Bush: ‘Our entire economy is in danger’

President uses prime time address to make case for $700 billion bailout

"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," U.S. President George W. Bush said in a 12-minute prime-time address from the White House East Room that he hoped would help rescue his tough-sell bailout package. Really? So to quote famous comedic character from television sit-com history, "Surprise, surprise, surprise!"

So what have we, the citizens of America learned from the massive and continuing Wall Street Meltdown of September 16, 2008? If pressed for honesty, I would probably be forced to answer - nothing! But what we heard was another matter altogether.

That puzzling sound coming from our elected leaders in our country's capital Washington DC, is the sound of the lid being closed on the coffin of the long vaulted American Dream of - Low and Middle Income Home Ownership.

America's Toxic Corporate Mythology

More than a fear of God, Americans have over the years developed a fear of the wrath of the 'underpaid executive', evidenced by the fact that they have been willing to suffer these huge comparative differences in pay scale, virtually without complaint. Why this trend ever developed is a mystery that can be debated for a long time without resolution, but that it exists here in today's America is undeniable. We have come to treat these people like Gods!

In fact, the public tolerance exists not just toward executive pay, but toward wealth and the wealthy Class in general. In the main, it would appear that this exotic acceptance derives from two key factors: (1) Americans are fiercely proud of their particular brand of capitalism, and (2) Our political leaders have bred us to believe - like a religion - without question - that taxing the wealthy for what they really should pay is equivalent to - taxing success. And as patently stupid as that may sound no matter how one should twist it in the light - we bought it hook, line and sinker as the old fishing term goes. Now, we the public are on the end of that fishing line and about to be dropped into the proverbial frying pan to the tune of $700 Billion dollars.

According to a study of CEO to worker pay ratios made in 2007 the following facts emerged:

The average CEO of a large U.S. company made roughly $10.8 million last year, or 364 times that of U.S. full-time and part-time workers, who made an average of $29,544, according to a joint analysis released by the Institute for Policy Studies and United for a Fair Economy.

Therefore, when one considers the average compensation (wages plus benefits) of full-time year-round workers in non-managerial jobs - roughly $40,000 - CEO pay is more like 270 times bigger than the average Joe's. That however is still a far cry from days gone by. In 1989 U.S. CEO's of large companies earned 71 times more than the average worker.

The report also compared U.S. CEO pay to that of leaders in other fields and other countries. The top 20 CEO's of U.S. companies made an average of $36.4 million in 2006. That's 204 times that of the 20 highest paid U.S. military generals, and 38 times that of the 20 highest-paid non-profit leaders. They also made more than three times that of the top 20 CEO's of European companies - who had booked higher sales numbers than their U.S. counterparts.

Finally, keep in mind that these huge pay gap numbers do not include the value of the many perks CEO's receive, which averaged $438,342, according to the report. Nor do they include their pension benefits: all part of the Golden, sometimes Platinum, parachute. Remember, the total retirement and benefits package of the outgoing chairman of Exxon Corporation, was recently revealed to have come to - a half billion dollars. For the mathematically challenged that's $500 Million Dollars.

The justification for such huge salaries and benefits has always been - the need to attract top talent. If that is truly the case, how then is it that we are in the financial condition we are at present - driven there, apparently, in the limousines of the same financial 'top talent' leaders?

It is because we have allowed these people to write their own contracts in which has given them free rein to become, - not bottom feeders, but top feeders. We have allowed them to skim the cream off the top when all is going well (or at least appears to be), and to be financially uninvolved or accountable for the results of their gross errors in judgment and overreaching mismanagement for personal profit - when things go terribly wrong.

The way they have come to view such problems is to rewrite maritime tradition to suit their own personal needs. In other words, the ship's captain who has driven his craft into an iceberg, does not have to go down with his passengers and ship.

Fighting Two Wars On A Credit Card

In the history of the United States of America, George Bush Jr. is the first president ever to award major tax cuts - in the middle of a war. Now we have two wars going and the crucible of debt grows ever greater.

After using up a $760 Billion surplus at the start of his administration the Bush crew, for reasons that have as yet to be fully brought to the light of day, took on a justified war and then - without warning, decided to enter into a major unjustified war.

Unfortunately, for the American people, the Bush administration apparently (or conveniently) overlooked two critical factors: How many troops did we need to fight that second war - Iraq, and did we have the funds available to engage in such a costly conflict at the time. The answers to both questions turned out to be - no!

This however did not deter them. They went ahead anyway to the tune of close to 5000 dead Americans, at nearly two hundred thousand dead Iraqis, and a war debt ceiling reaching for infinity. The end result, we are now in hock up to our ears for generations to come, and in debt to nations who stand very close to the preceipe of being our declared enemies. How's that for leadership?

The Sub prime Mess: Who's to Blame?

It would appear that the Republican Party and their Right Wing Conservatives supporters want desperately to blame this debacle, one that came about smack near the end of the Bush administration, on the Clinton administration. Unfortunately for their cause, even to the eyes of a blind person who can still - Think - their reasoning simply does not equate with the facts.

President Bill Clinton presided over the repeal of the Glass-Steagall Act, which had prevented the coupling of investment banking and lending. To be exact, on November 12, 1999 Clinton signed into law the Republican initiated Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal is it allowed commercial and investment banks to consolidate. Economists have long criticized this action.

The bills were introduced in the Senate by Phil Gramm (R-TX) and in the House of Representatives by James Leach (R-IA). The bills were passed by a 54-44 vote along party lines with Republican support in the Senate, and by a 343-86 vote in the House of Representatives.on Nov 4, 1999: After passing both the Senate and House the bill was moved to a conference committee, to there work out the differences between the Senate and House versions. The final bill resolving the differences was passed in the Senate 90-8-1 and in the House: 362-57-15. This veto proof legislation was signed into law by President Bill Clinton on November 12, 1999.

The banking industry had been seeking the repeal of Glass-Steagall since at least the 1980s. In 1987 the Congressional Research Service prepared a report which explored the case for preserving Glass-Steagall and the case against preserving the act.

The mortgage lending deregulation was inserted by Phil Graham (R) into legislation at the last minute. It passed a Republican-controlled Congress with veto-proof majorities in both houses. However, It was not just the lending rules that led to this meltdown status. It was the ability of the deregulated financing and banking system to bundle high-risk loans into securities, mixed with good loans, and to trade them, unregulated, as securities that led to this mess.

Neither the Democratic Party, the Republican Party or the Clinton administration ever instructed or intended to give license to these greedy institutions, to write such loans as the Sub-Prime monster eventually became.

Next to Fall: A House of Cards

Despite the historic economic mess we are all feeling our way through at the moment, both as government and citizenry, one should keep in mind that the situation can get a great deal worse. The reason I proffer such a foreboding caution is that the Credit Card Crisis is just around the corner - and very few know the full extent of that of that impending specter of doom.

According to an extensively researched 2007 report by Moody's Investors Service, Americans owed a record $915 billion in credit card debt. And with defaults on payments running high during the sub prime crisis, credit card companies wrote off 4.58 percent in payments between January and May of that year, which was almost a third more than in the same period in 2006, Moody's said.

As a result of such write offs, lenders such as Citigroup, Bank of America, and American Express, already reeling from the sub prime mortgage collapse, are being further weakened, according to a report issued by MoneyNews.com This dilemma hosted upon Middle America was highlighted by an article in the September 24 edition of U.S. News & World Report:

Mortgage Woes Boost Credit Card Debt

Consumer rates of delinquency rise, especially in areas where foreclosures are common

By Kimberly Palmer - U.S. News & World Report

Danielle Mathias-Lamb, a second-year nursing student, received a letter from Bank of America in January with a shocking message: The credit card she used to pay for her tuition was going to jump to a 28 percent interest rate from 10 percent.

"We didn't make any late payments but were just carrying higher levels of debt than we would have in a perfect universe," says Mathias-Lamb, 42, who lives in Tracy, Calif. She was close to maxing out her credit limit with the $7,000 balance she kept on it. (The card originally came with a zero percent introductory rate, one reason she decided to use it to finance her education.)

Consumers like Mathias-Lamb are increasingly finding themselves forced to deal with higher interest rates and other fees as credit card companies respond to the fact that - consumer debt is climbing, along with delinquency rates.

In January, average debt on credit accounts and fixed-payment accounts such as auto loans climbed to $16,600, up from $15,500 last April, according to the credit reporting agency Experian.

Over the same period, the average number of accounts per individual that are overdue by one payment or more climbed to 1.01 from 0.97. Bank of America says it may raise rates when customers' risk profiles worsen or when they are late or exceed their credit limit twice in a 12-month period.

How severe is this growing problem? A brief write up at the Christian Broadcasting Network (CBN.Com) narrows it down to an economically terrifying conclusion:

American Credit Card Debt Climbing

September 11, 2008- CBNNews.com

The finances of American households are getting worse, because of the weakening economy.Economy.com warns that falling home prices and increasing debt are hurting Americans. More people are using their credit cards to buy things, because banks have tightened their home lending standards. This has made home equity loans harder to get.

Most notable is the fact that while the average American household has a total debt of nearly $120,000, they will save less than $400 this year.

The Federal Reserve says consumer borrowing on credit cards grew at an annual rate of 4.8 percent in July, up from 3.5 percent in Jump

Banking analysts report that even though credit card use has gone up, payments on credit card debt continues to fall. Card payments fell 6.2 percent in July, which was the ninth consecutive monthly decline

Look out below and I caution don't stand under this load, for it has every chance of crashing down around us - just like the rest of the economy wasn't supposed to do - according to the 'experts.'

Worst Case Ending Scenario:Recession or Depression?

It would appear that an Extreme Right Conservative presidential administration, that has for almost eight years held the ground against any sort of social or economic program that even hinted of Socialism - of any kind, has now come up with the greatest Socialist capitulation of all time, - a $700 Billion dollar mystery purchase of unknown value inflated mortgage loans.

According to one of the economy gurus, the following is a realistic appraisal of the state of the current crisis, and of the levels it can drop to:

By Chris Isidore, CNNMoney.com senior writer

"...the economy is not at risk of falling into a depression, most experts agree."

"During the Great Depression, unemployment shot up to as much as 25% in 1933. That came after the gross domestic product, the broadest measure of economic activity, plunged 13% the previous year, and millions of people lost their savings when banks closed without any insurance for its customers' deposits. Few economists are predicting economic pain of that magnitude."

Well I say, don't believe him or anyone else who tries to feed you this line of - it's safe reasoning. These are the same people who assured us we would never be in such dire financial straits as we now find ourselves. They were warned well over a year ago of possible accellerated fallout to the economy from predatory lending practices by lending instutions to Low and Middle Income households, but waved off the warnings as unfounded. So what the hell do they know? (Click HERE for Senate hearing on predatory lending practices)

A deep Recession followed by a possible Depression is well within the realm of real 'worst case scenarios', tempered only by liklihood and probability. For the rest of the industrially developed world, Recession is the more desirable choice of the two for a limited and contained economic disaster, for it would allow them the 18-19 months necessary to reassemble and move their interests and holdings away from the U.S. dollar many have held over the past half century.

Should they however not be allowed this critical time and a worldwide Depression did come about, their fragile developing economies would take on some of the same troubling monetary waters as America's has. And the manner in which such a tragic occurrence might come about, and its affect on the world economy as a whole, at present no one can foretell - not even the so called economic experts.

It is the opinion of many that in either case scenario, the industrially developed world at large would move away from the American market, and rely more on reduced but more intensive, controllable and predictive trade among themselves. Such a move would, undoubtedly, leave America firmly planted in the class of - Second World Status.

In other words, we would be dethroned from the long held status of the most powerful nation on earth. Yes, it happened to Great Britain and it can, indeed, happen to us, and we have no one to blame but ourselves. After all, we were the ones who became drunk on Democracy and allowed Capitalism to get completely out of control.

Your comments - The voices of our readers

It's the de-regulation of financial institutions that got us all into such a mess begun during the hay-days of Reaganomics. Add to that the capitalism-can-do-no-wrong philosphy (Remember that "Greed is good" line from the film, WALL STREET?)and there! you've got a darn-good recipe for disaster. The only thing that will completely get the country back in shape once again, be that dreaded word of the far-right: "socialism". But then many things worked out fine after FDR kicked in much of the gov's money and had to nationalize a great many programs. It put people back to work, re-vamped our infrastructure, and even had a few dollars to help out war-torn Europe. Get ready Rush Limbaugh to eat up all those 'toxic' words of yours! Our corporate elites, just like children, need a helping hand and strict guidelines from here on in..... -N.P., Atlanta, GA How about giving this "Bail-out Money" to us taxpayers, and we will decide in whom we put our trust in. -D. Martin, N.F., NY I a,m really angry that these fat cats after making disgusting fortunes off of hard working American families now want to blame them for buying homes they could not afford. Like they themselves are blamless. Isn't it the job of their representatives to check out all loan borrowers completely?  My family was one of the ones they screwed.  My wife and I worked for 10 years to get the downpayment on the home we are now losing.  But they told us we could afford it.  We are both high school graduates but we are not money experts.  Thats why we went to them.  Now its our fault. -L.M., Short Hills, NJ