I used to think the brain was my most important organ. But then I thought: Wait a minute, who's telling me that? ~Emo Philips.
Every time I ponder this bailout, I come back to that quote. Wall Street is telling us that Wall Street needs to be bailed out. A Goldman man has run the Treasury for six of the last thirteen years. I am sure that they think what they are doing is necessary. But anyone who works long in any industry comes to view it as having an outsized importance in the world. If you doubt this, spend a few moments listening to journalists prate about the sacred privileges of the press.
The problem is that they're sort of right. There is no industry in America that does not depend upon Wall Street. If credit seizes up and the banks fail, everyone will suffer deeply as businesses cut back for lack of capital, mortgage capital dries up, credit card rates rise and car loans become hard to get.
But that doesn't mean one has to support the current bailout--you can add me to the list of libertarians standing athwart history shouting "stop!!!" I don't think we can punish risk taking managers and the shareholders who enabled them as thoroughly as we might like without possibly taking the rest of us down with them. But allowing banks to selectively offload their crap on the government without so much as a rap on the knuckles for having bought the crap in the first place is taking things too far.
Of course, I'm not Hank Paulson and Ben Bernanke, and I'm not privy to their information about the markets. What information I do have from various insiders suggests that the financial system was perilously close to simply ceasing to function on Thursday night. So I'm loathe to opine too certainly about the necessity of bailouts. But I'm pretty sure that we don't need to hand the bankers hundreds of billions worth of treasuries as a reward for a job well done.
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