desperately, including hiring scads of teachers and creating enough space to reduce class size in urban schools.

David Cay Johnston was an economics/tax reporter for the Times. This piece was posted on a forum for journalists (http://poynter.org/forum/view_post.asp?id=13611). Contradicting most of what we've been told about the credit situation, that he says is not a crisis, Johnston exhorts his fellow reporters to be skeptical and "check it out" instead of making the mistake they made in reporting the Administration's case for the Iraq war and the Patriot Act.

Here's an excerpt:
Ask this question -- are the credit markets really about to seize up?

If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?
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Thanks to Merry T.

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