Ron Paul has nothing good to say about the Wall Street bailout plan

Rep. Ron Paul (R-Texas) may no longer be running for president, but that doesn't mean he slunk away quietly and is simply tending to his re-election bid (though there may not be much to do, since he's running unopposed).

The free-market, small-government libertarian had plenty of harsh words about the Bush administration's proposed Wall Street bailout plan when he appeared on CNN's "Late Edition" today.

WOLF BLITZER ("Late Edition" host): What do you say to the president who wants you and your fellow Republicans and Democrats to quickly pass this $700 billion bailout package?

PAUL: Well, I think that's a mistake because we don't have the money. But that doesn't mean you have to do nothing. I mean, we could reform the system. We could return to sound money. We could balance our budget. We could change our foreign policy. We could take care of our people at home. We could lower taxes.

There's a lot of things that we can do. But the worst thing that we can do is perpetuate the bad policies that gave us this trouble in the first place, and that is that we no longer, over the last quite a few decades, believed in free-market capitalism. Capital is supposed to come from savings. We're supposed to work hard and save.

As a matter of fact, the Chinese work hard, right now, and they save, and they're buying up the world. But we borrow and spend and consume, and now it's caught up to us and it's undermining our whole system. ... So this $700 billion is not going to do it.

Paul also argued that ...

... contrary to the White House's contention, this plan does not help Main Street.

"This is Wall Street in big trouble and sucking in Main Street, now, and dumping all the bills on Main Street. ... And you can't solve the problem of inflation, which is the creation of money and credit out of thin air, by more money and credit out of thin air, and not changing policy. We have to change basic policy.

"Yes, it would be painful, but it wouldn't last so long. What they're doing now, they're propping up a failed system so the agony lasts longer. They're doing exactly what we did in the Depression."

"So, yes, there are going to be losses, but everybody lived beyond their means when the prices of houses were going up. Nobody cared about it. They kept borrowing against it. Oh, yes, that was fine and dandy. Everybody was making money, and the owner of the home kept borrowing and living beyond their means. Now they have to live beneath their means.

"What the government is doing now -- and this new program is trying to prop up prices. You want the price structure to adjust. You want the price of houses to go down. You don't want to fix the price of housing. You can't price-fix. We've had too much of that.

"We need a market economy. We need to believe in ourselves. We need to believe and understand how the economy got us -- how the government got us into this mess. And believe me, it wouldn't be that tough. It would be a bad year. But, this way, it's going to be a bad decade."

Paul had nothing but disdain for Republican presidential nominee John McCain's suggestion to create a new government entity to deal with the crisis, calling it "just more of the same, more government, more programs, more spending, more regulations, trying to prop up a system that has been undermined."

He did say that Democratic candidate Barack Obama "has a pretty good grasp on how to attack this politically and go after McCain, but he doesn't have any answer. He's not talking about the Federal Reserve system. He's not talking about balanced budgets. He's not talking about bringing troops home from Afghanistan."

And, as Paul has said before, his choice for president will be "neither one of those two. They don't offer any alternatives."

-- Leslie Hoffecker

Photo credit: Associated Press / J. Scott Applewhite

Comments

[Nader Paul McKinney]

Ron and Ralph Fool's Overture. History recalls how great the fall can be, while everybody's sleeping the boats put out to sea. Borne on the wings of time, it seemed the answers were so easy to find. "Too late" the prophets cry, the island's sinking let's take to the sky. Called the man a fool, stripped him of his pride, everyone was laughing up until the day he died. And though the wound went deep, still he's calling us out of our sleep.

Apocalypse Now...

[Gmartine]

Ron Paul hits the mark right on again.

Thanks for the great article. When everyone is panicking it is nice to see journalism that shows the truth of what is going on and how we can fix the problem.

[JimS]

I'm so sick of the way things are going I can’t see straight. I know what needs to be done but our government is unwilling to do it.. WE NEED TO TOSS THEM ALL OUT (but Ron Paul). Vote for anyone but the incumbent regardless of party (as party no longer means anything).

The people need more representation.

As it is now on average 1 congressperson for every 600,000 individuals this is a travesty. This is thanks to the congress cap of 1929 – the reason given (Not enough room in the government building WTF). I do believe the number Senators should remain as the Constitution intended. But, I also believe the number of representatives in the house should have remained as the Constitution intended it. I strongly believe that gerrymandering would become almost impossible and bad lobbying would be harder to hide. Lobbying is not a bad thing but some techniques used by lobbyists are deplorable. Point is we are getting further and further from a democracy.

If things don’t go back to the way our Constitution set them up to be, I say we stop paying taxes altogether. They can’t fund stupidity for that long without at least the illusion that a base of income is real.

[Eric]

As usual, Ron Paul is the only attacking the problem head on. McObama prefer playing the blame game without any solutions, just more of the same. Thanks Dr. Paul for actually trying to educate the masses unlike those two clowns.

[spinnikerca]

This man SHOULD have been President.

Too bad people couldn't listen to him in the '80s. Or in 2003 or... well, since then. It would have hurt less, for everyone.

I sure hope someone is listening now.

Thanks for the write up!

[Joe C]

"Paul also argued that ... ... contrary to the White House's contention, this plan does not help Main Street. "

Exactly! Anyone who only gets their news from mainstream TV will be misled to think this will help the average Joe. This is a bailout of fat-cat bankers who have taken their multi-million $ salary+bonus the past few years. Will the Wall Street fat-cats give back the bonus?

[joe]

God Bless you Dr. Paul!

Thank you Mr. Paulson (Mr. Goldman Sacks) while you bail out your investment bank criminals you sentences me to higher gas and food prices.

When are the stupid American People going to wake up? And see these criminals for what there worth.

Thank you Mr. Dodd (Friend of Angelo of Countrywide) for allowing allowing illegal plunder. And please Sir, never use the word retroprocity because you have no idea what it means.

Thank you Mr. Paulson for raiding the FDIC fund and helping private Equity firms to gobble up the cash when they didn't pay a dime into the fund.

And lastly, thank you Mr. Bernakie (Private Leader of the Private Central Bank that is neither Federal or has Reserves) for destroying Free Market Capitalism and sentencing my Children and Grandchildren to serfdom, slavery, and debt.

Hate is not a strong enough word to describe you all.

[joe]

How befitting that on the last day of Yankee Stadium, which represents everything good about America they destroy Free Market Capitalism the same day. Ironic don't you think? GOD BLESS RON PAUL! If only American's we not so stupid and have such blind faith?

[Darryl Schmitz]

Last year, much of the media had too little time to bother with substantive reporting about what Ron Paul was saying because Paul wasn't the sleekest, slickest politician running for president, so it was easier for them to lazily parrot the ridiculous "tilting at windmills" analogy when referring to Dr. Paul. Now it seems that it would have better to harken to the story about the boy who was brave enough to point out that the emperor had no clothes.

[Ben Straub]

Paul explains the painful truth. I guess I will take the good doctor over a bunch of corrupt lawyers and greedy bankers any day.

[Pontius]

As usual, Ron Paul is 100% right, and the rest are 100% wrong.

[me]

Federal guarantees against losses in money market mutual funds are nothing less than central government insurance against bad investment decisions. A free market demands that money market managers and the investors they represent bear the full burden of their investment decisions. The billions pouring out of money markets last week are a lesson in risk management, a lesson being taught to the players in the market who were foolish or unlucky enough to invest in the short term liabilities of firms who had significant exposure to toxic mortgage backed securities. Take away the risk of loss and you lose the lesson. Worse, you encourage future bad decision making.

The collapse of investment and commercial banks is another lesson. The actions of these firms in providing easy and undeserved credit to anyone asking for it led directly to the current financial catastrophe. These firms were in full pursuit of maximum profits without consideration of the downside risks they were exposing themselves or those downstream to. They acted irresponsibly and should be forced to bear the full cost of their greed. A quick look at the share price histories of these financial firms illustrates the unbelievable gains that their shareholders and executives realized. These people enjoyed the upside to their actions and it is required that they fully suffer the downside.

The pensions funds and other investors who eagerly swallowed higher interest paying CDO securities without adequately evaluating the risks are now suffering heartbreaking losses. This is a natural consequence of a free financial market. Sometimes we make good decisions, sometimes not, but a free market requires that we accept the consequences of our choices. Investors can't be allowed to reap gains from taking risk but not suffer losses or they lose the ability to make rational, risk-adjusted decisions.

The unwinding of the housing bubble is necessary and expected. All bubbles eventually collapse, causing widespread economic pain and suffering. Unfortunate for those caught up in it, even those who didn't have a direct hand in causing the bubble, but necessary. Housing valuations must be allowed to reset to more realistic levels. Government intervention to try to prop up housing valuations (better known as stabilizing the market) so that financial institutions and investors can establish valuations for mortgage backed assets they hold establishes a false floor for real estate values. That false floor is not sustainable and will eventually fail after costing taxpayers billions. Real estate is radically overvalued and must be allowed to deflate to more reasonable levels.

Every homeowner who purchased a home or withdrew equity hoping that their real estate would rise in value is, by definition, a speculator. Those facing foreclosure obviously obligated themselves to a debt they couldn't afford. They made a bad decision and they must be allowed to reap the negative rewards of their decision as freely as they would have been allowed to reap the positive rewards had their speculative bet gone the other direction.

It is not the role of the Federal Government to save individuals, companies or institutions from the consequences of their actions and it is not the responsibility of the American taxpayer to bear the costs of the irrational behavior of individual home owners or their lenders.

[me]

Federal guarantees against losses in money market mutual funds are nothing less than central government insurance against bad investment decisions. A free market demands that money market managers and the investors they represent bear the full burden of their investment decisions. The billions pouring out of money markets last week are a lesson in risk management, a lesson being taught to the players in the market who were foolish or unlucky enough to invest in the short term liabilities of firms who had significant exposure to toxic mortgage backed securities. Take away the risk of loss and you lose the lesson. Worse, you encourage future bad decision making.

The collapse of investment and commercial banks is another lesson. The actions of these firms in providing easy and undeserved credit to anyone asking for it led directly to the current financial catastrophe. These firms were in full pursuit of maximum profits without consideration of the downside risks they were exposing themselves or those downstream to. They acted irresponsibly and should be forced to bear the full cost of their greed. A quick look at the share price histories of these financial firms illustrates the unbelievable gains that their shareholders and executives realized. These people enjoyed the upside to their actions and it is required that they fully suffer the downside.

The pensions funds and other investors who eagerly swallowed higher interest paying CDO securities without adequately evaluating the risks are now suffering heartbreaking losses. This is a natural consequence of a free financial market. Sometimes we make good decisions, sometimes not, but a free market requires that we accept the consequences of our choices. Investors can't be allowed to reap gains from taking risk but not suffer losses or they lose the ability to make rational, risk-adjusted decisions.

The unwinding of the housing bubble is necessary and expected. All bubbles eventually collapse, causing widespread economic pain and suffering. Unfortunate for those caught up in it, even those who didn't have a direct hand in causing the bubble, but necessary. Housing valuations must be allowed to reset to more realistic levels. Government intervention to try to prop up housing valuations (better known as stabilizing the market) so that financial institutions and investors can establish valuations for mortgage backed assets they hold establishes a false floor for real estate values. That false floor is not sustainable and will eventually fail after costing taxpayers billions. Real estate is radically overvalued and must be allowed to deflate to more reasonable levels.

Every homeowner who purchased a home or withdrew equity hoping that their real estate would rise in value is, by definition, a speculator. Those facing foreclosure obviously obligated themselves to a debt they couldn't afford. They made a bad decision and they must be allowed to reap the negative rewards of their decision as freely as they would have been allowed to reap the positive rewards had their speculative bet gone the other direction.

It is not the role of the Federal Government to save individuals, companies or institutions from the consequences of their actions and it is not the responsibility of the American taxpayer to bear the costs of the irrational behavior of individual home owners or their lenders.

[Mike Massey]

Its been said that we get the government we deserve, but not all of us are getting what we deserve.
Ron Paul is the only sober voice I have heard all year.
People just do not want to be told that they are living behond their means. Unfortunately our government is an accurate representation of the people.
Reading these blogs gives me a little hope because it makes me realize that I am not totally alone in this crazy world. Lets write in Ron Paul for President.

[Andy Rebeiro]

I wont be surprised if Mr. Hank "CEO of USA" Paulson is rewarded by Goldman Sucks (oops Sachs) with a board position after he is done with all of this mess. After all, he has ensured 3 of their biggest competitors are effectively killed and making sure that 1 remained (MS) so that they are not villified as a monopoly. This is after he helped gain control of the NYSE itself (remember Thain and now Niederhauer were from Goldman Sucks). So he and his cronies are in total control of the US financial system. Maybe he may run for mayor or governor of New York.
All Hail King Henry.

[Pavel]

Ron Paul has it right - gold and silver standard stops these mega yacht speculators who ought to be jailed!

[Chris]

Thank God for some real journalism! It's good to hear someone put out the truth about what we are really going through on Wallstreet. It seems Ron Paul is the only politician with his head screwed on straight...

[pollypook]

I think he's right. You bail out once, you'll bail out again, and it will not solve anything. Eveybody is panicking, but in the end it is better to let the bad companies go out of business.

[AAAAANDRE]

Break down illegal institutions!

[Aaron the Geeky Drummer]

I am happy to see that, finally, Dr. Paul is getting some notice. WAY too little and for sure WAY too late... but at least the media is starting to realize that he was right all along.
Yet it saddens me that they will sit here and tell us all day that Dr.Paul was right and that he has the answers - and yet still they push these meddling, criminal-minded, communist-Marxist bastards at us during the election! WTF? I don't get it. It's like they are saying "Here's the savior and the answer to your problems, right here, here it is!! Now, go and disregard it."
As a society, we have given up freedom for the sake of security, and we now deserve neither... With the impending economic meltdown, we will have no freedom or security. It's here.
Orson Wells was about 24 years off - but he indeed wrote of this. Welcome, to 1984.

[Dr. Goober]

Ron Paul's Vision of an America that does not use Federal power to engage in foreign entanglements and promotes free markets died in the Mexican War and the Civil War.

Slave auctions carried on under a flawed constitution written by special interests was free market capitalism at it's finest.

Dr. Paul is an idealist. But his vision is flawed.

[John Smith]

Dear Member of Congress:

You are being asked to assign unprecedented powers to an unelected, and unaccountable former Wall Street banker, under the guise of bringing stability to the markets and solvency to our banking system. With one hastily thrown together vote, you are going to create the most powerful human being in world history – Henry Paulson.

This is being done for the purposes of fixing a “crisis” that has suddenly, in the last hour, been presented to Congressional leaders. This act would remove the constitutionally mandated powers of regulation of the money supply, and the value thereof, from Congress and give it to an unelected member of the President’s cabinet. According to the act, this person would be above judicial review, and be allowed a $700,000,000,000 revolving line of credit to print money on behalf of the United States government. That is more power than anyone has ever had – anyone. Caesar did not have this power.

This should sound eerily familiar.

In March of 1933, after the “crisis” of the Reichstag Fire, newly named Chancellor of Germany, Adolf Hitler, petitioned the German Reichstag to give him plenary powers over the affairs of German government. The Reichstag transferred its power, on an emergency basis, to the Cabinet of Germany for a period of four years, and this was called “The Enabling Act”. This was to deal with the perceived “crisis” of Communists within the German government, when the “crisis” was never fully substantiated. It is believed by most historians that the Reichstag Fire was a deliberate act to coax the Reichstag into giving up its power.

That history did not end well.

You are being goaded into giving Henry Paulson plenary powers over the economy and government spending, money supply, and value of that money. Those powers belong to you, held in trust for the citizens of the United States. Our Founders gave you those powers TO PREVENT THE VERY SCENARIO THAT SECRETARY PAULSON HAS PRESENTED TO YOU.

You are being manipulated.

For the past 13 months, Paulson, and Federal Reserve Chairman, Bernanke have repeatedly given public statements through the various media, and have testified to Congress on the soundess of our banking system. As that time has worn on, they have repeatedly come to Congress for various bailouts (Bear Stearns, AIG, Fannie/Freddie), as well as acted to install confidence through the manipulation of the Federal Reserve Monatary Policy, and announcing various liquidity programs to keep money in the banking system (TAF, TSLF). While they have been taking extraordinary measures to shore-up the banking system, they have always maintained that the system is sound and just needs a little time to get through a “soft spot,” or a “contained” problem (Subprime).

You now know that they were lying the entire time. There is no way to sugar coat this. They have been lying to you since March of 2007. They are lying now. This was plainly known to many in the professional and amateur investment communities, recently smeared as “short sellers.” It turns out that the cynics were right all along. This is why we have a free press.

Ask yourself, why didn’t they come to you for this unprecedented bailout last October, when Paulson attempted the same thing with various Wall Street banks? Surely, the problem was known last fall when Paulson attempted to create his “super SIV.”

Had he come to you at that time, there would have been at least 11 months to debate the issue, open it for public review, and deal with it while the stock market was trading at an all-time high. Why did he wait until the weekend before the Congressional recess for the bi-annual election cycle, and present the plan over a weekend where the public could not comment? Why did he have to wait until the stock market teetered on collapse, and the credit markets were frozen solid?

He needs a “crisis” so you will not oppose him.

Ask yourself, why did the Senate Majority Leader and Speaker of the House, as late as September 16, attempt to leave the issue in Washington and head back to their districts, leaving the Administration to clean up the mess, then suddenly have a change of heart less than 36 hours later? What was said? Why are the details of the briefing given to Congressional leaders not available for public review? Why are you being asked to vote for something so hastily and without proper briefing or public review? Does Democracy flourish in the dark, or does tyranny and fraud?

We know the following:

Paulson and Bernanke have lied for the duration of the credit crisis.
Every bailout has been bigger, more frequent, and has resulted in a much bigger “crisis.”

Now, Paulson and Bernanke are telling you that they really are telling you the truth and this bailout will work.

You are being played.

They are framing the issue in terms of Congress voting to rescue the banks and the markets. Let me be clear on this point: YOU ARE NOT VOTING ON THE HEALTH OF THE BANKS OR THE MARKETS. YOU ARE DECIDING WHO GETS WHAT MONEY IS LEFT OVER AFTER THEY FAIL. The markets (equity and credit) are going to experience a large dislocation, or in the common lexicon, “a crash.” That is an absolute certainty. You are merely deciding if the US citizens are going to keep their money, or give it to Wall Street bankers. You are deciding if the US government is going to survive or collapse. Giving Paulson unlimited spending powers will ensure that the government collapses. That is a certainty.

Paulson and Bernanke need to be removed from office for malfeasance. For 18 months, the health of the banking system has been very suspect. They have known all along what is happening and have failed to act. Their actions have been limited to lying to Congress and the American people and manipulating the accounting to cover the insolvency of the US banking system.

You are being asked to abdicate. The American people want their Constitution and their government to survive. We will rebuild what Wall Street has destroyed, but we need to keep our money in order to do it.

Vote against this unprecedented power grab. History shows the folly of such endeavors.

[stormn]

I see Ron Paul as someone which does understand financial matters. Our government of the rich and greedy. We the people have no one to blame for our anxiety for believing in our politicians from both parties. The liars have never been honest with the American people from either party for a very long time. We allowed Reagan to talk us into a free market that was not for us but for the rich and greedy. We allowed people like Greenspan and Bernake to have us believe they knew what they were doing. The party is over for us and the parties we believed in to sustain these United Stantes. We have been giving away money like to every Country in the world while we continue to borrow it to give to them. Our government has spent outlandishly sums of money for other Countries. We have lobbyist that work against the American people to profit the fat cats and themselves. Why is anyone surprised their is no one watching the crooks in Washington, D.C. as well as the crooks on Wall Street. Insanity is allowing the American people to bailout the wealthy greedy bastards allowed to walk away with parachutes filled with ill gotten gain.
No one has suggested prosecuting even one of these evil bankers from this administration. They are the people that Bush told us were his base at a dinner when he claimed who his real friends are and he did not say main street but wall street.
I say no incumbent should be safe in this election or the next election until all the incumbents have been kicked to the curb.
God help us for we can no longer help ourselves. We have gotten what we deserve for not watching the store that is the job of the American peoples. Our responsibility does not end when the election is over. McCain or Obama neither one will change Washington for they are Washington.

[Jesse Ting]

Is the Republican party and media still calling this man UNELECTABLE????
He is the only Presidential candidate who understands economic policy and foreign policy - what America really NEEDS to get back to as powerful as it used to be. Now, America is pathetic, and 'hated' by both the Islamic extremist and millions around the world.
Join the RON PAUL revolution to demand return to the CONSTITUTION.

[A. Halsey]

The good news is that an honest, decent, and wise, man can still be elected to the U.S. Congress. The bad news is that he's about the only one. It's awesome that Ron Paul has been the only one with the courage and leadrship to vote against numerous cockamamie (and often unconstitutional) laws thrown up by congress. America is not short of people who are as good as Ron Paul, just short of them in the Congress.