Posted by
Andrews on Saturday, January 31, 2009 10:39:20 AM
I have to say I may have been wrong about the Republicans. Though I am still troubled by their general support for a bailout, at least one is promoting my second choice solution (or third if you include "return to gold currency" in the list, unlikely as THAT is). From
Lawrence Kudlow's most recent article:
And Sen. Richard Shelby told CNBC that Washington should "shelve the
stimulus package" and instead attack the banking and credit problem
first -- probably with a government-sponsored bad bank that would
relieve financial institutions from their toxic-asset problem. Mr.
Shelby believes the credit crunch remains the biggest obstacle to
economic recovery.
Which is almost exactly what I have been proposing as the second choice, after "do nothing". To quote my post "
Revisiting Old Thoughts on Our Economic Situation":
Now, I am not suggesting the government buy up the mortgages in order
to keep up the values. I would prefer to see the government get out of
the way, as I describe in "Beware When Politicians Agree", or a long while ago in "Face The Music, Don't Try to Buy Votes", "A Final Comment on the Futility of a Bailout" and "Clarification of My Opposition to the Bailout".
However, if the government feels it must intervene, it seems it would
be much cheaper, and much less intrusive, for it to do so simply by
repeating what it did with the FSLIC, set up a fund to buy back
non-performing loans, perhaps limited to those sold by Freddie and
Fannie, or which qualified for the CRA. If it combined that with
allowing a general rise in interest rates and a cut in deficit
spending, we would be back on relatively sound economic footing. Not as
good as if they allowed the economy to self-correct and clear out all
the inflationary deadwood, but still pretty good.
Instead, we are getting a massive bailout which is, in the process,
making the financial firms' situation worse and still doing little to
help the overall economy. This is not liberals throwing money at a
problem. This is liberals throwing money at something other than the
problem.
Though he does not address the need to let interest rates rise a bit, shelve the CRA, close down Fannie and Freddie, and stop puffing up the money supply with massive deficit spending and open market operations, at least it is a start.
So perhaps the Republicans are starting to move in the right direction. Though I would hope at least a few would come out against any bailout at all, at least asking for some sanity, a targeted bailout, and, in general, the end of panic and the exercise of some restraint, shows that the Republicans have not completely joined the Democrats in their chicken little meets pork barrel politics approach to the economy.
POSTSCRIPT
Then again, I am not sure how widespread this belief is. Shelby is a relatively conservative senator on economic matters. So it is possible this is a minority opinion and I am being too optimistic about the party a a whole. I suppose it remains to be seen how the rest of the party behaves. Though I have to say the united vote against the Democrat bailout package is a good start, and a sign that, to some degree, the party has regained a bit of sanity.
Why does it always take a
massive loss for Republicans to remember why they were elected?