To tell you the truth, I don’t know what to think about the proposed financial bailout plan. But I do know what I think about a new Great Depression. Bad idea.
One thing is clear. The news media, by readily accepting the label of “bailout”, adds an editorial twist to virtually all reporting on the issue. The actual legislation refers to “financial stabilization”, which obviously has very different connotations than “bailout”. The differences that words can make are clear.
The House Financial Services Committee web site has the full text of the bill, a summary, as well as a section-by-section description.
It certainly looks like a very different beast than when first proposed, but it would be useful to have a somewhat detailed pro-and-con analysis of each part of the bill. Has anyone seen anything like that? Any suggested links would be appreciated. I’ll have to check out my friend Chuck’s “Of Two Minds Blog“, which usually a repository of detailed financial analysis.
Reports on what happened during yesterday’s vote in the House reminds me of one of those significant lessons I picked up during my years watching (and sometimes participating in) political decisions.
The lesson: Sometimes you don’t have to throw the game, you just have to shave points.
According to The Hill, the House minority whip said he could deliver ten votes more than he finally was able to produce. But with the shortfall looming, the Republican leadership reportedly did little to press for the final needed margin on a bill the minority leader termed a “crap sandwich”.
The Republican side of the House was not frenzied during the unsuccessful vote, despite intense lobbying from President Bush, Vice President Cheney and Treasury Secretary Henry Paulson.
Unlike the three-hour vote on the 2003 Medicare drug bill, House Republican leaders did not put much pressure on their rank-and-file members to back the rescue package.
So the GOP leadership didn’t have to take a position against the Bush administration’s proposal. They just sat back and didn’t press to achieve a winning margin. That’s shaving points in my book.
Another story in The Hill describes the situation on the Democratic side of the aisle.
Democratic leaders knew going into Monday’s vote that they didn’t have a majority of votes within their 235-member caucus to pass the $700 billion package. But they thought they had an understanding with Republicans that each party would deliver at least a majority of its caucus to pass it.
That way, the unpopular measure could pass with a bare majority. And members on the left and right with philosophical objections could vote “no.” So could vulnerable members in tight races only a few weeks away, whose phones were ringing with the calls of angry constituents.
And they figured it was only fair — it was the Bush administration’s plan.
Isn’t politics fun and interesting?
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Interesting but irritating and disgusting too.
I agree, use of the word “bailout” doomed this bill. The public was fed class warfare by the media and the crazies — “Bail out the rich SOB’s? How about us little guys?” What crap. As if we’re not all in the same boat.
On the political side, it was reported that five Democrat committee chairmen didn’t vote with the “leadership” — shows how serious the “leadership” took this. The vote also shows what spineless representatives we have representing Hawaii.
“Bailout” seems to be a more accurate term than “stabilization” to me in this case. Without changing the rules or dealing with foreclosures, there is another round of foreclosures due in 2009. There will therefore be more losses.
Regulation was dropped, bad bets turned to losses, and so “bailout” fits perfectly, IMHO.
Many have proposed one mechanism or another to freeze foreclosures or assist families in staying in their homes. Limiting foreclosures would stabilize the financial crisis nicely. But they’re not doing that, yet.
The focus on CEOs may be too late, since a savvy CEO has taken out what profits were available at this point. The “CEO” we need to watch is Paulson, who wants a bailout. I doubt he really cares about “stabilization” or anything else if it cuts profits. Wall Street is there to make money, as many gobs of it as they can.
Popular opposition is not to stabilization, either. I haven’t heard anyone say stabilization is a bad thing. But a bailout is, and that’s what just failed to find support in Congress.
Bailout is the accurate word, stabilization is the Crony Capitalist cover. The sum total of the bill is simple: “privatize profits, socialize losses.” If you read Nouriel or Brad Setser (two economists) you will find the proposal will not work anyway–it is money down a rathole. The basic idea is for the public to grossly overpay for bank-owned worthless assets as a way of “bolstering” banks’ credit. In other words, these institutions are insolvent. So why don’t we just buy them for $1 and outright mationalize them? Instead, we buy worthless MBS and CDOs in order to give them free money? That is insane. In Bush’s quotable phrase: “This sucker’s going down,” and by that he meant the economy. It may be the only correct thing he’s said in 8 years.
chuck smith