Will George Bush's Legacy Be The Economy?

  Once again we take a look at an overseas view of the United States and our soon to be gone President, George Bush.

Watching America

Bush: Mission
Accomplished

By Fernando Canzian

Translated By Anthony Enriquez
2008-10-19

Edited by Lauren Abuouf

Brazil - Folha Online - Original Article (Portuguese)
Bush: Mission Accomplished
WASHINGTON – Between the US election on November 4th and the inauguration of the new president, the world still has 77 days of George W. Bush.
Luckily, Bush can’t escape so easily from history: in the world of images, or the “cultural industry,” using the term coined by Horkheimer and Adorno, Bush has just been exposed for the public at large in the wonderful “W.,” the new film from director Oliver Stone (“JFK,” “Doors,” and others). Josh Brolin gives a spectacular and moving performance as the President.
Even without taking shots at Bush (just the opposite, in fact), the film ends up hammering one more nail in the coffin of the president and his family, pecking around the edges of power in the United States for 200 years now.
It’s also a slap to the face of Americans who have twice elected him. The second time, by the way, Bush and the Republicans achieved a complete victory in 2004: in the popular vote, in the Electoral College, in the House and Senate, and in the majority of the states.
Between Bush’s reelection and the end of his second term now, the US went from the heights of unilateralism, arrogance, and the use of force to an unprecedented appeal for international cooperation. If countries could go broke, Bush’s America would be the most spectacular case of bankruptcy in contemporary history.
In four years, the United States’ and Bush’s fortunes went from flying to failing, with a strong negative push coming from the President’s commands and his tiny and obtuse nucleus of power.
In 2003 and 2004, I had the privilege of witnessing in Washington both the events preceding the War in Iraq as well as, more closely, Bush’s reelection.
The United States was a different country. Distinguished newspapers unquestioningly believed in everything the President said. People stocked water, food, and batteries in their houses at every sign of a new terrorist catastrophe. The Patriot Act permitted the monitoring of millions of telephone lines of everyday Americans, and the government filled the atmosphere with the most potent fear it could create.
That is how Bush was reelected: by duping the easily-dupable US media outlets with horror stories.
Stone’s film is just one sign of the sad end of the Bush era. The once-all-powerful presidential advisors – with the power to record, interrogate, and apprehend – are now exposed in ways unimaginable four years ago. Even the headlines of Washington’s largest (free) gay newspaper, “Blade,” is questioning this week: “Is Condie Gay?” in reference to none other than the US Secretary of State, Condoleezza Rice – assumed to be a spinster like our mayor Kassab.
The Bush years also left indelible cracks in the world’s largest economy. We found out that the US would barely have grown in the last five years were it not for consumer spending. Surprise: that was financed by flimsy credit spiraling into nothing. The country is bankrupt.
The world’s richest (?) and most militarily powerful nation has been caught with its pants down at the end of Bush’s reign. Even the most coherent solution for the current crisis – directly injecting capital into banks – came from overseas, from the United Kingdom, and was replicated in the US. It’s all unbelievable.
But, as extraordinary is it all seems, Bush’s arrogance and ignorance may have rendered an immense service.
If the US grows close to nothing in the next two or three years, which is very possible, the Chinese economy will have expanded from one-third the size of the American to one-half. Various other emerging economies will also gain larger slices of the global participatory pie. At least in economic terms, it will be a whole new world.
And that just might be Bush’s greatest legacy.

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Bush's Final Treasury Pillage: The Bailout

   But first off. Happy Halloween!

Published on Friday, October 31, 2008 by The Nation

The Bailout: Bush's Final Pillage

by Naomi Klein

In the final days of the election, many Republicans seem to have given up the fight for power. But that doesn't mean they are relaxing. If you want to see real Republican elbow grease, check out the energy going into chucking great chunks of the $700 billion bailout out the door. At a recent Senate Banking Committee hearing, Republican Senator Bob Corker was fixated on this task, and with a clear deadline in mind: inauguration. "How much of it do you think may be actually spent by January 20 or so?" Corker asked Neel Kashkari, the 35-year-old former banker in charge of the bailout.
When European colonialists realized that they had no choice but to hand over power to the indigenous citizens, they would often turn their attention to stripping the local treasury of its gold and grabbing valuable livestock. If they were really nasty, like the Portuguese in Mozambique in the mid-1970s, they poured concrete down the elevator shafts.

The Bush gang prefers bureaucratic instruments: "distressed asset" auctions and the "equity purchase program." But make no mistake: the goal is the same as it was for the defeated Portuguese--a final frantic looting of the public wealth before they hand over the keys to the safe.

How else to make sense of the bizarre decisions that have governed the allocation of the bailout money? When the Bush administration announced it would be injecting $250 billion into America's banks in exchange for equity, the plan was widely referred to as "partial nationalization"--a radical measure required to get the banks lending again. In fact, there has been no nationalization, partial or otherwise. Taxpayers have gained no meaningful control, which is why the banks can spend their windfall as they wish (on bonuses, mergers, savings...) and the government is reduced to pleading that they use a portion of it for loans.

What, then, is the real purpose of the bailout? I fear it is something much more ambitious than a one-off gift to big business--that this bailout has been designed to keep pillaging the Treasury for years to come. Remember, the main concern among big market players, particularly banks, is not the lack of credit but their battered share prices. Investors have lost confidence in the banks' honesty, and with good reason. This is where Treasury's equity pays off big time.

By purchasing stakes in these institutions, Treasury is sending a signal to the market that they are a safe bet. Why safe? Because the government won't be able to afford to let them fail. If these companies get themselves into trouble, investors can assume that the government will keep finding more cash, since allowing them to go down would mean losing its initial equity investments (just look at AIG). That tethering of the public interest to private companies is the real purpose of the bailout plan: Treasury Secretary Henry Paulson is handing all the companies that are admitted to the program--a number potentially in the thousands--an implicit Treasury Department guarantee. To skittish investors looking for safe places to park their money, these equity deals will be even more comforting than a Triple-A rating from Moody's.

Insurance like that is priceless. But for the banks, the best part is that the government is paying them--in some cases billions of dollars--to accept its seal of approval. For taxpayers, on the other hand, this entire plan is extremely risky, and may well cost significantly more than Paulson's original idea of buying up $700 billion in toxic debts. Now taxpayers aren't just on the hook for the debts but, arguably, for the fate of every corporation that sells them equity.

Interestingly, Fannie Mae and Freddie Mac both enjoyed this kind of unspoken guarantee. For decades the market understood that, since these private players were enmeshed with the government, Uncle Sam would always save the day. It was the worst of all worlds. Not only were profits privatized while risks were socialized but the implicit government backing created powerful incentives for reckless investments.

Now, with the new equity purchase program, Paulson has taken the discredited Fannie and Freddie model and applied it to a huge swath of the private banking industry. And once again, there is no reason to shy away from risky bets--especially since Treasury has not required the banks to give up high-risk financial instruments in exchange for taxpayer dollars.

To further boost confidence, the federal government has also unveiled unlimited public guarantees for many bank deposit accounts. Oh, and as if this wasn't enough, Treasury has been encouraging the banks to merge with one another, ensuring that the only institutions left standing will be "too big to fail." In three different ways, the market is being told loud and clear that Washington will not allow the country's financial institutions to bear the consequences of their behavior. This may well be Bush's most creative innovation: no-risk capitalism.

There is a glimmer of hope. In answer to Senator Corker's question, Treasury is indeed having trouble dispersing the bailout funds. It has requested about $350 billion of the $700 billion, but most of this hasn't yet made it out the door. Meanwhile, every day it becomes clearer that the bailout was sold on false pretenses. It was never about getting loans flowing. It was always about turning the state into a giant insurance agency for Wall Street--a safety net for the people who need it least, subsidized by the people who need it most.

This grotesque duplicity is an opportunity. Whoever wins the election on November 4 will have enormous moral authority. It can be used to call for a freeze on the dispersal of bailout funds--not after the inauguration, but right away. All deals should be renegotiated immediately, this time with the public getting the guarantees.

It is risky, of course, to interrupt the bailout. The market won't like it. Nothing could be riskier, however, than allowing the Bush gang their parting gift to big business--the gift that will keep on taking.

Copyright © 2008 The Nation

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