Bailout Be Damned

By Jim Wiandt

It looks like the economic junta will have its way. And that's a good thing.

In this utterly political process, it's hard to step back and look beyond the politics. But let's do that, because I think Matt Hougan has misread the political process to a degree by pulling out that brutal quote from Representative Paul Ryan:

"We're all worried about losing our jobs," he said, in a speech supporting the bill. "Most of us say, 'I want this thing to pass, but I want you to vote for it - not me.' " (NOTE: Ryan SUPPORTED the bill.)

Personally, I prefer House Minority Leader John A. Boehner's quote calling the plan a "crap sandwich with a marshmallow inside."

Because no matter how you slice it, the thing IS a crap sandwich. And though the political fear and cowardice was real, I think that anger and indignation at an enormous government bailout ... the sort of reflexive reaction I had in my blog yesterday is what drove the vote.

And good for them, frankly. It's easy to pick on the House as the most hated institution in the United States (with an approval rating of 17.8% per www.RealClearPolitics.com, the best political site there is for the poll junkies out there). Well today, count me among the 17.8%, because the House is the most clear reflection of the rabble out there ... the real grit of the population with its raw anger and seedy earmark-infested underside. The people's voice has been heard, and Wall Street was slapped with the biggest down day in its history (by points anyway).

So at least I am good with it now. I've always supported the plan, and I think behind it all, my reaction and feelings were not that far out of line with the popular feel out there.

By the way—nice one, whoever came up with the idea of raising the FDIC insurance level from $100,000 to $250,000. I like that, and it does strike right at the leading area of fear in the system. Of course, both the Republicans AND Democrats are trying to take credit. One person came up with it, though, I'm sure. I wonder who it was? Some Senate intern or junior aide, I'll bet.

As another side note, Matt, you repeated the line that the bailout will likely cost far less than the $700 billion figure, and that it might even make money for taxpayers. Why do I get the feeling that that is pure fantasy and a spin sale? Taxpayers never get a good deal—not on aircraft toilet seats or Wall Street bailouts.

I would be shocked from here if the Senate then House don't quickly pass this thing today and on Thursday. Though it's not certain, it's nearly so. History will tell us if it was enough, or if there's more to come, but we'll never know if it was necessary, though all indications are that it very much was. Pretty much every great-mind economist has lined up behind the plan, including the index world's Bob Shiller (on the bailout and on home price drops now entering "great depression" levels). So the guys who understand what has historically driven major downturns, have said we had all indications that all the elements were in place, and that we know just what to aim at.

But let's drop the pretence about this being a free capitalist society, because it's not. And we would not want it to be. That would be anarchy. Every now and then there is a time and place for the enormous size and power of the U.S. government to bring its weight to bear. This is one of those times. Hank's will be done.

Comments

[IP Daily:]

So Jim. it was a good thing that the market lost over $ 1 trillion on Monday ?

2008 Oct 02 08:36 AM

[Blake:]

"Pretty much every great-mind economist" has lined up behind it? You're lying or fooling yourself. Stiglitz? Reich? Roubini?

Why would you or anyone else support this plan? Why isn't the House considering an alternative that might actually work, like direct capital infusion to the banks in return for an equity stake, or guaranteeing the country's home mortgages, which is the underlying problem? I mean, if we're considering $700 billion worth of socialism for Wall Street, why not $700 billion of actual socialism for Main Street.

2008 Oct 04 02:53 PM