What Cowboy Diplomacy Gets You
The dirty little secret to last week's crisis is buried in a quote from Henry Paulson in this morning's Times.
"Going back a long time, maybe a year ago, Ben, as a world-class economist, said to me, 'When you look at the housing bubble and the correction, if the price decline was significant enough,' " the only solution might be a large-scale government intervention, Mr. Paulson said. "He talked about what had happened when there had been other situations historically."Mr. Paulson said he agreed but hoped it would not come to that. "I knew he was right theoretically," he said. "But I also had, and we both did, some hope that, with all the liquidity out there from investors, that after a certain decline that we would reach a bottom."
There is in fact a lot of liquidity out there--in two places--sovereign wealth funds in China, Korea, Russia and the Gulf States--and in hedge funds. But neither the sovereign wealth funds nor the hedge funds want to touch this toxic waste. And so we the taxpayers are being asked to provide the liquidity.
It is a testimony to George Bush's Cowboy Diplomacy, that none of these countries will come to the rescue of American Capitalism. As for his white tie friends in the hedge funds that paid for his political campaigns, they're not taking his calls either.
So much for "Bring it on."
Advertisement
George W. Bush is the fullest expression of Reaganomics. And he just broke capitalism.
Did Usama bin Laden just win?
September 21, 2008 2:50 PM | Reply | Permalink
Ha! I think you're right, no wonder we've had such trouble trying to define "Victory"; it turns out it's not ours, it's theirs.
September 21, 2008 4:19 PM | Reply | Permalink
So where are the Feds going to get this $700 billion for the bailout? Exactly where Bush & Co got the money for their tax rebates and other give aways, the Treasury goes out and borrows the money. So we are not only buying Toxic Assets that may have no long term value but we're also paying interest on the money we're using to buy them. Sounds like the financial institutions are the only ones winning here.
We should pump more money into the FDIC to cover bank deposits at failed institutions and that is legitimate. Some banks will fail just like some businesses will fail. The Government had to take over Fannie Mae and Freddie Mac, they were originally public corporations and should have stayed public. It should not be difficult to sell off AIG in pieces without a big dent to the US Treasury, but new laws regulating insurance corporations need to be enacted. I feel very uncomfortable with any Treasury Secretary and FRS Chairman committing billions of dollars without Congressional leaders being involved at all stages.
Paulson may not have had a piece in the WMD/Iraq Conspiracy but he is tainted by association with this Administration, same with Bernanke. No blank check without a plan that includes checks and balances to protect the public.
September 21, 2008 4:33 PM | Reply | Permalink