Checks and Bailouts
| Mon Sep. 22, 2008 9:26 AM PDT
CHECKS AND BAILOUTS....As near as I can tell, conservatives are outraged by the idea of a blank check Wall Street bailout because — hey, Barack Obama might win in November, and God only knows what kind of insane nutball he might appoint as Treasury Secretary. Do we really want to trust $700 billion to whatever quasi-socialist we might end up with on January 20th?
Liberals, meanwhile, are outraged by the idea of a blank check bailout because — hey, even if you trust Henry Paulson, it's possible that John McCain might win in November, and God only knows what kind of insane nutball he might appoint as Treasury Secretary. Do we really want to trust $700 billion to whatever quasi-lunatic we might end up with on January 20th? Phil Gramm, anyone?
This almost restores my faith in the political system.
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This is a bit offthread but I thought it was relevant in the discussion of the bailout in terms of economic philosophy. Henry Liu in the Asia Times says:
"The US system rejects social democracy, which aims to reduce glaring economic disparity between people. The US system claims it promotes equality of opportunities rather than equality of rewards. It believes that the logic of the market is the most equitable arbitrage. Free-marketeers decry intimate relationships between government, finance and business and oppose even corporatism as an adjunct to the welfare state. They believe that the market's unforgiving rules of selecting and rewarding winners and penalizing losers are inherently fair, efficient and necessary for maximizing overall economic growth. It is obscene that when they are punished by market forces for their wayward manipulation that they call for government help for themselves in the name of the common good."
Asia Times
Submitted by low-tech cyclist (not verified) on Mon Sep. 22, 2008 9:43 AM PDT.
If they rush this thing through, there's still plenty of time for Paulson to buy up $700B worth of the Big S***pile.
And like I said here last night, that would screw Obama's chances of being able to push any new programs through Congress that would cost real money.
No matter that he'd be willing to increase taxes to pay for them. Team Broder would insist that the deficit had to be tackled first (they will anyway, but now they'll be a lot louder), the Blue Dogs would listen, and the Senate Republicans would have the political cover to block cloture.
DOA.
These are strange times indeed. On the way to work this morning, I, a conservative republican, heard that democrats want to "tweak" Paulson's plan, and I was happy to hear it.
My hope is that the threat of the economic disaster scares away the ridiculous partisanship of sticking on bill one-sided bill killer amendments, and we end up with a reasonable bipartisan bill that addresses the issue.
I echo low-tech cyclist's point. But would like to address a point made in Kevin's post, what makes anyone think Paulson, a known commodity, can be trusted?
He's a creature the investment bank world and an alumnus of Goldman Sachs, like Robert Rubin. Phil Gramm's legislation that deregulated the banking industry and made unregulated securities (e.g., credit default swaps) possible occurred on Rubin's watch. Paulson is cut from the same cloth and has shown no inclination to re-regulate a system that badly needs it, nor to punish those responsible for what may well become the greatest financial crisis in our history.
He's part of the Bush administration and shares its philosophy. Otherwise he wouldn't have been selected for the job. I'm getting tired of Dems who kowtow to him, reminds me of their inexplicable deferential attitude toward Greenspan (and now Bernanke).
The right-wing vilification of expertise makes me want to defer to experts, but which ones? Maybe not the expert foxes that have been watching over the henhouse these last few years. Just maybe their expertise in particular has been discredited and we should realize there are other options than to succumb to another it's-our-way-or-it's-a-disaster ultimatum. Have we seen even one example of anyone in this administration who has acted on altruistic impulses and not on self-serving claptrap? I'm ready for examples.
It's simply flat-out false that "Paulson has shown no inclination to re-regulate" the system. Have you bothered actually listening to what he's been saying rather than just reading opinion columns and blogs?
He has been calling loudly and vehemently for regulations to be put in place to prevent this kind of thing from happening again, or just getting worse.
It seems fairly clear that he's been on the losing side of the argument within the Bush administration about this since he was appointed. He's not on the losing side anymore.
What way too few people appreciate is that the difficulty of getting a broad consensus in Congress is a feature of the system, not a bug.
The biggest problem I have with Paulson's plan is that it could provide the Executive branch with a slush fund that reduces the ability of the Legislative branch to check and balance it. Power of the purse and all that.
I am not opposed to creating a federal Sovereign Wealth Fund; I just don't think it should be used to fundamentally change the balance of power between the branches.
My hope is that the threat of the economic disaster scares away the ridiculous partisanship of sticking on bill one-sided bill killer amendments, and we end up with a reasonable bipartisan bill that addresses the issue.
Shorter John Hansen: The Democrats should not be partisan enough to use the leverage that Bush's desire for a massive wealth transfer to the upper class gives them.
Fuck that!
First of all, Paulson's massive redistribution of wealth from taxpayers to reward the bad decisions of Wall Street needs to be scrapped, not tweaked.
Second of all, of course the Democrats should load up the bill with items that a "conservative Republican" -- and, as anyone who's familiar with John Hansen's long history of posting, faith-based, intellectually dishonest, morally stunted blockhead -- would find repulsive.
Republicans once claimed we couldn't afford social programs Americans demanded to enhance their economic security -- and in their way, they were right. if the American middle and lower classes feels more economic security, they're less vulnerable to exploitation by business and Republicans alike.
But no more. Where a simple glance at reckless borrow-and-spend policies failed, Bush's reckless policies have succeeded in destroying the Republican party's decades-long -- and utterly phony -- reputation as fiscally responsible. And amazingly enough, he's done it in less time than he needed to ruin the Reptiles' equally bogus rep as strong on defense.
The Republican policies jackasses like Hansen supports range from merely unworkable to actively damaging to the American polity. They're so bad, the Republicans have needed to evolve their own information structures, so dishonest morons like Hansen can avoid the reality that conflicts with their faith-based worldview (and then come here and lecture their betters, no less!).
Well, no more. The Republican brand is one of shame, dishonor and delusion, as McCain's campaign not just admits but shouts to the rooftops. The time has come that enablers of Republican mendacity, incompetence and corruption like Hansen shouldn't be able to admit that they're "conservative Republicans without shame and a heathly dose of mockery.
As for Paulson, Republicans in the White House and Congress and the Wall Street crew, I just hope the eventual bailout bill includes a healthy appropriation for tar and feathers.
wally: the current administration can't be trusted with a blank check either
No administration can be trusted with a blank check.
It's kind of sad that mutual distrust is all we have in common anymore.
Mutual distrust and limited powers is exactly the principle behind the Constitution. It's been working for over 200 years, and I see no reason to abandon it now.
In WWII congress didn't hand FDR a blank check to fight it. We had actual appropriations with congressional oversight. Are we supposed to change that now?
The biggest problem I have with Paulson's plan is that it's expressly designed to provide the Executive branch with a slush fund that explicitly eliminates the ability of the Legislative branch to check and balance it.
Fixed it for you.
No sale, no dice, no way, no how.
I'll also point out that, whoever takes office in January 2009, we'd have to be crazy to trust George W. Bush with this power even for a moment. Even if we didn't know about his tyrannical and corrupt inclinations, his demonstrated mendacity and incomepetence alone make it a non-starter.
Regardless of who wins in November, I don't want a single entity to have the unimpeded ability to purchase bad debt fromk whomever they want at whatever price they want.
Provide limits on what kind of debt can be purchased, and demand significant congressional oversight. This is not a democrat/republican or liberal/conservative issue. As with all other areas of government and finance, we need transparency.
Dear Mr. Paulson,
Gee, Hank, I'm sorry, but I'm tapped out. You see, I gave at the office. And frankly, I'm tired of you and your pals being unjustly enriched at my expense. So, I'm going to have to reluctantly wish you the best in bailing yourself out of this trouble you got yourself into. Maybe you should call FEMA. And Hank, if you want to create your own reality, do it on your dime, not mine.
Sincerely,
hollywood
By the way, Kevin, I know you try hard to be centrist, but I couldn't help but notice that it was easy for you to cite a Republican with delusional, dishonest and unworkable economic theories -- but I repeat myself -- that's likely to become Terasury secretary under McCain: Phil Gramm.
Can you actually name a "quasi-socialist we might end up with on January 20th" if Obama's elected?
"I'm mad as hell and I'm not going to take it anymore!"
Oh well, just a thought. When people realize that they can't maintain their credit rating, they'll only need to pay their mortgage, rent, and utilities, but not their credit cards.
Obama haters and McCain haters can rest. Paulson will spend it all before the next President takes control. Fed and Treasury have been practicing the art of spending tens of billions of dollars for the last one year. Now they are fully prepared to burn through 700 billion in a new york minute.
Vote for this based on what Paulson would do, not based on what a future Treasury sec might do. That future sec may have nothing left to work with.
Bail out the banks they will have capital to lend again. Unfortunately, Americans still aren't credit worthy--we're in hock up to the eyeballs, so the money will sit in the banks, unless they're willing to make some risky loans, perhaps rolling them up as innovative new financial instruments to sell abroad.
Why aren't Obama and McCain directly involved in these talks, anyway? Since one of them is going to be running the bailout in a matter of months, and if this is truly a financial apocalypse, it would seem their participation would be necessary.
