Posted by
Andrews on Wednesday, October 01, 2008 4:31:34 PM
Well, I suppose
it was inevitable. People have been trained to see the government as
the cure to any economic ill, so I really doubted any politician would have the nerve to say
we should just take our lumps. It would be suicide to say "the government should do nothing". But, as far as it goes, I suppose the current bailout is the best we can expect.
At least it proposes spending freezes, which mean we will possibly repay at least some of the bad debts out of tax revenues, though the added tax breaks make that a little less certain. Not that I oppose tax breaks, they are usually a very good idea, but when not coupled with real spending cuts, they can be an inflationary pressure. We can hope they spur enough growth that, coupled with the spending cuts, some real money goes to pay off these debts, but I am skeptical.
It also contains a number of ill-advised "solutions' which will only serve to make the problem worse, such as caps on CEO salaries, which I am
hardly alone in denouncing as counterproductive.
But what truly troubles me about the whole thing is McCain's rhetoric. Rather than pointing out the role of government in this problem, he launches into populist rhetoric which would embarrass a Democrat. He promises to:
apply new rules to Wall Street, to end the frenzies of speculation by people gaming the system, and to make sure that this present crisis is never repeated
Could someone explain to me how getting stuck with bad mortgages is making anyone rich? At least was before this bailout. It seems to me there is little money to be made from bad mortgages, that is why banks don't make them. So, how is it "
greed" which drove this?
He does make some small concessions to reality, but sadly, tries the Obama "blame everyone" approach, mixing political and business leaders in his blame:
The costs of unbridled greed on Wall Street, the foolishness of
politicians who fed the problem, and the recklessness of politicians
who failed to meet the crisis — all of these would have a familiar feel
to the man from Independence
It is time McCain and the Republicans stopped spouting Democrat propaganda. There was no greed here, no one "greedily" bankrupts themselves.
The problem, simply,
is government, and bad government policies. I wish someone had the nerve to say so, rather than feeding popular, but incorrect, notions that somehow Wall Street is getting rich by buying up bad loans.
POSTSCRIPT
To those who think this a denunciation of McCain, I have to say, bad as it is, it is still better than the alternative. I have a feeling a Demcorat solution would involve nationalizing banking, at the very least would include much more in the way of regulation, would lack tax cuts, and certainly would not include any free trade protections. So, idiotic as this plan is, it is not the outright evil that the likely alternative would be. I suppose it all goes to show I still prefer the stupid party to the evil party.
POSTSCRIPT II
By the way, if the problem is "too little regulation", then why has Wall Street become ever less stable and less trustworthy the more regulations we apply? I thought Sarbanes-Oxley was supposed to prevent accounting problems, such as, say, counting worthless loans as valuable assets. So, if regulations are the answer, why are we not seeing improvements? After a century of rather oppressive regulation, isn't it time to admit that perhaps regulations create problems of their own, and perhaps it is time to look for another solution?
(To answer my own question, the accounting rules of SOX actually helped cause this problem, as the accounting used to value assets actually forced companies to value these bad mortgages at purchase price, regardless of their real value.)