The Bailout Is No Less Than a Threat to the Rule of Law

I'm already on record as supporting a suspension of the constitution and four more years of the Bush administration -- and I stand by that still. However, for years, the primary charge against Bush has been that he's a secretive autocrat, with no belief in either the rule of law or checks n' balances.

Various Iraq and Halliburton-related actions have been the kindling of liberal paranoia. But the government's latest bailout of Wall St. -- and this time it is a bailout -- should be the cornerstone of any argument. Consider: It was clearly a rush job on the rules side (no short selling) and the move to spend up to $1 trillion US dollars on buying up bad debt is being ramrodded through congress with obvious fear mongering. Congressmen were apparently told that "the economy could die". Die.

Reports have suggested that the congressional action authorizing the bailout could be signed, sealed and delivered by Tuesday. Exsqueeze me? Spending $1 trillion, and they manage to get both sides of the aisle to agree to a three day timeline.

Surprisingly, there aren't many discussing the true systemic risk here -- the threat to the rule of law. Tyler Cowen is an exception, and this was before Thursday, even:

I'd like to stress again that I remain worried about the rule of law in all these events. First, the referee is on the playing field. Second, while Dodd and others are on board, basically we have the executive branch of our government -- the Treasury -- operating without formal checks and balances. (Does that sound familiar? Would this administration do that?) That's why it is all being done through the Fed. Fortunately the Fed is also a competent technocracy (as is the current Treasury) but the broader implications here are very worrying, both for governance and for the future of the Fed itself.

You know who else seems to grasp what's going on? Michelle Malkin. Well, the thing is about her is that she manages to find outrage in everything. That's her whole raison d'etre. But she's totally right this time:

Bush Treasury Secretary Hank Paulson just wrapped up his press conference announcing the Mother of All Bailouts. He said a “bold” approach was needed to achieve “stability” in the market.
Let me translate that.
“Bold” = Massively massive, taxpayer-funded rescue.
“Stability” = Privatizing profits and socializing losses on a scale we have never seen before in our lifetimes.
I have had it with Pollyanna conservatives who continue to parrot the “fundamentals of the market are great!” line.

I could probably go on and on with this argument, but I'll end with this YouTube clip of Bush doing a Freudian slip, announcing his intentions to "persecute" short sellers, rather than prosecute them. This isn't some "nuclear"/"nukyular" slip up as southerners are prone to do. This is just the wrong (right) word.

Comments

[Steven Hansen:]

you have got to be kidding. congress does not have a clue and if they debated this, the final product would be full of pork. there is no rule of law issues here - they have already happened with bear stearns and aig.

and if you believe this rtc 2.0 will only cost a few coins - you are not reading between the lines. the government talks about investor panic, the big boys are scared, and understating the problem. this is not a bazooka against a mouse - it is a bazooka against a battleship.

no, we should simply worry if the rule of law is being violated.

2008 Sep 22 01:35 AM

[junkyardog:]

Someone please slow this freight train down. Our current administration is trying to cram a proposal down the throats of the American public that will bail out the rich at the expense of the middle class - to the tune of $700 billion. And that doesn't count all the good taxpayer dollars they've already thrown at this bad situation.

It appears the goal is to get it done before the election and a new administration takes over, which is insane. We are about to put this country into even more debt. Such action deserves careful thought and right now, we've been given few details for how this will work except that the feds will have unfettered power to pick and chose who gets to participate.

This is an outrage. Wall Street and the over-extended got themselves into this mess; let them fix it.

If nothing else, politicians need to stop talking about tax cuts. If the feds and Wall Street get their way, we're all going to be paying for this for a very long time, when what we should be doing is using that money for public infrastructure projects and putting Americans back to work.

2008 Sep 22 02:02 AM

[rdr4:]

Having Bush and the Fed attempting to fix this is like having a child molester teaching primary school!

2008 Sep 22 08:59 AM

[Kelly Liebe...:]

Can we still short the dollar? Because it is headed to negative territory!
Buy Gold.

2008 Sep 22 09:22 AM