The Third Estate
What Is The Third Estate?
What Has It Been Until Now In The Political Order?
What Does It Want To Be?

Yet More On The Bailout

Tuesday, September 30, 2008
So far I've been writing about the machinations around the bailout bill in a narrowly political sense, but not how I felt about the substance. The fact is - I just don't know. On the one hand, the idea of forking over $700 billion to Wall Street financiers who make 30 gazillion dollars a year makes me want to throw up in my mouth a little. Making the Bush administration responsible for implementing the plan makes me want to jam the phone lines of my congress critter's office. On the other hand, doing nothing in the face of a credit freeze and bank failure is just unacceptable. I just got finished reading Schlesinger's "Age of Roosevelt", and Hoover didn't do anything when the market fell apart either. Repeat? Thanks but no thanks.

Experts on divided on this issue, and there are good smart liberals I respect on both sides. I know a little about macroeconomics, but the details of High Finance are a little beyond me. My preference would be to target policy in such a way that the underlying structure of the problem is addressed while those who made the mess have to bear most of the burden for paying for it. I don't know if that's feasible, or what that approach entails. But unlike certain hotheads at big left-wing political blogs that shall remain nameless, I'm not going to call folks on either side of the bailout debate any names.

What I do know is that anyone who thinks that an unregulated free market dominated by large corporations and big investment banks leads to stable prosperity - well, that person is just crazy.
Posted by Arbitrista @ 3:39 PM
  • Call me crazy, but it seems that there should be some balance with regulation. Too much or too little leads to exactly the kind of crapola we see now.

    I am not comfortable with this bailout. Whose to say that the amount desired for the bailout will fix the underlying problem. Without some oversight, the bailout is nothing more than a band-aid.

    By Blogger Seeking Solace, at 9:48 PM  
  • I think regulation needs to be balanced too - the problem is that the governing model of the last 30 years has been NO regulation. With predictable (and predicted) results.

    I think the purpose of the bailout is not the solve the underlying structural problems in the market. I think the purpose is to restore business confidence (a scarily Hooveresque phrase) and alleviate the credit freeze before the effects start to spread to other economic sectors. In that sense, you're absolutely right - it is a band-aid. But that doesn't necessarily mean that it's a bad idea.

    By Blogger Arbitrista, at 8:54 AM  
  • What both of you are forgetting is that band-aids are great, as long as they cover the wound to stop the bleeding. The bleeding must be local and the flow rate must be small enough to stop. That's where the analogy breaks down. If we wanted to use a band-aid, the Congress would have had to do it back in March after Bear Stearns was sold. Since then, the bleeding has occurred in more areas, and instead of a trickle we have a torrent. Since the Treasury Secretary doesn't really know how to stop the bleeding in every area, he is asking for a band-aid that he can contract and expand at will. The remedy is too late to stop a recession. So, the question is, do we want to give near-dictatorial powers to a single person when the powers probably won't make any difference? It's too little, too late. The best we can hope for is for the chips to fall where they may, WITHOUT a government bailout.

    By Blogger Marriah, at 10:05 AM  
Post a Comment
<< Home

:: permalink