I’m really conflicted on the bail-out scheme — asking taxpayers to patch up Wall Street’s greed is not a fair deal. The lack of oversight, and in particular the lack of regulations and controls that would prevent this from happening again, is a big problem. It means that we threw Wall Street a life raft, but we’re not doing anything to stop them from sinking it. It also strikes me as the worst aspects of socialism coupled with the worst aspects of capitalism — nationalization of private industry (along with all of its attendant inefficiencies), with taxpayers footing the bill to keep the private sector afloat.
But the plan that passed is far better than the original, and since I’m not coming up with better ideas, I’m trying not to be too critical. Of course, it’s worth noting that there are other ideas out there, and I — perhaps shockingly — agree with Larry Summers that a multi-pronged approach is the way to go. Brookings also has some interesting thoughts.
This plan is not a win for anyone, but something had to be done, and it had to be done quickly. I know there are those out there who think the government should have just let Wall Street clean up its own mess, and that’s a position that I’m theoretically sympathetic too — but not in the real world. The fact is that if Wall Street totally tanks, we’re screwed. Really, really screwed. And yes, I realize that Middle America has been getting screwed for a long time, but I’m talking more screwed. I’m talking screwed Great-Depression-style. There are levels of screwage, and the whole country is going to be taken to a whole new one if nothing is done.
But I sure don’t envy Congresspeople right now. These are uncharted waters, and this plan could be wildly successful or a massive failure; chances are it’ll be somewhere in between. But to have to make the call on something this important… I wouldn’t want to be in those shoes (which is why I’m extremely skeptical of anyone who thinks that this plan is 100% a great idea, or 100% a terrible one).
All we can do now is cross our fingers (and personally, I’m hoping that when Congress has more time to process and discuss — and when they’re not in crisis mode — they’ll patch up some of the holes in the plan, starting with regulations and oversight). And we can do our homework, because if you’re like me, you don’t know nearly as much about this stuff as you should. The Money Meltdown is a really good starting point to learn about what exactly is going on.
The fingers are crossed.
I’m looking forward to the nationwide overvalued assets garage sale we stage in order to recoup our subsidization of failed companies (at gunpoint). Maybe they have giant investment portfolios with expired Pets.com stock and Kazakh stamp collections available for pennies on the dollar.
Best case scenario, norbiz: A shit ton of foreclosed houses go on the market at fire sale prices at once. Buy up while you can!
I lean toward bad idea. Experts without a conservative axe to grind or personal pockets to line seem to think there are better alternatives. More importantly, this plan places huge piles of money and even more power in the hands of people who have proven to be incompetent, corrupt, or both.
I feel like I should have noted: just because this may be a bad idea, and there are probably better options, that doesn’t mean we can get any of those better options past the poo-flinging howler monkeys that make up the Republican caucus in the Congress. This may have been the best we could get until January, but it irks me that it doesn’t appear the leadership really tried for anything more.
Not to nitpick (okay, to nitpick), but nationalization of industries doesn’t create inefficiencies; nationalization of industries by inefficient or corrupt governments (like ours) does. Subtle, but important, distinction.
Call me fatalistic, but I’ve been against the bailout because I think it’s just postponing the inevitable. We’re in a bad enough economic place right now that I don’t see us not having a significant economic crisis of the rock-bottom variety before we start to climb back up. I’d just as soon have that happen now as later. Of course, the only real advantage to having it sooner is not having to watch the Titanic tip. Up. On. End. Ever. So. Slowly. Before. Sinkingtothebottomoftheoceanandsuckingeverythingdownwithit.
Amanda – I can’t help but think of the families that lost those houses… I don’t believe in ghosts, but… I can’t help but think there would be some negative energy in that. (Not literally, but my conscience would bother me forever.)
ACG – I agree with you. I think this money will put things off, but like it or not, without fundamental changes in the financial system, and an increase in actual production of real goods in America, we’re headed down the toilet. We’ve momentarily swirled out to the outside of the bowl, but we’re headed to that drain one way or another. It just may take an extra flush.
And just to prove that nobody knows shit about money, the Dow goes DOWN after the bailout. It’s all so much made up bullshit controlled by the rich. You’d have better luck betting college football than the stock market.
The economy is definitely still in trouble. They (theoretically) fixed the liquidity problem in the credit market, but the housing defaults are still there, and there are still more coming. Those teaser rate mortgages didn’t dry up until recently, so there’ll be a rolling wave of them blowing up for the next few years. Until housing prices go back up, that’s going to keep being bad paper. The glut of foreclosures isn’t good for anybody (except the people in a position to capitalize on it–lucky them).
And that’s assuming the banks learned their lesson about buying bad mortgages. Predatory direct lenders didn’t close up shop. Unfreazing the credit market could, if the banks haven’t learned their lesson, make the same game even easier, since the teaser rate people, and everybody else who’s on the wrong side of their mortgage is desperate to refi. Lowering the payment right now is an attractive thing, and worrying about tomorrow is easy if tomorrow is five or seven years away. . .
Slowing down the failure is probably better than letting it die all at once, right now. Big, fast market failures usually produce more pain than they needed to. It does suck that some of the pain is going to end up on Obama’s watch, but it will probably be getting better by the time he has to run for re-election, and it’s not like it’s going to be a hard sell to hang the recession (could easily be a depression–four consecutive quarters of negative GDP growth) on Bush. Bush is going to keep being toxic for a long, long time. At least he’d better.
The whole issue with not really being able to expect a better plan is why, well, we need to take the power of impeachment seriously and kick the losers out.
asking taxpayers to patch up Wall Street’s greed is not a fair deal.
Consumers would pay for this in one way or another eventually anyway.
Does anyone sickly hope the stock market keeps tanking just long enough to assure a landslide for Obama? I’m willing to sacrifice that for another month, as long as it comes back up…
If any woman here thinks a vote for Palin is a good idea, let me remind them that a vote for Palin will be their last choice, the freaking anti-women’s-freedom monsters!
*deep breath*
I think its bullshit, and the mddle working class is getting f*cked.
Bernie Sanders is right. The rich should bail the rich out, with a 10% surtax on wealth
If I were Abigail Johnson, and Congress decided that I owed them one and a half billion dollars, I’d move to the south of France, instead. Warren Buffet may really love Nebraska, but I bet he wouldn’t pay five billion dollars to keep living there.
Ms. F., I don’t think channeling Ayn Rand is an effective argument. Atlas Shrugged was a work of fiction, and I’ve seen no evidence that taxing wealth causes multibillionaire capitalists to throw up their hands, flee, and leave the rest of us to fend for ourselves.
The taxes on wealth in the south of France exceed anything Bernie Sanders is proposing, would be my guess. Thomm Hartmann said the other day that under BushCo., the wealth of the richest 400 individuals in the country has goneup 600%, while everyone else in the middle class has seen their wages go down. I think what Sanders proposed would basically return the tax burden on the richest 400 families in the US, to 1990s levels. You know, the prosperous 1990?
I”m always amazed at how rapidly the government can act when wealth and capital are at risk. It takes them years and years to get the proper body armour to soldiers, but when some banks crater the government can leap into action and turn on a dime.
This meltdown was not caused by the middle class, by minorities, or by brown people as wingnut commentators have speculated. It was caused by greed, and profiteering, by the wealthiest financial institutions and richest individuals in the investor class.
Bernie Sander is right – its them that should pay for their own bailout.
Peter: I would agree if the “rescue” bailout were about bailing out the greedy jerks on Wall Street. But it is not. Unfortunately, it is about bailing out the people pulling in a check every month from a pension fund invested in Wall Street. It is about bailing out the people not yet retired sending their money every month to a 401(k) or IRA. It is about bailing out those who need to buy a car, and cannot get a car loan. It is about people who want to buy a house and cannot get a mortgage. And it is about bailing out the people on Monday morning who are going to find out they no longer have a job.
Never read Ayn Rand. Must one be a wingnut to think it unlikely that anyone would pay five billion dollars to live in Nebraska? Nobody in the history of the world ever has paid that much, nor anything approaching it, for the privilege. But all of a sudden, because a pack of people who don’t like him screwed up their jobs, Warren Buffett is going to selflessly pony up ten percent of the money he’s made, rather than moving? Doesn’t sound like the sort of thing anybody would do.
Top end direct wealth tax in France is 1.8%. So, maybe I’d move to Brighton, instead, and just winter in the Riviera. Probably just a coincidence that there are more billionaires in Mexico than in France–I’m sure the wealth tax has nothing to do with it. Only a wingnut would think otherwise.
A gov’t that can put a big tax on wealth can also put restrictions on moving wealth out of the country.