Monday, September 29, 2008

Between the Devil and the Deep Blue Sea

First off, Americans apparently really do care about the Emergency Economic Stabilization Act of 2008, and have overrun Thomas. The Washington Post provides a helpful breakdown on what it all means. What started out as an amendment to the Internal Revenue Code became the vehicle for the $700B bailout that failed to pass. Jan Schakowsy voted in favor.

McCain, almost predictably, puts the onus on the Democrats even though it is clear that the Republicans had no love for this legislation. McCain engaged in rank showboating last week, and claims he was working the phones to shore up support. That's a claim he should be careful making as one could ask if this is another example of his leadership skills.

Steve Pearlstein opines that the "nays" don't get it. Perhaps they don't. Reading about the activities going on around the world, it is pretty evident that there is going to be a serious adjustment to our way of life, like it or not. Most Americans are not going to like it, of that I am certain.

I fear for the short term. If no bailout passes, or if what passes is extremely constrained, this could make for a very difficult time for all of us. You can't build and renovate infrastructure without funding. That funding has to come from somewhere, that somewhere usually being loans. I have already run across some anecdotal stories of small businesses feeling the heat of the credit crunch. I didn't like the bailout plan as it was originally crafted and I concluded that this version was much improved over the original. Unfortunately, Nancy Pelosi just had to shoot her mouth off. So much for statesmanship at a critical juncture. It didn't help that the Republicans were so unwilling to play ball to begin with. Even Boehner voted for it, and I bet he was holding his nose as he did. Too bad he couldn't get more of his colleagues on board.

It's not the end of the world as we know it. Yet.


Moonglum said...

If we really are in trouble, I'd rather the government have that $700 billion (to start with) than have it vanish, going to the same people who caused this mess to begin with. With real valuation of the poor debt available, people will have confidence in the system and liquidity will become available again. Just pumping money at the bad debt instills no confidence, and possibly makes the problem worse, not to mention bankrupting the US government.

Make the balance sheets transparent first, then they might be some private sector fire sales, and only then will we know who really needs to be bailed out. Not just who Paulson and Bernanke decide need to be bailed out. But those fire-sales, some of which are already happening before any government aid, will inject liquidity into the system. Also, the fed seems to have miraculously found $620 billion to add as liquid capital to the markets. If that's not enough, how was $700 billion going to be. This is not a problem that can be solved quickly by pushing half baked bills through, we need to give congress the time to hash out a real solution to the fundamental problems, not just fix the symptoms.

Fargo said...

Nancy Pelosi deserves the Giant Foot in Mouth award for the year. Igniting so much petty bickering is really counterproductive at any time, and is absolutely assinine and irresponsible in a crisis of this magnitude.

I don't feel like this giant band-aid is an ideal solution. Half baked is an apt description. Treating the symptoms and not the underlying disease may ultimately dig us a deeper hole.