Wall Street bailout

Yeah, that figures - thx for pointing that out J! If only we could be like that at work. We'll boss, I'll try to get this project done by that deadline, but if I don't, we can just extend it and get more budget, right?

What did you think of Bush's speech and the recent bailout deal? I thought it was funny how Bush, while he was giving a brief timeline of how we got to this point, failed to mention that the weak US dollar (partially due to artificially low interests rates maintained by the Fed) also contributed to the massive spending spree by foreign banks. And he never really justified to the country why he needs $700B, and where the hell that number came from.

Of course Wall Street is jumping for joy over the news, but like every economist worth a damn out there is fretting, so that should tell us something.

Krugman: http://krugman.blogs.nytimes.com/2008/09/21/thinking-the-bailout-through/
http://www.statesman.com/business/content/business/stories/other/09/23/0923bailoutsider.html
(but there are also plenty of other news links in favor of the bailout)

Congress acts all skeptical and critical, especially because their offices are being flooded with angry constituents protesting the bailout. They might express their displeasure in statements to the press, but only after a week of limited debate they come up with a bill that is fairly similar to Bush's original proposal? Yes they added on pay limits for execs and some oversight, but the "bailout" part is unchanged. Everyone keeps saying that this is a bad idea, but the alternative is worse. Maybe that's true, but it's pure political show again. Wall Street companies give millions each election cycle to both parties' candidates, and now they're calling in a mondo favor. Same goes for the presidential hopefuls, where Lehman/Lynch employees and there families have given $10M to Obama and $7M to McCain so far (1st link below, but I guess all that money didn't save Lehman from its sins anyway). And I don't think that they're just generous, patriotic citizens. This should be a bigger deal to them, because the bailout will mean they have hundreds of billions of public funds less to implement their lofty proposals for health care reform, energy/environment, defense, and education (2nd link).

http://news.yahoo.com/s/bloomberg/20080916/pl_bloomberg/ambsgo09sxvo
http://news.yahoo.com/s/bloomberg/20080917/pl_bloomberg/a8zvtv0iunks

But I hate it how the Congressmen act all outraged that the "humble, honest taxpayer" has to mop up rich and/or irresponsible people's mistakes, but when the chips are down, they let it happen without much resistance at all. As you said about auto emissions, they try to have it both ways. They can tell their constituents that they protested and voiced the people's concerns, so if the bailout fails, then they blame lame duck Bush for forcing it through in the twilight of his presidency, using the panic over growing economic calamity to justify hasty action. No mention of their abandonment of their legislative check and balance duty of course. And if the bailout succeeds, then they take the credit for "saving the economy" and helping Main Street as well as Wall Street.

If Congress had real concerns with this proposal, and frankly there are many details yet to be ironed out, then what is the hurry really? 3 more months of falling housing prices and maybe another bank or two going under won't impact us much more than our current shitty predicament (we'd be dropping from a -9 to -10, big whoop). And it's not like by passing this bill tomorrow, suddenly the economy will rebound and credit will flow like the mighty Mississippi. This will really become President 44's problem. Lawmakers can think things through over the holidays, do more research, and present a better proposal to Congress and the president by then. The economy and markets will get a Christmas shopping bounce as always to tide us over, anyway.