Since it's coming back on Thursday...
Sep. 30th, 2008 09:16 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
solarbirdSomeone on ![[livejournal.com profile]](https://www.dreamwidth.org/img/external/lj-community.gif)
seattle posted this comic, and I posted a response, which I repost here:
Seattle Post-Intelligencer, 30 September 2008
I always enjoy being caricatured as... I suppose today it's an ignorant redneck. Usually it's destroyer of Western Civilisation. Eh, whatever.
The reality is that economists - people who actually study the economy to know how it works - are overwhelmingly against this proposal. Overwhelmingly, to the point where I've only been able to find a couple of actual economists outside the Bush administration who support it. It is opposed because it will not achieve the goals it supposedly is intended to achieve, and will impede the government's ability to achieve those same goals. Doing nothing would be very bad; doing this would be worse.
And yes, the opposition - at least, much of it - has been led by economists, and, in particular, ones who have actually been correct about this unfolding economic mess, and have been warning about it regularly over the last few years. (Nouriel Roubini, Mish Shedlock, Brad Setzer to a lesser degree, Karl Denninger, who is less economist and more investor, but is onboard and more importantly has a very good track record on this scenario to date.) Support, by contrast, is led by Fed chair Ben Bernanke (who continued insisting that there wasn't a problem for the longest time - remember the "well-contained" mantra? I do - and has gotten every key element of this wrong so far), Treasury Secretary Henry Paulson (who as CEO of Goldman Sachs, helped champion the securities which have caused this disaster), and George Bush (a multiple failure bailout-recipient as a businessman who has led arguably the worst Executive branch in the last century and a half).
And yet, those of us who have opposed this are the stupid fuckheads sinking the ship. Make no mistake; the PR blitz is on for the reconsideration on Thursday, and it's already succeeding - I can't find the link now, but recent polling has moved from "overwhelmingly against" to an even-split. The political class lost a round, and they mean to correct that mistake.
Even aside from all that, doesn't the direct parallel between this (PASS IT NOW OR WE'RE ALL DEAD!!! NOW NOW NOW NOW AAAAAAAAAAAAGH!!!!) and every other major power-claiming initiative by this administration strike anyone else as a tad suspect? Particularly given that in the conference call about this over the weekend, it was acknowledged that they wouldn't start acting for another few weeks at least? Does the fact that $680 billion in new liquidity was thrown at the markets yesterday, and even with that and the assumption that the bailout would pass, the markets were already down 40% of their declines for the day - doesn't that make anyone question this spin? At all?
One side here is - at least in part - acting on facts and on a good track record. So please do not be stampeded like this. Dig into the actual data yourself, and figure out what this "bailout" really does, and what it will do, and what it won't do, and most importantly at all, what it will prevent the government from being able to do later. Please.
seattle posted this comic, and I posted a response, which I repost here:Seattle Post-Intelligencer, 30 September 2008
I always enjoy being caricatured as... I suppose today it's an ignorant redneck. Usually it's destroyer of Western Civilisation. Eh, whatever.
The reality is that economists - people who actually study the economy to know how it works - are overwhelmingly against this proposal. Overwhelmingly, to the point where I've only been able to find a couple of actual economists outside the Bush administration who support it. It is opposed because it will not achieve the goals it supposedly is intended to achieve, and will impede the government's ability to achieve those same goals. Doing nothing would be very bad; doing this would be worse.
And yes, the opposition - at least, much of it - has been led by economists, and, in particular, ones who have actually been correct about this unfolding economic mess, and have been warning about it regularly over the last few years. (Nouriel Roubini, Mish Shedlock, Brad Setzer to a lesser degree, Karl Denninger, who is less economist and more investor, but is onboard and more importantly has a very good track record on this scenario to date.) Support, by contrast, is led by Fed chair Ben Bernanke (who continued insisting that there wasn't a problem for the longest time - remember the "well-contained" mantra? I do - and has gotten every key element of this wrong so far), Treasury Secretary Henry Paulson (who as CEO of Goldman Sachs, helped champion the securities which have caused this disaster), and George Bush (a multiple failure bailout-recipient as a businessman who has led arguably the worst Executive branch in the last century and a half).
And yet, those of us who have opposed this are the stupid fuckheads sinking the ship. Make no mistake; the PR blitz is on for the reconsideration on Thursday, and it's already succeeding - I can't find the link now, but recent polling has moved from "overwhelmingly against" to an even-split. The political class lost a round, and they mean to correct that mistake.
Even aside from all that, doesn't the direct parallel between this (PASS IT NOW OR WE'RE ALL DEAD!!! NOW NOW NOW NOW AAAAAAAAAAAAGH!!!!) and every other major power-claiming initiative by this administration strike anyone else as a tad suspect? Particularly given that in the conference call about this over the weekend, it was acknowledged that they wouldn't start acting for another few weeks at least? Does the fact that $680 billion in new liquidity was thrown at the markets yesterday, and even with that and the assumption that the bailout would pass, the markets were already down 40% of their declines for the day - doesn't that make anyone question this spin? At all?
One side here is - at least in part - acting on facts and on a good track record. So please do not be stampeded like this. Dig into the actual data yourself, and figure out what this "bailout" really does, and what it will do, and what it won't do, and most importantly at all, what it will prevent the government from being able to do later. Please.
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no subject
Date: 2008-09-30 04:28 pm (UTC)this isn't over yet. and I'm really happy it hasn't passed yet. We can beat this.
no subject
Date: 2008-09-30 04:31 pm (UTC)no subject
Date: 2008-09-30 04:32 pm (UTC)http://www.youtube.com/watch?v=NU6fuFrdCJY
Apparently, it's all Clinton's fault.
no subject
Date: 2008-09-30 04:49 pm (UTC)meanwhile, here's a good link:
http://www.rgemonitor.com/roubini-monitor/253801/the_us_and_global_financial_crisis_is_becoming_much_more_severe_in_spite_of_the_treasury_rescue_plan_the_risk_of_a_total_systemic_meltdown_is_now_as_high_as_ever
$700B won't help because in the past *week* $300B has been injected and it hasn't helped.
no subject
Date: 2008-10-01 06:11 am (UTC)http://query.nytimes.com/gst/fullpage.html?res=9C0DE7DB153EF933A0575AC0A96F958260&sec=&spon=&pagewanted=1
From a 1999 article in the NY Times -
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
....
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
no subject
Date: 2008-10-01 10:45 am (UTC)yeah, i think fannie mae took on too much risk. but i think the freaky part of the credit bubble was people inventing new ways to overleverage repackaged loans, which is why suddenly the system can't accomodate the pressure it's under.
no subject
Date: 2008-10-01 03:38 pm (UTC)no subject
Date: 2008-10-01 04:40 pm (UTC)i'm just pointing out that i've seen a number of folks trying to pin the blame on carter and the CRA. which is all manner of bogus.
no subject
Date: 2008-10-01 05:56 pm (UTC)seriously.
those industrious little bastards.
no subject
Date: 2008-10-01 08:17 pm (UTC)aw
Date: 2008-09-30 05:31 pm (UTC)Re: aw
Date: 2008-09-30 05:43 pm (UTC)They had this thing at the beginning, whining about "IT'S FAIR USE!" Uh, not according to the RIAA... there IS no fair use if they're not making money!
Re: aw
Date: 2008-09-30 10:27 pm (UTC)Appears to be back up again...
Re: aw
Date: 2008-09-30 10:54 pm (UTC)Re: aw
Date: 2008-09-30 10:56 pm (UTC)no subject
Date: 2008-09-30 04:55 pm (UTC)In other news, the stock market is up today, which might take some wind out of the "the bailout didn't pass, and now there's no other option but catastrophe" meme.
no subject
Date: 2008-09-30 05:07 pm (UTC)The reality is that we have to do something. The Republicans won't agree to anything that isn't looting. The bailout bill on the table is the least crappy bill that could gain any measure of bipartisan support. That's why Democrats tried to push it through despite populist opposition. They were trying to do the responsible thing, in difficult political circumstances.
That leaves two options: do nothing, or draft a proposal that can gain a majority from Democrats alone, that the Democrats are willing to stand behind even though it means political risk.
We cannot do nothing, so our only alternative is for critics of the current bill to get behind an all-Democratic effort, even if it means swallowing their aversion to socialization of capital, and their inherent (and justified) suspicion of economic and political power. Just because the Bush administration uses crises to seize more power does not mean that the crises are not often real. Terrorists really DID crash airplanes into the WTC, and we did have to respond to that attack in some way. Similarly, this is a financial 9/11 (actually, it's a much more serious crisis in my view), and we do have to act. That doesn't mean giving Bush what he wants--even this bad bill is largely a capitulation by Bush and Paulson to critics--but just because Bush is willing to sign on in desperation does not mean that this is another sinister power-seizing move.
If we do nothing then I will hold not only Bush and Paulson responsible, not only the House Republicans for putting politics above country, not only the neo-liberal, anti-government ideology of modern conservatism, and not only the Democrats for refusing to put forward their own better plan. I will hold critics of this proposal, right and left, responsible for choosing to do nothing in the face of a national crisis.
no subject
Date: 2008-09-30 05:23 pm (UTC)Despite the fact that many if not most of us have not chosen to "do nothing" in any way, but have been actively advocating plans to our representatives? (And for that matter, promoting them places like, oh, here?)
If so, well, so noted.
no subject
Date: 2008-09-30 05:26 pm (UTC)Also, of the people I listed, I don't see how you can get to your conclusions about Denninger, or Shedlock. Or Roubini, even, given that he has repeatedly called the plan a disgrace - tho' he hasn't been co-ordinating political action against it, unlike the other two. I suppose Setzer could be read as thinking of it as merely as bad as nothing, though, so that's fair.
no subject
Date: 2008-09-30 05:58 pm (UTC)I appreciate that some critics (yourself included) have put forward alternatives, but I think a lot of the opposition--more than not--is like the guy in the cartoon--knee-jerk populists who don't want to give Wall Street billions of dollars but don't really appreciate what will happen if they don't get that money.
If it were up to me, I'd put together a small group of critics of the bailout bill to come up with an alternative that includes feedback from across the ideological and professional spectrum. We need some short-term help to get us through the end of the fiscal quarter, i.e. Thursday, and then through the next few months, but otherwise most of the plan should wait until the next administration.
Roubini and Mish would definitely be people I'd include, but I'd also add in reluctant supporters of the bill including Krugman and Galbraith, maybe toss in Warren Buffett to get a responsible inside view, and maybe even cranky old Ralph Nader who's been criticizing our financial mess from a consumer/populist point of view for years and calling for responsible regulation. Not everyone needs to be an economist, but we need diversity so that we can get broad buy-off on the plan. People I would explicitly exclude from such a group would be Paulson, Robert Rubin, and anyone else who was complicit in creating this mess in the first place.
no subject
Date: 2008-10-01 03:35 am (UTC)There are in fact *plenty* of economists and Wall Street types who believe that this in fact will do little to solve the problems.
I'd agree that *something* needs to be done, but there are a lot of easier smaller steps that could come before handing over $700 billion.
ETA: Interesting view from former FDIC chairman
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/26/AR2008092602200.html?nav=hcmodule
no subject
Date: 2008-10-01 02:29 pm (UTC)Roubini has supported measures that are better than, but similar to, provisions actually in the bill. I would characterize his view as looking for a better bill, not necessarily saying this one will be worse than nothing.
Dr. Roubini commended the House for its rejection of the bailout bill on Bloomberg Radio yesterday. He mentions doing that here.
no subject
Date: 2008-10-01 03:31 am (UTC)Wait a minute, let's give the Republican a fair hearing here, you're claiming that the majority of House Republicans that voted against this bill are in favor of "looting"?
By the way, it's easy to say they're doing it out of "politics", but I think you could also make an argument that they're simply doing what their constituents want them to do. Granted, there is a time to lead and vote for the right thing, despite what your constituents want, but it's a balancing act.