Wednesday, October 1, 2008

New Era panics

The Sept. 30 editorial "Redouble efforts on rescue plan" is one of the scariest in memory emanating from the New Era, and that is saying quite a bit.

Keeping in mind that some of the greatest experts in economics and government have serious reservation that the $700 billion "Bail Out" as currently constituted is the best approach, we question on what basis other than the hysteria of the moment that this provincial newspaper should twice describe the delay in passage as "despicable."

"By refusing to act; that is, refusing to take responsibility; the House missed an opportunity to stabilize the nation's financial markets and put them on a path of recovery; or at least to buy time before deciding what sterner, additional actions must be taken." From whence comes such certainty?

"Imperfect though it may have been, the Paulson rescue plan was better than nothing." Many criticized Paulson for not providing several alternatives rather than taking an approach that amounted to 'take it or leave it.' Also Paulson's intial plan subverted court and congressional oversight. Among other improvements added since the House rejected the Bill, the Senate includes House suggestions that the FDIC guarantee of bank deposits be increased from $100,000 to $250,000.

"Instead, the do-nothing Congress members infused more uncertainty in markets here and abroad, raising uncertainly, fear and the risk of panic." The very day the editorial appeared, the Dow Jones soared 475 points. Subsequently it has only lost 18 points. Hardly seems like panic, other than by the editors of the New Era.

"Democrats and Republicans, rich, poor and middle class, profited from the housing/mortgage bubble. Now all should take part in solving the mess it has created." They don’t think that everyone on the Hill these days is seeking to shore up the nations economy? Rather, it is a question of how best to do so.

Interviewed by Charlie Rose (available at, Warren Buffett Wednesday endorsed the "Bail Out." However, at least half a dozen times, he qualified his support by adding "if they buy at market value."

As was proposed last week, the "Bail Out" was to purchase mortgage not at current market value, which reflects that many are bad debts, but as if they were of good quality! That's a direct give away from tax payers to mortgage owners! We have yet to have read or heard that the new bill mandates purchase at market value.

As Buffett pointed out, an investment at market value will almost certainly prove profitable for the tax payers over the long run.

As a way to determine market value, Buffett suggests that for a billion dollar acquisition by the Treasury, the vendor be required to sell a hundred million on the market with the Treasury Department purchasing the balance at the same price as the hundred million package sold for.

Whenever local newspapers join the public panic (often stirred on by Administration propaganda) in emotionally calling for government action, we can expect that our civil rights are going to be reduced, our wallet is about to be picked, or we will soon be going to war. Instead, what we need from what is supposed to be our conservative newspaper (as well as the liberal) is sober and learned analysis.

The New Era editors should spend less time outing ex-convicts trying to make a life in our community and instead watch or listen to various experts on C-SPAN and other serious interview shows. Then they would gain perspective into the complicated issues facing our nation and the world.