Get to know D.C. with our daily newsletter
We dive deep on the day’s biggest story and share links to everything you need to know.
The U.S. is (possibly? maybe? mos def?) straddling the cusp of an economic crisis, and what do our politicians do? Stage a vainglorious meeting of the anti-Mensa:
Both McCain and his Democratic rival, Sen. Barack Obama, would leave the White House without comment, and the meeting was described as among the wildest in memory. A beleaguered President Bush had to struggle to maintain order and reassert himself. And when Democrats left to caucus in the Roosevelt Room, Paulson pursued them, begging that they not “blow up” the legislation.
The former Goldman Sachs CEO even went down on one knee as if genuflecting, to which Speaker Nancy Pelosi (D-Cal.) is said to have joked, “I didn’t know you were Catholic.”
Oh, Nance, you kinky tart, you. Seriously, this is what we should be asking: How bad does it have to be? Since this is an election year and there’s no stopping some sort of bailout bill, voters should keep a close eye on what makes it into this thing: defaulted mortgages, fine. “Car loans, credit-card debt and other devalued assets”? No. Fucking. Way.
It seems we’ve found the tipping point where we stop holding accountable the financial behemoths and start treating them like third world countries. A decade and a trillion+ dollars down the road, when investment banking has either mutated into something more conservative (which it would have to do sans bailout), or our economy has devolved into a super-slow growth economy (which—just you watch—could devalue the dollar to the point that vacationing in Tijuana is as expensive as London), we’ll look back and kick ourselves for letting the fat cats off the hook.
But for right now, we should ignore the impulse to infantilize grown adults. People who managed to “qualify” for cars they can’t afford or racked up a shit ton of credit card debt, convinced they could keep up with the payments, need a reality check, not bailing out. Millions of other Americans who concede to living within their means are trying to keep their lives from capsizing; all they’ll have to show for this nonsense is a reduced 2009 tax return and some very good reasons to resent the rich and the poor.
But don’t take my word for it. Here’s a joint letter from 200 of the United States’ most qualified experts, speaking out against the bailout:
1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.
2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.
3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, America’s dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.