USA Today on yesterday’s failed vote: At critical moment of crisis, irresponsibility wins the day

Posted by Kendall Harmon

This is standard politics, but perhaps both could hold off on the blame game until a solution to the immediate crisis is in place. There's still plenty of time to argue about who caused what, but not much time to keep the economy out of crisis.

Read it all.

Filed under: * Economics, PoliticsEconomyThe September 2008 Proposed Henry Paulson 700 Billion Bailout PackagePolitics in General

5 Comments
Posted September 30, 2008 at 7:33 am [Printer Friendly] [Print w/ comments]



1. RichardKew wrote:

What has been happening during the last few days has been a test of leadership, and virtually all those tested seem to have failed. There are no good and easy options in this situation, and the consequences of inaction are perilous. There is plenty of blame to go around and everyone deserves a share of it!

September 30, 8:04 am | [comment link]
2. Helen wrote:

I just don’t understand.  Why was it irresponsibility for the U.S. government not to go 700 billion dollars further into debt?  Could somebody please explain in terms that a non-economist can understand?

September 30, 8:55 am | [comment link]
3. BlueOntario wrote:

The thought is that the debt the US government would undertake wouldn’t “hurt” the markets - despite what common sense would make you think about the national debt, investors (lots of foreign governments are included in that group) have faith in the treasury bills (IOUs) that are sold to make up the difference in spending. The new debt would actually go towards relieving the credit market of older worrisome (not all of it is bad) debt and allow new borrowing to happen and keep business running as it does. By doing that now we _may_ prevent a “deep recession” (more like a depression) where large banks and investors are afraid to loan anyone anything at other than enormous interest rates. Not doing it we probably do have a major slowdown which means nothing much gets done outside of government spending anyway.

That’s the theory. Finance is and always has been more about gambling and not so much what you and I would take as common sense. I’ll add this: say what you will about FDR’s New Deal socialism, with so many people out of work and with no place to live they were happy to collect a paycheck and have a roof over their heads ala the CCC, WPA, etc. Even happier if they weren’t drafted and could work in a defense factory. Who’s to say we won’t resort to that again. Of course this isn’t the America of the 1930s and I don’t know if the same work ethic exists.

September 30, 9:19 am | [comment link]
4. Byzantine wrote:

BlueOntario,
You are falling for the oldest bit of smoke-and-mirrors that exists.  You see CCC and WPA projects and don’t realize that they are nothing more than capital that has been taken from the private sector.  What is not seen is what the private sector could have done had it not been forced to finance the CCC and WPA.  If government is a better allocator of capital than the private sector, why not nationalize capital, like they did in the Soviet Union and post-WWII Britain?  I assume the question answers itself.

Injecting $700B that is not funded by prior savings into the economy will greatly enrich the new recipients at the expense of all downstream dollar holders.  I’d like to postpone $10/gal gas for at least a few more years, thank you.  Moreover, why should we saddle our children and children’s children et al. with the debt for our profligacy?  Hardly the Christian thing to do.

The bailout was a naked power grab and transfer of wealth, pure and simple.

September 30, 9:38 am | [comment link]
5. BlueOntario wrote:

I never said I am a fan of FDR - I have a Landon/Knox button that is near and dear to me. I only said most people were happy to have jobs and roofs over their heads through New Deal programs when they couldn’t find work after the credit system dried up in the ‘30s. When or how the economy would have sorted itself out if left on it’s own is speculation (no pun intended). I will also say that human nature being what it is, many of the same people who are up in arms over throwing money at Wall Street will be calling for government to help them through job programs when the slowdown hits them.

September 30, 10:08 am | [comment link]
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