Econbrowser, started by Peak Oil aware economist James Hamilton, has commented very little on the rescue plans.

Menzie Chinn, the other half of Econbrowser, cautiously posts:

I think the members of Congress who voted against the plan the first time should, this time around, ask themselves this single question: "Do I Feel Lucky?" Those who are familiar with this quote will understand my meaning.

Caveats: First, of course, the plan is not perfect; but as they say, don't let the perfect be the enemy of the good. Second, the metaphor is inexact; in this case, collateral damage would encompass everybody -- innocent and guilty alike -- as well as the entire global macroeconomy.

As is often the case, the commenters don't hold back:

Commenter JG:
They are throwing out liquidity aids when this is a solvency issue.

Until they address the underlying cause of the financial stress -- that U.S. households will not be good for their $14 trillion in debt -- they will be just postponing and exacerbating the implosion.

The bailout bill will not work, and will further freeze markets: why sell on the open market low when you can sell to the Treasury high? Why buy from a bank with whom you may not have recourse (risk of BK) when you can buy from the Treasury with whom you may have recourse?

The good news is that this effort will not last long. The economy is in a death spiral, and tax revenues are plummeting. When the bill passes tomorrow, foreigners will really get skittish about holding U.S. government debt, 'cause they see a whole lot more is going to be issued and they see the tanking U.S. economy.

When those foreigners get skittish and stop buying our t-paper, the game is over. The bailout bill will accelerate this, is my guess.

Commenter MarkS:
Thanks Menzie for noticing that this most important economic event in the last 80 years finally deserves a discussion on the Econobrowser.
My viewpoint is that it is UNCONSCIONABLE that the US government will securitize as national debt, derivative instruments originated by the US investment and banking industry. We are paying off the same people who participated in the fraud.

The government, through the FDIC, Comptroller of the Currency, and the FRBs, has all the power it needs to close down insolvent banks. The government can then take equity stakes in the survivors as it recapitalizes the system via banking institutions that have proved they are well managed... The TARP legislation does little more than enable end-game bank looting before checkmate.

See this NY Times article by Gretchen Morgenson on how AIG got suckered into owing $20 billion in Credit Default Swap settlements on Goldman Sachs securities.

Bookies in the U.K. are now taking bets on the first major city to experience a government acknowledged ECONOMICALLY INDUCED RIOT:

Nobel Laureate Joseph Stiglitz: Bail Out Wall Street Now, Change Terms Later

JOSEPH STIGLITZ (winner of the 2001 Nobel Prize in Economics. He is a professor at Columbia University and the former chief economist at the World Bank.) agrees that it is a bad bill. I wonder if Obama will be willing or able to change it later.

This is the point I made before, that we’re having a massive blood transfusion without stopping the hemorrhaging at the bottom. Real estate prices are likely to continue to fall. And we need to do more. This proposal does very little to stem the underlying problem.

Well, first, let me make an observation, that it wasn’t very long ago that the President vetoed a bill to provide healthcare, health insurance, to poor American children who otherwise would not get healthcare. Without that healthcare, they could be scarred for life. And he said—and this is a bill that costs a few billion a year—he said we could not afford it. We didn’t have the money. All the sudden, we found this $700 billion to help Wall Street. And that sort of shows you a sense of priorities, a sense of proportion.

The fact is that Americans are not saving. Household saving has been close to zero; some quarters, it’s been negative. One of the problems with the Bush administration is that it thinks that tax cuts are a solution to every problem, and the February stimulus package focused on encouraging even more consumption through the tax cut. So, what does that mean? That means to finance this money, we’re going to have to borrow money. But where are we going to borrow it from? America is not saving. So, most of this money, or at least a significant fraction, is going to come from abroad. And that means we are going to be more indebted to China and to other countries. Our living standards in the future are going to be lower. We’re going to be sending checks on interest, and banks will repay it, on principle, abroad, money that could have gone into improving our standard of living, a whole set—you know, education, technology, infrastructure, to make our economy more competitive.

The basic lesson of economics is there’s no such thing as a free lunch, and there’s no such thing as a free war, and there’s no such thing as a free bailout. Our resources are scarce, and we’re going to have to give up something. And the amount that we have to give up will depend, in the long run, on how well we protect taxpayers in this bailout. And that’s one of the main criticisms of the Paulson plan. It’s not as well designed as it should be to protect American taxpayers.

Stiglitz seems to agree with Dmitry Orlov that the money will come from foreign interests that hold US Dollar assets.

Republican John McCain -- making the rounds of the morning news shows as polls show him falling behind Democratic rival Barack Obama and his running mate losing the confidence of voters -- sounded either bitter or fatalistic.

Asked why Obama has been rising as the Wall Street crisis has dominated attention, McCain said on Fox News Channel: "Because life isn’t fair.”

link

Life certainly isn't fair, but hearing John McCain complain about the hand he's been dealt should irritate anyone that isn't even sure they'll have a job next week.

“Bridge Loan to Nowhere”: Public Outcry Forces House to Reject $700 Billion Bailout of Financial Industry; Dow Falls Record 777 Points

ROBERT JOHNSON (former chief economist for the Senate Banking Committee): Well, first of all, Secretary Paulson put a dreadful plan forward, and it was as if he dropped a vacuum into the process. And Congress had to make a decision whether to adopt his simple and dreadful plan or put forward something of their own, but they had essentially one week’s time, with an anxious market, to put something together, so it was a very hurried process.

When they had made enough modifications, but essentially has adopted Paulson’s frame, you could feel the markets weren’t confident that it was going to work. The population, rightfully, didn’t feel like it represented them very well, and it was very unpopular. Republicans are very far out of power right now and losing power and afraid of losing their job. And some of the Republican congressmen thought they got a get-out-of-jail-free card. If they rebelled against this and actually represented the population, they could go forward claiming that they were on the side of the people. Democrats couldn’t afford to let them do that. And yesterday, Nancy Pelosi called the vote that she—how would I say?—I think understood would lose and send us all back to the drawing board.

AMY GOODMAN: You think she wanted it to lose?

ROBERT JOHNSON: I think it—I would say, probably, yes.

AMY GOODMAN: Why?

ROBERT JOHNSON: Number one, the Democrats can’t pass a bad bill and let the Republicans rebel against them. They’ll lose seats in the House. Number two, there’s now an opportunity to actually do something that’s much better vis-a-vis mortgage relief, a proper representation of the stockholders. You know, it’s as if we could have nominated Warren Buffett to represent the taxpayer. He would have structured the deal very differently. The deal we should get is the same deal Berkshire Hathaway stockholders get when he buys into Goldman Sachs.

AMY GOODMAN: Explain. What would Warren Buffett do now, if it was—if he was representing the taxpayers, and they were shaping this bill?

ROBERT JOHNSON: Well, the taxpayers have the strong hand. They’ve got the money. The Wall Street firms are weak. So he would go in. He would take control of the company, basically diminishing or wiping out the equity. He would probably ask for the resignation of top officials. He might not accept every resignation letter. He would restructure the company. He would sell off some assets. And then, when the company regained its health a few years down the road, he could sell those preferred stock shares back into the market and recoup the money for his investors, meaning, in this case, the US taxpayer.

AMY GOODMAN: In other words, he would restructure Wall Street.

BRUCE MARKS (founder and CEO of NACA, the Neighborhood Assistance Corporation of America): Why should we trust him with $700 billion of our money? There’s nothing you can do to this bill to make it palatable to the American people. And that’s why all the establishment and the economists have said we should do it. But you know what? The American people are smarter than that, and they’re saying, “Hell no! We’re going to stop this thing,” because if I was a congressman, if I was a senator, I’d be scared to death to go to my district and say I supported this corporate bailout. It’s an outrage, and we’ve got to call it for what it is.

AMY GOODMAN: What we have now is Washington Mutual seized by regulators before its assets were sold to JPMorgan. Now, the nation has three superbanks: Bank of America, Citigroup, JPMorgan Chase.

ROBERT JOHNSON: You say, too big to fail. Well, if you’re too big to fail, you’re too big to be let loose to do whatever you want to do, because, in essence, you’re a ward of the state. You’re like a public utility that we all depend on. And what they’ve tried to do is be too big to fail, but, on the upside, play whatever gambling games they want to do. That’s got to change.

AMY GOODMAN: Ten seconds, Bruce Marks, final words?

BRUCE MARKS: It is a real problem out there that these are so big they can’t even move to readdress what’s going on in the market. But again, the last words are: please, to all your viewers, call your congressmen, call your congresswomen. Tell them, don’t do the bailout. It’s working; we’re winning. The left and the right are coming together to stop this theft of the American taxpayer dollar. It’s a theft. Let’s stop it. We’re winning. We can kill this thing.

“Is this the United States Congress or the Board of Directors of Goldman Sachs?” Rep. Dennis Kucinich Rejects $700 Billion Bailout

REP. DENNIS KUCINICH: Well, you know, that implies that you would accept the underlying premise. I reject the underlying premise that we needed this bill. And as a matter of fact, that we’re putting this up before an adjournment in an election season shows that Congress is being put under extraordinary pressure to bail out Wall Street. We haven’t looked at any alternatives, Amy. This is—you know, it isn’t as though, if you had a liquidity crisis, that—you know, a real one—that you’d start to look at all the alternatives. We haven’t done that. We have a bill here, a bill of more than a hundred pages, that we haven’t had a single hearing on the bill, you know—on the concept, yes, on what Paulson and Bernanke asked for initially. But, you know, we need to have hearings on this. There’s 400 economists and three Nobel Prize-winning economists who have said, “Whoa, wait a minute! What are you doing? Why are you rushing this?” You know, this thing doesn’t smell right, frankly.

REP. DENNIS KUCINICH: I said we’re the Congress of the United States; we’re not the board of Goldman Sachs. Goldman Sachs is struggling to survive. And, you know, their former chief is now the head of the US Treasury. He’s in a position to be able to direct assets in a way that would help enhance his own financial standing. I mean, that’s a clear conflict of interest. And, you know, that’s something that needs to be said. You know, why are we permitting the person who has essentially been in a position where he’s managed assets that—you know, many of which are now in trouble, and he can come back and help clear the books for a lot of his friends? This is wrong. It’s fundamentally wrong. And, you know, it’s one of the things that adds a degree of stench to this.

Rep Roscoe Bartlett of Maryland has been one of the few persistent congressional voices warning us about energy depletion. He voted against the "and for other purposes" bailout, but has introduced two alternate plans:

Congressman Roscoe Bartlett said that he voted against H.R. 3997, the financial markets bill, because, “rushing to bail out Wall Street won’t protect Main Street.  This bill failed the basic tests I outlined last week.”   The bill was defeated 228 to 205. Congressman Bartlett was among 133 no votes by Republicans and 95 by Democrats.  140 Democrats and 65 Republicans voted for the bill. He released the following statement after the vote.

“As I said last week, you can’t privatize profits and socialize losses.  You can’t reward bad behavior. Protecting the assets of individuals and businesses and our community banks who played by the rules are fundamental requirements to restore confidence in our financial system.  

“The original proposal failed these tests. This revised proposal made improvements. However, it still amounted to trading private debts of unknown value for a $700 billion loan from taxpayers in the hopes that the taxpayers’ money would eventually be paid back.

“Instead, I have introduced the Main Street Protection Act (H.R. 7228) to provide real protection to the taxpayers. It provides an unlimited amount of insurance for accounts insured by the Federal Deposit Insurance Corporation (FDIC). It also authorizes the Secretary of the Treasury to protect the principal in money market accounts through the Treasury’s exchange stabilization fund. This bill is based upon recommendations by Dr. Lawrence Lindsey, an economist and tax policy expert who served as a Governor of the Federal Reserve System from 1991 to 1997.  It will protect assets and restore faith in our core savings institutions on Main Street.

“I have also cosponsored an Alternative Economic Rescue Plan (H.R. 7223) to provide Wall Street a mechanism to use private capital to restore faith in financial markets. It would create mandatory insurance for Mortgage-Backed Securities (MBS) by the Treasury Department paid for with risk-based premiums by the institutions that hold them. That will stabilize markets and establish a floor of value to these assets.  Providing temporary tax relief for private capital invested in these assets will make them more attractive and provide time for our financial system to recover.”

According to Roll Call, this is the name of the "bailout" or "rescue" bill that just failed in the house:

H R 3997 To amend the Internal Revenue Code of 1986 to provide earnings assistance and tax relief to members of the uniformed services, volunteer firefighters, and Peace Corps volunteers, and for other purposes