Hit The Road, Punks!

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

John Kenneth Galbraith

Although I haven't come right out and said it here, I've tried to make it plain that I don't support the bail out. And unlike the proud members of congress, the "10% Gang" who profess they are voting no for deeply philosophical reasons that claws at their consciences, my objections are purely visceral and almost Bolshevick in countenance. But since our leaders are urging citizens like me to support this piece of shit for the purely patriotic notion that it is for the very welfare of the nation I love, I've decided to be more thoughtful about rejecting a bail out. I listened to Obama's speech today from LaCross, which I found very moving and powerful; I doubt he could be stopped in the election right now. However, the likelihood that Barry will be the next president just serves to reinforce my feeling that the current lame-duck, National-Socialists remnants of the GOP should have absolutely no in-put or control over this deal. They've done enough stealing for a million political life-times. This could wait a couple of months, and then a Democratic House, Senate (purged of vichy swine like Joe Leiberman) and Executive could carve out a bill that better serves the interest of working people.

Besides, professor Krugeman distills, as usual the principle of the matter in his blog today:


No deal

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a "fair price" for mortgage-related assets will still leave much of the financial sector in trouble. And there's nothing at all in the draft that says what happens next; although I do notice that there's nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

Here's the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

The Treasury plan, by contrast, looks like an attempt to restore confidence in the financial system — that is, convince creditors of troubled institutions that everything's OK — simply by buying assets off these institutions. This will only work if the prices Treasury pays are much higher than current market prices; that, in turn, can only be true either if this is mainly a liquidity problem — which seems doubtful — or if Treasury is going to be paying a huge premium, in effect throwing taxpayers' money at the financial world.

And there's no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

I hope I'm wrong about this. But let me say it again: Treasury needs to explain why this is supposed to work — not try to panic Congress into giving it a blank check. Otherwise, no deal.

The idea that Republicans even matter, much less should have the power to force a compromise that includes roll-backs on capital gains, or further slashes taxes on the wealthy few makes me want to vomit. As much of a disgrace as Harry Reed has turned out to be for putting the rules and comity (i.e. fellating the GOP) of the Senate before the interests of the country at-large, I would prefer new leaders take a look at this in January. Otherwise, we are submitting to national blackmail all over again. Battered America, we will have a restraining order soon, let's wait for our abuser to move out before making a community property settlement.