CT Blue

Some interesting comments on the bailout from Dean Baker:

While all right-thinking people might know we need the bailout, just about all right-thinking people don’t have a clue as to what they are talking about.

The Great Depression story is of course the most extreme case. No one has yet sketched out the sequence of events that will give us ten years of double-digit unemployment. But hey, if the scare story helps get the bailout passed — and gets those uneducated skeptics in the hinterlands to buy it — why not talk about the Great Depression?

I was on a talk show today in which one of the other guests (a representative of the security industry trade group) told listeners that you can’t get a mortgage unless you put 30-40 percent down. This is of course total garbage (the interest rate on 30-year fixed rate mortgages is a very low 6.0 percent) and the vast majority of loans are being made with 10-20 percent down, but lying for Wall Street is no sin.

The host of the show was appalled to find that neither I, nor the other in-studio guest, supported the bailout. At one point he became exasperated and told me that because companies can’t get access to credit they might have to lay off workers. He told me that United and GM may have to begin laying off workers next month if the credit squeeze doesn’t ease.

Of course if United and GM actually do lay off workers, the credit squeeze will be a very small part of the story. The airline and auto industry face really big problems for reasons that have nothing to do with the credit squeeze, although paying higher interest rates on borrowing clearly does not help.

It is remarkable how the contemptuous comments that the elites have directed at the masses for opposing the bailout can be so much more accurately directed back at themselves. In fear and anger they have embraced a bailout that makes little sense in the context of the economic crisis facing the country. Rather than listening people who actually understand the economy (I doubt a single economist in the country believes that the bailout is the best way to help the economy) they have shouted down and shut out critics of the bailout and have been willing to spread all manner of outlandish scare stories to advance their case.

After I read this article at work I emailed a link home with some notes to the effect that at this point the Democrats could do one of three things with the failed bill (other than just forget it, which isn’t in the cards):

1. Try to get the original bill passed;

2. Try to win additional Republican votes by making the bill even worse;

3. Make it a Democratic bill by vastly improving it and telling the Republican President that he can take it or leave it.

By the time I got home I found that they had, quite predictably, taken option 2, so what little suspense there was on the question was removed. Of course, with a choice like that we know what the Democrats will always do.

I hope Joe Courtney sticks to his gun. By any measure this bill is worse than the one he voted against.