Economics

Why the Bailout Died in the House

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What a strange and wonderful narrative that's coming out of the failure of the bailout bill in the House o' Reps yesterday:

Ms. Pelosi delivered the Democratic votes she had promised, but could not muster enough of them to avert a defeat that could long be remembered.

More here, from The New York Times.

Now, we "know" why the Republicans pissed on the bill (well, by a 2-to-1 margin, meaning 65 GOPpers voted for the bailout): Speaker Nancy Pelosi (D-Calif.) gave a rankly partisan speech that dried House Minority Leader John Boehner's teary eyes and steeled the will of the free-market ideologues to vote against a bill they know is bad for all sorts of reasons (more on that in a second).

But why didn't the Dems, who hold a freaking majority in the House, not pass the bill on a party-line vote? Did you get that above about the Dems? Pelosi delivered the votes, but just not enough of them. WTF? That's like a line from Pravda.

Actually, according to the morning yak shows, she gave passes to tons of congressfolks in "tough" re-election fights, and to various other folks who didn't like the bill.

In any case, here are two non-ideological reasons why it's great that this bailout went down the tubes faster than you can say "Bearstearnswachoviaaig":

1. This thing was The PATRIOT Act of the financial world. That is, it's a bill designed to address an enormously complicated situation that will have incredibly far-reaching implications probably for decades. Warren Buffet and others have invoked Pearl Harbor to conjure up the need for speed when it comes to the bailout. But this isn't war. Or terrorism. Or even a depression. We've got time to work through the details, which are all that matter. There isn't any need to pass virtually any bill in seven days, or even seven weeks, or even seven months. Especially important ones. That's one (of many) lessons of The PATRIOT Act experience.

2. This thing is gigantically unpopular with the American people. Polls show large majorities against the bailout, which suggests that, at the very least, the Hank Paulsons, George Bushes, Barney Franks, and Nancy Pelosis of the world have done a real crap job of selling the bill to people. At least since federal soldiers illegally kicked the Cherokees out of the Southeast, the government has had a credibility gap wider bigger than Lyndon Johnson's earlobes. That trend has, er, only accelerated under President Bush for reasons that don't need to be rehearsed here. And Pelosi, remember, came into office saying the Dems were going to be the party of fiscal responsibility—and then larded up a farm bill with more lard than a Golden Corral parking lot. This bailout came with a "Trust Us" sticker on it. And no one is willing to trust the government (a good thing, actually).

If you believe in, coff coff, "Free Minds and Free Markets," there are plenty of other reasons to be glad that any bailout effort tanked. Most of which are rooted not simply in anti-interventionist ideology but in pragmatic concerns over the ways that rules work and how institutions are governed. You can read about them by scrolling through the past week's, month's, and (40) year's worth of economics coverage in reason. So there's no need to go in to them right here. But if you want to, start here.

NEXT: Are We All Evil, Stupid, or Just Insane?

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  1. A koan:

    If a party’s Congressional leadership can’t deliver more than 1/3 of its caucus on a vote, is it still that party’s Congressional leadership?

  2. Did you get that above about the Dems? Pelosi delivered the votes, but just not enough of them. WTF? That’s like a line from Pravda.

    Yeah, that’s surreal.

    “I passed…but I failed!”

    “Well, then I’m happy and sad for you.”

  3. Pelosi set up a win-win for herself. If the bailout failed, it’s the GOP’s fault. As the economy worsens and banks continue to fail, she can point at the GOP and say “they did it.”

    If the bailout had passed, she was already blaming the GOP for the lousy financial situation and could pat herself on the back for crossing the aisle to at least so something.

  4. There was a deal between Boener and Pelosi. She’d deliver about 130 votes, and he’d deliver about 100. She counted carefully and decided who to whip (Congressmen in easy districts) and who gets a pass (those facing tough re-election fights). She ended up delivering a little more than 130.

    The interesting question is whether Boener let his grumbling caucus off the hook, or whether they defied him.

  5. elosi set up a win-win for herself. If the bailout failed, it’s the GOP’s fault. As the economy worsens and banks continue to fail, she can point at the GOP and say “they did it.”

    She put herself so far out front of this issue and so many of her own party gave her such a swift kick in the ass on this (yay!), that she’s going to be the public face of the scapegoat, after Howlin’ Hank Paulson, who will be seen more as an untrustworthy chicken little.

    Live and die, by the sword and all that stuff.

  6. Let me get this straight. It is financial armagedon, the end of the world, 1933 all over again, yet you give your members in close districts passes to vote against the bill. Either Pelosi is lying when she says things are that bad, which since she lies about nearly everything is certainly possible, or she is more interested in power than the well being of the country.

    I am starting to think maybe this whole thing is overblown. The problem is that it is impossible to tell the truth. The media is basically the ministry of truth for the Democratic Party and interesting in nothing beyond getting Obama elected, so they will never tell anything not calculated to achieve that end. You would like to think that Pelosi would do the right thing. But, Pelosi is probably one of the three of four dumbest people ever to hold office in this country. She is wrong about nearly everything. Is she wrong about the scope of the problem? Does she just not care? Her mind is so simple, yet so craven, I am not really sure how to read it.

  7. The bill was toxic and everyone knew it, so neither party was going to champion this thing.

    And if you’re up for a tough re-election in 30-odd days, “I stood up to Bush and Wall Street!” sounds a lot better than the alternative.

  8. It is financial armagedon, the end of the world, 1933 all over again, yet you give your members in close districts passes to vote against the bill.

    …because you had a deal which led you to believe that you had a safe margin to pass the bill. Funny how you managed to forget that part.

  9. Matt Lauer and the Today show had some fun groupthink going on this morning. Lauer and that rodent they bring on for political analysis, Chuck Todd, poked fun at congressmen who voted against the bill and called them cowards (iirc, “the opposite of brave”) for voting how their constituents wanted them to vote.

    The horror, the horror.

  10. She had a deal Joe. Yeah and when the votest didn’t come in, she couldn’t as speaker, hold the vote open and tell her members to switch their votes? It would have been very easy. Either Pelosi is dumb as a brick or didn’t want the thing to pass or chose to watch it fail and let the country go down the tubes for partisian advantage. This is the House not the Senate. The majority and the speaker hold all the cards. Pelosi has not been above using her power on other issues but didn’t here. But it is still all the Republicans fault.

  11. John, do you think Boener was unable to deliver the votes he promised, or that he blew it off?

    Based on is initial reaction – blaming it on mean Nancy Pelosi and The World’s Meanest Speech – I’m inclined to think he just lost control of his caucus.

    But then, that doesn’t sound like the lockstep Republican caucus we’ve seen for the past decade and a half, does it? Is that only how they operate when they’re in the majority, or was this a unique episode relating to this particular bill?

  12. Yeah and when the votest didn’t come in, she couldn’t as speaker, hold the vote open and tell her members to switch their votes?

    She could have, but not for this bill. Remember, this was the bill that was negotiated with the Republican House caucus after they blew up the previous bill at the end of last week. The Dems conceded a lot to get them on board.

    If Pelosi is going to twist arms to get a bill through her caucus, she probably isn’t going to do so for a bill like that, but for a Democratic bill.

  13. I am strting to come to the conclusion that the thing is a bunch of horseshit designed to save the fortunes of Paulson’s Wall Street chronies. So what if the markets tank? The markets have tanked before and historically had very little long term effect on the economy. We are due for a recession anyway. Further, business don’t depend on banks for credit anyway. Most of them use bonds. Ultimately, I don’t see how this is anything but taking money from productive people and giving it to unproductive. Why not use $700 billion to help by letting productive and profitable businesses grow? There is no credit? Fine let the fed loan the money to solvent banks on the condition they immediately loan it out. People can’t pay their mortgages? Fine, take some of that money and give it them to help them pay their mortgages. Anything has got to be better than this.

  14. joe,

    I was talking with a GOP friend yesterday and suggested that the NO voters could use this an an opportunity to change leadership – push the Flake, et al group to the forefront. Obviously, you dont do it right now, but come January with the new congress, use this vote as the measuring stick – “if you dont support the leadership on financial issues, lets pick new leadership”.

  15. I think I’m through reading Reason. I’m tired of this ironically mindless talk of “free minds and free markets”. “Free” markets are your hammer, and the world looks like a nail to you. I thought I was a free market proponent until I started reading this magazine’s coverage of this bailout plan. What a stunning lack of historical and economic perspective. Not to mention plain stupidity. Yesterday, Matt Welch quoted an article that complained “Why isn’t the TED spread even at record levels if this is a real crisis?” This is so incredibly ignorant, it’s almost at Sarah Palin proportions. And now, this comment from Nick Gillespie citing POLLS as a legitimate argument against the bailout plan. And his argument is a straw man attack linking the bailout to the PATRIOT act.

    All of this is just the opposite of “reason” to me.

  16. All of this is just the opposite of “reason” to me.

    Damn, it’s early, but drink!

  17. Anything has got to be better than this.

    “This” being the Paulson bill, and the various amended versions.

    Maybe that track is gone for good. Neither the Democrats nor the Republicans in Congress liked the basic idea behind that bill – they just agreed to use it as the basic framework because it’s what they had in front of them.

    Well, it failed – and not just some initial version, a later version that had been considerably tweaked to make it as broadly acceptable as possible.

    So, now onto something else.

  18. Joe,

    You are right. Boehner was a moron for claiming that people voted against the bill because of Pelosi. Yeah, Pelosi is an ignorant hack. They are suprised by this? That was dumb on their part.

    Ultimately, the leader bears the responsibility. She is the majority leader and couldn’t make it happen. Her job is to control her party and she had no business, assumeing things are this serious, telling members they were okay to vote against it.

  19. The interesting question is whether Boener let his grumbling caucus off the hook, or whether they defied him.

    He let them off the hook.

  20. The voices in my head won’t stop screaming!
    Must see doctor for another prescription.

    Most incompetent speaker of the House ever….
    Not qualified to be third in line to the Presidency……

    Dems crazy knee jerk affirmative action leads to gilded housewife dabbler as majority leader of the US congress…….

  21. John,

    she had no business, assumeing things are this serious, telling members they were okay to vote against it.

    I think this is key. Did the speaker in 1941 tell members they didnt need to vote for Declaration of War against Japan is they had a close race?

    Certain things are so important that they transcend partisan politics. We were told that this was one of those things. It clearly isnt. If the bailout is necessary to prevent financial armageddon, then the members wouldnt give a damn about the election in 5 weeks, they would vote for it anyway.

    I would like to thank Pelosi for making the best argument against the bailout.

  22. You are right. Boehner was a moron for claiming that people voted against the bill because of Pelosi.

    I think he was being truthful. I think he was genuinely pissed off. He’d whipped a lot of people who didn’t like the bill into supporting it, and then Pelosi ticked them off and he lost them.

    Her job is to control her party and she had no business, assumeing things are this serious, telling members they were okay to vote against it. If she had the votes from the Republicans to pass it, why not? A better line of criticism would be, she had no business giving a fire-breathing speech that would alienate Republicans if she was depending on them to pass the bill.

    The ball’s in her court now. If she can get something passed – whether a different bipartisan bill or a Democratic bill voted on party lines – she’s made in the shade. She’ll be the one who got a better bill passed after the Bush Bill failed. If not, she’s in the dog house.

  23. robc, do you think anybody was opposed to the declaration of war in 1941? Do you think there is a single district in America in which voting to respond to Pearl Harbor would have been politically damaging?

    Terrible analogy.

    We were told that this was one of those things. It clearly isnt. Or, it is, but there’s still time on the clock.

  24. joe,

    She’ll be the one who got a better bill passed after the Bush Bill failed. If not, she’s in the dog house.

    Who gets the credit if nothing passes and things survive just fine without it?

    GOP for being the majority of the votes against? Obviously not the GOP leadership. Dems who voted against? Pelosi for pissing people off and causing it to fail?

  25. Seriously, the commentary around the blogoworld regarding ‘why this failed’ is so partisan, it’s hard to tell ‘why’. So thanks for this article.

    However,
    “But why didn’t the Dems, who hold a freaking majority in the House, not pass the bill on a party-line vote? Did you get that above about the Dems? Pelosi delivered the votes, but just not enough of them. WTF? That’s like a line from Pravda.”

    OTOH, the President and Paulson wanted this to pass also. That they could not get even a plurality of their own party does say something (nothing new, of course; that Bush is a lame duck isn’t a shocker). And doing a strict party line vote would have been difficult for two reasons – getting their two wings together to ‘bail out wallstreet’, no matter how left leaning a bill, is not a trivial task. And two, then their bill would either get a Bush veto or a more likely a Senate fillibuster.

  26. joe,

    do you think anybody was opposed to the declaration of war in 1941? Do you think there is a single district in America in which voting to respond to Pearl Harbor would have been politically damaging?

    I couldnt come up with a better one. Name another event in which it was being sold as a major, must act now crisis that also was opposed by most americans? I cant think of one. The Patriot Act maybe, but it wasnt being pushed as hard as the bailout has been plus, for whatever reason, I think a majority supported it, at the time.

  27. Pelosi is a lousy Speaker, but most of them suck. In this instance, she may have acted intentionally, not wanting to openly oppose the bill but not wanting to pass it either. The idea that she can look good after this is questionable, because the GOP played a bigger role in opposing this than her party did.

    I doubt seriously that anyone voted one way or the other due to anything she said. There are perfectly valid reasons to vote either way, though I personally think the “ayes” were mistaken. Unfortunately, we’ll be inflicted with some sort of bailout before this is all done, I’m sure. If not, maybe Bush will send the Army in and force Congress to vote. ‘Cause it’s an emergency.

  28. James,

    I am so happy over this vote failure I think I wetted myself. Congress had a choice between three to six months of painful market correction, or three to six years of painful recession or depression. Miracle of miracles, congress chose the former!

    This crisis came about because of anti-market policies. First we had artificially easy credit that caused a housing bubble. Whenever that bubble looked like it was slow the Fed would inject more money into the system. Then when the bubble started to burst the Fed stepped in to stop it. The bubble got bigger and the gummit stepped in again. But surprise surprise, the bubble still kept getting bigger! The solution is to let the bubble pop, not to let it continue to grow with a one trillion dollar debt funded bailout. The pop may be painful, but to make a disgusting analogy, it’s better to lance the abcess now than to let the leg get gangrenous.

    A “free market” is about letting people interact freely and voluntarily, rather than trying to order behaviors with government controls and force. 100% free markets do not exist, but the freer you can make it, the more you let people act freely, the better the economy will be in the long run.

  29. robc, do you think anybody was opposed to the declaration of war in 1941? Do you think there is a single district in America in which voting to respond to Pearl Harbor would have been politically damaging?

    There was that one woman from Wisconsin (Minnesota? one of the Dakotas?) who voted against both WW1 and WW2.

  30. Episiarch | September 30, 2008, 10:11am | #

    “I passed…but I failed!”

    “Well, then I’m happy and sad for you.”

    Man, you are DETERMINED to ride Chris Knight all the way to the finish line aren’t you?

    BTW, I have already decided to go to the Capitol early Thursday morning, and kill all the mics and cameras, which apparently renders Congress completely powerless..at least it worked for Pelosi. Now how could we do that without getting shot….hmmmm…

    “Hang on a minute, hang on… we could use a pinch. ”

    “What’s a pinch?”

    A pinch is a device which creates, like, a cardiac arrest for any broadband electrical circuitry. Better yet, a pinch is a bomb – now, but without the bomb. See, when a nuclear weapon detonates, it unleashes an electromagnetic pulse which shuts down any power source within its blast radius. Now that tends not to matter in most cases, because the nuclear weapon usually destroys anything you might need power for anyway. But see, a pinch creates a similar electromagnetic pulse, but without the fuss of mass destruction and death. So instead of Hiroshima, you’d be getting the seventeenth century.”

  31. robc,

    That’s tough to suss out. The revolting House Republicans and Democrats, maybe? Certainly not Pelosi, since she’s so plainly tied to trying to pass a bill. Nor the GOP as a whole, since Bush, Paulson, McCain and the Congressional leadership were all on board.

    Was the S&L bailout this unpopular?

  32. The entire congress voted for the Patriot Act. It was hugely popular and people demanded it. This bill is hugely unpopular and people were rebelling. Any way you look at it, Democracy worked this time. People don’t want to bail out wallstreet. I am not sure I don’t agree with them. But, if we don’t bail out wall street and it turns out we should have, voters have only themselves to blame.

  33. You know, this was George Bush’s bill, not Nancy Pelosi’s. When is it the responsibility of the Democrats to pass Republican legislation? In her speech, Pelosi ridiculed Bush and then voted for his bill. According to Republicans, Nancy was so mean to George, they voted against George’s bill, to punish Nancy! Smart! Real smart!

    The irony is, I was against the bill, and still am, and I’m a Democrat! I guess it’s some sort of damn kismet that Nancy derailed the bill by supporting it.

  34. If a plan is so stupid and ill-conceived even a majority of Congressmen can tell…

  35. Man, you are DETERMINED to ride Chris Knight all the way to the finish line aren’t you?

    I’m not sure I like your phrasing here.

    “Would you prepared if gravity reversed itself? The only thing I can’t figure out is how to keep the change in my pockets. I’ve got it. Nudity.”

  36. John,

    if we don’t bail out wall street and it turns out we should have, voters have only themselves to blame.

    Here is my question: what result would lead to you saying, “Huh, I guess we should have bailed them out?”

    I cant think of one for myself. Short of the complete disintegration of western civilization, that is.

  37. Oh, by the way, it was Jeanette Rankin, from Montana, who voted against WWI and WWII. She came from a largely German district, not exactly excited about going to war against the Fatherland. She was elected for only two terms, in 1916 and 1940. There’s a park dedicated to her in Missoula, Montana, which is a very nice town. In fact, it’s looking better and better every day.

  38. There was that one woman from Wisconsin (Minnesota? one of the Dakotas?) who voted against both WW1 and WW2.

    Montana. Jeannette Rankin.

  39. I was against the bailout until the House voted against it. Now I think I must have missed something and should reasses.

  40. reassess. actually, i may have meant reasses.

  41. Montanta: Representative Jeannette Rankin. “No” for WWI, “No” for WWII.

    http://en.wikipedia.org/wiki/Jeannette_Rankin

  42. Why is that toy on your head?

    Because if I wear it any place else, it chafes.

  43. “You see Mitch, I used to be you, and lately I’ve been missing me, so I asked Dr. Hathaway if I could room with me again and he said sure.”

  44. “Here is my question: what result would lead to you saying, “Huh, I guess we should have bailed them out?”

    I cant think of one for myself. Short of the complete disintegration of western civilization, that is.”

    Honestly, neither can I.

  45. I never thought I’d say this but if it come to a choice between a bailout or complete and total collapse… “Screw Western Civilization”

  46. The fact that Pelosi is from Berkely and buys in to the Berkely mindset hook, line and sinker tells me she isn’t very smart. Certainly not smart enough to believe losing could be winning.

  47. I think he was being truthful. I think he was genuinely pissed off.

    With good reason. Pelosi telegraphed her punches, letting the Repubs know that she was going to get them to take the fall for any backlash against the bill.

    Under those circumstances, I would have said “fuck you”, too. Of course, I never liked the bill in the first place, but if I had deep reservations, the stated intention of the Dems to let its own at-risk members take a pass, while trying to put a knife into every Republican, would have led me to say “screw this – the Dems aren’t willing to put anything on the table, so neither am I.”

  48. The ball’s in her court now. If she can get something passed – whether a different bipartisan bill or a Democratic bill voted on party lines – she’s made in the shade.

    I think it depends on what she shoves through. If its a genuinely bipartisan bill (and good luck with that, after her blown double-cross of yesterday), maybe. If its a Dem-only bill, then she takes the fall for the backlash. Which is likely to be huge.

  49. Right, right, RC. If she passes something really unpopular, it wouldn’t help her.

    But it doesn’t look like an unpopular bill is going to pass.

    But what makes you think that a Dem-only bill is going to cause a huge backlash? Or that a bipartisan bill wouldn’t? People hated the bipartisan bill, but the Democratic proposals include popular stuff.

  50. “her blown double-cross”

    If she couldn’t live with the bill that failed yesterday, but also couldn’t be seen opposing the negotiated bill, what happened yesterday was the best possible outcome for her.

    She now has a free hand to go partisan if she wants, and she isn’t tied to Bush and Paulson’s basic outline anymore.

  51. joe,

    If she couldn’t live with the bill that failed yesterday, but also couldn’t be seen opposing the negotiated bill, what happened yesterday was the best possible outcome for her.

    This is a if A and B then C scenario. And the logic is solid. What I dont understand is B: “couldn’t be seen opposing the negotiated bill”. Why not? She is frickin’ speaker of the house. Possibly, the most powerful position in the government (due to lack of term limit). If she opposes the negotiated bill, show some balls and state it openly. It will be a sign of courage, not of weakness. Look, I realize there are times when people vote the party line in opposition to their personal beliefs in order to maintain party unity (and as tradeoffs). But, this isnt one of them. This may be the most important issue (other than maybe wars) that will ever be voted on by these people. This is the time to not worry about party politics and other bullshit and vote for what is right. I may not agree with Pelosi on what is right, but she still needs to act with courage and responsibility.

  52. That’s like a line from Pravda.

    Pravda, The New York Times… same difference.

  53. What I dont understand is B: “couldn’t be seen opposing the negotiated bill”. Why not?

    Because she was one of the negotiators. If she’d come out against her own bill, she would have looked awful.

    Pelosi has staked out the position that something needs to pass. Yesterday, she brought up a bill that was carefully negotiated on a bipartisan basis, and the opposition killed it.

    She can now say that she did everything she could to pass a bipartisan bill, but the mean old Republicans wouldn’t go along, even after getting all sorts of concessions. So now, she can push for a bill she and her caucus actually like, ram it through on a party-line vote, and say she would have preferred somethign bipartisan but the mean old Republicans didn’t want to play, leaving her no choice.

    I don’t think she has a responsibility to pass a bill with Republican support; she has a responsibility to pass the best bill, by her lights, that she can get through. You’re telling me there’s politics going on here, and that she’s acting in an underhanded way to advance her agenda instead of playing with cards face up? Boo fuckity hoo.

  54. I wasn’t sure before.

    but “Real Genius” quotes have made hit and run the number 1 blog ever in my opinion.

  55. joe,

    You’re telling me there’s politics going on here, and that she’s acting in an underhanded way to advance her agenda instead of playing with cards face up? Boo fuckity hoo.

    That isnt what I said at all. I think she wanted to pass it and failed. I dont think she acted underhanded, I dont think she intentionally submarined things.

    I was just disagreeing with your logic. If she didnt like what she negotiated, she should have not agreed to it during the negotiations. I think it was good enough for her and she decided to play politics with it because she thought is was going to pass.

    I was just saying that a couragous politician can come out against an important bill that they dislike. You said she couldnt.

  56. I was just disagreeing with your logic. If she didnt like what she negotiated, she should have not agreed to it during the negotiations.

    By agreeing to it during negotiations, bringing it up, arguing for it as the best deal she could get, and voting for it she covers herself against charges of obstructionism and partisanship – and then it killed in a way that keeps her fingerprints off the body.

    I was just saying that a couragous politician can come out against an important bill that they dislike. If by “courageous,” you mean “Perfectly willing to lose both the issue and the policy,” sure. Nancy Pelosi could have been brave, and played the role of the Evil Lady Who Killed the Rescue, immediately after arguing quite vocally how important it was to pass, and marched off to a brave death.

    Or, she could set things up to make conditions more favorable for a bill she likes better.

  57. “””I am starting to think maybe this whole thing is overblown.”””

    Welcome aboard.

    Guy’s didn’t you hear Boner speak? The republicans opposed the bill because of Pelosi’s speech, not the bill its self. Which most of us know is really BS, I’m suprised he said it. The republicans can score points by refusing to hook the tax payers for the expense. Why Boehner would try to make it sound like it’s a partisan temper tantrum is beyond me. Stand up like a real man and call the bill BS.

    “””You’re telling me there’s politics going on here, and that she’s acting in an underhanded way to advance her agenda instead of playing with cards face up? Boo fuckity hoo.”””

    I’m always amazed at people claiming Congress is playing politics. They are not playing politics, we pay them, they work politics.

    “””But, if we don’t bail out wall street and it turns out we should have, voters have only themselves to blame.”””

    Bullshit. Fault still lays at causation. That’s sort of like me asking joe for a loan because I lost my money betting, then claming it’s joe’s fault I lost my house because he didn’t give me the loan.

  58. joe,

    Or, she could set things up to make conditions more favorable for a bill she likes better.

    Do you really think that was her intention. She can do that now, but I really think she thought it was going to pass. Do you really think she made a speech to intentionally cause republicans to not vote for it, so she could get something she liked better? She isnt that bright.

    Nancy Pelosi could have been brave, and played the role of the Evil Lady Who Killed the Rescue, immediately after arguing quite vocally how important it was to pass, and marched off to a brave death.

    She would have never made the argument in my scenario. Do you have no reading comprehension skills? Im discussing a hypothetical not the real situation.

  59. Don’t do that “reading skills” shit. I’ve been perfectly civil to you.

    Good bye.

  60. Here’s a *real* poll on the public’s view on the “bailout”:

    Washington Post-ABC News Poll

    Not everyone cares what a democracy thinks (perhaps some think Reason can operate in a vacuum), but this poll doesn’t show the “bailout” as “gigantically unpopular with the American people”-what is gigantic is the number of people who are against the “bailout” who are vocal and call their congress members.

    For those mentally shackled to the “Free Minds and Free Markets” doctrine (sliding the spectrum from experimental pragmatism to theoretical ideology): generally speaking, given that some positive feedback loops can be good (think compound investments)-do you really think there will be “naturally occurring” stabilizing negative feedback loops to counter every potentially explosive positive feedback loop?

    (E.g. Derivatives were unregulated? making transparency, and hence the public accountability for institutions that can have severe public externalities [e.g., economic woe], untenable).

    I’m not saying my mind is unfettered; but the prison guard of transparency can shed light on risk, and those who would game the system, even if the system had no rules. Slight changes in the rules of the game can have unforeseen consequences-but at what other time would one expect radical reform, other than in crisis? Both “No-Logo Naomi” Klein and “Negative Tax Milton” Friedman might agree on that.

    The difference between a confident deer caught in the headlights and a cowardly ostrich with its head in the sand-too subtle for me.

  61. Don’t do that “reading skills” shit. I’ve been perfectly civil to you.

    Boo fuckity hoo.

    Bullshit.

  62. do you really think there will be “naturally occurring” stabilizing negative feedback loops to counter every potentially explosive positive feedback loop?

    Yes. Gravity is a positive feedback loop on velocity of a fallin object. And yet, the ground still provides a negative feedback.

  63. robc – EVERY potentially explosive feedback loop?

  64. robc– consider an asteroid the size of Manhattan! Yes, it stops, but what does it take with it?

  65. “I’m not saying my mind is unfettered; but the prison guard of transparency can shed light on risk.”
    Man, that’s like a Paul Simon lyric or something. (The singer, circa Rhythm of the Saints, not the former senator from Illinois.)

  66. Thanks… but I’m not really saying I have “dangerous mind.”

  67. EVERY potentially explosive feedback loop?

    I dont think it has been determined yet whether the big bang leads to expansion forever or to an eventual crash, so maybe not EVERY.

  68. consider an asteroid the size of Manhattan! Yes, it stops, but what does it take with it?

    Hopefully, at the very least, Manhattan.

  69. No wait. Wrong album.
    I’m thinking of:

    The Misissippi Delta
    Is shining like a national guitar.
    I am following the prison guard of transparency
    shedding light on the risk of the Civil War.
    I’m going to Graceland, Graceland…

  70. Casten,

    You may want to read my 11:07 post.

  71. This whole thing is being over-thought.

    My take on this issue it that it’s a sector bubble burst. The housing bubble started collapsing so naturally so did the securities backing it. No mystery there. The investment firms are predicting this issue to continue therefore the MBSs are probably sink even more. So they want to do what any good investor would do, load them off onto some poor sucker. But because the housing issue is obvious and expected to continue downward, they can’t find any buyers for the MBSs, so they need to sell them to someone who is willing to force some sucker into buying them. The government is that someone, and we are the suckers.

  72. Robc says,
    “Here is my question: what result would lead to you saying, ‘Huh, I guess we should have bailed them out?’

    I cant think of one for myself. Short of the complete disintegration of western civilization, that is.”

    Is that a judgment based on pragmatics, principle or both? The disintegration of Wall Street? Or, the ever popular buzz phrase “Main Street?”

    TrickyVic- Maybe you could explain Credit-Default-Swaps too… some are thinking they need to avoid Warren Buffet’s “Armageddon.”

  73. Is that a judgment based on pragmatics, principle or both?

    Both. Principle primarily, but I think it is pragmatic to. I will take some short term pain to make the long term economy better. Bailouts prevent some short term pain for a long dragged out illness. Like Japan in the 90s.

  74. Casten,

    BTW, I generally consider principle and pragmatics to be the same. My measuring stick is freedom not dollars. So the thing that pragmatically increases our freedoms generally follows principle too.

  75. robc- you may be right… some market analysts see this as difference between a 5 month vs. a 5 year recession (the “bailout” plan). I’m definitely for transparency regulation, but if “global” credit begins to freeze? A lot of the “bailout” plan would depend on how much taxpayer money could be recovered from asset sales. Why not let that huge company, Uncle Sam, play real-estate banker– would you deny another monopoly that action? (This assumes no tax-payer cost).

    Freedom? What about power?

  76. Some might say we already have anarcho-capitalism, but the US Government Company has all the big guns. Being a “radical moderate”– I’m not so sure.

  77. Sadly, I’ve spent a lot of time watching CNBC these last few, and this shallow reference to “main street” seems quite condescending to me (where “wall street” is lower manhattan, and “main street” is the rest of the country).

    I strain for human words to come out of these talking heads, but they are SO geared towards wall street that the “case for main street” was nothing more than a few scattered remarks about “availability of student loans” and “making payroll for auto dealers”.

    If that’s the best case they can make, then there SHOULD have been serious circumspection on this bill.

  78. Ed– I really do think some “ranting” CNBC commentators like Rick Santelli could have a (possibly necessary) second career in Pro-Wrestling. (I do like Rick’s sense of humor though). I Completely agree that the “main street” phrase is condescending (and accusations that common folk just don’t understand what’s going on- although many polled confess they don’t– maybe this will be a tale of the Emperor’s New Clothes?).

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