Monday, September 29, 2008

Now, I'm no economist...

...but, uhh, today didn't go very well. I find myself somewhat conflicted on this issue and both sides make some sense. Really, we have no idea what will happen but we're pretty sure it's going to be brutal no matter what so we're left trying to decide which option sucks the least. I'll lay out a few of my thoughts with the huge caveat that I have no background in this at all and have to base my opinions almost entirely on reading the thoughts of those who do know something.

First, how big a crisis is this? Just a few months ago Paulson, et al, were saying that the economy was doing fine and now that it's crashed they want $700 billion yesterday. That goes to what is probably the biggest factor in my skepticism, I just don't trust them. I don't trust Bush, I don't trust former Wall Street guys at Treasury, I don't trust people like Greenspan or Bernanke who were supposed to be in charge of this whole thing.

However, that said, a lot of people I trust seem pretty spooked by this whole thing and honestly when you peak into the shadows it is pretty scary. These banks have been propping up everything on a house of cards based on assets that were way overvalued. If banks start collapsing and credit dries up we're all pretty much fucked. Not just the fact that no one will be able to buy houses or cars but businesses might not be able to pay you if they can't get capital. What happens to an economy based pushing imaginary money around a computer and getting people to buy more than they can afford when it all finally collapses?

So, I'm fairly certain we've got to do something and it's probably going to hurt a lot but it's important to get the best deal possible. Maybe it's just my inner bomb throwing anarchist struggling to get out but in these types of deals it always seems to be the working people that get screwed and are left holding the bag. I saw it described as the same people that weren't invited to the party are stuck cleaning it up and paying the bills now that it's over.

From what I read about this bill the provisions and oversights were mostly toothless. Paulson and Treasury still had near dictatorial powers, CEOs still got their golden parachutes (which is really just a feel good issue that doesn't really address any real problem, and the government still buys all the worst assets guaranteeing that they will lose a lot of money. There are really smart people saying that buying bad assets is a horrible way to get out of this and buying up shares in banks, as Sweden did once upon a time, is a much healthier, and cheaper, option.

The situation is certainly dire but is it so dire that there's only time to look at one plan without examining other alternatives? Robert Reich is predicting a smaller, temporary package will be voted on soon. This seems like the way to go...I guess. I do believe that after the election it will be easier to get people focused on solving the problem. No one wants to vote for this and explain to pissed off voters why they just sent $700 billion to Wall Street a month before the election.

Speaking of the election...could John McCain play this any worse? He tries his stunt last week to "suspend" his campaign to fly to Washington over the objections of everyone involved in the negotiations. Then reports leaked that he went to the meeting with Obama, congressional leaders, and Bush but didn't say anything until the very end. Then he tried to take credit for bringing both sides together just hours before the whole thing blew up after Republicans dynamited the deal. I just want this election to be over so I can stop worrying that he might somehow win. Fortunately he appears to be attempting to take care of that himself.

So, I'm hopeful that a better bill can be crafted but I'm also somewhat skeptical that they will ever be able to get enough Republicans on board to pass anything worthwhile. Some feel that this was the best bill the Democrats were going to get but I have to believe that something more could have been done to help the homeowners instead of the lenders and to ensure that you and I aren't left holding the bag while the millionaires and billionaires escape relatively unscathed from a mess of their own doing. Hopefully they get it done...and soon.

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