Saturday, September 20, 2008

Quotes from the Edge of a Cliff

It's not a topic I know about, but what I'm reading from people who do know about it is scaring me half to death. It sounds like we're about to make a mistake of Iraq-war proportions or worse.

Here's some of what I've been reading (the first half are people who know a lot more about this than I; the second are people who don't, but have read stuff similar to the first half and are angry in an articulate way). I may add more as I see 'em, but for now:
"...looking at the plan as leaked, I have to say no deal."

-- Paul Krugman

The decisions that will be made this weekend matter not just to the prospects of the U.S. economy in the year to come; they will shape the type of capitalism we will live in for the next fifty years. Do we want to live in a system where profits are private, but losses are socialized? Where taxpayer money is used to prop up failed firms? Or do we want to live in a system where people are held responsible for their decisions, where imprudent behavior is penalized and prudent behavior rewarded? For somebody like me who believes strongly in the free market system, the most serious risk of the current situation is that the interest of few financiers will undermine the fundamental workings of the capitalist system. The time has come to save capitalism from the capitalists.

-- Brad DeLong Brad DeLong quoting (with misleading formatting) Luigi Zingales [PDF Link]

The scheme has gone from invisibility to inevitability in the blink of an eye. This is extremely dangerous.... The plan is being marketed under false pretenses.... The Treasury plan outlined on Friday involves vast risks to taxpayers, huge complexity and no guarantee of success. There are better ways forward.

-- Sebastian Mallaby, "A Bad Bank Rescue"

If Wall Street gets away with this, it will represent an historic swindle of the American public--all sugar for the villains, lasting pain and damage for the victims.... The scandal is not that government is acting. The scandal is that government is not acting forcefully enough...

-- William Grieder

Congress, the Fed, and the Administration shouldn't be giving more help to Wall Street. Policymakers should focus instead on people who really need a safety net right now -- workers who have lost or are about to lose their jobs, who need extended unemployment insurance and health insurance for themselves and their families; homeowners who have lost or are likely to lose their homes, who need additional help meeting mortgage payments and reorganizing their debts; and people who have lost or are in danger of losing their savings or pensions, who need better insurance against possible loss.

-- Robert Reich

Any member of Congress who looks at the plan to give Hank unchecked power to transfer $700 billion from the Treasury to his friends' companies and has any reaction other than "You've got to be fucking kidding me" does not deserve to hold office.

-- Atrios (a.k.a. Duncan Black, Ph.D. in economics, just btw)

This is the domestic equivalent of the Iraq war authorization. The threat of financial collapse is analogous to the weapons of mass destruction. The markets will wait. Congress can give a proposal with real conditions and then it will be Bush's call if he wants to be responsible for collapsing the U.S. economy. Congress can't be taken yet again.

-- Dean Baker (link added)

... any business that markets itself as "too big to fail" is also too big to be unregulated. Free Marketeers forever quote Adam Smith's famed "invisible hand" metaphor. They interpret Smith to be saying that the sum of everyone acting selfishly will be the public good. If we have learned anything from the mess in which we find ourselves now, it is the untruth of that belief. To achieve a thriving economy - to build a society of which we can be proud - we have to use the brains God gave us. That means positive, active, assertive, informed governmental action. For decades, one political party has told us that government is the problem, not the solution. They certainly aren't acting that way now.

-- Richard Tedlow (Prof., Harvard Business School)

I know very little about... the high-wire financial mess we're currently in... But I know enough to be troubled that we appear ready to give upwards of a trillion dollars in unfettered and unreviewable spending authority to the ... let's face it, the Bush administration, the folks who did such a bang up job in Iraq and New Orleans. This morning a friend told me it's like the Iraq War all over again -- Shock & Awe, followed by an occupation of Wall Street, and all with no exit plan.

-- Josh Marshall

...the fact that Democrats are on board with this scheme means absolutely nothing. When it comes to things the Bush administration wants, Congressional Democrats don't say "no" to anything. ... They say "yes" regardless of whether they understand what they're endorsing.... an injustice so grave and extreme that it defies words is taking place; that the greatest beneficiaries are those who are most culpable; and that the same hopelessly broken and deeply rotted institutions and elite class that gave rise to all of this (and so much more) are the very ones that are -- yet again -- being blindly entrusted to solve this.

-- Glenn Greenwald

I do not ever want to hear another damned word about the free market. I don’t want to hear another thing about letting the market regulate itself. I don’t want to hear about the free flow of capital. I don’t want to hear about government getting out of our lives. None of it. From superfunds to super-bailouts, I am tired of other people getting rich being irresponsible and then being told I have to pay to clean it up. I didn’t read one punitive aspect of this new plan. Not one punishment for the people who did this.

-- John Cole

Hank Paulson is asking for $700,000,000,000. That's $2,333 from every man, woman, and child in the United States. In exchange for that money, Paulson is unwilling to accept any demands to make markets more transparent, limit executive compensation, or assist homeowners fighting foreclosure. The sole purpose of that $700,000,000,000 is to bail out Wall Street and only Wall Street, but not to fix it, or our larger economy. He is asking to be absolutely unbound by any law when he spends that money. Hank Paulson--one of the CEOs who got us into this mess--is asking each and every American to give him $2,333 to do with as he sees fit, with absolutely no strings attached.

-- Emptywheel at Firedoglake
As for what would be a good idea, Dean Baker has some suggestions.

Time to call your congresscritters, folks. Even if, like me, you don't know much about the details, it seems that telling them to slow down and look at other options before jumping and make sure there is some accountability here seems very important. This looks like it could get really, really, really ugly.

Update, 9/21: Still more quotes:
There is more information on the back of a box of Froot Loops than on what they've presented...

-- Austan Goolsbee

Paulsen and congressional Republicans... have said that there can't be any "add ons," or addition provisions. Fuck that. I don't really want to trigger a world wide depression (that's not hyperbole, that's a distinct possibility), but I'm not voting for a blank check for $700 billion for those mother fuckers.

Nancy [Pelosi] said she wanted to include the second "stimulus" package that the Bush Administration and congressional Republicans have blocked. I don't want to trade a $700 billion dollar giveaway to the most unsympathetic human beings on the planet for a few fucking bridges. I want reforms of the industry, and I want it to be as punitive as possible.

-- Anonymous member of Congress

But thus far, the Administration has only offered a concept with a staggering price tag, not a plan.... The bottom line is that we must change the economic policies that led us down this dangerous path in the first place. For the last eight years, we’ve had an “on your own-anything goes” philosophy in Washington and on Wall Street that lavished tax cuts on the wealthy and big corporations; that viewed even common-sense regulation and oversight as unwise and unnecessary; and that shredded consumer protections and loosened the rules of the road. Ordinary Americans are now paying the price. The events of this week have rendered a final verdict on that failed philosophy, and it is a philosophy I will end as President of the United States.

-- Barack Obama

Obama's people are making the right noises, but there's a difference between being on record as being kinda-maybe against and actually, you know, opposing... Basically, you'd have to be insane to give Paulson a $700 billion blank check with no strings attached. The fact that this is what Paulson has asked Congress to do is enough reason to tell him to fuck off and come up with something better, with him utterly out of the loop.

The Dems sucked as a minority party, and they suck harder as the majority.

-- Atrios

The only defense for the play is for a significant group of Democrats to say they won't vote for any proposal that isn't unpalatable to industry, and mean it. It's a pretty high stakes game of chicken, but otherwise we come out of this with nothing but a $700 billion giveaway to a crooked industry.

-- A (different) anonymous member of Congress

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