round up of news:*just to say it, the articles below do NOT reflect the views of this blog. they are being reposted to show the varied takes on the situation.
from NY Times.com
“Stock markets plunged sharply as it appeared that the measure would go down to defeat, and kept slumping into the afternoon when that appearance became a reality.
Worldwide financial markets had slumped even before the House vote; shares in Hong Kong closed down 4 percent and in Paris and London they were down 3 percent. By 3:15 p.m. Eastern time the Dow Jones industrial average had fallen more than 5 percent.House leaders pushing for the package kept the voting period open for some 40 minutes past the allotted time, trying to convert “no” votes by pointing to damage being done to the markets, but to no avail”
by Mike Whitney
from CountrePunch
“It all get’s down to this: The reason the system is exploding is because the various financial institutions have been allowed–via deregulation–to act as banks and create as much credit as they choose without a sufficient capital base. When one reads about massive deleveraging, this relates directly to the fact that under-capitalized businesses were operating with too much debt in relationship to their capital. That’s it in a nutshell; forget about the CDOs, the MBSs, the CDS and the whole alphabet soup of derivatives garbage. They were all inserted into the system so Wall Street landsharks could expand credit without supervision and balance trillions of dollars of debt on the back of a one dollar bill. This is why Paulson wants to suspend the rules which would bring credibility and trust back to the system. After all, that might impinge on Wall Street’s ability to enrich itself at the public’s expense.”
Instant View: House Rejects Bailout
from Reuters
“There is a risk of failure of the financial system, although I don’t think that is going to happen. At least the bailout package gave some certainty, at least something was out there, but now the market is left to its own devices and whatever liquidity facilities the Fed has out there”
Shares Plummet as US Congress Rejects Bailout Plan
from the Guardian.co.uk
“Despite a round-the-clock weekend negotiating session, members of the House of Representatives ignored a last-ditch appeal from George Bush by rejecting the rescue scheme on an initial count by 228 votes to 205… The dramatic and unexpected show of political opposition came largely from the Republican benches, where a majority of congressmen opposed the measure citing concern among the public about the cost of the bail-out. The White House said Bush was “very disappointed” by the outcome”
House Bailout Vote: The Uprising comes to Wall Street and Washington
by David Sirota
from the Huffington Post
What I’m going to say is pretty simple: it’s clear that Congress is facing a full on revolt from both the Right and Left… No longer is this a populist revolt merely scaring Wall Street and Washington – this is a populist revolt that has, to quote Markos, crashed the gate, and it represents a real victory for the progressive movement and voices who said Hell No… Just as I said in the book that it’s not clear what is going to come out of the Left-Right grassroots uprising throughout the country, it’s not clear what is going to come out of this uprising in Congress.
The bailout and capitalist worries about the parliamentary democratic form of rule
After the problems getting Congress to agree to the bailout the ruling class surely must be having some doubts about the viability of parliamentary democracy, at least in handling major, systemic crises. (Domestic counterinsurgency planning and the general movement towards greater state repression, of course, also points to what leading sectors of the bourgeoisie see as the long-term prospects for traditional “liberal democracy” in the US, and is a manifestation of the secular crisis of capitalism.) Since the ‘70s, discussions have periodically emerged in rc circles about the weaknesses of the US state structure, with its “checks and balances,” which constrain the executive branch from taking strong, decisive action. (Think of the old Trilateral Commission report, “The Crisis of Democracy”.) The Iran-Contra episode reflected this growing rc impatience with Congress getting in the way. Now, with a Congress that has been very pliable so far, in areas including warmaking and domestic political repression, something went wrong again. Congressional opposition to the bailout notably included some stalwart conservative Republicans, who usually could be counted on to support the Bush administration on anything.
The near failure of the bailout bill to pass is again stirring up rc questioning of the reliability of Congress. This can be seen in a recent editorial in the Washington Post (Oct 1) by Michael Gerson, a policy expert at the Council on Foreign Relations (long the premier capitalist policy-planning organization in the foreign policy arena) (accessed at the CFR’s web site, http://www.cfr.org/publication/17406/). Gerson:
“America’s economic crisis has become a political crisis – with the second now compounding and exceeding the first.… America is left with one portion of one branch of government that does not seem to work.… [I]t is now clear that American political elites have lost the ability to quickly respond to a national challenge by imposing their collective will. What once seemed like politics as usual now seems more like the crisis of the Articles of Confederation – a weak government populated by small men. And this must be more frightening to a world dependent on American stability than any bank failure.”
If a global regulatory framework has to be established to deal with the financial meltdown, Congress may again prove to be an obstacle to crisis management, and again illustrate the “tension between the political and economic interests of global capital and the national frameworks that field armies, raise taxes, and print money” (d. Hamerquist). (I don’t believe there is a genuinely global ruling class, just yet, but I’m starting to believe there is a tendency in that direction.)
Nick Paretsky