Bring It On!

Bailout Bites the Dust, But Not in a Good Way

September 29th, 2008 | by Omnipotent Poobah |

Return of the Great Depression?

The “I’m the real leader” antics are done and Bailout 2.0 is on the trash heap. In the wake of the failure there’s plenty of rancor and posturing, but it misses the point. No doubt there’s blame aplenty - politicians, CEOs, the voters, investors, and the people who borrowed much more than they could afford should chuck a little mud they’re own way. Because of our poor decisions all of us are going to pay and pay big. It’s too late for blame, so like it or not, it’s time to face reality and start pulling together.

Even economists can’t agree on whether we need a bailout and therein lies the problem. This is macroeconomics writ with a capital, 72 pt. M. Anyone - economists included - that tells you they have the inside, dead-certain track on it is lying at worst and deluded at best. Nobody knows the best thing to do because ALL the options suck. Despite the bill stinking like rotten fish on a hot day, I swallowed hard and was behind it. We can look at our current situation and see the results of doing nothing - repeat Herbert Hoover six times fast.

Snake Oil, Inc.
I’d describe myself as a ‘reluctant regulator’. I think there can be too much regulation, but I also realize that capitalism is based on naked greed. To let markets cure all the world’s ills may work well in the classroom but as a practical matter, greed-driven free markets run away with themselves. When they eventually auger in, they hurt more than just the investors who signed up for get rich quick ponzi schemes sold by the CEO of Snake Oil, Inc. They can hurt millions of workers and the foundation of the global economic system.

Clearly, Mayor McCheese’s sudden burst of ‘leadership’ was nothing more than political theatre - a bad vaudeville act by an over-the-hill Borscht Belt comedian, but both he and Obama the Oracle deserve some credit. They told the public something they really didn’t want to hear - act now or face larger consequences later. Voters have every right to be pissed. Regardless of their own culpability, because it was mostly people in higher pay grades mucking things up. But refusing to do anything is simply cutting your nose off despite your face.

A Product of Democratic Capitalism
A bailout is neither panacea nor complete flop. It just buys time to work out ways to prevent it from happening again. There will be setbacks that cost taxpayers big money and run roughshod over unlucky consumers, but that’s one of the few constants in macroeconomics - there’s no way to adjust every decision to everyone’s benefit or to total ‘fairness’.

In some ways this pickle is unprecedented and hopefully won’t be seen again for a long time. In other ways it’s a simple by product of democratic capitalism - out of control greed counter-balanced by a need to look out for both your neighbor and yourself. This bill wasn’t perfect or fair and future ones won’t be either. They’re just imperfect examples of how our democracy works when it finds itself in trouble. Hopefully, we can find common ground soon and learn from our mistakes. But if history is any guide, common ground is going to be uncommonly difficult to find.

And that, my friends, is also a byproduct of democracy.

Cross posted at The Omnipotent Poobah Speaks!

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  1. One Response to “Bailout Bites the Dust, But Not in a Good Way”

  2. By Liberal Jarhead on Sep 30, 2008 | Reply

    There are two kinds of fixes. If the government comes up with a plan that (1) protects homeowners until the next president and Congress have time to implement some solutions that will help ordinary, non-rich Americans - say, by including a 6-month moratorium on foreclosures and a plan to allow people at risk of losing their homes to refinance on workable terms; (2) re-regulates the finance industry by rebuilding the partitions between banking sectors and other safeguards that have been systematically dismantled by people like Phil Gramm over the last three decades; and (3) holds corporate leaders accountable for the impact of their management choices, tie their compensation to that of their employees and their severance packages to those received by their workers when they get laid off or retire - and where necessary, vigorously prosecute them if they’ve used their corporations to break the law - THEN we’ll be looking at the kind of fix the American people will buy into, a true repair.
    If all they do is hand another huge pot of money to the people who just showed us they can’t be trusted to manage money, it will be the other kind of fix, the kind a junkie seeks, the kind that just feeds the addiction for a little while, leading to another fix being demanded as soon as the high wears off.

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