Wed 10 Sep 2008
Demagoguing the Bailout
Posted by David Dudley Field '25 under Eph Pundit at 7:47 am
I think that Obama should demagogue the federal bailout of Fannie Mae and Freddie Mac. Details below.
If you don’t know the policy issues, start with this overview from Slate or Wikipedia. (More commentary here.) Most of the good and great think that this bailout is absolutely necessary. I don’t think it is and, moreover, the politics of the issue line up nicely for Obama. Imagine that he said something along these lines:
For too long President Bush and the Republicans in Congress, led by Senator McCain, have put the interests of the rich and powerful ahead of the interests of working Americans. For too long, Bush and McCain have sought to comfort the rich, have tried to help Wall Street instead of Main Street. Our current recession was caused by the failed economic policies of Bush and McCain.
Yet, this week, they have gone a bailout too far. They propose to spend hundreds of billions of dollars bailing out their rich friends on Wall Street and in China. They want you, working Americans, to back up the promises made by Fannie Mae and Freddie Mac.
But why should we? Why should regular Americans like you and me be on the hook for their failed policies? Why should our tax dollars go to Wall Street Banks and International Sovereign Wealth Funds? They invested stupidly. They should face the consequences of their mistakes.
When you make a mistake, does the federal government bail you out? No. Why should we bail them out? McCain and Bush want to send your money to China and to Wall Street.
And so on.
Sensible economists will hate this sort of talk. In polite company, we aren’t supposed to demagogue Wall Street, much less China. But the politics are fairly compelling. First, it changes the topic from Palin to the economy. Obama is on much more favorable ground with the latter. Second, such a speech focuses the debate more on the Bush administration and McCain’s support of it. Every day that McCain defends an economic policy of the Bush administration is a good day for Obama. Third, normal independent voters do not really understand why we need to bailout Fannie Mae and Freddie Mac in the first place. If Obama can frame the debate in terms of their money going to rich Wall Streeters or, even better, foreigners, he wins. Fourth, because he is just a candidate, Obama does not need to act on any of this now. Once he takes office in January, he can decide, in light of new information, what the best course of action is.
Moreover, there are a few folks, like me, that argue (example here) that the bailout is actually bad policy. To simplify greatly, Fannie and Freddie sold a bunch of bonds to greedy (stupid) people that said, “We promise to pay you X in the future. And note that this promise is not backed by the US government.” The stupid/greedy buyers bought those bonds because the yield was high (i.e., the bonds were cheap). The buyers thought that, even though the bonds were explicitly not backed by the US (it said so on the actual pieces of paper), there was still an “implicit” federal guarantee.
Well, tough, There wasn’t. You are out of luck.
What would happen? Well, for starters, we would not be bailing out rich people from their financial mistakes. Surely that is a good thing! Going forward, they will invest more wisely. Second, those rich people will not lose everything. The bonds of Fannie and Freddie are backed by millions of home mortgages, the vast majority of which are perfectly sound. Even if we allowed Fannie and Freddie to “fail,” their bonds are still worth at least 80 cents on the dollar, and probably more than 90 cents. Poor Bill Gross and the Bank of China need to take a 10% haircut. Boo hoo!
The sophisticated concern is that, without Freddie and Fannie, the US mortgage market would seize up, that you would not be able to get a loan for the house you want to buy at an interest rate you like. Probably true. First, that is a good thing! Fannie and Freddie (and all the other investors who made house financing so easy) distorted the housing market. Their actions made rates too low and terms too easy. That is a big reason we are in so much trouble. Every credit boom is followed by a credit bust. Better a market with higher rates and larger down payments then one we need to bail out again in 10 years. Second, don’t underestimate the creative powers of capitalism. There is hundreds of billions of dollars in money waiting to be invested in the US housing market at the right terms. Give them a chance to lend money at 8% on houses were the buyer has put down 20% and is borrowing 3 times her (honestly documented) income and they will line up around the block. We need to clear away the dead wood of our current financial system and allow a new one to arise it is place.
Yet the point here is not that preventing a bail out is, substantively, good policy. The point is that arguing against the bail out — demagoguing against the Bush/McCain economy and the pay-outs to their rich supporters — is great politics.
Can we demagogue the bail out? YES, WE CAN!
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17 Responses to “Demagoguing the Bailout”
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September 26th, 2008 at 12:06 pm
[…] I don’t see how McCain can beat Obama. But what if McCain demagogued the bailout, as I previously urged Obama to do? Doing so would allow him to be against both Bush and the Washington consensus. He, not Obama, […]
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Ronit says:
We can’t really afford to piss off the Bank of China by making them swallow a 10% haircut. It’s not an option. If we do that, we lose the unlimited credit card that comes from issuing the world’s reserve currency, and we would have to start raising taxes and curtailing programs. Political suicide.
September 10th, 2008 at 8:40 amDavid Kane says:
Says who? Please spell out the logic more clearly. What could the Bank of China do to you or me?
Presumably, they will be much less likely to buy bonds with the implicit guarantee of the US government in the future. Good! They shouldn’t be buying those bonds anyway. They might also be less likely to buy regular US treasuries, thereby pushing up interest rates. Fine! The rate that the US government pays should be set by supply and demand. I see no reason why we need to make it easier for the government to borrow money.
(And, even if that were a goal, much better to just take the money that we would have spent on the bailout and just spend it ourselves. Let’s cut out the middleman!)
The key fact to understand is that the Bank of China (and everyone else with dollars in China) needs to do something with the dollars they get when we buy stuff from China. Who cares if they don’t invest those dollars with Fannie Mae anymore? Not me!
Now, if the Chinese find less appealing ways to spend their dollars, they will probably want less of them. Perhaps the value of the dollar will fall. So what? The value of the dollar should be set by supply and demand. Many people think that it is too high as it is now and, moreover, you can’t really control the value, at least over the long term anyway.
You sound as if it is a good think that the US government has an “unlimited credit card that comes from issuing the worldâs reserve currency.” How has that worked out for you over the last 8 years?
September 10th, 2008 at 9:01 amronit says:
Basically, David, the action taken with the GSEs is about monetary policy, not fiscal policy. The net fiscal cost to the taxpayer is not really very large (yes, the GSEs have large liabilities, but they also have offsetting assets). But the monetary costs of doing nothing would have been unacceptably high.
1. But first, a fiscal point: If we make it more difficult for the government to borrow money, that will cost taxpayers a great deal extra in interest payments over time. It is in the taxpayer’s interest to make it as cheap as possible for the Treasury to borrow. Also, a failure to live up to an ‘implicit’ guarantee hurts the long term credibility of the US Treasury, which also hurts tax payers by driving up interest rates for the govt.
2. Through the medium of mortgage-backed securities, all those dollars we have spent buying cheap Chinese crap at Walmart have come back to us in the form of long-term capital to finance housing and other things. Now, in a credit crunch, doing anything to hurt MBS-holders is exactly the wrong thing to do. Pissing off the BoC will do a lot to even further dry up the sources of capital for the US, driving Americans into a much worse housing and economic crisis than what they have now.
3. If the Chinese can no longer stash their excess dollars from trade in safe MBS, they might not be quite so willing to hold dollars. If they start selling dollars, the dollar gets devalued, and that increases prices for US consumers.
Basically, your suggestion will have the effect of a monetary contraction [see note below], and that is the last thing the US needs right now. It would only exacerbate the problem, pushing a housing crisis and credit crunch into a 1930s-style depression. Cf: http://www.federalreserve.gov/boarddocs/speeches/2004/200403022/default.htm
Note: “Monetary contraction” is not quite right. Weirdly, David’s suggestion would cause, potentially, both high inflation (typically a sign of monetary expansion) as foreign banks start to hold other currencies in preference to the dollar, as well as an increase in interest rates and a drying up of capital (typically a sign of monetary contraction) as investors start charging a much higher yield to hold dollar bonds.. I think the word I’m looking for is ‘stagflation’, a scenario where we can neither afford present-day consumption nor find the capital to finance future growth.
September 10th, 2008 at 9:17 amJeffZ says:
Lipstick on Freddie Mac … ummm … sex in kindergarten … ackkk ackkk … actual discussion of fiscal policy … don’t … think … I can breath — wait, this has something to do with Palin’s step-uncle-in-law, right? Phew.
September 10th, 2008 at 9:25 amDavid Kane says:
To the extent that you think that the US has a monetary problem, then why not use regular old monetary policy to fix it? Why do we need to hand money to Bill Gross and the Bank of China?
If you think that the supply of dollars is too low, then have the Fed print more. If you think it too high, have them print less. There is no need to hand those dollars to Bill Gross, or anyone else.
Again, the key point that you miss in 2) and 3) is that the Chinese (and everyone else with dollars) must do something with those dollars, unless they can stuff them under the mattress. I agree that they won’t buy any more MBS but so what? They shouldn’t. They may be less likely to buy treasuries, but big deal. Maybe they will buy airplanes or copies of Word, thereby decreasing the trade deficit. Maybe they will build car plants in Tennessee. I don’t really care. They will need to do something with those dollars even if they take a haircut on their agency securities.
So, let us try to be specific. You are running the Bank of China (or PIMCO or any other organization that gets hurt by this). The bail out is canceled. You still have billions of dollars on your balance sheet. What, precisely, do you do with these dollars and why is that a bad thing?
Your point about it being nice for the US government (or Williams College or you and me) to be able to borrow money cheaply is true, I guess. But then why stop at bailing out the bond holders of Fannie and Freddie? The preferred holders also assumed that their money was safe. Heck, even the common share holders thought that the US government would never allow Fannie and Freddie to implode. After all, there was “implicit” backing!
The point, obviously, is that while giving people their money back (whether they own bonds or preferreds or stock) does make them, marginally, more likely to give you money in the future, there benefits, in this case, do not match the costs. Better to stiff everyone.
But, again, I think the main point is to specify what, precisely, the Bank of China would do and why that would be a bad thing.
September 10th, 2008 at 9:41 amfrank uible says:
It behooves the U.S. to reduce its deficit spending and its national debt but gradually over the long term and not nearly so evulsively as suggested. Absent monumental continual economic growth of an unforessen nature, to keep up the U.S.’s current fiscal pace means, in my view, gradual financial decline and erosion of the standard of living of the U.S. – certainly in relative terms and possibly in absolute terms. A remedial course would be difficult politically – whether it will be taken (and if so, how it wiil be taken) is up for grabs. The subject is a thicket. Why should Obama risking an almost sure winner at the polls by tackling the question during his campaign – except possibly for idealistic reasons (which we all know never work politically)?
September 10th, 2008 at 10:22 amfrank uible says:
Risk, not risking.
September 10th, 2008 at 10:23 amronit says:
Here’s one thing the Chinese central bank could do:
Refuse to bid on MBS at what we would consider ‘normal’ rates, thus pushing up mortgage rates in the US to historically high levels.
Result: more foreclosures and asset deflation for Americans, more wealth destruction, and a further squeeze on credit and consumption – pushing the economy into an even deeper recession. This is exactly the opposite of what the US needs right now. If you read the Bernanke paper I linked earlier, you might start to worry that this course of action could lead to another Depression. I think his explanation of the Great Depression is exactly right, and that it would be extremely unwise to do anything that might jeopardize the future supply of capital from institutional investors and central banks.
David, the liquidationist view you endorse might be perfectly consistent with free market dogma. However, I think it’s clear that this course of action would be economically painful in the extreme of American voters, and it would be political suicide for any government or Congress to stand aside and let the free market take its course.
Sure, it might be nice to fantasize about telling Bill Gross to pound dirt, but the consequences of this action would be positively harmful. Gross will be just fine – he’ll still have plenty for himself even if the GSEs defaulted; on the other hand, the “American people’s” access to capital would be jeopardized in the extreme. Is the satisfaction of sticking a finger up at “Wall Street” and “foreign central banks” worth the very real costs to the US economy? Like it or not, we are all socialists now, at least when it comes to the capital markets.
Unrelated point: As Dan Drezner points out, you’ve got to enjoy the sheer entertainment value of being able to write sentences like this one –
September 10th, 2008 at 11:45 amDavid Kane says:
I cry for Williams Economics! Ronit writes:
I do not think that “historically high” means what you think it means. Here is the history of 30 year mortgages.
Lack of Chinese (and other international) demand might push rates up a percent or two (although I doubt even that). And yet you claim that we need to worry about the 10% we saw in 1990 or the 16% of 1982? Ridiculous.
And, yet again, the key point is that the Chinese still need to do something with those dollars. Maybe they buy more planes from Boeing. Good for profits and wages! Maybe they invest in a car factory in Tennessee. Good for employment! Maybe they buy US stocks. Good for the S&P 500.
Once someone has a whole pile of dollars, they can either burn them or spend them. If they spend them, the people they spend it on are better off. It is true that some people in the US (home builders) are worse off when the Chinese switch their investments from MBSs to something else. But the people who make the “something else” are now (equally) better off.
And, moreover, you don’t think that this shift is already happening? Chinese (and other) buyers are extremely nervous about these bonds, and other similar securities. Everyone now recognizes that investment in US real estate is much riskier than anyone thought before. Almost everyone is waiting for prices to go lower.
And so the key comparison is not to compare Chinese flows during the boom with Chinese flows today with the bailout. The key comparison is Chinese flows with the bailout (what we see today, low) and Chinese flows without the bailout (lower, but not that much different).
More later.
September 10th, 2008 at 2:27 pmrory says:
yeah…you know when I think about good years to compare an economic indicator to, i think 1982 and 1990 also!
September 10th, 2008 at 2:45 pmDavid Kane says:
If we don’t bail out Bill Gross, the Bank of China and all the other rich and powerful people/institutions that own Fannie/Freddie bonds, Ronit claims that
This is certainly related to the conventional wisdom (relevant discussion here and here). But you are getting a bunch of the details wrong.
First, bailout or no bailout, there will not be “more foreclosures,” at least as a first order effect. If you can pay your mortgage, you are safe from foreclosures. If you can’t, then you are in trouble. It does not matter if we bailout the Chinese, you still need to write that check for $1,000 per month. If you can’t, you will be foreclosed. It is that simple.
Second, who care about “asset deflation?” All anyone (should) care about is the real value of their assets. You can avoid “asset deflation” easily. Just print more money! Drop it from the helicopters! House prices will double and triple and soar ever higher, along with the prices of everything else.
In real terms, it is now clear that houses in America were, on average, over-priced a few years ago. That is the sort of thing that happens in free markets, on occasion. In the long run, nothing can stop houses from moving to the market clearing price. Maybe we are there now. Maybe prices need to fall another 10% or 20%. No one knows. But, no matter how much money the government hands out to rich people, house prices will eventually hit their “true” level. Convincing the Chinese and Bill Gross to buy more MBS might slow that process for a while, but it can’t stop it.
Third, where do you get this talk of “more wealth destruction?” I have my house. I had it 5 years ago. With luck, I will have it 5 years from now. The real “wealth” of that house is what it is (ignoring depreciation). If house prices fall, I am worse off, but no “wealth” has been destroyed, in any meaningful sense. A fire destroys wealth. A drop in prices does not.
Fourth, it is true that anytime you decline to hand out money (to rich people, poor people or even the Bank of China), you put a “squeeze on credit and consumption.” But this is only true if you ignore what else you might be doing with that money. Instead of handing several hundred billion to Bill Gross and the BoC, why not hand the same amount of money to US tax payers? That money will do at least as much good (in terms of stimulating the economy) in their hands as it would in Bill Gross’s.
Fifth, very little going on here has any connection to anyone’s “access to capital.” How much capital do you have access to? How much should you have access to? Unless the world implodes, you will still have a credit card. You will still be able to borrow money. If you decide to start a business, you will still be able to go to the bank and borrow something. If you have a company, you can still sell stock and bonds. There are still trillions of dollars in savings that need to be invested somewhere, that will provide someone with “access to captal.”
It is true that we will (I hope!) not see the capital-access (for housing) that we saw in 2005. Much of that capital was wasted because it was invested stupidly. We don’t want a world with access to capital in that fashion, a world in which someone can lie about their income and buy a home with no downpayment. That is bad access.
We don’t want a world in which “access to capital” is cheap. We want a world in which it is efficient.
September 10th, 2008 at 2:53 pmronit says:
DK – like so many people who argued for higher interest rates and liquidation in the first years of the Great Depression, you have made the mistake of confusing nominal interest rates with real interest rates. Read Bernanke’s paper, he is perceptive as usual on this.
September 10th, 2008 at 3:03 pmronit says:
First, bailout or no bailout, there will not be âmore foreclosures,â at least as a first order effect. If you can pay your mortgage, you are safe from foreclosures. If you canât, then you are in trouble. It does not matter if we bailout the Chinese, you still need to write that check for $1,000 per month. If you canât, you will be foreclosed. It is that simple.
This does not apply if you are on an ARM, where your payment is dependent on the current market rate of interest. Keeping mortgage rates from spiking higher does a good deal to keep many Americans in their current homes. Bringing them lower helps even more, because it allows homeowners, whether on fixed or adjustable mortgages, to refi. Your likelihood of being foreclosed upon is a first order effect of current mortgage rates.
Second, who care about âasset deflation?â All anyone (should) care about is the real value of their assets. You can avoid âasset deflationâ easily. Just print more money! Drop it from the helicopters! House prices will double and triple and soar ever higher, along with the prices of everything else.
Yes, that’s worked out well for Zimbabwe.
In real terms, it is now clear that houses in America were, on average, over-priced a few years ago. That is the sort of thing that happens in free markets, on occasion. In the long run, nothing can stop houses from moving to the market clearing price. Maybe we are there now. Maybe prices need to fall another 10% or 20%. No one knows. But, no matter how much money the government hands out to rich people, house prices will eventually hit their âtrueâ level. Convincing the Chinese and Bill Gross to buy more MBS might slow that process for a while, but it canât stop it.
I am unclear as to what, if anything, is meant by the “true” level of house prices. In so far as house prices are set by market processes, they are dependent on the supply of housing as well as on the supply and cost of capital. Gumming up the supply of capital (through letting the GSEs fail) may reduce prices, but I’m not sure that gets them any closer to some kind of Platonic “true” price level than where they were 2 years ago.
Third, where do you get this talk of âmore wealth destruction?â I have my house. I had it 5 years ago. With luck, I will have it 5 years from now. The real âwealthâ of that house is what it is (ignoring depreciation). If house prices fall, I am worse off, but no âwealthâ has been destroyed, in any meaningful sense. A fire destroys wealth. A drop in prices does not.
I disagree. Something is worth what someone will pay you for it. Your house is worth what you could get for it on the market, or how much a bank would be willing to lend to you with your house as collateral. I’m not sure how a drop in house prices can be construed as anything but wealth destruction.
Fourth, it is true that anytime you decline to hand out money (to rich people, poor people or even the Bank of China), you put a âsqueeze on credit and consumption.â But this is only true if you ignore what else you might be doing with that money. Instead of handing several hundred billion to Bill Gross and the BoC, why not hand the same amount of money to US tax payers? That money will do at least as much good (in terms of stimulating the economy) in their hands as it would in Bill Grossâs.
I’m not sure where you get the several hundred billion figure from – that seems awfully high to me. Also, I’m not sure how you can ignore the fact that respecting the legal rights of bondholders helps to ensure the long term supply of investment capital in a way that a stimulus check most assuredly does not.
Fifth, very little going on here has any connection to anyoneâs âaccess to capital.â How much capital do you have access to? How much should you have access to? Unless the world implodes, you will still have a credit card. You will still be able to borrow money. If you decide to start a business, you will still be able to go to the bank and borrow something. If you have a company, you can still sell stock and bonds. There are still trillions of dollars in savings that need to be invested somewhere, that will provide someone with âaccess to captal.â
Actually, many businesses, especially smaller and medium sized regional businesses, are finding it very hard to get access to commercial credit. You might not be familiar with just how tight bank balance sheets are right now, but it is ugly, and doing something to prop up the GSEs prevents it from turning a great deal uglier.
You are quite right that, in the absence of easy credit, businesses can still get access to capital. They can do so by raising equity capital – by selling ownership stakes.
I’m sure that’s a political winner – once we have devalued their status as legal creditors, the only way for the Chinese to get an adequate degree of protection for their money, and for us to get access to capital, is for them to take an ownership stake in American businesses, banks, and real estate. Once you have failed the bondholders, you leave them no option but to take over operating control of your assets. Would you rather owe money to foreign central banks, or become a wholly owned subsidiary of foreign central banks?
September 10th, 2008 at 3:23 pmDavid Kane says:
1) Ronit writes:
All true. And irrelevant! While it is true that ARMs are a complex topic, the most important point for us is that most of them are based on an interest rates that the US government can not meaningfully control. It is true that, if LIBOR goes up, people with ARMs based on LIBOR are in trouble. But the US government can’t control LIBOR, so it does not matter to this discussion.
The same number of people will be foreclosed on whether or not we bailout Bill Gross and the Bank of China because that action (or inaction) won’t materially impact the interest rates that most ARMs are based on.
2)
Perhaps a better split is between wealth destruction we can avoid and wealth destruction we can’t avoid. There are all sorts of actions that I can take to avoid the wealth destruction associated with fire. I can install smoke alarms. There are also actions that the government can take, like hiring more firemen, that decrease wealth-destruction-by-fire.
But there is nothing that government can do that will, over the long term, change the aggregate wealth associated with the nations housing stock. The government can, in the short term, create a credit boom that raises that value of everyone’s home by 50%. But that is an unsustainable bubble. It had to pop. There was no way that that “destruction” (really just a return to what the price would have been in the absence of a bubble) could be prevented.
Giving money to Bill Gross and the Bank of China makes them better off. It has no effect on US house prices in 2015.
3)
I am flexible on the estimate. Maybe it is only $100 billion. Still large enough for some demagoguing by Obama! Also, most bailouts (like almost all government programs) end up costing more than their initial estimates.
More importantly, I am all for “respecting the legal rights of bondholders.” Give the bondholders everything they are entitled to. They just aren’t entitled to a bailout.
Also, there are two issues. First, the course of the economy over the next year or two. Handing $100 billion to consumers will do more to help employment/growth than giving that same money to Bill Gross. Second, the longterm growth rate. I do not see how bailing out Fannie Mae bondholders hurts (or helps) that.
Note that you give no sense of when we can stop the bailouts. All your arguments apply to bailing out the preferred as well. Why not bail them out? Why not bail out the common equity? Why not bail out Bear Stearns at $60 per share?
But, again, my main claim is not that a bailout is unnecessary. Perhaps I am wrong. I just think that the demagoguing against the bailout is a great political position for Obama.
September 10th, 2008 at 9:18 pmronit says:
1. Remember that LIBOR is set by banks, and that banks will find it much harder to lend money (to homeowners or to anyone else) if the GSEs disappeared – bank balance sheets are strained, and the removal of the world’s largest mortgage buyers would have been catastrophic for banks. Do you really think that letting the GSEs go under would not have caused LIBOR to rise to a level not seen in a couple of decades? Counter-party risk would also have risen to a record high, because of all the agency paper on bank balance sheets. Lending activity would have probably come to a screeching halt. Credit is the lifeblood of commerce, and a GSE failure had the potential to bring the entire economy down with it. As I said, protecting the owners of MBS is an indirect way of making sure that market interest rates for mortgages stays in line with the interest rate targets of US monetary policy.
2. I am not disagreeing that the housing bubble had to pop. However, the recent actions taken by the Fed and the Treasury to provide liquidity and protect certain large institutions are helping to make sure that this “housing recession” does not turn into a Depression that destroys large swathes of the economy. Protecting bondholders is far from a cure-all, but it almost certainly makes things less worse for us in 2015. I’m not much of a Bush fan, to say the least, but Bernanke and Paulson have both done a credible job, and it is no surprise that their actions have won extremely broad, bipartisan support.
Look, I’m not advocating for nationalization of the entire capital markets; nor am I with the hysterical pessimists who are gleefully anticipating the final collapse of late-stage Western-style capitalism. On the other hand, I believe that it is entirely unreasonable and impractical to advocate laissez-faire dogma at this time – and, given what I’m reading from financial institutions and life-long investors, it seems that libertarians in a credit crunch are as rare as atheists in a foxhole.
I believe we are at a very significant rough spot, and that the Fed and the Treasury are largely doing exactly what we need them to do so that we can muddle through this without excessive collateral damage to the economy (though the Fed could certainly have acted faster to provide liquidity to Bear Stearns). We will get past this eventually, and interventions that help to prevent wide scale liquidation of bonds and assets will help to prevent this thing from becoming much worse than necessary.
Broadly speaking: Capitalism is a necessarily unstable equilibrium, and I don’t think anyone really wants to live in world where the world’s largest investment banks and mortgage lenders are allowed to be wiped out entirely. We’ve been through that kind of systemic instability in the aftermath of the 1929 crash, and modern day capital markets policy is rightly built around preventing a recurrence of the Depression. The interventions of the Fed, the Treasury, and the FDIC are necessary to prevent the hard landings necessary to the business cycle from turning into crashes.
I don’t really much care about the political point you’re making re: demagogurey, because now I’m resigned to the fact that the next 2 months will be devoted to the most trivial, inane bullshit, that no issues will ever be seriously discussed, and, depending on how they respond to this bullshit, the American will get exactly the government they deserve.
September 10th, 2008 at 11:09 pmronit says:
Btw, if you were going to attack the bailout you could do a lot worse than copy Roubini:
Basically, direct the outrage not at the bailout itself but rather at the preceding period of laissez faire complacency which is now forcing us to these measures. Paulson’s current action is less of a problem than the administration’s previous ideological resistance to reasonable regulation.
September 11th, 2008 at 2:50 pm