Wall Street blues

They came so close on Capitol Hill. Ignore the tosh about Pelosi’s pre-vote speech. If that’s all it took to put the Republicans off voting to try to save their financial system from imminent meltdown… Country First, anyone?

Yes, it is all about stopping the financial system imploding and the credit from drying up altogether. We can expect more bank failures now, and not just in the US. If we’re — yes, we’re in this too — lucky, the collapse of credit world-wide won’t precipitate a major recession. And we’ll get a revised version of the failed plan before too long, as Robert Reich suggests. If we’re lucky. (Hat-tip Daily kos.)

If we’re unlucky we get a full-blown depression. But we don’t know about that, because there aren’t a lot of models for a situation this extreme.

It’s not about the fat cats. But for many ordinary people, the idea that the fat cats would benefit was repugnant. (Initially at least. Rasmussen reported today that “Opposition to bailout plan falls dramatically”.) And there being an election in a couple of months, some congresspersons put saving their ass before saving their country.

Hell, who do you think finds the idea of giving money to the rich most objectionable? The liberals, or the people who skew tax-cuts to the super-rich?

Okay, there were the Republican Study Committee conservatives who came up with the idea of insuring the toxic debts (mortgage-backed securities not already insured) and somehow magicking away the cost. The proposal was a one-pager.

At the end of the day, any banking system collapse requires recapitalisation to avoid credit drying up and economic disaster, as the IMF’s study of 124 banking crises and responses shows.

I personally don’t think that buying toxic assets is the best solution, but then, what do you expect from Bush? There are other models, and the best outcome would be for the US legislators to consider some of the others. But quick. And without the spoiler interfering again.

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One Response to “Wall Street blues”

  1. barnsleybill Says:

    Nice to see you blogging again JP..
    Now then.
    JP, forgive my directness. But that is unmitigated bollocks.
    http://www.guardian.co.uk/world/2008/sep/29/congress.wallstreet1
    The link is to excerpts from Pelosi’s speech faithfully reproduced by the left wing Grauniad.
    There seems to have been a good deal of effort to create the impression of a bipartisan approach to this crisis by the American poli’s.
    Pelosi blew this out of the water with her ill timed and ill considered comments.
    Her failure to acknowledge the hand the Clinton presidency had in the loan to any and all root causes of this crisis are stupid, simply blaming the incoming regime for allowing it to continue is a sickening rewrite or recent history.
    Her conciliatory comments and sick looking demeanor at the post match press conference were plain for us all to see. She knew she had overplayed her hand and the dems will have to eat a lot of shit to get a bill passed now.
    This is far too serious for a left/right view as a basis for our arguments. And redundant as well because the dems are to the right of ACT anway.
    Like you, I hope they do get something fixed up because if the American taxpayers don’t man up and pay we are all doomed.

    Hey, wanting others to pay must make me a socialist!

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