I've been floundering a bit on this bailout plan. I know we need to do something -- and something big -- but what Congress is doing has too much of that Paulson stink all over it. It appears that it backstops the failing banks while it fails to make sure our money gets recycled through the economy. They've acted too fast and the plan hasn't been sufficiently explained to the public. This is the biggest bailout in history, something we're all going to have to live with for ... well, the rest of our lives, and we're letting a dismal failure of a Congress gin it up over a weekend?
To better understand what's really happening, I went to one of the best and most prescient economic minds in America, NYU prof/guru Nouriel Roubini.
Roubini agrees there needs to be a meaningful government plan but calls this one a "disgrace" and a "bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer."
A bit more:
And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. It is pathetic that Congress did not consult any of the many professional economists that have presented ... alternative plans that were more fair and efficient and less costly ways to resolve this crisis. This is again a case of privatizing the gains and socializing the losses; a bailout and socialism for the rich, the well-connected and Wall Street. And it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners.
To read Roubini's entire post, and I strongly recommend it, click here.
This thing needs to be reworked before any vote takes place. Where are our esteemed members of Congress? Where's the always-disappointing Ron Klein? Where's the always-yapping Debbie Wasserman-Schultz? Where's Obama? Where's McCain? Where is one goddamn leader in this stinking country?
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I'll tell you where our politicians are: they're cowering in a corner. They're all afraid to stall this thing because they're afraid the market will crash and they'll be blamed and their political careers will be finished. Paulson and Bernanke stoked these fears and it worked like a charm.
Tomorrow looks to be a replay of the 2002 Iraq vote. Think about it. Congress gave Bush carte blanche power to invade because they were afraid it would happen anyway and they fell for the neocons' bullshit, namely that the Iraqis would be greeted as liberators and everyone who was opposed to it would be drummed out of politics. This bailout thing has exactly the same feel.
Where the hell is Hillary Clinton? She plays tough on TV, but she's just another craven politician when it comes to the big stuff (including Iraq). She's never going to be president if she doesn't grow a pair (pardon the metaphor). At least Obama has a presidential campaign to lose as a lame excuse for his weakness.
Tomorrow is a day that John McCain could reverse course and actually win the election. If he steps up and puts the brakes on this thing and demands some of the same measures proposed by Roubini and other top economists, he will immediately leap-frog Obama. This may be one chance for him not only to do the right thing, but also to render a master political stroke. C'mon John, revive the maverick.