Monday, September 22, 2008
Thoughts on the bailout.
Forget the technical definition of recession. Ignore the 1930's term of a depression. What we are experiencing now is best described by the popular 19th Century term for a severe economic downturn.
We are in a full-blown panic.
The Bush administration wants to spend between 700 billion and one trillion dollars of taxpayer's dollars to bail out the corrupt moneylenders who caused the financial mess. The idea is to buy a giant mass of bad debt that the market doesn't want. While "responsible" economists are in favor of this, voices left, right and center are against it. Honestly, when was the last time you heard Paul Krugman agreeing with Pat Buchanan and Bill Kristol?
Both McCain and Obama came out in favor of it, but now the Democrats are talking about conditions and not signing a blank check. One can only hope they will show some spine, but pinning your hopes on Nancy Pelosi and Harry Reid is like to being a Chicago Cubs fan. After you've said "maybe this will be the year" for a century, you may still have hopes but not actual faith. Continuing this simile, it's late September and the Cubs really do look like the best team in the National League. Maybe years ending in 08 are lucky for them.
Returning to the financial mess, a lot of focus of the Democrats is on the bankruptcy laws passed a few years back when the Republicans were in charge of both houses of Congress and the executive branch. We definitely need to have these laws changed in a significant way, as they turned bankruptcy into something akin to house arrest debtors' prison. If the Democrats can tie bankruptcy reform to the bailout, something good could come out of this. If it makes the bill unpalatable to the Republicans and Bush and it is vetoed and the veto can't be overridden, so be it.
Those in favor of doing something, even a gigantic stupid something, point to the Japanese who did nothing in a similar situation in the 1990's and saw about a decade of slow to negative growth. Right now, I'm not sure any past result is a good analogy for the mess we find ourselves in today. But this pattern of unfettered capitalism for the big winners and compassionate socialism for the big losers in the markets is not the answer to the deregulated mess the Republican "free market fundamentalists" have handed us.
We need new leadership, and McCain-Palin with economic advisors Phil Gramm and Carly Fiorina aren't it. These people have to go. In 2000, we were told "the adults" would be back in charge in Washington. The "head adult" turned out to be Dick Cheney. The current crop of GOP "adults" may not be quite as evil, but they don't have the best interests of working Americans at heart.