Well, the last couple of days could have gone better, couldn’t they? The Wall Street Journal has probably the best overview of Congress’ failure. Lest anyone get the wrong idea from yesterday’s post, which I will freely admit I wrote……

Tom Frickin’ Coburn. Not exactly a liberal pansy. “Taxpayers deserve to know that there is no guarantee this plan will work, but there is a guarantee that we will face a financial catastrophe if we do nothing. If banks continue……

But I think it’s fair to say that the scandals that we’ve seen, both legal and illegal, under the current White House and Congress, are far worse than most of us could have imagined, Barack Obama told fellow Democrats with…

The lesson of the Great Depression is that the New Deal did not fix our economy, WWII did.

I feel I am on pretty solid historical grounds in saying this. For those who disagree, I would direct you to the recent release by Amity Shlaes entitled The Forgotten Man.

Applied to the current crisis, I would say that history dictates that continued government intervention into the markets only prolongs or delays the necessary correction. For those who argue for doing “something” are you certain what impact the plan will have on housing prices, inflation, unemployment, interest rates, etc. over the next several years?

As for today, the markets hate only one thing, uncertainty. Specifically the uncertainty created in the minds of foreign investors who watch CNN and the other cable networks which reported extensively over the weekend that a deal on the bailout was reached.

Shame on professional journalists who attempt to influence the news rather than simply report it.

Angry Dumbo on September 29, 2008 at 5:03 PM

Unfortunately, there is a huge amount of work shooting down Amity’s work. The fact is War is just a larger version of Bastiat’s Broken Window Fallacy. War, just as any other government spending does not and can not stimulate an economy out of a depression. It can stimulate a sector of the economy, but at the cost of all the rest of the sectors.

This isn’t a huge lesson, it is basic Austrian Economics 101. There ain’t no such thing as a free lunch.

I am still waiting to be explained how you or anyone thinks that the government that caused this can fix it. Have they ever fixed anything? Absolutely not.

The only bailout plan that will work without costing taxpayers and giving more power to the Federal Government: The Austrian Plan

The NYT had an insightful article to this end this past weekend.

http://www.nytimes.com/2008/09/28/business/28melt.html?_r=1&partner=rssnyt&emc=rss&o

The article explained how AIG’s collapse can be traced to its tiny 400 employee London unit which sold credit derivatives, which were insufficiently collateralized, yet the London AIG unit pulled in annual salaries that exceeded 1 million dollars per employee even after their firm was under criminal investigation.

The bad eggs are getting bailed out or rather taken off the hook. Not a good deal for taxpayers. However, the problem real problem is the bailout won’t work and the precedent is set that big politically connected firms will not be allowed to fail.

See Peter Creswell for a full explanation.

I feel I am on pretty solid historical grounds in saying this. For those who disagree, I would direct you to the recent release by Amity Shlaes entitled The Forgotten Man.

Applied to the current crisis, I would say that history dictates that continued government intervention into the markets only prolongs or delays the necessary correction. For those who argue for doing “something” are you certain what impact the plan will have on housing prices, inflation, unemployment, interest rates, etc. over the next several years?

As for today, the markets hate only one thing, uncertainty. Specifically the uncertainty created in the minds of foreign investors who watch CNN and the other cable networks which reported extensively over the weekend that a deal on the bailout was reached.

Shame on professional journalists who attempt to influence the news rather than simply report it.

What is he going to do about it?

Again, crickets.

CSMBigBird on September 29, 2008 at 3:29 PM

Be careful with that. Actual deflation is an economic killer. Investment is the lifeblood of the economy, and why would you invest if you get a better return risk free by stuffing your mattress with money?
Not realizing this is one of the things that caused the Great depression.

Ugh, one of my ‘R’ guys voted for it and the last person I would have thought to do so.

Bishop on September 29, 2008 at 2:47 PM

That may mean that things are not what you think they are.

This bill does not represent a new and sudden departure from free market principles as much as it represents an emergency response to congressional actions that have ignored free market principles, and our Constitution, for decades.

Coburn is Dead on here. While I’m not completely supportive of this bailout. You have to admit that something needs to be done here. This was a government made problem, and sadly, gov’t needs to fix it. Or actually, gov’t is the only one that can fix it.
I’m not sure I see it in this bailout though. But I haven’t gone through the whole thing yet.

“Coburn should be removed from office.”

You are insane. Coburn is all that stands between you and the barbarian socialist/marxists. You have the stupidity to conflate Coburn and his history of conservative support with the rest of the grifters – Dodd, Frank, Clinton, Biden, Kennedy, amd Reid? That’s like shooting the last soldier in the back, who is guarding you from the barbarians in the street. Boy will that feel good. Idiot!

Coburn is my senator. I’m proud of him. If you don’t live in Oklahoma, then shut the xxxx up. We do it right. He has been doing it right. Maybe you should clean your own nest first!

This is far from just being about bad mortgages by deadbeats. Thats the root, but not the Catostrophic part. Its these Derived contracts and how they work.

Either these CDS’ contracts need to be annuled in some way or all the bad mortages need to be purchased which would stop this from turning into a Multi-TRILLION problem.

“As much as members of Congress want to find scapegoats, the root of this problem is political greed in Congress. Members of Congress from both parties wanted short-term political credit for promoting home ownership even though they were putting our entire economy at risk by encouraging people to buy homes they couldn’t afford. Then, instead of conducting thorough oversight and correcting obvious problems with unstable entities like Fannie Mae and Freddie Mac, members of Congress chose to ignore the problem and distract themselves with unprecedented amounts of pork-barrel spending.”

“Taxpayers who want to ensure that this doesn’t happen again should send a very clear message to Washington that it’s time for Congress to live within its means and restore the principles of limited government and free markets that made this country great.

Does not make sense. The root of the problem is Congress, so taxpayers who want to ensure this doesn’t happen again should trust Congress to “live within its means.”

For crap sake, Senator Colburn. You are smarter than this. Politicians in who create problems, as you admit was done here, never admit their mistakes and get re-elected. Nobody in Congress has taken the fall for the Fannie/Freddy/AIG mortgage crisis and they are unlikely to fall on their swords before November.

The heat of campaign season, 30 days before a Presidential election no less, is NOT the time to force feed legislation on the American people.

Spending hundreds of billions should require far more public debate and deliberation than has been allocated for this bailout bill.

9 of 10 Americans are paying their mortgage on time and our concern regarding the long term and ongoing systemic implications of such a massive government takeover are not trivial.

Senator Coburn has Washington has changed you that much?

Plenty of Democrats in the house want to get re-elected. They’ve been hearing from their constituents en mass.

digitalintrigue on September 29, 2008 at 2:43 PM

I’ve been e-mailing my Democratic congresswoman, begging her to vote against any bail-out bill that includes provisions for the government to purchase debt other than mortgages (as the just-defeated bill did — the gov’t would have had the authority to buy bad mortgages, bad car loans, bad student debt, bad credit card debt, etc.), or that provided a slush fund for corrupt organizations such as ACORN, La Raza, etc.

My congresswoman is a first-termer, and she has some competition this time (unlike last election, when the Republican party refused to financially support the guy who won the Republican nomination and basically gave the election away).

She votes with Pelosi 90% of the time, but this time, she voted no on the bail-out. I can’t wait to hear her reasons. Was it because there wasn’t enough Democratic pork in the bill to suit her, or did she just hear from so many outraged constituents that she feared a yes vote would spell the end of her short career? It’ll be interesting.