At this point with the election a little more than a month away it makes sense to leave the bailout for after the election. The enviroment is too politicaly charged to get anything done that doesn’t pander to almost everyone.
After the election no one has to worry for at least 2 years, maybe they can take a long term view and actually try to fix the problem.
Time is valuable, and it ran out a while ago. I do think that a couple days (in the scheme of things) isn’t going to matter much in the aggregate, but I don’t think the same can be said about weeks, and certainly not months. DC should be a busy place, and if it isn’t…then I guess a President who was worth a damn could get something done, but we don’t have one.
Part of the problem is that republicans have cried wolf so many times no one takes them seriously anymore.
This may be a huge problem but it may be another Irag. That will be Bush’s legacy a complete lack of trust in what our drama queen government says.
That is one of the reasons I like Obama he does not seem like an overreaction waiting to happen unlike McCain.
The Repubs are idiots. That said, we also can trace the crisis back to:
1) LBJ – he moved Fannie & Freddie off balance sheet. If it was bad for Enron, why is good for the feds?
2) Secretary of HUD Andrew Cuomo – he armtwisted Fannie & Freddie to make loans without the usual niceties of income proof or downpayment back in the late 90s.
3) All the good legislators who received donations from the GSEs (care to ask the party affiliation of the top recipients)?
caveat – the thing is being treated like a political problem by the right-wing, where there’s this revision of history and a theme to the fiction that people can really sink their teeth into.
Bill Clinton deserves a ton of the blame, for signing out of law the Glass/Stiegel Act, which allowed deposit banks to become investment banks. The lack of proper oversight from the SEC, FED and Treasury from the day that this was signed until the NASDAQ bottomed was a disgrace. Investment banks raked in the cash, distributed it internally, and once that happened, there wasn’t anyone working for one of those firms who didn’t toss ethics to the side for the sake of becoming rich.
Alan Greenspan was as destructive an empty suit as this country has ever come across. We were told by the media and Congress to take everything he said as the gospel truth, and to assume that he was so much smarter than everyone else. The whole thing was a sham, and from this we have his anti-regulatory orthodoxy suddenly confronted with credit derivatives and CDOs, which he then goes on a tear about, proclaiming that they spread risk around and that the world would benefit from these inventions forever. Even though they had been created and a market was established, Greenspan argued that the government would only end up screwing everything up if they decided to take a look or regulate…
He was a charlatan, as was Rubin…Paul O’Neil was the only one who knew what the hell was going on, and due to that fact, he had to be kicked the fuck out as soon as possible.
I see this as a crime that was perpetrated on our society, and the list of officials deserving of blame is long. The argument that one party had it right and the other wrong is like taking this tragedy and attempting to teach it to kindergartners.
The field of economic science and economic politics aren’t blessed with arrows pointing to where they need to look next…there is no equivalent to DNA in this arena. Which makes me realize that this is going to be worse than the dot-com bubble, which means that there is still far to go…bailout or not, it’s going to get worse, and THAT is the game…the political bullshit only works to further dumb-down the national dialogue.
Al, I agree with all your points except for the repeal of Glass-Steagall and Paul O’Neill.
You couldn’t have JPMorgan Chase Bear or Bank of America Merrill, which are good things, with that Depression-era firewall. I blame Greenspan to a large degree, in his misplaced faith in subsidizing awful borrowers, but he was a lot better than Arthur Burns.
O’Neill didn’t do anything right. I am so glad Paulson is there instead of O’Neill. I’ve matured to the point where I don’t make the perfect the enemy of the good.
This is worse that the .com bubble for sure.