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September 22, 2008 2:29 AM   Subscribe

The Wall Street bailout proposal has prompted Bill Kristol and Paul Krugman to write identically-minded columns opposing the plan.
posted by pjenks (194 comments total) 11 users marked this as a favorite

 
Well, I was against it until now. But if serial bad advice giver Kristol's against it, huh, maybe it is a good thing.

Oh wait, it's just that Kristol figures this is the last 700 Billion we'll be able to tease out of the Chinese, and he insists on using it to fund the most important things: Israel and a war on Iran, right?
posted by orthogonality at 2:36 AM on September 22, 2008 [6 favorites]


Turning and turning in the widening gyre
The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.
Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of "Spiritus Mundi"
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

posted by troy at 2:42 AM on September 22, 2008 [23 favorites]


I haven't really liked Billy Kristol that much since Soap.

Wait... who? Oh. Between the runaway deregulation and the financial black hole that is Iraq, there has to be some way to make these neocons and their fellow travelers pay for this bailout. Gotta be some way they can comp us for 2 trillion dollars, 4200 killed and 30,000 wounded American servicemen, right?
posted by psmealey at 2:45 AM on September 22, 2008 [1 favorite]


Aside from Kristol and survivalist nuts, anyone involved who is affiliated with the Republican Party wants to pass this as quickly as possible, before everyone gets wise to the con job.
posted by Blazecock Pileon at 2:46 AM on September 22, 2008 [7 favorites]


You know, I'd like to think the Iraqis have first dibs on punishing anyone for the war on their soil - but I guess, psmealy, you're providing the contemporary version of the view that insists Vietnam was first and foremost a tragedy for the United States.
posted by rodgerd at 3:08 AM on September 22, 2008 [5 favorites]


Aside from Kristol and survivalist nuts, anyone involved who is affiliated with the Republican Party wants to pass this as quickly as possible, before everyone gets wise to the con job.

I suspect that Senator Change We Can Believe is also scratching at the fleas he got from lying down with Warren Buffet and Robert Rubin.
posted by three blind mice at 3:13 AM on September 22, 2008 [1 favorite]


(As an aside, at this point, are either of the would-be Presidential candidates passed over in their party primaries quietly thinking, "Damn, I'm glad I didn't win"?)
posted by rodgerd at 3:17 AM on September 22, 2008 [2 favorites]


Excerpts (from Daily Kos) from seven op/eds on the Paulson bailout.
posted by orthogonality at 3:38 AM on September 22, 2008 [2 favorites]


Obama and the Democrats are making noise like they are not going to accept this bailout but that might just be their normal dance that they do before caving and giving Republicans everything they want.
posted by octothorpe at 3:47 AM on September 22, 2008 [19 favorites]


The last time Congress passed a big piece of emergency legislation at Bush's urging, we got the Patriot Act. This time around we know for a fact that Paulson will get an unreviewable blank check for $700B, and he's already told us that he's going to use some of that to take bad debt off of the hands of foreign investment banks who helped bundle mortgages that they knew were garbage.

But the part that really scares me is this: I got most of the way through a Bill Kristol column without the urge to leap through my screen and throttle him to death.
posted by 1adam12 at 3:48 AM on September 22, 2008 [6 favorites]


'yall know that Paulson is Goldman alumni right? Just saying.
posted by H. Roark at 4:43 AM on September 22, 2008 [2 favorites]


you're providing the contemporary version of the view that insists Vietnam was first and foremost a tragedy for the United States

Oh, is that what I was doing? Tell me more.

If it helps, my thinking there was simply that is that these chickenhawk cowards simply do not and will not relate to the unspeakable human tragedy ongoing in Iraq (not to mention most Americans who do not have friends and family in the military). That it now affects them personally may be the only and last way to make these people understand what the impact of these murderous decisions have had.

bin Laden sought to mire to US in an intractable conflict that would ultimately bring about our downfall, a replay of the Soviet experience in Afghanistan, and the Bushies did his bidding every step of the way.
posted by psmealey at 5:01 AM on September 22, 2008 [4 favorites]


I said this in the long Palin thread, but I think it bears repeating: asking middle-class taxpayers to bail out investment banks is like asking sexual assault victims to pay for their own rape kits (I'm looking at you, Sarah Palin).

This shit is crazy. I think a mortgage strike or a tax strike would be completely in order from the American public. Won't happen, I guess.

If this happens, it's the last step in the Bush administration's long, slow coup d'etat.

Let. The. Banks. Fail.
posted by fourcheesemac at 5:10 AM on September 22, 2008 [12 favorites]


I always knew there was a vast Left Wing-Right Wing Conspiracy.
posted by lukemeister at 5:11 AM on September 22, 2008 [2 favorites]


And another thing -- I wish the pundits would start making it clear what 700B (and you know it will end up being double that) would buy if spent differently: health care for all Americans, new schools in thousands of communities; a nearly complete overhaul of our interstate highway system's infrastructure; a war in Iraq. Wait, did I say that last one?

Yes, they want to spend the equivalent of what they've *already* spent in Iraq. To help bankers.

Mother. Fuckers.
posted by fourcheesemac at 5:17 AM on September 22, 2008 [27 favorites]


Congress is going to take the money from people with one house and give it to people with 8 or more houses. If you agree that this is a fundamentally sound idea, you may be John McCain.
posted by DU at 5:20 AM on September 22, 2008 [24 favorites]


I think that the groundswell against this bill is getting stronger the more people think about it. Some good links for anyone interested, these sites have so far ahead of the mainstream on the financial debacle we find ourselves in that they should be required reading:
Naked Capitalism
The Big Picture
Calculated Risk
Global Economic Analysis
And for a more colorful look at things, Karl Denninger's Market Ticker
posted by tgrundke at 5:20 AM on September 22, 2008 [6 favorites]


From Reuters, the text of the Legislative Proposal for Treasury Authority to Purchase Mortgage-Related Assets:
Sec. 6. Maximum Amount of Authorized Purchases.
The Secretary's authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time.
...
Sec. 12. Definitions.
For purposes of this section, the following definitions shall apply:
(1) Mortgage-Related Assets.--The term "mortgage-related assets" means residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before September 17, 2008.
$700,000,000,000 is merely the starting blocks. Does anybody know where the finish line is?
posted by cenoxo at 5:21 AM on September 22, 2008 [1 favorite]


I suspect that Senator Change We Can Believe is also scratching at the fleas he got from lying down with Warren Buffet and Robert Rubin.

What's the problem with Buffett?
posted by Your Time Machine Sucks at 5:28 AM on September 22, 2008


You know, I think that when people marvel at this administration's neglect of the economy, and wonder how they could "let" it collapse like this, they are missing the real point; it was supposed to happen. If this bailout goes through, they will have succeeded in their goal of bankrupting the government to the point that they can easily drag it into the bathroom, and drown it in the bathtub.
posted by Fenriss at 5:31 AM on September 22, 2008 [4 favorites]


Hell, from what I can tell, CSU is already determining that drowning was the cause of death.
posted by fourcheesemac at 5:33 AM on September 22, 2008 [1 favorite]


'yall know that Paulson is Goldman alumni right? Just saying.

Yeah, and Gramm is a UBS alum. You can't be saying that this is a massive example of regulatory capture, can you?
posted by norm at 5:38 AM on September 22, 2008


What a piece of work:

Mr. Paulson is resisting efforts to limit the pay of executives whose firms participate in the program and plans to fight it "hard," according to a person familiar with the matter. He fears that provision would render the program moot, since many firms might choose not to participate.

posted by SteveInMaine at 5:39 AM on September 22, 2008 [1 favorite]


First of all, under no circumstances should the advice of Bill Kristol be heeded on any subject, particularly issues of economics and finance, two areas in which he can't even claim interested amateur status.

This is by no means the perfect plan, but that isn't the standard. The standard is the best plan that can get passed by Congress and implemented in under 10 days, because that's at most what the short-selling restrictions and M&A activity in the banking center have gotten us.

The best solution would require months and months of study. Congress and the administration were evidently surprised by the events of last week, having becoming perfectly comfortable with the idea that the Federal Reserve would do the actual work or running the economy while they just talk about it.


I've spoken to a few people I know in the industry over the weekend, and while they all disagree with each other on who's fault this all is and the best way out of it, they all agree that last week could have been one of the worst in American history but for the actions of the Fed and the Treasury. You can't let the banks fail, because they'd fail for everyone, not just deadbeat homeowners and Wall Streeters. You wouldn't be able to access your checking and savings accounts, among other things.

What's worse, we risked a run on money market funds that would have had far more catastrophic global ramifications. Debt markets would have collapsed, etc.

Ironically, there's a new growing problem, which is this. The longer it takes to pass this bailout package, the more criticism there is likely to be of it, and the market's overall confidence in its ability to stop the current crisis will be low, which will in turn manifest as a lack of confidence in the market.

We are at a point where we need people to believe the problem is fixed so we can move forward. Otherwise, too many people are going to exit the system for the system to survive.
posted by Pastabagel at 5:42 AM on September 22, 2008 [7 favorites]


McCain's Campaign Manager Made Nearly $2 Million To Defend Mortgage Giants From Stricter Regulations:

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.
posted by ornate insect at 5:46 AM on September 22, 2008 [11 favorites]


The longer it takes to pass this bailout package, the more criticism there is likely to be of it, and the market's overall confidence in its ability to stop the current crisis will be low, which will in turn manifest as a lack of confidence in the market.

Heaven forbid we lose our swaggering about a broken system!

We are at a point where we need people to believe the problem is fixed so we can move forward.

Bush Administration's position on Iraq and a host of other problems? Is that you?
posted by DU at 5:47 AM on September 22, 2008 [2 favorites]


What's the problem with Buffett?

Well maybe it because he's one of Paulson's cheerleaders!

"Resetting" the system does nothing to fix the fundamental problems in the system. For Obama to rely on those who call for a bailout shows a little ability for innovative thinking and no desire to "change."

Apparently, the Senator has never read Hegel.
posted by three blind mice at 5:51 AM on September 22, 2008 [1 favorite]


You can't let the banks fail, because they'd fail for everyone, not just deadbeat homeowners and Wall Streeters. You wouldn't be able to access your checking and savings accounts, among other things.

Sorry Pastabagel, but this sounds like a ransom note.

GO AHEAD AND KILL THE HOSTAGE. She means nothing to me.
posted by three blind mice at 5:58 AM on September 22, 2008 [8 favorites]


See also: Bernie Sanders on how to reform the proposed bailout.
posted by washburn at 6:00 AM on September 22, 2008 [3 favorites]


3bm-- supporting the take over of fannie and freddie isn't the same as supporting the bail out proposal on the table now.

Buffett is one of the good guys here.
posted by empath at 6:11 AM on September 22, 2008


Arlen Specter is squawking a bit on this one too. He is usually a pretty good barometer for when the Republicans are trying to sodomize our economy.
posted by Mister_A at 6:11 AM on September 22, 2008 [1 favorite]


Having bought these securities for any price Mr. Paulson would like (and he can compel institutions to sell at his demanded price as noted above!) he can then sell those assets at any price he wishes, to anyone he wishes. It certainly is nice to be a "Friend of Hank", and it most certainly sucks if you're not.
posted by 445supermag at 6:23 AM on September 22, 2008


supporting the take over of fannie and freddie isn't the same as supporting the bail out proposal on the table now.

Obama huddles with Buffett, Rubin, O’Neill on economy
posted by three blind mice at 6:25 AM on September 22, 2008


Kristol is hardly an economist and here he simply speculates what this or that one might possibly do, tossing in a gratuitous insult about Obama and spending when in fact it is the people in power and the guys who stood for deregulation that have brought this mess about. Kristol might be against the bailout but he gives us little ecomomic advise to work with.
posted by Postroad at 6:26 AM on September 22, 2008


supporting the take over of fannie and freddie isn't the same as supporting the bail out proposal on the table now.

Yes it is when Obama surrounds himself with same people.

Obama huddles with Buffett, Rubin, O’Neill on economy

Obama was to meet with advisers in Coral Gables, Florida, on the campus of the University of Miami and then announce new proposals. In addition to Rubin and Summers, the list includes billionaire investor Warren Buffett, former Federal Reserve Chairman Paul Volcker and Laura Tyson, the former head of the Council of Economic Advisers under Clinton.

Change I can believe in? Sounds like the same old gangsters doing their same old ganster stuff.
posted by three blind mice at 6:30 AM on September 22, 2008 [1 favorite]


I'm with this (as yet) unnamed, angry Democrat.
posted by bashos_frog at 6:35 AM on September 22, 2008 [2 favorites]


Here is what I sent to all the Senators on the Banking committee. I suggest everyone in the US call and ask for similar taxpayer protection. We can't let the rush to do something get in the way of doing something good. Given the cost, we need to do it right. What they proposed isn't right. What was done for AIG was.

Note that for item 3, they already changed that. I include it because I sent it before that was announced.

--------------

While I sincerely believe that some assistance to the financial system is necessary and inevitable, the proposed legislation from the Treasury is an atrocity.

First, it completely fails to protect me or any other taxpayer. The legislation, as proposed, requires that the taxpayer purchase and take the losses on the worst financial instruments available. Though I have been careful and responsible with my borrowing and finances, I now am faced with being required to "invest" my tax dollars in assets that have no market and are essentially worthless.

Second, it allows all benefits to accrue to the financial companies who made the worst decisions. Requiring the taxpayer to purchase these assets will benefit the companies who made the bad decisions, as their businesses and stock prices will improve. This allows gains to accrue to the ones who made the bad decisions, with no penalty, which can only encourage further risk-taking.

Third, it allows financial companies to easily game the system to their own profit. As the bill allows only assets owned by US companies to be purchased, it puts those US companies at an advantage. They can buy the assets of foreign companies then sell them to the Treasury, with the profits coming directly from the taxpayer. The US will become the world-wide dumpster for all of these assets.

Fourth, there is no limit on what can be spent. The way that the bill is written, it allows no more than $700 billion to be outstanding at any time. The Treasury could therefore buy that many assets, sell them for a penny, and repeat as many times as required. All without further accountability or review. There is no doubt that dollar devaluation would then occur.

A reasonable bill must include the following measures:

Taxpayers should not get stuck with the debt without getting a share of future equity. If we require taxpayers to purchase these assets, then taxpayers should get an equity share in the companies to allow sharing in the profits, if any. This was done in Norway and Sweden during their banking crises, and eventually turned a profit for the taxpayers there.

Companies that pass their financial trash onto the taxpayer should suffer some consequences to deter future risk taking. Sufficient equity dilution, as described above, would suffice for this.

The system developed should not be easy to game for profit. One way to stop this might be to only allow the Treasury to purchase assets that US companies owned on or before September 19th, 2008, so they do not purchase foreign assets and dump them on the US taxpayer.

There should be an absolute limit on what can be spent, rather than a rotating balance. It should not be possible for the Treasury to lose unlimited amounts of money in $700 billion chunks.

I appreciate your attention to this. We are facing a tremendous crisis, and while we absolutely must to do something, we really need to do something that is beneficial to all.
posted by procrastination at 6:40 AM on September 22, 2008 [8 favorites]


Warren Buffett is maybe one of the few I'd trust on this issue. Certainly more than Paulson.

The terms of the bailout seem like a putsch, like a military takeover, except that it's financial. Paulson for Emperor?

I agree with most (even Kristol, ferchrissakes...) that there must be alot more accountability built into this plan.
posted by Artful Codger at 6:51 AM on September 22, 2008


The terms of the bailout seem like a putsch, like a military takeover, except that it's financial.

Write in Smedley Butler this November!
posted by enn at 6:55 AM on September 22, 2008 [6 favorites]


This might or may not be off topic but here it goes. This bail out business is horrible. All it is is rich greed trying to suck more money out of the working class. How many times do you hear "No one is turned down!" or Good credit, bad credit, no credit!" Seriously, stupid loans to people with horrible credit are finally taking their hold. Credit unions, financial giants, and banks are beginning to reap what they sowed. Instead of letting these retards get what they deserved.... uncle sam bails them out on our dime. Also if people in the government would grow a backbone and/or stop taking care of their friends and made companies stay in the US maybe people would be able to pay their debts and the quality of life would be a little bit better here. I think I saw this from here: Henry Ford was asked once why he paid his employees so well and he said so they can buy my cars. He knew that you have to give some back in order to get more. The man wasn't a greedy money sponge like we have today. Sigh.....
posted by Mastercheddaar at 7:01 AM on September 22, 2008 [1 favorite]


> Write in Smedley Butler this November!

if only...
posted by Artful Codger at 7:05 AM on September 22, 2008


The best bit is the foreign buyouts. hell yeah the American taxpayer can bail out our broke-ass banks in return for, uh, nothing at all. Thanks, guys!
posted by bonaldi at 7:12 AM on September 22, 2008


I say cough up the money and STFU. You re-elected them...
posted by sporb at 7:16 AM on September 22, 2008 [1 favorite]


I'm with this (as yet) unnamed, angry Democrat.
posted by bashos_frog at 9:35 AM on September 22


And that, my friends, is why we're in this mess. What a childish, incompetent and impotent loser that lawmaker is. Your unnamed angry Democrat has no clue what the problem is, how big it is, or how to fix it. He's a dummy. He thinks in terms of good guys and bad guys, and thinks of them in terms of 1930's stereotypes.

He's a fucking rube, a sucker, he got taken like every sucker should be taken, and now he's sore about it. You want Mommy to get your dollar back from the 3-card monty hustler? Fuck you.

Your angry Democrat needs to understand that we are angry with him. When the revolution comes, he's the first against the wall, not Wall Street. He failed us. We don't expect private companies to be looking out for the national interest. We expect them to be driven by profit. We expect the government to look out of the integrity of the system, not to defer responsibility for the economy to the Chairman of the Federal Reserve. We expect them to regulate and provide oversight, not to scratch their heads and fall asleep during hearings.

In particular, we elected the democrats to Congress in 2006 to stop the bleeding. They've done nothing. The banks didn't fail us, because the banks do what all companies do, look out for their own interests. The government, particularly this Congress, has failed us because they've done nothing at a time when we specifically put them there to do something.

He wants to "insult" the CEOs by making them take a credit counseling course? Is that a joke? Yeah, way to be tough on greed. Congrats, douchebag, you just gave those CEOs a way to spread the mandatory course over three days at a resort in the Bahamas and deduct it from their taxes. You showed them!

Congress is a joke. Listen to how Paulson has to talk to them. He has to dumb-down his language like he's explain to a child what makes cars go. He might as well use puppets to make his point with a poor defenseless overweight homeowner sheep stalked by an evil banker wolf in a top hat and cape stroking his moustache.

Congress is populated by tort lawyers, car salesmen, religious zealots, and race baiters who've been promoted one step beyond their level of competence to a position of total incompetence. Wall Street is run by cum laude graduates in law and finance from the best schools in the world. The notion that you're going to insult these people by making them sign some papers or take some courses is laughable. Remember how just a few years ago Sarbanes-Oxley was supposed to put a stop to book-cooking? Yeah, that worked out well. For the lawyers. SOX should be named the "Wall Street Lawyer Full Employment Act." But it did precisely dick to protect shareholders, as we can see today.

If we are going to take a "fire the bastards" approach to this, then it has to be all the bastards, including the ones on Capitol Hill. If you sat on a finance, banking, or ways and means committee in the House or Senate at any point in the last eight years, you are either too stupid to serve and should be sent to a mental hospital or you are part of a criminal conspiracy with the companies that have raped the economic institutions of the country and you should go to prison forever. I don't care what your party is.

"I'm not voting for a blank check for $700 billion for those mother fuckers." Yes you are, stupid, you just won't realize that's what you're doing until it's too late.
posted by Pastabagel at 7:17 AM on September 22, 2008 [63 favorites]


Wall Street is run by cum laude graduates in law and finance from the best schools in the world....who've been promoted one step beyond their level of competence to a position of total incompetence.

Throw them all into the gulag.
posted by three blind mice at 7:38 AM on September 22, 2008 [2 favorites]


In particular, we elected the democrats to Congress in 2006 to stop the bleeding. They've done nothing. The banks didn't fail us, because the banks do what all companies do, look out for their own interests. The government, particularly this Congress, has failed us because they've done nothing at a time when we specifically put them there to do something.

Check your history; the fatal damage was done 2003-2006. There was no "bleeding" until the subprime crisis first hit HSBC in February 2007.
posted by troy at 7:38 AM on September 22, 2008 [3 favorites]


Obama was to meet with advisers in Coral Gables, Florida, on the campus of the University of Miami and then announce new proposals. In addition to Rubin and Summers, the list includes billionaire investor Warren Buffett, former Federal Reserve Chairman Paul Volcker and Laura Tyson, the former head of the Council of Economic Advisers under Clinton.

Change I can believe in? Sounds like the same old gangsters doing their same old ganster stuff.


TBM: Shut up. You're just engaging in rank cynicism-bating here. I know you hate America on principle, and all, but... (kidding!)

Volker was one of the most effective Fed chairmen in US history (he was also a Carter appointee), and the consensus among economists is that it was his leadership of the Fed that brought us out of the stagflation era and led to the recovery and expansion that the republicans took credit for in the 80s.

And Warren Buffet is a guy who literally issued a public statement once asking congress to raise taxes on his income bracket, a guy who on the subject of inherited wealth once remarked: "I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing." And given his consistent support for progressive political causes and policies that promote equal economic opportunity, he really does seem to be one of the few decent guys among the ranks of the super-wealthy. If all our economic elite were like Buffet, we probably wouldn't be in this mess.
posted by saulgoodman at 7:40 AM on September 22, 2008 [6 favorites]


I say cough up the money and STFU. You re-elected them...

Hell no I didn't.
posted by six-or-six-thirty at 7:43 AM on September 22, 2008 [1 favorite]


Seconding the advice on ignoring Kristol. The bastard is always wrong, and yet he keeps on making predictions. This weekend he claimed that Palin's performance in the veep debate will make heads explode and that people on the UWS will be throwing themselves out of their windows. I think this is his idea of a compliment. He's walking, talking bullshit from head to toe. Fuck him with a blow torch.
posted by trondant at 7:51 AM on September 22, 2008 [4 favorites]


Let's be perfectly clear, there may be many people we don't want advice from in this mess, but Warren Buffett is not one of them.

Ms. Brown is hardly alone in her criticism of the derivatives. Five years ago, billionaire investor Warren Buffett called them a “time bomb” and “financial weapons of mass destruction” and directed the insurance arm of his Berkshire Hathaway to exit the business.

http://www.financialweek.com/apps/pbcs.dll/article?AID=/20080920/REG/809199997/1036
posted by shen1138 at 7:51 AM on September 22, 2008 [2 favorites]


there must be alot more accountability built into this plan.

Right now, as far as I can tell, there is NO accountability built into this plan, and the foxes are guarding the henhouse.

Last night Goldman Sachs--a firm that generously rewarded Paulson for creating the very mess we're now in, and whose executives are a Who's Who of the power elite (among its alumni... Robert E. Rubin,...and Mario Draghi, the Bank of Italy’s governor. Jon S. Corzine, New Jersey’s governor, led Goldman for several years. Joshua B. Bolten, the current White House chief of staff, is a Goldman alum, and John A. Thain, the new chairman of Merrill Lynch, was Goldman's president before he left to help rescue the New York Stock Exchange.)--was granted the privilege of not having to face bankruptcy. They were allowed to transition into becoming a "bank holding" company rather than have to face the music.
posted by ornate insect at 7:53 AM on September 22, 2008 [1 favorite]


The only string I'd like to see attached to the bailout legislation is that it should be funded by a one time bill sent to each US citizen for $2,333 to be paid to the order of [insert giant financial services corporation's name]. Well, every citizen but the wealthiest 1%, who should be exempt. You know, just to make the point.
posted by Slarty Bartfast at 7:57 AM on September 22, 2008 [8 favorites]


I wish a was a rich man:
I would spend money like rich men,
And no matter how poor I got
I'd soon be rich again.
I'd throw away a fortune,
Just like old Freddie Mac,
And every penny spended
Is a penny I'd get back.
Oh, to live without comeuppance!
No creditors! No jail!
You can't go broke like us poor folks;
You're just too rich to fail.
posted by Astro Zombie at 8:08 AM on September 22, 2008 [9 favorites]


And every penny spended
Is a pennynickel I'd get back.

posted by uncleozzy at 8:20 AM on September 22, 2008 [2 favorites]


Ooh. Improved!
posted by Astro Zombie at 8:22 AM on September 22, 2008 [1 favorite]


Seconding the advice on ignoring Kristol.

This time, he's actually being honest. He's all about free markets, and free markets have consequences.

You may disagree with him (I certainly do) but he's actually playing the card he should be playing, if he's honest with his stated beliefs. He's against it for different reasons than I am, but any true free market capitalist should be against this bailout in any form.

I'm against it because it's the wrong bailout. I'm not a free market capitalist, because I think (and history is with me here) that fully unregulated markets will fail. Krugman is against it because he doesn't think it will work (and the oversight issues.) Kristol is against it because it's government intervention in the free market. Hell, even Newt Gingrinch is against it (once again, because he actually believes in no government interference, and that includes buyouts.)

He's a loon -- but he's being a self consistent loon. The real liars are the free market capitalists lining up for bailout money.

I'm not agreeing with Kristol or Gingrinch because I believe their positions. I'm agreeing with them because, in this case, their positions and my positions (and Paul Krugman's positions) all end up flowing down very different logical rivers into the same logical sea -- that this bailout is bad. Kristol hates the color, I hate the cut, but we both hate the suit.
posted by eriko at 8:24 AM on September 22, 2008 [5 favorites]


From Bernie Sanders' piece:

(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999.

Can anyone clarify the firewalls he's talking about? I'm curious because that would have been on Clinton's watch, no?
posted by mediareport at 8:40 AM on September 22, 2008


Japanese Bank to Buy Stake in Morgan Stanley
posted by ornate insect at 8:51 AM on September 22, 2008


mediareport, I suspect he's referring to the repeal of the Glass-Steagall Act. This repeal allowed a bank to offer both investment and commercial banking, as I understand it, which had been prohibited under Glass-Steagall since the Depression.
posted by enn at 8:52 AM on September 22, 2008 [1 favorite]


Can anyone clarify the firewalls he's talking about? I'm curious because that would have been on Clinton's watch, no?

Glass-Steagall repeal

I'm no expert but I think the 2004 SEC change allowing the IBs to lever up more was the biggest needle that punctured this balloon.
posted by troy at 8:52 AM on September 22, 2008 [1 favorite]


You want Mommy to get your dollar back from the 3-card monty hustler?

Um, no. I want the police to arrest and jail the robber that has a gun to my head and his hand on my wallet and is about to make a run for it. This particular robber happens to be stupid enough to have announced to the entire world that he is going to rob every taxpayer in the US, so maybe the cops can cut him off before he does it.
posted by ryoshu at 9:11 AM on September 22, 2008 [1 favorite]


The last three grafs of the Kristol piece are amazing. How terrible a candidate is John McCain? So terrible that Bill Kristol has to praise his hypothetical policy positions.
posted by phooky at 9:13 AM on September 22, 2008 [2 favorites]


mediareport: mccain's former campaign co-chair, a former congressman, played the leading role in tearing down the firewalls referred to. A little more about that below (from here):
In 1933, a few years following the stock market crash, Congress passes the Glass-Steagall Act, in hopes that regulating banks will help prevent market instability, particularly amongst Wall Street banks.

....

In 1999, former Senator Phil Gramm (who is, incidentally, Senator John McCain's economic adviser and cochairs his presidential campaign) set out to completely gut the Glass-Steagall Act, and did so successfully, replacing most of its components with the new Gramm-Leach-Bliley Act: allowing commercial banks, investment banks, and insurers to merge (which would have violated antitrust laws under Glass-Steagall).
....

Everything in between Glass-Steagall and Gramm-Leach-Bliley (i.e. Savings and Loan crisis/bust) was, in large part, the incubation period for what would take place over the nine years that would follow the passage of Gramm's Act: an experiment in deregulation.
posted by saulgoodman at 9:15 AM on September 22, 2008 [2 favorites]


heh. or more succinctly, what enn said.
posted by saulgoodman at 9:16 AM on September 22, 2008


Bush Urges Quick Action on Financial Rescue Package
posted by ornate insect at 9:16 AM on September 22, 2008


Does anyone really think we live in a Democracy right now?

I mean, seriously?
posted by cell divide at 9:19 AM on September 22, 2008 [2 favorites]


I'm curious because that would have been on Clinton's watch, no?

It may have been on Clinton's watch, but it was a Republican congress. And that was back in the pre-Bush II days, before congress' role in governing was viewed as largely ceremonial.
posted by saulgoodman at 9:20 AM on September 22, 2008 [1 favorite]


I'd gladly sign over a check for $2500 to the bank of your choice if I could see a perp walk featuring the CEOs of all these failing companies, the lobbyists who have worked for them, and the legislators and administration officials they bought.

Hell, I'd pay 10K to see that. More, even.

Instead, I'll be paying many times that for the pleasure of watching them retire to the Bahamas.

No, sorry there has to be accountability here for the CEOs and lobbyists and government officials. Otherwise, we'll be right back here again when this money runs out.
posted by fourcheesemac at 9:31 AM on September 22, 2008


From Kristol: "I will stipulate that this is an emergency, and is a time for pragmatic problem-solving, perhaps even for violating some cherished economic or political principles. (What are cherished principles for but to be violated in emergencies?)"

Would someone please explain to Bill what principles actually are?
posted by Capt Jingo at 9:33 AM on September 22, 2008 [1 favorite]


From the Freakonomics blog: John Steele Gordon on the Financial Mess: Greed, Stupidity, Delusion — and Some More Greed
posted by 912 Greens at 9:36 AM on September 22, 2008 [1 favorite]


Dear Secretary Paulson,
It is with a heavy heart that I inform you I am unable to get rid of some Troubled Assets and I am requesting your assistance with this matter under your proposed authority to purchase Troubled Assets.

The list of troubled assets and the purchase price I am requesting are as follows:
-Several pairs of ill-fitting shoes at... how about $15,000 per shoe?
-A sweater that just never looked right on me at $50,000
-A Lily Allen CD that I now regret buying. Besides, the CD player in my car doesn't even work, so what's the point? I'd like $10,000 for this.
-Some golf equipment. I work a lot during th week and I'd only ever used them at the driving range in the evenings, but now that the days are getting shorter, they are much less useful to me. These are nice clubs, though. How about $1,500,000?
-My apartment lease. I hate writing the check for this each month. You can sub-let my apartment for $200,000 a month. There is 3 months remaining.

After you remove these troubled assets from my balance sheet, my liquidity position will be greatly improved and I can go confidently to help restore strength to the global capital markets. I look forward to your check.

Prudentially,
Milkrate
posted by milkrate at 9:40 AM on September 22, 2008 [20 favorites]


Don't forget your $30,000 watch. Oh, I forgot, the hooker stole it.
posted by fourcheesemac at 9:45 AM on September 22, 2008 [1 favorite]


GO AHEAD AND KILL THE HOSTAGE. She means nothing to me.

And then what?

I hate the idea of the bailout as much as anyone, and I've been for stricter government regulation of damn near everything for my entire life (and will be for the rest of it), but what choice do we have? As much as you (or anyone) might like it to happen, the system cannot fail at this point. Desperate times call for realists, not ideologues.

Also, re: the bailout legislation language: correct me if I'm wrong, but just because Congress says a bill will be exempt from review doesn't make it so. Last time I checked (ha), there was still a little something called judicial review. Marbury v. Madison is still good law, and the Court has the final say on constitutionality. So yay for checks and balances.
posted by diggerroo at 9:49 AM on September 22, 2008


In response to Pastabagel's ... We are at a point where we need people to believe the problem is fixed so we can move forward. Otherwise, too many people are going to exit the system for the system to survive.

I hate to admit it but I agree. Macro-Economics is nothing if not weird Ju-Ju. It's kind of like that Monty Python skit where an apartment building has been constructed by hypnosis. As long as the residents all believe in it, it will not fall over. And yes, we all live in that building ... or certainly close enough that, if it does fall, we'll get taken out by the debris.
posted by philip-random at 10:26 AM on September 22, 2008 [1 favorite]


I hate the idea of the bailout as much as anyone, and I've been for stricter government regulation of damn near everything for my entire life (and will be for the rest of it), but what choice do we have?

Not believing the hype of chicken little vested interests who find the sky of their own making getting uncomfortably close?

It is still not clear that an unaccountable bailout with no fixed limit which rewards irresponsible lending and patches a clearly broken business model is the only choice, and even then it's still not clear if it would work anyway. And the main guy selling it is a deeply vested interest who went native a long time ago.
posted by bonaldi at 10:28 AM on September 22, 2008


> "As much as you (or anyone) might like it to happen, the system cannot fail at this point. Desperate times call for realists, not ideologues."

So... Mr Realist... what makes you so sure that this bailout will actually work? To date there's been... bailout of Bear-Stearns, collapse of Lehman Bros, shotgun marriages for Jp.morgan and one other, bailout of Fannie Mae and Freddie Mac... it occurs to me that all of these were supposed to work, also.

(on preview - what bonaldi said)

On principle, I personally avoid big decisions when someone's threatening me. There's so much wrong with the proposed deal. I think we need to take a week to put together something better, and if a week's delay is catastrophic, then I suspect the bailout will merely delay the failure, not end the possibility.
posted by Artful Codger at 10:42 AM on September 22, 2008 [2 favorites]


Alternatives to the original Treasury plan are happening very quickly. Senator Dodd (who is not someone I normally have lots of respect for, since he has been on the banking committee forever and let us get into this mess) has introduced a modified version of the Treasury plan that includes an equity stake in companies. It has some other stuff as well, but I haven't had the chance to read the whole thing and think about it.
posted by procrastination at 10:42 AM on September 22, 2008 [1 favorite]


Seconding what bonaldi just said. Over on this ask-mefi thread, theoddball points out that the question of the moment is not necessarily about whether or not something should be done to address issues of solvency and liquidity in the capital markets, but rather what is the best plan of action that will: a) best benefit the long-term interests of the average American taxpayer, and b)ensure the root problems are dealt with.

Paulson's bailout plan is still not fully fleshed out, but so far it appears at first glance to have nothing attached to it in terms of new regulations, new accountability measures, etc. These things seem to some, includig me, to be conspicuously absent.

I'm willing to give Paulson and Bernanke the benefit of the doubt until they (along with SEC chairman Cox) present their plan in more detail to the Senate Banking Committee tomorrow, but in the meantime it seems healthy to encourage public discussion and scrutiny: to have counter-proposals, questions, red flags, and the like being raised by pundits, economists, lawmakers, folks here on the blue, etc. With luck, that discussion helps ensure that at the very least the plan is not simply digested whole by decision makers in D.C. without first being tested and tasted.

That people are angry, skeptical, suspicious: these are not necessarily bad things, even if one agrees with Bush, Paulson and Bernanke that the situation is dire and requires immediate action. We would really be remiss to simply accept the plan as is, without further discussion, qualification, and a full review of alternate plans. I for one remain unconvinced that all Americans should pay for this plan equally; it seems to me those who benefited from this system (and that includes Paulson himself) should not be allowed to pass the buck without repercussions.
posted by ornate insect at 10:47 AM on September 22, 2008 [1 favorite]


Sadly that's exactly what Bush says should happen. We have to focus on the problem, and the problem is that we need these firms to participate in the program and sell us this debt. Having punitive measures would provide a disincentive for firms to participate, and that would make the program much less likely to succeed.
posted by bonaldi at 10:57 AM on September 22, 2008 [1 favorite]


from bonaldi's link:

In 2007, Wall Street’s five biggest firms — Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley — paid a record $39 billion in bonuses to themselves.

That’s $10 billion more than the $29 billion loan taxpayers are making to J.P. Morgan to save Bear Stearns.

Those 2007 bonuses were paid even though the shareholders in those firms last year collectively lost about $74 billion in stock declines — their worst year since 2002.

posted by ornate insect at 11:02 AM on September 22, 2008 [2 favorites]


> we need these firms to participate in the program and sell us this debt.

what? We still have guns, yes?

If getting Wall St's buy-in to a solution is mandatory, we're screwed for sure.
posted by Artful Codger at 11:03 AM on September 22, 2008


I've spoken to a few people I know in the industry over the weekend,

Who all fear for their livelyhood and want protection. They want little government oversight and government protection for when they screw up.

You can't let the banks fail, because they'd fail for everyone, not just deadbeat homeowners and Wall Streeters. You wouldn't be able to access your checking and savings accounts, among other things.

The only reason that is a problem is because the tax man still wants to be paid from the now non-existent funds that used to be in the bank.

That way, the tax man can then bail out the cratered banks. Where the money used to be.
posted by rough ashlar at 11:05 AM on September 22, 2008


diggerroo:
...but what choice to we have?
...the system cannot fail at this point.

Why not? Let it fail.
posted by angrybeaver at 11:05 AM on September 22, 2008


and also: how can a firm have a "disincentive" to participate (in a frigging bailout plan!) if that firm is already effectively bankrupt? Who cares what the firms want; they're toast either way. What are they going to say: "you either loan us this money and swallow all our bad debt unconditionally, or we'll, we'll, we'll...we'll what, exactly?"
posted by ornate insect at 11:07 AM on September 22, 2008


Using the shock doctrine, Wall Street and Washington’s wrecking crew aim to get the most expensive free lunch in American history
posted by homunculus at 11:10 AM on September 22, 2008 [1 favorite]


the system cannot fail at this point.

At what point can it fail then?

When you got yours? When you are dead?

Desperate times call for realists, not ideologues.

Reality - man made machines fail. Man made institutions fail. Fiat currencies have a history of failure.

Out of the failure comes a new form, so long as a basic support system is not damaged in the failure.

So why should not this failure go forward? Do you fear that the basic support system is too damaged to allow a rebuilding?
posted by rough ashlar at 11:11 AM on September 22, 2008


Does anyone really think we live in a Democracy right now?
posted by cell divide


Never thought America was a Democracy. Was taught it was A Republic.
posted by rough ashlar at 11:14 AM on September 22, 2008 [2 favorites]


We don't expect private companies to be looking out for the national interest. We expect them to be driven by profit.

Actually, you know what? I do expect some respect for community and national interests of private (and public) companies. I expect a baseline standard of ethical citizenship that doesn't just push the boundary of what's allowed by law. Maybe even just enough responsible due diligence to have a real and vetted idea of what your assets actually are.

I recognize that the best human judgment and integrity can by rationalized away in the face of opportunity, and that it might even be pretty naive to expect the best judgment and integrity from wall street and other opportunity-driven power centers. But I don't think it's too much to at least expect lip service to values beyond return to the shareholders and some real shame when it becomes apparent that the bounds of sanity, let alone propriety, were exceeded, rather than some kind of c'est la vie.

Of course, what *I* expect many not be the relevant point here. I've listened for as long as I've payed attention to politics to market fundamentalists convinced that markets simply govern themselves and regulation and any state interference is nothing but a departure from the ideal. The ostensible expectations of those for whom the capital-M Market is the pre-eminent social institution were, in fact, that the general interest would be, at least indirectly as a secondary effect, looked after by these private players and their shareholders. So while I think the current crisis blows a Hiroshima-scale hole in that little fantasy, I'm not at all inclined to let any apologists off that particular ironic hook.

We expect the government to look out of the integrity of the system, not to defer responsibility for the economy to the Chairman of the Federal Reserve. We expect them to regulate and provide oversight, not to scratch their heads and fall asleep during hearings.

I expect that as well, but when cops don't catch the bank robbers, I blame them for not being effective at their job, not for robbing the bank. Unless they're in cahoots, which unfortunately seems to be a bit of an open question at the moment.

In any case, many of the criticisms of the actual bailout (rather than knee-jerk reactions to *any* bailout) seem apt, in particular Krugman's.
posted by weston at 11:19 AM on September 22, 2008 [5 favorites]


Throw them all into the gulag.
posted by three blind mice


With the new Lego prisons you could have their jails anywhere! I prefer scenic overlooks of what the jailed used to own.

Stocks to bind them in and rotted veggies are extra.
posted by rough ashlar at 11:23 AM on September 22, 2008


WSJ article on Dodd's alternative bailout plan

I still think it's a terrible, knee-jerk, "just do something" response, which tend to always be about the worst possible examples of unintended consequences and lack of foresight, but it's better than the Bush plan.

At least it kicks Wall Street in the nuts, even if it doesn't actually stop them from getting away with our wallet.
posted by Kadin2048 at 11:26 AM on September 22, 2008


Never thought America was a Democracy. Was taught it was a Republic.

Who taught you that? How did this meme get started? Our republic is a democracy. It's a representative democracy.
posted by Astro Zombie at 11:27 AM on September 22, 2008 [1 favorite]


From today's NYT story:
“Treasury’s 840-word legislative bailout proposal comes to more than $830 million per word,” Stephen Ellis, the vice president of Taxpayers for Common Sense, a fiscal watchdog group, said in a statement on Monday, adding that “when they come up with a title, that will drive the average dollar per word down.”
posted by grouse at 11:27 AM on September 22, 2008


Why not? Let it fail.

Live on a self-sufficient farm? Unless you do, you may be unpleasantly surprised at where "let it fail" may end. Trying to buy bread with wheelbarrows of worthless currency like those cute Germans in old pictures from the Weimar Republic doesn't seem that appealing.

This rescue plan may suck (and it seems to as far as I'm concerned, mostly because it seems like a blank cheque with no quid pro quo on regulation, removing proven incompetant management teams, or much of anything else), but "letting it fail" will not somehow magically gut fatcats while leaving ordinary folks alone. The fatcats will mostly stay fat, while ordinary folks cold end up wondering why they ATM card no longer works.
posted by rodgerd at 11:32 AM on September 22, 2008 [1 favorite]


Nouriel Roubini has an alternative to the Paulson plan
posted by pharm at 11:42 AM on September 22, 2008


Live on a self-sufficient farm?

If IT fails, all life on a self-sufficient farm is going to get you is heavily armed visitors desperate to feed their children.

There will be no justice for the guilty if IT fails. There won't be much of anything.
posted by philip-random at 11:47 AM on September 22, 2008


Same question to you rodgerd: what in the proposed plan convinces you that it will prevent market failure? I'd get behind anything if I could be convinced that it would work. All last week's precipitous actions haven't worked, what in this precipitous action is going to work, that would justify our blind support?
posted by Artful Codger at 11:49 AM on September 22, 2008


I am writing my rep and my Senators to tell them that I expect the taxpayers to gain equity in whatever assets we're bailing out.
posted by Mister_A at 11:50 AM on September 22, 2008


Rough Ashlar: "Never thought America was a Democracy. Was taught it was A Republic."

You need to go back and slap your teacher in the mouth then, because your teacher was a charlatan peddling bogus poly-sci.

There's a reason both parties were once a single party called the Democratic- Republican Party: It's because the two terms are more or less interchangeable in their ideological substance. The only differences between them are that the term "republic" refers to the embodiment of general democratic ideals in a particular form of government, while "democracy" is a more general term for the concept of popular will playing a role in the political process.

In other words, a republic is just a specific type of democracy. So it's both.

republic
1604, "state in which supreme power rests in the people," from Fr. république, from L. respublica (abl. republica), lit. res publica "public interest, the state," from res "affair, matter, thing" + publica, fem. of publicus "public" (see public).

democracy
A system of government in which power is vested in the people, who rule either directly or through freely elected representatives.
posted by saulgoodman at 11:51 AM on September 22, 2008 [5 favorites]


Senate Vote On Passage: S. 900 [106th]: Gramm-Leach-Bliley Act

Aye AZ McCain, John [R]
posted by matteo at 12:07 PM on September 22, 2008


How did this meme get started?

The CIA
Government type: Constitution-based federal republic;
posted by rough ashlar at 12:09 PM on September 22, 2008 [1 favorite]


The bailout is more likely to lead to wheelbarrows full of worthless currency than simply letting them fail, and is not necessarily going to mean that self-sufficient farms will be the new way of life.

So what if my ATM card doesn't work? So what if my employer can't pay me? So what if I can't pay my landlord? Does that mean I'm going to sit at home and starve to death or begin a great trek back into the country? No. I'm going to talk to my banker, my boss, and my landlord. We are all in this mess together.

It would be nice to see the fatcats suffer but they probably will be off in the Grand Caymans somewhere with their harem. It's more productive to move on and focus on being productive.
posted by angrybeaver at 12:09 PM on September 22, 2008


And what rough ashlar said at 11:11am.
posted by angrybeaver at 12:10 PM on September 22, 2008


Live on a self-sufficient farm?

If IT fails, all life on a self-sufficient farm is going to get you is heavily armed visitors desperate to feed their children. There will be no justice for the guilty if IT fails. There won't be much of anything.


Oh, please. To conflate the collapse of the financial sector with the collapse of civilization (or even the actual, you know, productive sectors of the economy) is precisely the kind of hysterical propaganda that Paulson and his crew want you to believe. Sure, there will pain and maybe even a good measure of inconvenience (gasp!) while the system re-jiggers itself. But I will guarantee you this: within 72 hours of a true Wall St. financial collapse, there will arise the beginnings of a whole new alternative financial order which will be more than happy to step in and provide the services needed to continue running the American economy. If said institutions don't arise, well, then that will prove once and for all that (the American brand of) Market Capitalism is a failure and probably didn't deserve to be saved in the first place. I, for one, would rather have the 700 billion go towards the reconstruction of a newer, fairer system with more transparency than propping up the hyper-corrupt, insular, crypto-socialist (by the rich, for the rich) system we are burdened with now.
posted by Chrischris at 12:11 PM on September 22, 2008 [7 favorites]


That was an ugly sentence. Let me try again.

It is more productive to move on and focus on what needs to be done.
posted by angrybeaver at 12:13 PM on September 22, 2008


"Who taught you that? How did this meme get started? Our republic is a democracy. It's a representative democracy."

It's because it comes up every time that folks say something stupid like 51% of people think that gays shouldn't be allowed basic civil rights. It would be more precise to say, well, thank goodness we're not a direct democracy and instead are a constitutional republic based on Enlightenment conceptions of rights, but the short-hand of "It's a Republic, stupid," gets it across faster.

And for all the FAIL-mongers here, you guys know that the Great Depression was precipitated by the failure of banks and trusts, and that a lot of our federal monetary system is set up to preclude the chaos that comes with domino failures, right? That's why people are arguing for a bail out, and why just hewing to a Manichean morality where banks are punished for their misdeeds with failure will, in the long run, harm all of us more than a well-structured bail out (I am not necessarily arguing that this current bail out is the well-structured one we need).
posted by klangklangston at 12:22 PM on September 22, 2008 [2 favorites]


However, this from the John Steele article: "In 1933, we were a country of haves and have-nots; today, we are largely a country of haves and have-mores. The poverty of the sort seen in the immortal photographs of Walker Evans simply does not exist today." is bullshit. There isn't as much of it, and the veracity of a lot of those FSA photos has been questioned, but that level of poverty in rural areas is still relatively easy to find, especially in Western scrubland and immigrant communities.
posted by klangklangston at 12:29 PM on September 22, 2008


saulgoodman took the words out of my mouth. The United States is a democracy, the United Kingdom of Great Britain and Northern Ireland is a democracy. Only one is a republic.

Pastabagel said: You can't let the banks fail, because they'd fail for everyone, not just deadbeat homeowners and Wall Streeters. You wouldn't be able to access your checking and savings accounts, among other things.

Is that really true? Is there no deposit insurance in US mainline banks? If there's any taxpayer funding into the banks, the existing shareholders need to be wiped out, or nearly, to punish them for their imprudence, but the depositors need to be secure.
posted by athenian at 12:34 PM on September 22, 2008


It would be more precise to say, well, thank goodness we're not a direct democracy and instead are a constitutional republic based on Enlightenment conceptions of rights, but the short-hand of "It's a Republic, stupid," gets it across faster.

I think this points out our country's failure at teaching its own citizens what exactly a democracy is. How many people are laboring under the misapprehension that if it isn't a direct vote, and 51% don't win, it isn't a democracy?
posted by Astro Zombie at 12:35 PM on September 22, 2008


Now that the M3 is discontinued they can print up all the money they want!

What's the problem here? Need more money? Just run the printing presses on overdrive for a while. As we have seen in the past few years, inflation isn't linked to the amount of money that is created.

And, yet, this is what they are going to do. Blows the mind.
posted by Sukiari at 12:35 PM on September 22, 2008


I just keep wondering where these guys were with their trillion dollar bailout when the American public school system failed. Or the manufacturing sector. Or the roads and bridges. Or New Orleans. Or accessible higher education. Or water and land rights in Darfur. Going into my closet to hug my knees and rock now.
posted by nax at 12:38 PM on September 22, 2008 [19 favorites]


you guys know that the Great Depression was precipitated by the failure of banks and trusts,

And before that there was the Great War where many people got rich selling crap to the Military. War Profiteers in the style of the day.

History may not repeat itself, but it sure rhymes.
posted by rough ashlar at 12:39 PM on September 22, 2008


Going into my closet to hug my knees and rock now.

I would also like to hug your rock.
posted by Astro Zombie at 12:40 PM on September 22, 2008 [3 favorites]


We Gambled. You Pay.
posted by homunculus at 12:43 PM on September 22, 2008


sorry klang, but it's still not a valid distinction. a republic doesn't by definition have to be "based on Enlightenment conceptions of rights" or any of that other stuff (the roman republic definitely was not informed by enlightenment principles, for example). the republic as a form of government long precedes the enlightenment.

the only common features republics have is their basis in popular rule and their use of democratic election processes to choose representatives--but those representatives have always had an explicit charge to govern in accordance with popular will.

the modern fiction that republics are some special form of government that at the same time is/but isn't really a democracy is wrong. end of story.

republics are by definition just a specific kind of representative democracy--every republic is by definition a democracy first and a republic second, so this recurring kerfuffle about how we're a republic not a democracy reflects a weirdly disorganized understanding of both concepts.

it's like saying, "we're riding on a huffy not a bicycle! quit calling it a bicycle!"
posted by saulgoodman at 12:48 PM on September 22, 2008 [1 favorite]


Are there any decent write-ups of the options here? The way I see it, we've got...

1) do nothing. system crashes. insert doomsday scenario.
2) THIS proposed bailout. lots of power to Bush and cronnies. insert reason why this is terrible.
3) this proposed bailout, except paying for it by taxing/penalizing CEOs personally.
4) Pre-empt credit failure with AIG-like Fed bailouts.
5) Case-by-case AIG-style bailouts only for certain companies under certain conditions.

Is that a fair wrap-up? If not, what am I missing?
posted by lunit at 12:56 PM on September 22, 2008


nax:
For years now, they’ve told us that we can’t afford—that the government providing healthcare to all people is just unimaginable; it can’t be done. We don’t have the money to rebuild our infrastructure. We don’t have the money to wipe out poverty. We can’t do it. But all of a sudden, yeah, we do have $700 billion for a bailout of Wall Street.
Sen. Bernie Sanders
posted by bonaldi at 1:31 PM on September 22, 2008 [13 favorites]


...they can easily drag it into the bathroom, and drown it in the bathtub.

Henceforth we will call this "norquisting".

Sadly that's exactly what Bush says should happen. We have to focus on the problem, and the problem is that we need these firms to participate in the program and sell us this debt.

You mean they'll only let us bail them out if we ask nicely?

Government type: Constitution-based federal republic;

I know it's taxing to read all the words, but did you notice what follows the semicolon, a punctuation mark usually indicating another complete clause with important information? This: "strong democratic tradition". I think that might be relevant to the discussion at hand.
posted by Mental Wimp at 1:34 PM on September 22, 2008


Dirty Secret Of The Bailout: Thirty-Two Words That None Dare Utter
"A critical - and radical - component of the bailout package proposed by the Bush administration has thus far failed to garner the serious attention of anyone in the press. Section 8 (which ironically reminds one of the popular name of the portion of the 1937 Housing Act that paved the way for subsidized affordable housing ) of this legislation is just a single sentence of thirty-two words, but it represents a significant consolidation of power and an abdication of oversight authority that's so flat-out astounding that it ought to set one's hair on fire. It reads, in its entirety:
'Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.'
In short, the so-called 'mother of all bailouts,' which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch - who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable."
posted by ericb at 1:45 PM on September 22, 2008 [8 favorites]


Mastercheddaar wrote: How many times do you hear "No one is turned down!" or Good credit, bad credit, no credit!"

You only actually hear that from car dealers. The so-called buy here pay here places don't give a shit whether you actually pay for the car. They're selling you a crappy used car for a high price, then tacking on somewhere between 15 and 30 percent APR. If you don't pay, they take the car and you just had an expensive rental. Then they sell it to some other shmoe, who may or may not actually get to keep the car.

It's a racket, but it's not one that's going to bring down the larger economy, because they know exactly what sort of people (financially speaking) they're dealing with and have been doing it for years.

Hell, there are a bunch of rednecks who do it around here and make good money at it. You just need a few cars and a tow truck.

And as a general comment, I think what many people fail to realize is that the big monstrous banks are not the only banks in the country. Let 'em fail. My deposits (such as they are..that is to say, small) will be fine, as my bank is well capitalized, doesn't hold a bunch of shit on their books, and only lent to people who can actually afford their houses, as did most small and regional banks.
posted by wierdo at 1:45 PM on September 22, 2008


Paulson's Folly -- "The current Wall Street rescue plan has some serious failings. Will congressional Democrats (and Republicans) stand up to the treasury secretary?"
posted by ericb at 1:46 PM on September 22, 2008 [1 favorite]


Congress, Bush team agree on some bailout terms
posted by ornate insect at 2:04 PM on September 22, 2008




"Now that the M3 is discontinued they can print up all the money they want!"

Oh for the love of God, we can do better than that around here. Please google "monetary policy." Or just read the Fed's wikipedia page. The fed can create money in the parts of the banking system under its control, but it does not print money. Creating money does not equal printing money.

And stop focusing on the M3 money supply as if it were some secret code describing all the real money that Wall Street, the Illuminati, or the British royal Family(TM) are hiding from you. M3=M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements. It includes supplies of money far removed from what the Fed or its member banks control. Here's your M3 money supply. Now what? What is it supposed to tell us?

The Fed ignored it when they were publishing it, they're still going to ignore it when someone else publishes it.

Finally, the ENTIRE problem in the financial markets is being called a "credit crisis" or "credit crunch". In other words, there isn't enough credit in the system. Or in other other words, there isn't enough money in vital parts of the system to keep the entire system running. That means the supply of money is too low, not too high.

All those defaulted mortgages are money disappearing from the system. Every bank failure is money disappearing. Stop talking about "the fed is printing money"=inflation. The problem isn't inflation, the problem is catastrophic deflation.

AND THE FEDERAL RESERVE ISN'T PRINTING MONEY. Sheesh.
posted by Pastabagel at 2:12 PM on September 22, 2008 [1 favorite]


"the only common features republics have is their basis in popular rule and their use of democratic election processes to choose representatives--but those representatives have always had an explicit charge to govern in accordance with popular will."

No. I mean, go back to your Roman Republic—there was no real popular rule, and the powers of the democratic parts were severely limited. That the power nominally flowed from the people, and that the government acted nominally in the people's name, does not make it a Democracy.

Similarly, the Machiavellian Republic was based on a Prince (though not necessarily a hereditary one), an aristocratic body and a popular body. Our three elected bodies come from this theory of government. The idea of a republic has more to do with the separation of powers than the democratic origin of them, and especially the democratic origin of all of them.

What we are dealing with are two words that mean similar things and have similar connotations, but are not the same, and can encompass internal contradictions.

For example, Athens is the quintessential example of a democracy, but it wasn't a Republic. It lacked the fundamental assumption of a Republic—that pure democracy is fickle and must be moderated. (It was also not a democracy like we might think of one now, in that their conception of enfranchisement was fairly narrow, which is at odds with the egalitarianism that we associate with democracies). Sparta, contemporary with Athenian democracy, was a republic, mixing democratic, oligarchic, monarchic and theocratic rule.

Similarly, Germany after 1871 was functionally a Republic, but was not a democracy—deliberative and legislative powers rested theoretically equally in the Reichstag (democratic) and the Bundesrat, which was appointed by party leaders; executive powers rested with the Chancellor, who was appointed by the Kaiser (who was hereditary). That Germany now has a very similar legislative structure, while also being a democracy, is another distinction between republic and democracy.

Hell, though Plato's Republic is only known as that due to the weird translations of time, the City In Speech that's often referred to as Plato's Republic is an undemocratic mix of monarchy and meritocracy.

So, it's not refusing to call a Huffy a bicycle—it's refusing to call a Big Wheel a bicycle, even though they both have pedals and wheels.
posted by klangklangston at 2:40 PM on September 22, 2008 [2 favorites]


"I think this points out our country's failure at teaching its own citizens what exactly a democracy is. How many people are laboring under the misapprehension that if it isn't a direct vote, and 51% don't win, it isn't a democracy?"

God, every time a ballot initiative gets challenged in the courts—hell, any time anything gets overturned in the courts, people start to bitch about "democracy." Yeah, the courts overturned the will of the people. The will of the people was stupid.
posted by klangklangston at 2:44 PM on September 22, 2008


It includes supplies of money far removed from what the Fed or its member banks control. Here's your M3 money supply. Now what? What is it supposed to tell us?

How many dollars are out and about in the world, looking for a home.

These dollars will be coming back as commodities purchases (eg. corn), equity purchases (eg. the Dubai port deal), t-bill purchases (Japan, China), GSE bond purchases (China).

The dollars may ping around the world but sooner or later they will extract value from the US -- because, each one of these dollars is A DEBT OBLIGATION.
posted by troy at 2:52 PM on September 22, 2008


I, for one, would rather have the 700 billion go towards the reconstruction of a newer, fairer system with more transparency than propping up the hyper-corrupt, insular, crypto-socialist (by the rich, for the rich) system we are burdened with now.

Couldn't agree with you more in terms of what I would want to see happen. I also wanted to see America not go madly/stupidly/impulsively to war "against whoever it is we're at war against" in the wake of 911 ... but I wouldn't have bet a hundred bucks on it, even at 10-1 odds.

What you're calling for here is visionary, sane, maybe even inevitable. But it's not going to happen in the "now". What needs to happen in the "now" is for the collective "We" to accept the fact that there's a nasty storm blowing through, NOT PANIC, ride it out, then not forget all of these brilliant hopes and notions when it comes to cleaning up the mess, tracking down the culprits and profiteers, and then figuring out how to make sure it doesn't happen again.
posted by philip-random at 3:35 PM on September 22, 2008


A friend forwarded this to me:

From: Minister of the Treasury Paulson
Subject: REQUEST FOR URGENT CONFIDENTIAL BUSINESS RELATIONSHIP

Dear American:

I need to ask you to support an urgent secret business relationship
with a transfer of funds of great magnitude.

I am Ministry of the Treasury of the Republic of America. My country
has had crisis that has caused the need for large transfer of funds of
800 billion dollars US. If you would assist me in this transfer, it
would be most profitable to you.

I am working with Mr. Phil Gram, lobbyist for UBS, who will be my
replacement as Ministry of the Treasury in January. As a Senator, you
may know him as the leader of the American banking deregulation
movement in the 1990s. This transactin is 100% safe.

This is a matter of great urgency. We need a blank check. We need
the funds as quickly as possible. We cannot directly transfer these
funds in the names of our close friends because we are constantly
under surveillance. My family lawyer advised me that I should look for
a reliable and trustworthy person who will act as a next of kin so the
funds can be transferred.

Please reply with all of your bank account, IRA and college fund
account numbers and those of your children and grandchildren to
wallstreetbailout@treasury.gov so that we may transfer your commission
for this transaction. After I receive that information, I will
respond with detailed information about safeguards that will be used
to protect the funds.

Yours Faithfully
Minister of Treasury Paulson
posted by grouse at 3:49 PM on September 22, 2008 [6 favorites]


AND THE FEDERAL RESERVE ISN'T PRINTING MONEY. Sheesh.

No, that would be the Bureau of Engraving and Printing. BTW, a fact I am proud of is that my sister was co-leader of the team that redesigned the US paper currency back in the day.
posted by Mental Wimp at 3:50 PM on September 22, 2008


In any case, the response to all of those problems finally caused Ben Bernanke to gas up the helicopters. Last Wednesday, it was announced that the Treasury plans a special series of bill auctions to help the Fed expand its balance sheet. Read: The Fed is going to print money to buy Treasurys so that the Treasury Department can lend money to all these institutions. In other words, the printing presses are setting about monetizing all of our problems.

from: Whatever we do, it will be wrong
posted by telstar at 3:50 PM on September 22, 2008


So, it's not refusing to call a Huffy a bicycle—it's refusing to call a Big Wheel a bicycle, even though they both have pedals and wheels.

The usual form this disagreement takes (and how it started here), is person A says, "We live in a democracy," and person B, all chummed for the kill, states brightly (imagine Ralph Wiggum), "No, we live in a Republic!" It's like if I said, "My hair is brown," and you replied, "No, your eyes are blue!" It's really stupid.
posted by Mental Wimp at 3:55 PM on September 22, 2008


Admittedly I don't know how it works, but does the Federal Reserve not print any of it's own interbank notes and such?

I'm pretty sure that when the Federal Reserve "makes available" $250bn to various central banks they are literally adding $250bn to the money supply that was not available to be spent before. They may not physically print it, but they certainly create it.
posted by polyhedron at 3:56 PM on September 22, 2008


My bad Pastabagel, the point I attempted to make was covered adequately in your original post.

However, when you addressed the "credit crisis" you made the contention that the problem was caused by too little money in the system. Isn't the lack of liquidity due to deleveraging caused by the revaluation of assets? At some point it seems to me that the lack of money now is due entirely to the prior surplus of money -- money that did not represent the actual value of its backing assets. Am I completely off?
posted by polyhedron at 4:04 PM on September 22, 2008


After thinking about it a little more, it seems like the point of the bail out in the context of my interpretation of the source of the credit crisis would be to maintain liquidity until inflation makes up the difference between the asking price for the bad mortgages etc. and their real value.

Is that right? They want to hose us to the tune of $700bn (x2, or x3...) so that the value of the dollar will drop to a level that can sustain the inflated home/asset values? That seems likes the only way it could work.
posted by polyhedron at 4:10 PM on September 22, 2008 [1 favorite]


So everyone who believes that deregulation is awesome is going to shut the fuck up forever and/or commit seppuku in shame, right?

Right?
posted by Pope Guilty at 4:17 PM on September 22, 2008 [2 favorites]


They want to hose us to the tune of $700bn (x2, or x3...) so that the value of the dollar will drop to a level that can sustain the inflated home/asset values? That seems likes the only way it could work.

Much recent reading on the subject gives me the impression that this is pretty accurate. Articles like this Marketwatch piece: Gold rallies as massive rescue plan pressures dollar seem to support this view.
posted by telstar at 4:22 PM on September 22, 2008


Ok, I know this makes me terribly uninformed as far as American opinion-meisters goes, but every time someone slags William Kristol, I think "hey, that thing I read by him the other day made some good points." Only to realize later that it is Nicholas Kristof who made the good points.

S'alright. Keeps me humble.
posted by Durn Bronzefist at 4:48 PM on September 22, 2008


I would also like to hug your rock.

No! Mine! (goes back into closet)
posted by nax at 4:53 PM on September 22, 2008


Crawling out of my paranoid crouch for a moment, may I ask if this whole insane plan is evidence that the neocons think Obama is going to win and they are scrambling to saddle him with such a mess that they can then point their fingers at his failure and start the whole sad cycle again? And the Dems are too scared to stand up for patience and reflection because there's an imminent election? (actually, I don't seem to have moved much from my paranoid crouch.)
posted by nax at 5:01 PM on September 22, 2008


Is that right? They want to hose us to the tune of $700bn (x2, or x3...) so that the value of the dollar will drop to a level that can sustain the inflated home/asset values? That seems likes the only way it could work.

No. Americans, who pay the mortgages, still get paid in US dollars by US firms. Wages aren't increasing. Home prices need to come down to a reasonable equilibrium to match current lending standards (3x income, 20% down, good credit history).

Besides which, dollar devaluation destroys our ability to buy cheap goods from China and Japan, who incidentally have used the dollars we give them to buy Treasuries and mortgage-backed securities.

The program is designed to prevent a systemic devaluation of a variety of asset classes (since people are deleveraging, thus reducing the incentive to push prices upward). Inflation is controllable with high interest rates and tightened credit. Deflation is not controllable, period. Ask Japan. That is what the entire world is trying to prevent.

Should they? I dunno; I think a little deflation would do the world some good. But see, the problem is, the market doesn't work in increments. It ALWAYS overshoots, upside and downside. So the Fed and Treasury are doing what they can to prevent the market from destroying itself by overshooting on the downside. The best thing that could happen right now (in the Fed and Treasury's eyes) is a little extra inflation to prevent asset price collapse.
posted by SeizeTheDay at 5:08 PM on September 22, 2008


So everyone who believes that deregulation is awesome is going to shut the fuck up forever and/or commit seppuku in shame, right?

It's not that simple. Regulation breeds bureaucracy and bureaucracy is at best a necessary evil. Clearly, US banking and economic policies need some increased regulation. And no doubt, these policies will eventually go too far. The future, if there is one, will be complicated. Get used to it. Maybe read some Ecclesiastes.
posted by philip-random at 5:09 PM on September 22, 2008


"The usual form this disagreement takes (and how it started here), is person A says, "We live in a democracy," and person B, all chummed for the kill, states brightly (imagine Ralph Wiggum), "No, we live in a Republic!" It's like if I said, "My hair is brown," and you replied, "No, your eyes are blue!" It's really stupid."

No. I'm annoyed by this false pedantry.

The way it came up here was Cell Divide complaining that the planned bailout should make people doubt that we live in a democracy (ostensibly due to the extraordinary powers that the Secretary of Treasury would have and the lack of voice that we citizens have in it). Rough Ashlar fired back the cliché about living in a republic, which is germane in that it implies limitations on democracy. It's not the non sequitor that your comment implies, especially when you realize that while there is a lot of overlap, the terms are used to emphasize different aspects of governance.

It's like you saying "I'm an Aryan!" and my reply of "No, you're just blond." That Aryan can mean blond does not mean that Aryan is the same as blond, nor that blond is the same as Aryan. And neither one disqualifies you from being the other.
posted by klangklangston at 5:17 PM on September 22, 2008 [1 favorite]


So everyone who believes that deregulation is awesome is going to shut the fuck up forever and/or commit seppuku in shame, right?

Right?


Poor, naive Pope- you didn't think this crowd had any honor, did you?

Political Correctness, Not "Predatory Lenders" (from Feb)

Cavuto suggests Congress should have warned that "[l]oaning to minorities and risky folks is a disaster"

How the Democrats Created the Financial Crisis: Kevin Hassett
posted by Challahtronix at 5:25 PM on September 22, 2008 [2 favorites]


can we have more analogies about democracy and republic in this NYT bail out criticism post please?
posted by garlic at 5:32 PM on September 22, 2008


Conflict Of Interest? Report Says Goldman Sachs ‘Among Biggest Beneficiaries’ Of Paulson’s Bailout
posted by homunculus at 5:36 PM on September 22, 2008


We are at a point where we need people to believe the problem is fixed so we can move forward.

Awesome -- faith-based finance now, too! Thanks, Jesus!

Otherwise, too many people are going to exit the system for the system to survive.


I'd suggest that 'the system' -- the one that most folks actually think is in place when they think of American capitalist democracy and the whole constellation of ideas and warm gutty-wut feelings associated with the phrase -- is dead already, has been dying for a while, and burying the corpse full fathom five is advisable before it starts to stink the place up even worse.

Crawling out of my paranoid crouch for a moment, may I ask if this whole insane plan is evidence that the neocons think Obama is going to win and they are scrambling to saddle him with such a mess that they can then point their fingers at his failure and start the whole sad cycle again?

Now I'm the first to point and laugh at conspiracy theorists, but I have inklings that things go a lot further down the rabbit hole than that. I actually tend to think that the Cheney presidency has been about laying the ground for much longer-term change, and not only in the middle east. They're enriched the richest in America on the way up, and this bailout will enrich the same folks on the way down. In the process, the country gets bankrupted, but that's short-term, and the real ideological payoff is, if through some dieboldian machination McCain and his Quayle win, that they'll have a blank check for whatever 'emergency measures' they can push through. Save us, Wrinkly McPOW! As others have mentioned, it's Patriot Act time again, this time reaching deeper into people's lives, and the noose gets tighter.

And if Obama wins, he inherits control over a cratered landscape of smoking ruins -- the more devastated, the harder it is for his administration to do anything to improve the state of things. They don't give a shit how bad it gets, as long as they people they care about (and don't think they give a fuck about bluestate trailertrash, even if those yokels vote for them) make off with the booty. Throw a few under the train, of course, for show, but pardons and payoffs and consulting gigs and golden parachutes will make sure that none of them suffer too badly or too long. Worst case scenario for the oligarchs? Four years of Democrat rule, after which the idiocracy turns back to the Republicans in dismay as their 60-inch plasma TV gets carted off by the repo men, and the noose gets yet another notch tighter.

It's a pretty powergrab, and the pointer to is in that bit that ericb quoted "'Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.'"

I don't really believe that there's any kind of overarching conspiracy happening, of course -- that would be a little crazy. But I have no doubt that the kind of calculus I describe has been pursued, and that the sacrifice of any and all principle, and the livelihoods of any number of ordinary Americans who don't have enough money to hit the radar screens of the current and past American administrations, has been the order of the day to achieve the long- and short-term goals of the current Cheney presidency, which are to consolidate power, weaken the rule of law, subvert political discourse, stifle dissent, propagate American hegemony, hide true power and decision making from sight behind affable puppets, subvert the role of the media as watchdog, disenfranchize the poor and middle class, and bring about what amounts to a one-party political system.

Then again, it's never wise to attribute to malice what can be explained by incompetence. But I wonder sometimes. I really wonder.

You guys are pretty much fucked, I think, either way, and the schadenfreude would be more enjoyable if I hadn't lost a bunch of money recently too, at least for the moment. The markets here in Korea have not been immune to The Troubles. None of us will be.

That's why you fuckers need to get Barack Obama into office, and if he doesn't change things in a real way, well, then I'd say it's time for revolution. Those guns you love so much might just come in handy for something besides robbing 7-11s and distracting you from the way that your futures are being stolen from you.
posted by stavrosthewonderchicken at 5:42 PM on September 22, 2008 [3 favorites]


I know very little about economics and finance, so I've been enjoying these recent threads. Back in university I avoided this stuff in favor of political theory (bad move). A lot of the talk lately has reminded me of studying "mutually assured destruction" for some reason.
posted by Hoopo at 5:49 PM on September 22, 2008


No. I'm annoyed by this false pedantry.

I'm sorry, but it's historically true that a republic could have just about any degree of democracy and a democracy could be anywhere on the scale of republics (including not one at all), so I think my analogy holds better than yours. And the cliché does not appear to explain squat in this context, since cell divide's comment was on the lack of any impact the vast majority of voters seem to have on all this and being a republic is pretty irrelevant to the complaint. More to the point is that it's a representative democracy, not a direct one.

However, I am open to the possibility that I missed something, if you care to elaborate.
posted by Mental Wimp at 5:50 PM on September 22, 2008


It's kind of moot, guys. Your democratic republic is so hopelessly broken and compromised and corrupt, it's more oligarchy than anything else by now.
posted by stavrosthewonderchicken at 5:56 PM on September 22, 2008


All major cable news outlets are playing either missing siblings, or McCain/Obama/Palin spam. The only channel of relevance is a local station interviewing an aged Congressman who got a caller asking for investment advice. Even the armchair activist petition sites have less than 10k signatures.

If there was a convenient harbor with a boat full of credit default swaps I could throw overboard, I'd be all over it.
posted by RobotVoodooPower at 5:59 PM on September 22, 2008


On King George, King Henry and how Paulson will "catch a pass he threw to himself"
posted by ornate insect at 6:03 PM on September 22, 2008


Mish is asking that people send Congress the following letter:

Dear Senator

Instead of rushing into a $700 billion Paulson bailout proposal, please consider the following alternatives:

Mish's Open Letter To Congress On The $700 Billion Paulson Bailout Plan
http://globaleconomicanalysis.blogspot.com/2008/09/open-letter-to-congress-on-700-billion.html

Hussman's Open Letter to the U.S. Congress Regarding the Current Financial Crisis
http://www.hussmanfunds.com/wmc/wmc080922.htm

Your Name
Your Address
Your Phone Number
Your Email Address

posted by telstar at 6:12 PM on September 22, 2008


Stocks Fall as Rescue Plan Is Negotiated

By 2-to-1, Americans Blame GOP for Economy
posted by ornate insect at 6:15 PM on September 22, 2008


Rally, Comrades! Commissar Paulson has seized the means of production!

But seriously, this is a scam. The republicans want the democrats to pass the "Bush-Pelosi" bailout plan so they can vote against it and run against it.
posted by OldReliable at 7:35 PM on September 22, 2008 [1 favorite]


"I'm sorry, but it's historically true that a republic could have just about any degree of democracy and a democracy could be anywhere on the scale of republics (including not one at all)"

Right. So remarking that we're a Republic, not a Democracy, highlights the fact that it's intentional that the American public doesn't have direct input because we're a Republican Democracy.

"And the cliché does not appear to explain squat in this context, since cell divide's comment was on the lack of any impact the vast majority of voters seem to have on all this and being a republic is pretty irrelevant to the complaint."

IMPACT OF MASS OF [VOTERS]=PURE DEMOCRACY.
MITIGATION OF IMPACT OF MASS OF [VOTERS]=IMPURE DEMOCRACY=REPUBLIC.

Now, this is a narrower form of Republic, and I don't want to overstate the case—I'm not pretending that "impure democracy" is the only way to read "republic", but it is one way and it does make sense.

If you think the phrase is being used glibly, question the person about what they mean—don't just try some sort of reverse-gotcha bullshit.
posted by klangklangston at 8:19 PM on September 22, 2008 [1 favorite]


But seriously, this is a scam. The republicans want the democrats to pass the "Bush-Pelosi" bailout plan so they can vote against it and run against it.

I've heard this from a lot of blogs now, but honestly, isn't the plan to run against the opposite of whatever happens because the Democrats are in control of Congress?

If there's a plan passed, Republicans will vote against it and say it's the Democrats' fault. If enough Democrats refuse to agree to a negotiated bailout and the entire thing fails, causing without a doubt a massive drop in the market and probably a few more bank failures, Republicans will say it's Democrats' fault. Republicans are going to blame Democrats for anything that happens because, technically, Democrats are in charge of making things happen right now.

If you haven't been watching the news for the last few years, you may have missed that refusing to agree to anything and then blaming Democrats for an agreement not being reached is the only thing Republicans have actually done, at all, since they lost control of Congress. I think the bailout plan is a dumb idea, but arguing for or against it based on how Republicans will respond to it is moronic. Spoiler alert: they're going to say Democrats are bad.
posted by XQUZYPHYR at 8:22 PM on September 22, 2008


"But seriously, this is a scam. The republicans want the democrats to pass the "Bush-Pelosi" bailout plan so they can vote against it and run against it."

That's a fair point, but just as many Dems can figure that it's better to go into an election trumpeting a bi-partisan quick solution than it is to be blamed for being obstructionist in the time of need Though, honestly, their poll numbers might be good enough right now to push for concessions (which could backfire after the whole thing fails to prevent another meltdown).

I kinda wonder if anyone on McCain's team worked at Enron…
posted by klangklangston at 8:23 PM on September 22, 2008


I kinda wonder if anyone on McCain's team worked at Enron…

Phil Gramm's wife was on Enron's board.
posted by XQUZYPHYR at 8:45 PM on September 22, 2008


IMPACT OF MASS OF [VOTERS]=PURE DEMOCRACY.
MITIGATION OF IMPACT OF MASS OF [VOTERS]=IMPURE DEMOCRACY=REPUBLIC.


there's never been any system that remotely qualifies as a pure democracy by your puritanical standard. even participation in athenian democracy was limited to citizens (defined as rich white guys). the closest thing is probably switzerland, i hear.

i'm a little confused what your argument is. all the historical examples you cited are just various subtypes of democracies, not examples of the difference between a democracy, on the one hand, and a republic on the other.

you write: "Similarly, Germany after 1871 was functionally a Republic, but was not a democracy—deliberative and legislative powers rested theoretically equally in the Reichstag (democratic) and the Bundesrat, which was appointed by party leaders; executive powers rested with the Chancellor, who was appointed by the Kaiser (who was hereditary)."

but that's nonsensical. a republic is a form of non-monarchical representative democracy by definition. the executive head of a republic has to be either directly elected by the public or appointed by elected representatives acting on behalf of the pubic. if the position of kaiser was inherited, and the kaiser had the ultimate executive authority, germany in 1871 was a constitutional monarchy with a deliberative body, not a republic.

the fact that a state has a constitution or even a legislature means jack squat when it comes to whether or not it qualifies as a republic. if there were a constitutional government structured exactly like ours, even if it still had a directly elected legislature, but instead of being elected, the president inherited his position or was appointed by a monarch, that would be a constitutional monarchy. in the same way, if the president was appointed by an unaccountable, unrepresentative body of wealthy elites, you'd have an oligarchy.

the only necessary and sufficient features for a state to be a republic are an executive head whose leadership is elected or appointed by elected representatives (or their appointed representatives) and a political body that represents the popular will and common good. anything that doesn't satisfy these conditions is not a republic.

That Germany now has a very similar legislative structure, while also being a democracy, is another distinction between republic and democracy.

i really don't follow this reasoning at all. how does the fact that germany's democratic government still has more or less the same structure it had when it was a constitutional monarchy back in 1871 help to distinguish a republic from a democracy?

fine, maybe this is getting pedantic. but at some point recently (i honestly think it started with limbaugh), a serious misunderstanding of what the term 'republic' actually means insinuated itself into popular culture, and it needs to be corrected because it contributes to the partisan rancor between democrats and republicans and emboldens political interests seeking to curtail rights of citizenship (even though muddled questions about whether america is a democracy or a republic had nothing to do with the split that spun off the democratic and republican parties from their common ancestor, the democratic/republican party).

here's a syllogism: 'democracy' --> 'republic' as 'novel' --> 'moby dick'.

democracy isn't the form that the state takes, it's an abstract ideal that defines what the general aims of the state-apparatus should be, regardless of its particular organizational structure (and completely indifferent to how 'purely democratic' it is). and a republic is just a country whose government takes the form of a democratic republic, another subclass of democracy, like parliamentary democracies, direct democracies, and all the others on this list. now, what exactly democracy means is debatable (was athens really a democracy or was it a plutocracy?), but that's a different debate.
posted by saulgoodman at 8:52 PM on September 22, 2008 [2 favorites]


all right, i admit it. i'm just being an asshole now.

/nevermind
posted by saulgoodman at 8:54 PM on September 22, 2008


McCain Campaign Has Strong Ties To Corporate Lobbyists At Center Of Bailout.
posted by ericb at 9:00 PM on September 22, 2008 [1 favorite]


Dems can figure that it's better to go into an election trumpeting a bi-partisan quick solution than it is to be blamed for being obstructionist in the time of need

NO NO NO!

Democrats need to stop doing what they think will avoid attacks from Republicans, and start doing what they know is right. They've been rolling over in fear for the last seven years. It's time for it to end.
posted by grouse at 9:12 PM on September 22, 2008 [1 favorite]


Democrats, Remember Your History
posted by homunculus at 9:13 PM on September 22, 2008


'Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.'

There will be no need to talk.

Hem hem.
posted by casarkos at 9:48 PM on September 22, 2008


Okay, if this thing's still going on when I wake up tomorrow, I'm going to lay out what I really think is going on. It's probably pretty much exactly what Stavrosthewonderchicken has pointed out already, but I'm honestly too tired to read the whole thing.
posted by philip-random at 9:49 PM on September 22, 2008


Has anyone made the obligatory drug addict metaphor yet re: Wall Street? I'm surprised at the number of people saying we "have to" do a bailout, even though it sucks, because goldarnit if Wall Street fails then AMERIKA TURNS INTO THE ROAD WARRIOR MOVIES.

But ya know, if we do this bailout thing, in a bout six months people will forget all about it, Wall Street will go back to making disgusting amounts of (private) profit, and then somewhere down the road we'll have another bubble and then another crash and another round of socialized loss.

I think there's actually a pragmatic, reasonable motivation to let Wall Street in its current incarnation and die a natural death. Sure, it'd be hell for everybody for a while, but what about the drug user who keeps getting enabler-type friends to buy him a fix, when what he really needs to do is go cold turkey and/or bottom out? Wall Street knows it can always depend on the Fed to bail out it's sorry ass, and the sooner they realize this isn't the case the sooner we can return the most important guarantor of a healthy market: moral freakin' hazard.

(I live abroad now anyways, partly due to the fact that the American economy was sucking donkey balls even before this latest mess and decent paying jobs were hard to come by. And yes, I'm voting for Barry, and yes, I couldn't be happier to be an ex-pat right now watching the smoke and flames rise across the Pacific Ocean. But it's not that I want America to fail for its own sake. I just really think the time has come for us to put our feet down and say, no, you do not get hundreds of billions in tax-payer money to cover up for your greed and incompetence. Let 'em fail, because in the long term it's the responsible thing to do. Hell, it's the financially prudent thing to do.)
posted by bardic at 10:25 PM on September 22, 2008 [1 favorite]


In particular, we elected the democrats to Congress in 2006 to stop the bleeding. They've done nothing. The banks didn't fail us, because the banks do what all companies do, look out for their own interests. The government, particularly this Congress, has failed us because they've done nothing at a time when we specifically put them there to do something.
Ans what are you going to do, vote republican? The democrats already have your vote -- they don't have to listen to you.
posted by cotterpin at 11:25 PM on September 22, 2008


Krugman is warming up to Dodd's plan.
posted by homunculus at 11:26 PM on September 22, 2008


"Not so fast Hank. Put the gun down, and back away from the economy. We're going to do this my way."
posted by homunculus at 11:29 PM on September 22, 2008


Dodd wants to buy mortgages for 15% below the current market value of the house and then re-issue a new mortgage to the homeowner does not get around the fact that many do not want a new mortgage, they just want to get rid of their house which they had no intention of living in for longer than it took for their teaser rates to reset.
posted by PenDevil at 11:36 PM on September 22, 2008


Members of Congress aren't getting a lot of calls on this.

“Where’s the backlash?” asked a leadership aide yesterday. “We’re kind of expecting it. But so far the calls we’ve been getting are very organic, not like the wave of calls we get when someone’s organizing a campaign.”
posted by poxuppit at 5:54 AM on September 23, 2008


Sweet Jesus. I sure am rich.

A few years back I accidentally knocked a large oil-rich Mid-East country over at the Pottery Barn, so I had to buy it. I felt pretty stupid, but you never know: even a broken oil-rich country might be worth a lot some day.

Then last week I bought a big insurance company pretty cheap, one of those impulse buys as you're going through the checkout line. Boy, the wife was mad when I got home, but she'll see: I'm gonna make a profit off that beast if I have to chop it up and sell it for parts.

And it got me thinking... "Son," I said to myself. "There's money in this reckless spending if you do it right. Go big or go home, know what I'm saying?"

So this week I'm hoping to get a big stake in three or four investment banks I saw at the swap-meet. In a couple of years I'm gonna spend my profits on health care for all. Then I'm going to pay for my parents to retire early. Gosh... I sure am a lucky bastard. Charmed existence ain't the half of it. I think the Big Guy Upstairs has got a thing for me.
posted by anotherpanacea at 6:41 AM on September 23, 2008 [1 favorite]


"there's never been any system that remotely qualifies as a pure democracy by your puritanical standard. even participation in athenian democracy was limited to citizens (defined as rich white guys). the closest thing is probably switzerland, i hear."

For example, Athens is the quintessential example of a democracy, but it wasn't a Republic. It lacked the fundamental assumption of a Republic—that pure democracy is fickle and must be moderated. (It was also not a democracy like we might think of one now, in that their conception of enfranchisement was fairly narrow, which is at odds with the egalitarianism that we associate with democracies). Sparta, contemporary with Athenian democracy, was a republic, mixing democratic, oligarchic, monarchic and theocratic rule."

"i'm a little confused what your argument is. all the historical examples you cited are just various subtypes of democracies, not examples of the difference between a democracy, on the one hand, and a republic on the other."

No. I mean, go back to your Roman Republic—there was no real popular rule, and the powers of the democratic parts were severely limited. That the power nominally flowed from the people, and that the government acted nominally in the people's name, does not make it a Democracy.

Similarly, the Machiavellian Republic was based on a Prince (though not necessarily a hereditary one), an aristocratic body and a popular body. Our three elected bodies come from this theory of government. The idea of a republic has more to do with the separation of powers than the democratic origin of them, and especially the democratic origin of all of them.


"but that's nonsensical. a republic is a form of non-monarchical representative democracy by definition. the executive head of a republic has to be either directly elected by the public or appointed by elected representatives acting on behalf of the pubic. if the position of kaiser was inherited, and the kaiser had the ultimate executive authority, germany in 1871 was a constitutional monarchy with a deliberative body, not a republic."

And this is why only idiots argue from dictionaries. The Roman Republic selected its Consuls from a vote of the military, and candidates could only come from the upper classes—Rome was more oligarchical than democratic. Further, Sparta was a Republic that had a hereditary aristocrat as its executive. It was called a Republic by Roman writers—because Res Publica means "public works" or "commonwealth" or "Politeia." (Politeia meaning a government through mixed classes, which is roughly the original title of Plato's Republic). Later on, Kant explicitly argued that constitutional monarchies can be Republics.

So, no, a republic is a form of non-monarchal representative democracy by one definition, but clearly not all definitions, and only an ass would insist otherwise in the face of repeated examples.

"fine, maybe this is getting pedantic. but at some point recently (i honestly think it started with limbaugh), a serious misunderstanding of what the term 'republic' actually means insinuated itself into popular culture, and it needs to be corrected because it contributes to the partisan rancor between democrats and republicans and emboldens political interests seeking to curtail rights of citizenship (even though muddled questions about whether america is a democracy or a republic had nothing to do with the split that spun off the democratic and republican parties from their common ancestor, the democratic/republican party)."

No. I'm annoyed by this false pedantry. It's like insisting that grocer's apostrophes don't have a vibrant history in English. You're also wrong about calling the Democrat-Republican Party a single party, as that wasn't the conception at the time, and you should note that calling it the Democrat-Republican Party evidences a distinction between Republics and Democracies.

I mean, even in that list, which you seem to be treating as if it weren't just a Wikipedia hodgepodge (I mean, defining "e-democracy" as bloggers undermining mainstream media?), if you'd followed the link, you'd note the quote, "By this definition there are abundant examples of states that are republics but not democracies, and of states that are democracies but not republics."

By saying "It's not a democracy, it's a republic," they're saying "it's not red, it's blood red." They're implying that the distinction between a democracy and a republic is noteworthy and salient in this context. Which it is. "It's not a game. It's baseball." Or hell, yes, even "It's not a novel. It's Moby Dick." Yes, Moby Dick is a novel. But it's also much more, including historical fiction, natural history, allegorical meditation—it also departs formally from the novel structure in several long passages, including quite a bit of Shakespearean soliloquy and theater-style dialogue. If you just keep repeating "But Moby Dick IS a novel," people will rightly relegate you to pulling carts instead of discussing literature. Likewise, the republic/democracy distinction.
posted by klangklangston at 10:11 AM on September 23, 2008


kk, you're working too hard. Take a break. Putting lipstick on that pig isn't helping.
posted by Mental Wimp at 10:36 AM on September 23, 2008


Bush Mouthpiece Admits: They’ve Been Sitting on this Plan
posted by homunculus at 11:01 AM on September 23, 2008 [2 favorites]


David Cay Johnston (Pulitzer for Tax Policy reporting):

"Are the credit markets really about to seize up? ... If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. ... As of now we are, as a group, behaving just as we did the last two times the administration sought to rush through a hastily thought out, ill-conceived plan. Why in the world are we being so gullible and naive?"

[via TPM]
posted by one_bean at 12:14 PM on September 23, 2008 [3 favorites]


Why can't the public see the presentation that "scared" the Senate and House banking committees so much they had to declare this an "emergency?" We're being threatened with terrible consequences, so lay them out logically and rationally and not just with vague emotional appeals to fear or apocalyptic scenarios. Show us the numbers.

The more I read, the more I think a) nothing on this scale is going to work anyway, because the problem is much *bigger* that a trillion dollar infusion can solve and b) the more we're being conned about the story here.
posted by fourcheesemac at 1:17 PM on September 23, 2008


Also via TPM:

DEEP THOUGHT
Why did Bush ruin the country?

--Josh Marshall

posted by fourcheesemac at 1:18 PM on September 23, 2008


I'm going to let the 'idiots arguing from the dictionary' snipe slide because I only cited the dictionary entries in the first place to be an ass, so I don't deserve any less in return.

The Roman Republic selected its Consuls from a vote of the military, and candidates could only come from the upper classes—Rome was more oligarchical than democratic.

And yet the Roman Republic is still broadly classified as a representative democracy. What if I argue from the encylopedia now, instead of the dictionary? Are you too smart for the encyclopedia, too? Well, who isn't.

By saying "It's not a democracy, it's a republic," they're saying "it's not red, it's blood red." They're implying that the distinction between a democracy and a republic is noteworthy and salient in this context. Which it is. "It's not a game. It's baseball."

I could almost be convinced this is a good point. The problem is, how you might read what you're calling a 'distinction' here (though it's actually more a point of emphasis than a distinction) is not necessarily how others might. And you know what? Baseball actually is a game. And the fact that it's a game implicitly tells us certain things about it. So when you say "baseball is not a game" I might think the things that are usually common to games don't apply to baseball. Since it's not a game, maybe it doesn't matter when rules are broken. Maybe the player's actions are governed by a series of elaborate polite conventions and baseball is just some weird form of ballet.

I regularly see the particular 'distinction' we've been talking about here not to emphasize that the US is a specific kind of democracy with a certain kind of organizational structure, etc., but to muddy the waters around the fact that it was explicitly founded as a democracy or to insinuate that, since we're organizationally a republic, popular concerns about the government conforming to democratic principles are broadly misplaced (and it's just as easy to say "it's a representative democracy, not a direct democracy" to avoid all the confusion).

But look, this is a debate even actual political scientists still go around and around about, so let's just call it quits and say you win (since the condescending tone of your last couple of comments doesn't make a compromise resolution seem likely).
posted by saulgoodman at 1:53 PM on September 23, 2008


It really sounds like you guys are arguing about what type of sinking ship you're currently on.
posted by Challahtronix at 2:30 PM on September 23, 2008 [2 favorites]


It's not a ship. It's the Titanic.
posted by klangklangston at 5:23 PM on September 23, 2008


("(and it's just as easy to say "it's a representative democracy, not a direct democracy" to avoid all the confusion)"

Except that doesn't mean the same thing as Republic. The explicit point of saying that it's a Republic and not a Democracy is to highlight the common feature of Republics—that they seek to mitigate the instability of democracy through institutions, and that this is viewed as a feature and not a bug.

This is an important point, especially with a view toward American democracy, that I'm kind of surprised you don't seem to be getting. Republicanism is why we initially had an appointed senate. That doesn't mean that we weren't a representative democracy [or that Rome wasn't either], but that we took steps to intentionally institutionalize power.

Another way to think about it is to note the tension within representative democracy—do we elect representatives to do our bidding or to use their judgment? I mean, ideally both, but the idea of democracy leans toward the former and the idea of republicanism leans toward the latter.

It is worth noting that the debate goes round and round, and that the terms do get confusing—for example, France's First, Second and Third Republics were intentionally more democratic than America or Rome [with the trend being more democratic to less]. And there are many places that call themselves Republics without really justifying that language through democracy or the rule of law.

Is the objection that this is traditionally a conservative position, both in American Right/Left and in the underlying retarding change sense?

One last point—I don't remember where the "It's not a game. It's baseball" quote came from, though I heard it recently watching some game [probably the Tigers getting drubbed again]. The statement the announcer was making was that baseball was, as we say on the internet, serious business. I remembered it because it reminded me of Wittgenstein's discussion on the definition of a game, as illustrative of the fact that our vocabulary maps fairly poorly to actual concepts. A game can imply amateur status, or play, or fun, or rules, or score, or plurality of people, or diversions… Each is a strand that makes up the rope of meaning. By negating that, you call attention to the differences between any given example and the broader overlap of the concept.

It's similar to one of my objections to the Stuff White People Like site, which, by choosing that title, implies that black people don't like, say, tea or indie rock [the broader objection is that for every clever idea they have, they tend to have five more that are like, totally, amirite?]. When we were talking about this in the MeTa, dios mentioned that this goes along with the long-held legal principle that distinction implies difference.

But if my point hasn't been made by now, I don't think it will be. Mental Wimp showed his clumsiness with cliché above—he should have reminded us of the adage "You can't teach French to a pig. It wastes your time and annoys the pig."]
posted by klangklangston at 5:51 PM on September 23, 2008


klang: i can see the merits of your arguments. but IMO, for taxonomical clarity, the relationship between these two ideas should be considered a strict hierarchy. but then i have a prescriptivist streak (maybe because i'm a programmer), so my preference is to just stipulate strict definitions for things and then stick to them to avoid confusion. in my taxonomic scheme, democracy is a term for a wide range of different forms of government that share as their common organizing principle the idea (no matter how imperfectly realized) that the governance of the state should be conducted with popular consent and in the public interest, not by decree.

they seek to mitigate the instability of democracy through institutions

one last hair to split here: i'd offer instead that they seek to perfect democracy through institutions. the ideal of a democracy is not mob rule, but enlightened rule by the people. the state apparatus of a republic isn't supposed to work at cross-purposes with democratic principles, but to help bring democratic ideals to their fullest, most idealized realization.
posted by saulgoodman at 6:53 PM on September 23, 2008


Stopping a Financial Crisis, the Swedish Way
posted by homunculus at 1:08 AM on September 24, 2008


Just returning to note that I teach political philosophy and klangklangston has a better handle on the way these words are used. Sorry, saulgoodman. Before Madison and Montesquieu, there wasn't a meaningful distinction between the two words 'republic' and 'democracy.'

One is Latin "res publica" meaning public thing, thing for all (men) who are past puberty; the other is Greek, "rule of the people," i.e. rule by the crowd. Democracy got a bad name because it was associated with mob rule and wealth redistribution, and because the Athenians sentenced their best citizen [Socrates] to death. The Athenians assigned many offices by lottery rather than ballot. Republics sounded better to Madison's audience because they reminded them of the Roman Republic which was as good a model of a longterm successful state as anyone had found. Thus, Madison invented (with some help from a French writer Montesquieu) a distinction where there was none. When we argue about the distinction now, there's little grounds for the kinds of taxonomies you're demanding, because there are twenty-three centuries of contrary usage.
posted by anotherpanacea at 4:01 AM on September 24, 2008 [1 favorite]


Gee, sorry to interrupt this oh so interesting hair-splitting about republicracy. The above link to "Stopping a Financial Crisis, the Swedish Way" is really worth the read, if you're at all concerned about what the bailout should look like.

For the impatient, here's the central idea (quoting):
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.
The banks had to do more than just hold out their Hallow'e'en treat bags
Sweden told its banks to write down their losses promptly before coming to the state for recapitalization. Facing its own problem later in the decade, Japan made the mistake of dragging this process out, delaying a solution for years.

Then came the imperative to bleed shareholders first. Mr. Lundgren recalls a conversation with Peter Wallenberg, at the time chairman of SEB, Sweden’s largest bank. Mr. Wallenberg, the scion of the country’s most famous family and steward of large chunks of its economy, heard that there would be no sacred cows.

The Wallenbergs turned around and arranged a recapitalization on their own, obviating the need for a bailout. SEB turned a profit the following year, 1993.
In other words, the banks had to share the pain, and they had to clean their house before the money flowed. By doing so, apparently some banks were able to work their own way out of crisis without assistance.

Why wouldn't this work here? I know the knee-jerk answer is "ewww -Sweden...socialistz!!!" but I don't see much socialist about receiving an ownership stake in return for taking over bad debt. Is it more to do with the fact that things are that much critical here than we're being told, and that the bailout is the carpet they hope to sweep the problems under?

Here's a question - has the financial community (eg "Wall St") themselves proposed anything resembling a workable plan for averting a meltdown? I haven't heard or seen anything; it seems Paulson and Bernanke are advocating for them just fine.
posted by Artful Codger at 8:16 AM on September 24, 2008


thanks for your insights anotherpanacea. still have a couple of nagging doubts you might address, though, if you don't mind.

One is Latin "res publica" meaning public thing, thing for all (men) who are past puberty; the other is Greek, "rule of the people," i.e. rule by the crowd.

still don't see the distinction. even athenian democracy only allowed the participation of a certain subset of its population (again, all men past puberty). and 'res publica' actually means something closer to 'thing belonging to the people/public' (publicus -a -um [belonging to the people, public]). how that term suggest anything other than rule of the people by another name i can't see.

When we argue about the distinction now, there's little grounds for the kinds of taxonomies you're demanding, because there are twenty-three centuries of contrary usage.

but there are also many centuries of usage for the term democracy other than as a term for "mob rule and wealth redistribution," though the point that this understanding of the term has been common is a good one. representative democracy is a valid taxonomic designation for a form of democratic government, no? so where does that usage fit into your understanding of the term as denoting rule by mob? i would argue that the instability of pure mob rule was seen as a potential downside of certain forms of direct democracy, not as the essential character of democracy as an abstract ideal. republicanism represents just one approach to realizing the essential character of democracy--popular sovereignty and rule by the consent of the governed--while preventing the descent into the tyranny of mob rule (which isn't a purer expression of democracy, but a form of its corruption)

and there seems to be a broad consensus that:
"Although conceptually separate from democracy, republicanism included the key principles of rule by the consent of the governed and sovereignty of the people."
posted by saulgoodman at 8:53 AM on September 24, 2008


I still think that our derail about the concepts of a republic and a democracy are still relevant to the current topic and I thank klangklangston and saulgoodman for keeping it alive. I especially appreciate the historical and philosophical lessons I'm getting.

I still maintain that the two are somewhat orthogonal aspects of the form of government. From sg's link:
Republicanism is the ideology of governing a nation as a republic, with an emphasis on liberty, rule of law, popular sovereignty and the civic virtue practiced by citizens.
This seems to emphasize civic values beyond popular sovereignty, making it 3rd out of 4 characteristics. However, calling a government democratic emphasizes that aspect, in fact making popular sovereignty the foremost characteristic of a democracy.

Hence, the original statement
"Does anyone really think we live in a Democracy right now?

I mean, seriously?"
was referring specifically to the popular sovereignty issue, and appropriately used the term democracy to most pointedly emphasize that issue in the current situation:
'Democracy' is a form of government in which the supreme power is held completely by the people under a free electoral system.
The common (idiotic) response given (I paraphrase freely) , "It's not a democracy, it's a republic (duh!)" is an insipid derail meant to show the speaker's misguided belief in their own superior knowledge about forms of govenment, when it fact, it is less specific about the topic at hand. Saying that a republic is more specific than saying it is a democracy is sophistry at its worst. Whether the US is a republic or not is pretty irrelevant to the idea that the current decisions being made by our government are neither of the people, by the people, or for the people, sort of the soul of popular sovereignty, otherwise known as democracy.
posted by Mental Wimp at 10:32 AM on September 24, 2008 [1 favorite]


Ok I have had more time to stew over this....

This bailout plan is the dumbest move in the last 8 years. We already gave these numbnuts 300 billion already. I do not want my taxes going to bail them out. They are the ones that got into this mess to begin with. Screw them, let them fail. The weak ones will jump out of windows while the strong ones will take up the vacuum that was created. We don't need this debt over our (tax payers) heads. Rich politics got them into this mess and well I'm sorry but I don't want to pay for it.
posted by Mastercheddaar at 10:50 AM on September 24, 2008


The Power of Negative Thinking: The delusional optimism of mainstream, all-American, positive thinking should get its share of the blame for the financial crisis.
posted by homunculus at 10:58 AM on September 24, 2008 [1 favorite]


how that term suggest anything other than rule of the people by another name i can't see.

Err... that's my point. Two words, two languages, but they mean (pretty much) exactly the same thing.

representative democracy is a valid taxonomic designation for a form of democratic government, no? so where does that usage fit into your understanding of the term as denoting rule by mob?

Obviously, if we're just inventing taxonomies without respect to usage, this is just as valid a designation as any other. I thought that the prescriptivist in you would balk at that kind of arbitrariness, though.

Generally speaking, prior to the American experiment, our form of government would have been described as 'mixed,' since it combined elements of monarchy (executive), aristocracy (Senators appointed rather than elected), and representative democracy (the House.) When we collapsed the ancient distinctions by equating democracy with elections, there was simply a radical break with prior usage.

but there are also many centuries of usage for the term democracy other than as a term for "mob rule and wealth redistribution," though the point that this understanding of the term has been common is a good one

Most of the pre-Montesquieu city states ruled by the adult male 'people' would have rejected the term democracy and used (the local translation of) republic instead: Florence, Geneva, etc. Those places all spoke some variety of a Romance language, so of course they used the Latin-derived word. The political theorists who tried to describe those situations often contrasted their rule with that of the Athenians, and generally under the sway of either Plato or Aristotle described democracy as vicious or unstable.

With regard to the bailout, I think it does establish that our rule is not isonomy, self-rule, since the major decision-makers and potential administrators of this plan have not been elected, or selected from a common pool, and are not accountable to the people.

Anyone who is interested in this question should check out Robert Dahl's On Democracy. It's the contemporary classic for parsing these issues.

Some more texts to read:
Herodotus Histories (the speech by Otanes and the responses, especially Darius's)
Aristotle's Politics
Machiavelli's Discourses on Livy
Montesquieu's Spirit of the Laws
Federalist Papers #9 and #10 (People should really spend more time on Hamilton's argument then they usually do.)

(Links not provided because they can all be found through google and I'm feeling lazy.)
posted by anotherpanacea at 5:38 AM on September 25, 2008


Quotes from Dahl, cited by the always informative anotherpanacea:
As in Athens, the right to participate was restricted to men, just as it was also in all later democracies and republics until the twentieth century.[emphasis added]
Clearly Dahl makes a distinction, but feels that the distinction is not obvious. Perhaps more relevant to our current discussion:
If we approach market capitalism from a democratic point of view we discover, when we look closely, that it has two faces. Like the emblem of the Greek god Janus, they face in opposite directions. One, a friendly face, points toward democracy. The other, a hostile face, points the other way.
Democracy and market-capitalism are locked in a persistent conflict in which each modifies and limits the other.
posted by Mental Wimp at 10:52 AM on September 25, 2008


M.W., I see property-capitalism as cetrifugal and democracy as centripetal; just a "governor" keeps an engine from tearing itself apart, government's role is in doing what the free market can't, which includes regulating itself.
posted by troy at 3:23 PM on September 27, 2008 [1 favorite]


Krugman: The world according to TARP

Bailout questions answered
posted by homunculus at 10:49 AM on September 29, 2008


Four Never-Never Land Provisions in the New Bill
posted by homunculus at 10:50 AM on September 29, 2008


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