The New York Times reports that to meet the present financial crisis, the privately owned Federal Reserve is “resorting to the oldest action in its book”, printing more money out of nothing for which Americans are charged interest to use, as the House of Representatives rejected a recent bailout bill proposed by the Fed itself.
Another available option provided by the experts is to borrow more money from foreign countries. The Times quotes Kenneth Rogoff, an international economist at Harvard, as saying, “We have a lot of money to play with. As long as foreigners have a lot of confidence in our ability to solve our problems, we can borrow the $1 trillion to $2 trillion we need to solve it.” He added that “The real constraint is not a bookkeeping one. It is a sense of faith on the part of foreigners that the U.S. government will repay its debt. Our most precious asset is that credibility.”
The plan to bail out major financial institutions with taxpayer dollars is widely unpopular among the American public, but not among the political and financial elite. The corporate media is thus portraying the rejection as a setback.
A Washington Post-ABC News poll showed 47 percent opposed to the Bush administration’s proposed economic package compared to 45 percent in favor. Despite more people opposing the measure than favoring it, the Post inexplicably leads its article on the poll with the interpretation that voters “overwhelmingly fear that the House’s rejection of the measure on Monday could deepen the country’s financial woes”. This deceptively implies that people “overwhelmingly” believed the bill could help the economy. The contradiction might perhaps be explained by the wording of the question, which did not ask participants whether the favored the measure or not, but whether they were “concerned” that the House’s rejection of the plan “could lead to a more severe economic decline”. Of course people are “concerned” about it, but interpreting the overwhelming concern as support for the measure is dishonest spin.
There’s another interesting thing about the percentages favoring and opposing the measure. In its article, the Post uses the data from September 29. But the poll was actually conducted from the 27th to the 29th. Including the previous two days, it shows not just a plurality, but a majority, 51%, opposed to the plan, with only 42% in favor. The Post reports only the results from the 29th to deceptively represent the percentage of respondents opposing the plan as being less than the full results actually showed.
Thus, the Times suggests that “our representatives in Washington just don’t get it”, and says that American investments are safe “As long as you trust the U.S. government”. As for whether Americans should buy stocks or not, the Times suggests that “This is a great time to make bets”, but “Just be prepared to lose big”. More bank failures, the Timesassures, “will happen.”
Another Times analysis criticized the House rejection of the bill by saying it demonstrated “a failure…of political leadership”.
The Senate will also vote on a version of the bailout bill the includes tax cuts for corporations and investments into alternative energy, as well as increase government insurance amounts for bank deposits. Increasing caps on Federal Deposit Insurance Corporation (FDIC) coverage beyond the current limit of $100,000 on standard accounts is apparently designed to help boost depositor confidence to prevent a run on the banks that could cause the whole economic house of cards to come tumbling down.