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Sunday, September 21, 2008


usurping the power of the purse

as highlighted earlier, congress is about to sign off on spending what will end up trillions of dollars with less than a week's deliberation -- and no real choice in the matter. the fed and treasury have, under the direction of the administration, turned this crisis into a lever by which they are usurping the power of the purse.

this is possible without the complicity of congress, i suspect -- would they really win a constitutional battle of tactics? public pressure for expediency would cow them regardless of the complete validity of their position! -- but such circumvention isn't needed.

instead -- as with the days after september 11 -- they can be terrified into signing away any claim on authority.

read yves smith's objection to the proposed legislation. this is actual text from the bill treasury has forwarded:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

these are pathetic moments in the decline of the american government by law. if there was any question that the experiment was over, the reaction to the great crisis of 2008 is answering it. this is validation of naomi klein's shock doctrine. if this is passed, there is no rule of law. it's the financial equivalent of the 1933 enabling act.

and the awful final parallel to the disastrous response to september 11? it's unlikely to do any of the things that supposedly justify it. nouriel roubini in the ft noted that the shadow banking system is unraveling.

beyond yves smith's trenchant opposition and joe nocera's times piece, there are many others to note -- david merkel, dean baker, luigi zingales, paul krugman, calculated risk, steve waldman, jck at alea, tim duy

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