Thursday, September 25, 2008

$700 Billion or Bust? Why?

The nagging questions are how the Bush Treasury Department arrived at that sacrosanct figure, why it's not negotiable and what's wrong with authorizing it in installments.

Sen. Chuck Schumer, who comes from a tradition of never buying retail when there's an alternative, asked Henry Paulson why it would not make sense to put $150 or so billion into the markets and see what happens but got a bristling rebuke:

"I think that would be a grave mistake," Paulson answered. "This is about market confidence and the tools to do the job," he added, insisting he needed the full amount to deal with unanticipated contingencies.

Unanticipated? That's an apt description of the entire mess that his Treasury Department was slow to recognize but now claims with absolute certitude that it knows how to clean up, but only if taxpayers commit an enormous amount to a lame-duck Administration, no questions asked.

But, to the credit of Congress, members are not responding meekly to the pre-election panic this time as they did to the 2002 resolution to invade Iraq, but are negotiating for oversight and transparency, executive pay limits and equity interest on taxpayers’ behalf as well as a provision to allow bankruptcy judges to revise mortgage terms.

Their constituents should be urging them to adjust the price tag too to keep from tying the hands of the new President and Congress by giving away the store now.

This morning, President Bush will be trying to make his last sale in office to Barack Obama and John McCain but, to the credit of both, there are signs that they won't buy in whole-heartedly.

Paulson has no sure way of knowing how much is needed to calm the credit markets but, like his leader, is stubbornly arguing that he should be the Decider, even though he will be long gone if and when he turns out to be wrong.


R. S. Abrinaud said...

Forget $700 billion. Can I have $700 grand? I don't really need the money as a bail-out, per se. I don't carry any credit card debt. I don't have a mortgage--our family owns our land and our house. The most I've got is a few leftover student loans that are a drop in the bucket compared to most folks'. Still, I'd love to have that kind of money to buy a plot of land in full and build a modest house on it, to get myself a hybrid car, and to invest in my own small business--which *would* help to stimulate the economy. I mean, since the Government is so keen to give away cash...

Oh. That's right. If I'm an ordinary person suffering financial difficulties or even just looking for a handout, then I'm a "whiner", I'm lazy, I just need to "suck it up", or maybe get a second or a third job. Isn't that what key Republicans have been saying for a while now?

I guess the rules are different for rich moguls who take bad financial risks. I guess *they* don't have to suffer consequences for their poor stewardship and reckless behavior.

My mistake.

Anonymous said...

Buy Euros if you have cash to do it with. We are going into hyperinflation if
this expropriation goes through. Hell, I always wanted to own an insurance
company; But I never wanted to risk $6000. Now Paulson will override my
reticence and take it from me whether I like it or not. I hope we get the same deal Warren Buffet got, a guaranteed 10% per
month on his dough.

I can understand the CEO's balking at any give backs. At 70 million a year they
are only getting $35,000 an hour. That may be the price of loaf of bread next
week. I am glad I have a wheelbarrow. I can use it to carry my change to the
parking meter.