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  • « The view from Europe | Main | The Week on GNW (Sept. 21-28) »

    September 29, 2008

    The view from the American heartland

    Posted by: Kevin

    NocontinuedThe mega-bailout bill went down in flames.

    I say: "Hear, hear!"

    Speaker Nancy Pelosi (D-CA), sensing the shifting polls in Congressional districts across the country against incumbent Democrats, even in safe districts, as angry phone calls and emails roll into Capitol Hill against the bailout, took to the well and blamed the GOP for the crisis just before the vote.

    She did this knowing that she was going to lose almost 100 of her own Democrats in this vote, and would need Republicans to pass it.

    She lost 12 votes in seconds.  The bill failed.

    Approval ratings for the Democratic Congress are about as low as those for the Bush White House.  And as the country learns more about the bumbling incompetence and failure to act by the Congress and a succession of Administrations to stop this crisis from arriving, more and more of us are loudly asking -- why are we being forced to pay for this?

    There are many leaders, many of whom I respect, who are raising all sorts of alarm bells about catastrophe.  Some came up with fairly simplistic explanations about where we stand in terms of the evaporation of credit that may or may not be underway right now.  But in the end, nobody -- nobody -- has made a convincing case that passing this gigantic bill will lead to prosperity and shiny tomorrows.  No one has articulated how we will avoid a Japanese style deflation as a result of endless rescues of worthless asset sheets (and nobody on either side of this debate believes that this bill would be a one-time thing).  And that is why the votes are not there from either party to pass this bill.

    What's more, these leaders don't seem to understand that the taxpayers believe we are already in a recession.  We already are feeling the pain.  It can't get much worse for a lot of people -- except, they argue, if we blindly endorse this massive turkey of a bill and the country goes into the very recession we're all expecting anyway, but with next to no fiscal room to reinvest and recover because of a $700 billion charge sitting on the nation's Visa card, secured literally by the lowest valued junk assets in the country.

    The Democratic leadership is now carrying on at a post-mortem press conference about how they are putting the country first, venting their own hurt feelings over the Republicans' hurt feelings (and the markets slid over 100 points more as they spoke).  You wonder why the country is sick of Washington, and finds itself with an entire government packed with self-interested, panicked idiots who had years to stop this crisis from coming and yet even at this critical moment, still trim all of their thoughts and motives and energies to partisan, self-aggrandizing ends.  Like a pack of wild-eyed derivative traders operating with no rules.

    Frankly, they can all go to hell.  And I'm sensing that the country agrees.

    And should that opinion now dominate this debate, Barney Frank will have no room left.  He'll just have to blame the country.

    (And the market recovered 200 points after they stopped talking...)

    [UPDATE: 4:15pm -- Now a McCain adviser Doug Holtz-Eakin is literally saying Pelosi gave that speech to purposefully to defeat the bill, blame the Republicans and deny McCain a "victory" for delivering the Republicans.  Obama, meanwhile, is apparently gearing up to come back to Washington to force passage of the bill (e.g. suspend his campaign?), and Obama surrogate Gov. Tom Vilsack of Iowa is saying the bill failed because McCain failed to deliver 100 Republican votes (about as many Democrats as the leadership lost).  This is a bottomless pit now.  Let the markets tank tomorrow and the next day.  Let the utter lack of confidence in all of these people honestly show its face and wash over them.  I can only hope the same happens on Election Day.  If only there was a positive outlet for this anger, but alas.  There probably won't be.]

    [UPDATE #2: 4:45pm -- Paulson just read a statement in the WH driveway.  It seems that he is ready to abandon the bill and start over.  (*stifles a loud cheer*) Let's hope this golden turkey of a bailout is truly dead, and we see something emerge from the ashes that makes sense.  Let's hope it comes either from Obama or McCain, or from the dissident factions in the House -- and that it gives the nation something to get behind instead of something to stab each other with.  Not holding my breath.]

    [UPDATE #3: 5:15pm -- McCain just spoke, and said little.]

    [UPDATE #4: 5:30pm -- Just saw a sound bite of Obama on the stump calling on Democrats and Republicans to get back to work to pass something that will at least deal with immediate concerns.  For once in over week he didn't regurgitate the Congressional talking points.  There are also reported murmurs that Obama actually didn't do enough to back the bill... perhaps because he didn't want to get too close to it.  Is there a reason to hope here?  If Obama sweeps in now with a rational short-term strategy (not something warmed over from that tired Cooper Union speech), puts the childish partisanship of the Congress to one side, and speaks directly and convincingly to the country, he could gain tremendous traction at this crucial moment.  It could only become political paydirt if the Democrats in Washington manage to keep their big mouths shut and fall in line.  He could choose to throw the Congressional leadership under the bus and demand his own plan be put into place, and chide them for their failure.  Boy would that be a game changer.  Bush failed early.  McCain had his chance and didn't deliver. Pelosi and the Congressional Democrats are now face down in the gravel.  Obama has a huge opportunity to change course and capture the moment.  Again, no breath being held.]



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    1. North Dallas Thirty on Sep 29, 2008 4:00:53 PM:

      And wait, there's more.

    1. Herb Spencer on Sep 29, 2008 4:23:33 PM:

      Behind the glowing cigarette in the darkened room: Franklin Raines.

    1. Randy on Sep 29, 2008 4:43:23 PM:

      I wrote on my own blog that Washington needs to be *very* afraid in November and in 2010. We all have our favorites but I would bet that the nation is ready for a clean sweep of both chambers.

    1. Tim C on Sep 30, 2008 8:29:06 AM:

      Maybe the whole house of cards needs to come crashing down. How long can you power an economy on the assumption that people will continue to spend beyond their means? I remember in high school when I finally figured out this economy thing and realized that the entire structure was built on the assumption that everyone was going to buy a new car every two year (most were still made in Detroit then), and wondering if that was really a good thing. Well, now it's worse than that. Now the assumption is that everyone, including the government, is going to spend wildly beyond their means and will always be able to find someone to get a loan from. Looks like that may have just stopped.

    1. North Dallas Thirty on Sep 30, 2008 11:52:25 AM:

      That's pretty much it, Tim.

      No matter how people try to spin this, it is the government attempting to create value for things that have little or no value in an attempt to drive consumption.

    1. jimbo on Sep 30, 2008 4:01:13 PM:

      Jack Nicholson as the Joker in the first Batman film:
      "This town needs an enema!"

      I don't understand why this is now an "emergency" when there was about the coming crisis over a year ago. It shouldn't be a crisis, it didn't have to be.

      I do hope there are repercussions to both Wall Street and Capitol Hill, but I'm afraid it's going to be the taxpayers who suffer in the end. 25% of my 401K is already down the shitter at this moment.

    1. Tim C on Oct 1, 2008 9:53:11 AM:

      I am happy to hear that my favorite senator, Jim Webb of VA, is, as of last night, opposed to a bailout of the scope of the House bill. Webb's view is that the current House bill gives too much to banking executives, would send US taxpayer money to prop up foreign banks, and does not provide enough opportunity for the taxpayer to get share in the profits when the situation turns around. He also does not like that there is nothing in the bill to keep all this from happening again. For Webb, the promise that regulations on margin requirements and securities valuation will be taken up at some later date is not good enough.

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