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Meltdown Blogging
By57 percent of Americans support the bailout. Yves Smith:
The sorry fact is the US has consumed at an unsustainable level. We need to reduce consumption and increase savings (and reducing debt is a form of savings). Reduced consumption means a fall in GDP. In Britain, which is going through its own credit crunch, the officialdom has said that the public will experience a fall in living standards. Why are we unwilling to accept the inevitable?
James Pethokoukis talks down Michelle Malkin et al, a group he dubs the "MellonHeads":
Rather than risk a financial collapse, the MellonHeads might want to spend more time making the case how big government caused a mess only big government can fix and how we can avoid a repeat.
...the plan only helps the financial situation if Treasury pays prices well above market that is, if it is in effect injecting capital into financial firms, at taxpayers’ expense.
What possible justification can there be for doing this without acquiring an equity stake?
No equity stake, no deal.
Yglesias doesn't understand why Paulson needs all $700 billion right now:
If congress feels like taking Paulson at his word, they can appropriate some fraction of $700 billion deemed adequate to tide Paulson over until November, add on a second stimulus and some measures to start reorganizing mortgages, and then let everybody keep studying the issue. Then if Paulson wants more money after the election, he can send a request that’s coordinated with the president-elect’s transition team to the lame-duck congress. Why should a rushed process commit us to spending months from now?
Bernanke is a liar. You know it, I know it, and Bernanke knows it. The idea that taxpayers are going to get "good value" of out $700 billion of pure garbage is insanity, especially if those auctions are rigged.
Congress should drive the hardest deal it can with Wall Street. But Congress also needs to pay direct attention to Main Street. It should extend unemployment insurance, freeze mortgage rates, and pass a stimulus package that generates more jobs.
Unless Americans on Main Street have more money in their pockets, Wall Street’s bad debts will continue to rise -- which means the Bailout of All Bailouts grows even larger, which means taxpayers take on even more risk and cost.
