For the bailout bill, public opinion is running anywhere from 100 to 1 to 300 to 1 or more against passing this bill, according to sources on Capitol Hill. Given the massive size of this package, the fact that it rewards the guilty on Wall Street and does nothing to address the cause, that anger is fully justified.
First, non-financial private debt is $32.4 trillion dollars as of the second quarter of 2008. Household debt is $14.0 trillion. Households lost $400 billion last quarter. Wall Street wishes to add $700 billion more in losses (via government obligations that taxpayers must cover) this quarter; this package is insignificant against the total bad credit outstanding. Federal capacity to "bail the system out" is insufficient.
Second, it will not and cannot work because the issue is trust, not money. There is lots of money (and credit), but it is being hoarded throughout the system. Consumer savings have gone from nothing to the highest rate ever in American history - in the space of a few months. Money is flying into Treasuries because of lack of trust, not lack of money. We must fix the cause of the problem, not apply band-aids.
Third, commercial paper is being cited as the "lockup" that threatens an imminent financial train wreck. The truth is that commercial paper rates for "AA"-rated non-financial firms is placing at a rate half that of a year ago as the Fed Funds target has been dropped from 5.25 to 2.20. With risk having increased, the rate of return offered is lower?
This is where the stress is coming from; at last summer's rates, this paper would roll. We are being gamed by Paulson and Bernanke; even for "threatened sectors" rates are not materially higher than last year.
There are alternatives that will work; they all involve restoring trust and using existing market mechanisms to resolve insolvent institutions. While I am not particularly partial to my view on how we resolve "failed" institutions, addressing the root of the problem - lack of trust - is paramount. Three elements are involved here and they must be fixed or we will fail.
We only get one more shot at this! We have spent over $1.6 trillion thus far (by some estimates; $500 billion by others) attempting the same thing over and over again, and it has not worked.
Carol Berry
Colfax, Iowa
The Arts Are Central to Education
As an educator in the arts I would like to bring attention to Barack Obama's Platform in Support of the Arts in which he states: "To remain competitive in the global economy, America needs to reinvigorate the kind of creativity and innovation that has made this country great. To do so we must nourish our children's creative skills. In addition to giving our children the science and math skills they need to compete ... we should also encourage the ability to think creatively that comes from a meaningful arts education." Due to budget cuts, unfortunately, many school districts locally and nationwide have had to eliminate art and music education."
Barack Obama believes the arts should be a central part of effective teaching and learning. Citing studies that test scores in low-income schools improve faster in schools implementing arts across the curriculum than scores in schools without this approach, Mr. Obama also favors establishing an "Artists Corps" of young artists trained to work in low-income schools and their communities.
John McCain does not appear to have a policy on the arts. His Web site provides no mention of the arts, arts education, or federal arts programs. Various organizations, including the Arts Journal and ARTOCRACY have requested a copy of Mr. McCain's art policy several times, but have yet to receive a response. Commentators have noted that if you are wondering about Mr. McCain's policy on the arts, you can keep wondering.
Federal support of the National Endowment for the Arts was slashed from $175 million annually in 1992 to $125 million today. Barack Obama favors increased funding for the NEA, which enriches schools and neighborhoods across the U.S. and in turn promotes economic development. As president, Barack Obama will champion keeping the arts in young people's lives.
Rowen Schussheim-Anderson, Faculty
Augustana College
The Constitution and Religion
What's wrong with this picture, Mr. Whitehead? (See "The Constitution Is the Issue," River Cities' Reader Issue 702, September 17-23, 2008.)
Constitution: Freedom of religion.
Legal system : Prayer in public school system is unconstitutional.
Constitution: Freedom of religion.
Legal system : Freedom of speech is guaranteed to students unless the topic is religion, then it is unconstitutional.
Constitution: Freedom of religion.
Legal system : Students prayer aloud over lunch is unconstitutional.
Constitution: Freedom of religion.
Legal system : A kindergarten class is being unconstitutional if they ask whose birthday is at Christmas.
Constitution: Freedom of religion.
Legal system : Invocations or benedictions at graduation ceremonies are unconstitutional.
The constitution says, "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof."
I am quite sure by now, that we are all aware that Mr. Whitehead is quick on the draw to bash Bush for his alleged ignoring of the Constitution, but the way the Constitution is worded, it seems like Mr. Whitehead's colleagues have declared in public record, that they don't even know of the existence of the Constitution. Tis a puzzlement.
Guy Lundvall
Muscatine, Iowa
