I have not been purposely neglecting writing a new post, but I have had a bit of a writer’s block this past week. I just didn’t see much humor in the Government preparing to give $700 billion to Wall Street without any idea of whether this would actually work or just turn into another very large “Oops!” moment for the Bush administration.
Then there’s the response from the Presidential nominees. McCain calls for a time out, as if his presence in Washington is so crucial for brokering the deal. Obama was caught between a rock and a hard place, not wanting McCain to have the upper hand, but also not wanting to look like he doesn’t care. Either way there is no reason why the debates shouldn’t go on as planned.
Economists have weighed on what they feel might be the best solution to the problem at hand, and it seems like most of them are hinging their hat on different theories as to what the outcome will be. The majority feel that handing over a blank check to Paulson and the succeeding Treasury secretary is a bad idea. And that buying debt at the value the banks have listed is a bad deal for taxpayers. If the assets are purchased for less than what they’re listed as, it will probably not help the banks at all. My favorite economist Paul Krugman suggests using the $700 billion to add capital and allow taxpayers a share of the market. When the market recovers (as it should given this plan) profits might actually be made on the public money loaned.
Either way I feel the complexity of this crisis and the public policy solutions necessary to alleviate it are at a level that requires the skill, expertise and willingness to learn that has been at times wholly thrown out of the Presidential race. One example again comes from Governor Palin’s most recent interview with Katie Couric, here’s a brief transcript of her response when asked how the bailout will help out the average American.
COURIC: Why isn’t it better, Governor Palin, to spend $700 billion helping middle-class families struggling with health care, housing, gas and groceries? … Instead of helping these big financial institutions that played a role in creating this mess?
PALIN: Ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up the economy– Oh, it’s got to be about job creation too. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions.
Huh?! How does this have anything to do with health care reform or job creation. Maybe she thought this was a different question or maybe like the Bush Doctrine no one has prepped her on why Wall Street needs a $700 billion bailout. If this does not work everyone is in serious trouble, not just "fat cats" and CEOs, but anyone who would like to continue to live and earn money in the U.S. and even abroad. If we are sent back to a bartering economy, at least Alaska might be in some good shape with all those beaver pelts. I'm going to start hoarding copper and other scrap metal to bring down to the trading post.
Add on top of that Washington Mutual failing and having to be purchased by J.P. Morgan Chase, and I am really starting to believe the sky might just be cracking a bit. The minute WaMu decided to move away from its customer service model to a money hungry banking institution like BofA and WeFa this was bound to happen. This is why I suggest Credit Unions or maybe international banks like HSBC.
All of this is made a little better by the Dodgers clinching the N.L. West Division, but then again made a little worse by the Trojans losing to Oregon State. Oh woe is America right now, which is why I suggest everyone head to your nearest watering hole and have a strong drink. Wake me up on November 5th.