Let’s do a little critical analysis of Dean Baker’s sanguine column opposing the bailout, shall we? Baker starts out by telling us that there is no financial crisis.
I’ve heard lots of phony stories. Much of the country’s political and economic leadership has been running around raising the prospect of the Great Depression and a breakdown in the banking system (I actually had taken the latter seriously). These stories are absolutely not true.
There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression.
Phew. That’s a relief, I guess I will call my congressperson and tell him ‘Hell, no, do not support the bailout package.’ Set aside for a moment the strawman argument that the we’re worried about a reprise of the Great Depression. Can’t we agree that we don’t want a Medium Depression, or even a Small Depression? Let’s focus on the part where Baker says that it is ‘absolutely not true’ that there is a prospect of a breakdown of the banking system. Does he really mean it? Well, no, not really.
There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.
You get that? The failure will be ‘very brief’. Why will it be very brief?
The basic argument for the bailout is that the banks are filled with so much bad debt that the banks can’t trust each other to repay loans. This creates a situation in which the system of payments breaks down. That would mean that we cannot use our ATMs or credit cards or cash checks.
That is a very frightening scenario, but this is not where things end. The Federal Reserve Board would surely step in and take over the major money center banks so that the system of payments would begin functioning again.
First of all, the main concern is not so much that people won’t be able to use ATM’s or credit cards or cash checks. Yes, if the people make a run on the banks, they will become insolvent and unable to honor your deposits. But the intervention is aimed at freeing up short-term lending of the type used by businesses to meet payroll, pay utilities, and make investments in raw materials to meet new purchase orders. Without that short-term credit, small businesses will simply go out of business as they will not be able to do business. And, once that starts to happen, there will be a domino effect. But let’s be clear what Baker is arguing. He’s saying that it’s okay for every major bank in the country to fail because the Fed will just step in and take over the banks. Think I’m kidding?
In other words, the worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks.
See? No problem. I mean, what’s there to worry about?
The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money.
Everyone with a 401(k) is a shareholder, but as long as those nasty bank executives are unemployed, everything will be fine. Baker is actually making a recommendation that the Federal Government take over the entire banking sector of this country and selling it as no big deal. That’s just dishonest. Anyone that undersells the risk of this scenario to such a degree cannot be trusted on other details.
The best analogy I can think of for this kind of sanguine attitude is the Neo-Conservatives’ Theory of Creative Destruction:
Creative destruction is our middle name, both within our own society and abroad. We tear down the old order every day, from business to science, literature, art, architecture, and cinema to politics and the law. Our enemies have always hated this whirlwind of energy and creativity, which menaces their traditions (whatever they may be) and shames them for their inability to keep pace. Seeing America undo traditional societies, they fear us, for they do not wish to be undone. They cannot feel secure so long as we are there, for our very existence—our existence, not our politics—threatens their legitimacy. They must attack us in order to survive, just as we must destroy them to advance our historic mission.
In short, certain elements on the radical left are looking at the current crisis as an opportunity to ‘tear down the old order’, with little to no regard for the tumult that would ensue. Sure, it’s easy to demagogue this bailout. And it’s tempting. There are a lot of greedheads that deserve to get their comeuppance. If you want a revolution, you might be on board for a little creative destruction. If, however, you want to avoid losing your job and your retirement, you might want to listen to more prudent advice.
Here’s how:
He gets up, today, at some rally, and makes an announcement. 1) The bill is bad, bad, bad. 2) I’m going to vote “Aye” on this bad bill, because the alternatives are simply not acceptable. 3) My first act in office as President will be to convene the largest task force of financially-trained FBI agents who will attempt to find as many of the corrupt operators in this problem as possible. My aim would be speedy trials and jail for as many as 5000-10000 of the senior players on Wall Street.
The Motto:
Bail them then Jail them.
there are endless opportunities for demogoguery.
Well, that goes for almost every issue now, right? There are oodles of them for national security and civil rights, too.
Except that this issue resonates across ideological lines. People were angry about the economy BEFORE this bailout. High fuel prices, skyrocketing fuel costs, health care costs – people are being pinched from the pump to the grocery store to the doctor’s office and beyond.
To say this issue will be demagogued is unfair to demagogers everywhere. This issue will be used like a battering ram to anger voters all over. Most people who pay attention realize there are no easy answers…but most people do not pay attention. No one ever went broke underestimating the intelligence of the American public.
And believe me, it’ll be used by both sides wherever politically expedient to do so. You know, county first. Mitch McConnell may find himself on the outside looking in after the election because of this bill.
Yes, everyone agrees that something must be done. But the public perception, at least at this point, is that the taxpayers are bailing out tycoons. This issue is at tipping point and about to go critical mass…
I believe that creating a task force to determine who screwed up and prosecute said persons is far from demogaugery. Why do you believe that enforcing the law is demogaugery? An odd position, to say the least.
Hmmm…sounds like McCain’s proposal to convene a blue-ribbon commission.
This will be the singular campaign issue in less than a week. McCain has been setting the agenda all silly season, with help from the most excellent Republican propaganda machine. It shouldn’t be too hard for him to run on this and weaken Obama’s economic advantage.
McCain’s tactic? Get it close with this issue, play the Wright/Race card, and steal a few votes. Doesn’t sound too far-fetched to me.
I hear what you’re saying– the thought of the government having to come in to take over banks on a large scale is frightening. That said, the takeover model (i.e., receivership), is what the RTC did with failed S&Ls. It is akin to what happens in bankruptcy. It’s a proven procedure for unwinding the good from the bad of a failed enterprise. Whereas, the bailout, even the “good plan” that Democrats proposed, seems to be uncharted territory as far as I can tell. It involves, basically, throwing a whole bunch of money at a flawed system and hoping it helps. No one knows for sure it will work. The reality may simply be that there is no way out of this mess without large scale “destruction.” This bailout, along with the mini-bailouts of the last 6 months, reminds me of our fire control policies in the west. By constantly trying to keep destruction at bay, we make it all the worse when it finally comes, as it inevitably will. What happens when the bailout fails, when the system collapses anyway 6 months from now, after we have thrown a trillion dollars of our money on the pyre? I am not sanguine about the destruction. I just wonder if we are not kidding ourselves in thinking it can be avoided.
I’m sympathetic to your argument but it’s a distraction to say that we’re going to throw a trillion dollars at the problem in the next six months. I can’t have a debate with someone that starts out with a premise like that.
We need to clean up our rhetoric and stick to the facts if we’re going to discuss this rationally.
We have big problems and banks are going under both here and in Europe as we speak. We no longer have a financial services sector. The bailout may slow this process, but it will not reverse it. There is a lot of destruction in the queue.
However, the critical thing is to make sure we don’t start to see small businesses go under because they cannot secure credit. If that starts to happen we will have Depression of at least the small variety.
On another note, who does Baker think the Federal Government will hire to run the banks? Farmers?
Baker’s wrong to an extent.
There are some pretty plausible scenarios that lead to depression with or without the bailout. I do agree they are more likely with one than without however.
i think you’re relying too much on stereotypes of the people opposing this bailout. currently, i’m hoping it fails, largely because it’s being rushed through without a serious discussion about the premise of a $700 billion bailout. instead the argument has been about what sort of checks we can place on companies that take part in the plan, not whether we need to do this bailout in the first place, or whether $700 bil. (a number apparently made up just because they wanted a big sounding number) is the right amount.
i am completely open to being convinced this is the right thing to do, but no one is actually trying to convince me that the bailout itself is necessary. i’ve been reading quite a lot about it and the arguments simply aren’t there. and it’s hard to get past the idea that paying these investment companies hundreds of billions of dollars so that they can unload bad investments on the tax payers looks like a blatant corporate giveaway. especially when a plan directed towards mortgage-holders facing foreclosure would be a much more direct way to handle the problem.
i agree that the current version of the bill is much better than the original draft from last week. but that’s really not saying much, is it? i’m not trying to “tear down the old order” as much i don’t want to be railroaded by corporate interests. and this definitely feels like a railroading, especially when the economists i read are pretty divided about whether this corporate payout will even make things better.
noz, you should focus on the most immediate problem.
The immediate problem is short-term lending. The reason that we can’t tackle this problem at the mortgage end (renegotiating at-risk mortgages) is because that is a long-term solution to an immediate problem. The bill should have had more of an emphasis on making bad mortgages good, but it does address the issue.
This is a pretty basic thing if you keep your focus on issue of short-term lending. Many, many businesses take out short-term loans to meet payroll. If you get a purchase order for a million new widgets, you take out a loan to cover the cost of materials that you pay back as soon as you are paid for making them.
Not that many small businesses as so liquid that they can throw around ready cash to meet every new business opportunity. The lack of short-term credit can very quickly rip through the economy and cause job loss and negative growth. And that very quickly dries up federal revenues. The cost of letting that happen is enormous.
then why not authorize the treasury secretary to disburse money to cover defaulting mortgage payments as they occur? why do it so indirectly by buying securities that may or may not include the bad mortgages that are the heart of the problem? or why not nationalize the lending industry (the so-swedish model).
i understand that something must be done to deal with the short-term lending problem. it just is far from clear to me whether the bailout as a concept actually deals with it, or even if it does deal with it, is better than the other options. and there are other options. the mere fact that both the bush administration and congressional leaders are taking the “this deal or no deal” approach itself tells me that the entire deal is based on deception and scare tactics.
the short answer is that we are swapping cash for frozen assets in order to free up capital for short-term lending. No plan that fails to free up cash will avert the immediate crisis. All the rest of this bill is either window dressing or addressed to longer-term issues. Your plan would be ad hoc and long-term, and also unwieldy.
no, we’re swapping cash for bad assets at are allegedly the reason the credit system is frozen. the credit markets are really frozen because no one knows where the bad loans are and so now we’re letting the taxpayers buy up any bad investments (whether they contain bad mortgages that cause this crisis or not) in the hopes that will reassure the credit system that the various debtors will be able to pay them back down the line. rather than target the bad mortgages, which is what is really behind all of this, the government is going to let the financial service industry unload all of their dog investments, whether they involve mortgages or not.
the bailout is no quicker than a guarantee to back defaulting mortgage payments or nationalization of the financial service industry. in fact, even if the bill is signed into law today, the payments won’t start right away. this whole “we must act now!” is just bullshit to scare people into rushing the deal through.
congress in adjourning. The fact that payments will not begin for a month or more makes it more urgent, not less.
Yes, Congress could stay in session and have committee hearings and hammer something better out, and if the bill fails they just might have to that.
And, yes, we’re buying up bad assets. But what we’re really doing is a huge infusion of cash, and that is what is needed. Are you suggesting we just go out and pay off people’s mortgages for them instead? How is that not a bailout for the lenders?
it would be bailing out lenders. it’s just that by paying the mortgages directly, it is a more direct way of addressing the problem. under the plan that will probably pass today, we’re just trusting the treasury department to decide what bad investments to buy. they may not necessarily have anything to do with the bad loan problem. it will be very easy for the bush administration to give away cash to their corporate buddies, provided that they’re willing to take the oversight in the current version of the bill.
again, i’m not saying i will always be against the bill. i am open to being convinced. i just don’t like that the basic premise is not being challenged at all. and i think that the concept of a $700 bil (or, i guess technically only $350 bil in the short term) is going to end up being overinclusive (i.e. it will be used to pay stuff having nothing to do with the crisis) and may not even work. incidentally, the europeans are all going the nationalization route, which makes sense because that approach actually has a precedent with what happened in sweden in 1992. our approach is completely untested.
Two quick responses:
In this bill, we are not supposed to wind up paying anything. I’ll believe that when I see it, but it isn’t the enormous outlay that people are making it sound like.
Just some contrarian remarks reflecting on the mind of the average voter.
I recall reading the words of a European analyst in the past about a Polish election, who assured that the winner would be the one who guaranteed cheap sausage. For Americans, the winner will be the one who assures an American birthright: cheap gas. That alone is enough to explain the recent surge of Obama: higher gas prices after the Huston-Galveston hurricane rather than the bailout, a nonpartisan action.
So the US government is going to become a real estate agent. So what. My taxes aren’t going up, but my energy bill is. So is it drill, baby, drill or alternative energy sources. What does “alternative” mean? Can I put it in my car?
Dean Baker is in no way ” radical Left ” and what he says simply points to where we should be investing tax dollars. This bailout was engineered by the true radicals on the right and has been in the works for months.It’s a WMD scare tactic and to make it all of a sudden a sacred document strikes me as very strange. It does seem to have sucked many dems in but not all. It is a horrible bailout in that it simply puts huge money in the wrong place – wall street, not main street, gives hugely unprecedented authority to Bush/Paulson and, probably sets Obama up for deeper structural problems soon after he’s elected with a coffer down a trillion dollars.Why does such a wide range of economists have such a bad take on it? Again, Baker is one who has been predicting this mess for months and the Iraq war analogy holds for me in that we are letting those who got us into this mess engineer the bailout – crazy.
Again, I can’t debate anyone that calls this a trillion dollar outlay. That is too dishonest to warrant a response.
Please. A trillion dollars will be much closer than the snake oil “profit” you guys are selling.
The Fed has already loaned out treasuries for bad crap. That’s even before this 700B injection. They will be back for more as well.
Plus we’ve taken over Fannie, Freddie, AIG, Bear Stearns and already done one “stimulus” package.
FDIC funds will be impacted.
We are already well on our way to over 1 T.
As far as this smoke you are blowing up our asses, that this is actually an awesome deal for the taxpayer . . . c’mon. You crazy. Just. Stop. It.
The last sale we saw in the private market for this toxic crap was for about .05 on the dollar.
And I remind you that you guys promised us secret profits when the government took over Bear Stearns–that the taxpayer might get their 30 Billion back. How did that promise work out? That was only a few months ago and we can’t have our answer so quick, can we? Surely the government might be down a bit on that deal but we’ll make a lot of that 30B back, right? Right? We couldn’t have blown through it already? And surely you wouldn’t be back in only a couple of months trying to sell us the same snake oil?
You really are insulting how you take on this aire of superiority and yet don’t have a clue what you’re talking about.
I think it’s a lost cause. You know in my line of work we have a word for people who threaten dire consequences unless they get a bunch of money.
According to Bloomberg: Swiss investor Marc Faber, known for a long track record of good calls, believes the damage may come to $5 trillion:
Of course, Faber must be some left wing radical, eh?
the bill appropriates $350 billion. Not 5 trillion.
What is needed in the future is an argument for another bill.
I really wish that people had not been told so many lies about this bill.
Faber says it will ultimately cost $5 trillion. He doesn’t say — nor did I imply — that this bill would cost $5 trillion.
You seem to be giving very Armando-like answers to a lot of the questions here.
There is a plethora of respected, non-lefty economists who think this bill is a bad idea, primarily because it has no chance of fixing the problem it supposedly is designed to fix. You can ignore them if you want, and set up your strawman arguments against Baker, but it doesn’t change the fact that this bailout is not what it is advertised to be, and, by estimates of a number of well-respected experts, will cost way more than whatever back-of-the-envelope number might be in this particular bill.
It’s bad policy.
It’s bad social justice.
It’s bad economic justice.
It’s political suicide.
27% President in cahoots with a 17% Congress pass a bailout supported by 20% of the public.
We’re losing a major opporunity to significantly change the dominant memes. Look at what we’re not talking about:
1.) Bernie Sanders 5 year “surcharge” on single incomes over $500K and couples over $1M
2.) Josh Zetiz’s (NJ-04 challenger)call for unionization of bank clerical and support staff as a requirement for the bailout. And an even more politically possible call for banks to be required to bring their call centers back onshore as domestic, unionized operations.
What we’re seeing is an abject and utter failure of capitalism, or as we say in polite company – markets.
The current plan and debate starts from the assumption that our current approach works and just needs a big assist from the government to get things ungunked.
The real problem is a system overweighted towards speculative finance with no downside consequences for the participants.
What I would like to see would be a $500B national bank that provides funding and liquidity to actual operating concerns that produce or service actual tangible items.
We need to challenge the dominant memes and push the overton window.
We have one opportunity to reverse course and pull out of the nose dive that empire and financial speculation has brought. So far there’s really been no leadership outside of “fringe” people like Sanders, Zeitz and Dean Baker.
Ian Welsh has a great post on Firedoglake right now – Four never-never land fantasies of the bailout bill. It’s clear as a bell that this new bill was not written by “grownups”.
Also, Stirling Newberry has an excellent post up right now on Daily Kos about this bill. Again, if I strike you as dishonest about the figure of one trillion dollars, that is open for debate. In eight years I’ve NEVER seen a scare tactic proposal by this group of mega criminal operatives that hasn’t exceeded its stated purpose AND cost by multiple factors – never.They are the liars and always have been and are right now. I think a trillion is a lowball estimate frankly.
The bill authorized $350 billion to buy assets that are worth some unknown fraction of $350 billion. Let’s say that we spend 350 billion to buy 175 billion worth of assets. And then let’s say that the act of intervention, as well as moves to salvage some mortgages results in a partial rebound in the value of the purchased assets.
Five years from now we may discover that we paid 350 billion for 250 billions worth of stuff. In that case, the president has to submit a plan to congress to recoup the 100 billion we lost.
If the second apportionment is allocated, as expected, you can double these numbers. We might be looking to recover 200-300 billion.
This bill does not cost or even put at risk a trillion dollars and it is totally dishonest to say that it does.
Might we discover that we need to spend a trillion in the future? Sure, but this bill does not authorize that.
No one knows what this stuff costs, even the banks. And add unknown derivative obligations and even more obscure SWAPS “contracts” on top of this mess and even the actual claims to the assets themselves can be in question.
That’s why economists are aleady talking about additonal bailouts beyond this one.
If the system really collapses we’re going to need that $700B to put people back to work, feed them, house them and provide health care.
The Fed just put another $630B into the banking system to increase liquidity this morning! When’s it going to stop? We’re mortgaging two or more generations now.
Kevin Phillips may be right. There may be no way out. At least if we go down it’ll put and end to the Anglo-Dutch capitalist model. Perhaps we can rebuild with a more federalist version of Scandinavian capitalism.
The radical left sees this as a moment of Creative Destruction?!!? I’m afraid it’s the left, right and center this time.
IMHO, the current ‘burn Rome’ shite really runs back to the inspiration for Italian fascism. I wrote a diary on the intellectual history behind the creative destruction impulse – in fact, behind the creative destruction economy ( aka as ‘Disaster Capitalism’ or the ‘Shock Doctrine’ thanks to Naomi Wolf’s book. It might feel more relevant when read in this context.
My October, 2007 Diary on Futurism
I’m not kidding, but it isn’t Conservative ideology that must be killed as a result of this, but rather the apparent affection for the capitalism of constant self/mutual destruction you mention.
To that end, I’d say either do nothing, or hold a ‘meta bailout’ where all sorts of action and wordplay promises to do all sorts of crap in order to liquify markets, then nothing is implemented besides some re-regulation to prevent a future.
Regardless of motivations and intentions, we are indeed in a moment of creative destruction. Every failure is an opportunity, blah blah blah… Problem is, I don’t think this moment is all there is.. I think what we are seeing is conversion to a fascist/futurist state based on an economy of war/destruction/construction (anyone recognize that cycle?).
Currently, we get to choose between
warscandidates, but we can’t choose to slow down the destruction/reconstruction cycle.This crisis is perhaps the only moment we’ll ever have to throw off the yoke of futurist-spawned mania. Looks like that opportunity has already passed us bye.
apologies to Naomi Wolf, I meant Naomi
Klein
:
http://www.naomiklein.org/shock-doctrine
Compare these two quotes. The first from above:
The second, from the century old Futurist Manifesto:
Does this sound familiar YET?!!?
the current bill doesn’t do anythign to protect homeowners facing bankruptcy. Nor does it specifically re-instate glass-steagal or other post-depression safeguards. i can’t get behind that because in its current form the bill dumps money into the system without establishing the regulations to prevent a future collapse.
sorry, no deal.
I’m with you, but also consider the balance between speed and not f’ing up that they have had to consider.. I assume much of the TBD sections will be most displeasing once they are fleshed out.
I’m down with helping homeowners, but only on their primary residences.. The little guy’s speculation in the housing market was not without contributing consequence…
Then what is this?
“enoucrage” does not mean “mandate”.
..adding “Much, if not all, will be paid back”?
hey anyone feel like loaning me some money if I agree to pay you back “much if not all”? I’m sorry, that is NOT much of a confidence booster, if any.
Your essential right-wingedness comes through ever more clearly.
This is not a criticism, necessarily, although I do not much like your masquerade as a liberal or left-winger.
I began to realize where you really live when you spent what seemed a like a couple of years frontpaging those two intel goons Larry Johnson and that Muslim-thumping supposed ex-military intel guy who lives in France, Pat Lang.
Yes, you are a “Democrat”.
So was Joe Lieberman. Only he was aware of his trickery.
Are you?
I doubt it.
AG
It seems to me that Lang and I became incompatible almost immediately. As for Larry, our interests separated when he lost interest in opposing Republicans.
Strangely enough, almost all of the writings of these two spooks seems to have disappeared from your fine progressive website.
However…a little googling found posts by Mr. Lang here from 10/22/05 through 1/14/06. It seemed…longer somehow.
But maybe not.
He was plainly an unrepentantly racist, peculiarly military sort of asshole.
Larry Johnson on the other hand?
I find a reference to a Bootrib post of his as early as 2003. Is that a mistake? Has this blog been around that long? And a I found a post of his from here as late as Sept. 5th, 2007. I am fairly sure that he had a secure place on the front page of this blog at least until this spring when he began running with the Clintonites against Barack Obama’s candidacy. And who would be surprised by that? Johnson was a prime apologist for the whole Plame side of that particular intel stinkup, and there is no doubt whatsoever where the Clintons stood as far as that thing went.
You are a good Democrat, Booman. You work for the team, you do some organizing and you run a pro-Dem blog. I guess the real question is…how “progressive” are the Democrats?
If Obama wins, we will soon find out.
On the evidence of the last 2 years…and on the evidence of Obama’s admittedly politically-driven pronouncements on international wars, Israel, the economic situation, etc… not very progressive, apparently.
It’ll all become clear soon, though.
Any day now.
Aaaaany day now…
I can’t wait!!!
AG
Larry stopped posting as soon as I came out against Clinton. And he stopped being welcome to post when he began his shenanigans. I’ll trust you to do the timing.
As for Lang, I was uncomfortable with him almost from the beginning and let him post longer than I should have. Three months sounds about right.
I take allies as I find them. And I take on allies when our interests diverge. I’m not shy about criticizing even my friends when I think they are misguided.
Here’s an odd factoid: I’ve received more fan mail in the last two days than I have over any other thing I’ve covered in the last two years.
“Without that short-term credit, small businesses will simply go out of business as they will not be able to do business. “
Ah, the myth that credit is necessary for business. Actually that would only apply to businesses that were poorly managed and/or got overextended. Prudent businesses manage their money carefully and don’t need to borrow to make payroll and such. Competent businesspeople do everything they can to avoid borrowing money since the interest comes out of their profits and hurts them. Eliminating the easy availability of credit to businesses would be the best possible thing to encourage and support competent businesspeople.
Mike-
with all due respect, this is just an astonishing piece of tripe.
Imagine that you and I went into business using our combined nest-eggs (no borrowing). We make political t-shirts, bumper stickers, magnets, hats, buttons, etc.
We make a modest profit, and are able to buy some more equipment in cash (no borrowing) and we also hire a couple of employees.
Then, one day, we get a call from the DCCC and they want to give us a contract to provide political materials to many of their candidates. It’s a multi-million dollar opportunity. But to do it we will need to purchase numerous pieces of equipment and hire a dozen or more new employees.
How are we going to take advantage of this great chance to expand our business? The answer is that we will go get a short-term loan, using the purchase order as proof that we can repay the loan once we make good on the deliverables and receive payment.
Unfortunately, we can’t get the money (or we can’t get it at acceptable rates) and so we have to tell the DCCC that we are incapable of doing the job.
This is but one example of the ways that short-term credit is absolutely critical.
In another example, a company that is growing rapidly will find that it is often short of capital as it makes new investments and has to bridge massive outlays (like payroll or material purchases) with payments.
If you want a dead economy, create a system where successful growing companies miss payroll or have to forego new contracts.
I find Gilroy’s comment very significant in its overheated and somewhat demented way. The current financial discomfiture represents a Rohrschach test similar to 911 and once again it pits two communities against each other: one based on empiricism vs. one based on magical thinking, sloganeering and a constant need to feel good about itself. The differences between “right” and “left” become totally secondary in circumstances like these. The question is: after wasting enormous amounts of time and energy pursuing chimerical dreams of retribution and domination in the military sphere are we now going to waste our energy in a similarly counterproductive way on financial institutions. If so, the US’s slide into parochialism and international irrelevance will accelerate (I didn’t think that was possible).
badly worded: “wasting our energy on financial institutions” will probably misunderstood as meaning that I oppose the buying up of illiquid mortgage backed security by the treasury, which I of course support. The waste of energy I am talking about would consist of the punitive crippling of the financial industry.
The best analogy I can think of for this kind of sanguine attitude is the Neo-Conservatives’ Theory of Creative Destruction
Creative destruction is not a “theory” of the neocons. (Have you heard of Wikipedia?) It is an idea popularized by the Austrian economist Joseph Schumpeter, who taught at Harvard. His thought is sufficiently complex that there is no point in calling him either left or right-wing. He wrote about business cycles (which are something we had forgotten about, thinking the current “boom” would last forever; the bailout bill very much belongs to that kind of thinking) and wrote a book called Capitalism, Socialism and Democracy, in which he argued that socialism would replace capitalism, because in a democracy, people would vote against free market capitalism, which is bad for them, as is now all too apparent. (OK, so the right-wing strategy that Thomas Frank writes about in What’s the Matter with Kansas didn’t occur to him.)
Booman, you are out of your depth. You don’t know anything about economics. You are doing what you like to accuse David Broder of: wanking.
if you followed my link you wouldn’t be so confused.
I did follow the link. I imagine that both Michael Ledeen and John Laughland, who wrote the article you linked to, know where the idea of creative destruction comes from, something you evidently do not. That is something one assumes everyone who is interested in politics or economics knows about.
did you notice the apostrophe?