No. Blank. Check!
Nobody, except extreme Libertarian ideologues, wants to see another 1929 Wall Street crash. So a bail-out makes sense. Except: a bail-out with no strings attached, not so much. A bail-out without recognition of the deeper structural problem of chronic current account deficits — the U.S. doesn't manufacture exports to pay for the imports we buy — for which there is no bail-out mechanism when foreigners stop wanting to buy dollars. And a bail-out that doesn't mention the huge market in derivatives (the definition of quadrillion may actually be needed soon). Congress should say, "Wait a doggoned minute, we won't sign a blank check!"
The objection is (according to Democratic insiders who were in the meetings), we don't — and can't — know the details of what's needed so just sign the check. But that doesn't hold water. It's only reasonable, and prudent, for Congress to demand that one condition of a bail-out be that officials appointed in a bipartisan way by Congress oversee what happens and that the entire process be transparent to the public. After the fact (partial, vague, what-have-you) reporting to Congress just doesn't cut it. Nor does any bail-out that enables Wall Street players to walk away with large severance packages.
Re-regulation, yes. But that can, and perhaps should, come later. It's complicated, it'll take time, and Congress should try to do it right.
My second point should actually come first on the priority list, but for the sake of political realities take my third point second. Congress has to talk about the huge dollar value of the derivatives market and make it clear that many/most/all hedge funds are expected to fail, and that, further, criminal penalties may well ensue for their principals and officers. Shut that market down!
The expectation is that after a bail-out the U.S. economy will recover. But how can that be if the U.S. isn't making things anymore? And if the U.S. isn't making things, how is it possible for working class Americans to have good paying jobs? This crisis represents either the chance of a transition to an industrial revival or an interim, failed step on the road to long-term economic collapse. And, obviously, to make the choice requires some discussion of the problem.
Progressive populist central calling Mr. Obama...
Posted by George Kenney on September 21, 2008 7:53 PM 
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Comments
Does your idea that the US needs to 'make things' and export them take into account the climate change problem?
To tackle climate change, shouldn’t all countries have to live as well or even better, while they make fewer things, travel, ship, import and export less, etc...?
I don’t think the idea that 'the economy will recover' is good news. It shouldn’t get back to the previous state that was intended to be totally ignorant of physical limitations. Neither destruction, nor return to the previous state of things, are good news.
Posted by: iSoph
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September 22, 2008 6:06 AM
Surely the US makes enough 'things' to export, mainly weapons. It's just a shame that American people buy more 'new toilet seats' from China than foreign regimes buy weapons from the US.
Buying less from China would have a positive side effect to the climate change issues and is much less destructive than to sell more weapons to make up for the trade deficit.
Posted by: Tom | September 22, 2008 7:47 AM
The first thing the Dems ought to do (which of course means they won't) is to reject the Bush/Paulson plan and refuse to even discuss it. The idea that we should solve a problem largely caused by unaccountable investment banks without oversight by handing $700 billion to a former investment banker without accountability or oversight is so ridiculous that no one should even discuss it absent derisive laughter.
I see that Senator Sanders has some cogent suggestions for an alternative, but I assume the "most liberal" Senator Obama will not diss his Wall Street campaign funders by exercising any leadership to bring hope to the American people.
I am in the midst of reading James Galbraith's new book "The Predator State" and he has the most apt and powerful description of the current situation I have yet read, and he wrote it before the full crisis hit. (George, what a great and timely guest he would make!)
Posted by: Democracy Lover
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September 22, 2008 11:58 AM
I agree with iSoph. (Also agree with Tom and Democracy Lover).
By the way, DM, it's even worse than handing over $700 billion — the language of the proposal reads in part, "The Secretary’s authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time." emphasis added.
It also states "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."
It reads like the financial version of the Patriot Act.
Posted by: 8isis8
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September 23, 2008 3:03 AM