Deep Thought

Remember when everyone said that the economic/political center-left and the labor-liberal left had reconciled their differences in the post-Clinton period? Good times.

Comments

[Shock Mouse]

I dunno, the voting breakdown among Dems seems to split across all ideological lines. http://openleft.com/showDiary.do?diaryId=8664

Blue Dogs: 59.57% yes
New Democrats: 62.71% yes
Progressives: 47.76% yes
Congressional Black Caucus: 46.15% yes

Or you could just be talking about pundits/blogs, but I don't really associate the anti-bailout demagogues with the labor-liberal left, yet.

[Shock Mouse]

Of course, that's not to say that we aren't on the tip of seeing huge splits in the left-wing coalition as it assumes power.

[Sir Charles]

Nick,

I'm not sure I see the split that way either -- I have been getting a lot of anti-bailout emails from labor and activist groups, but I'm not sure anyone is in love with this deal.

[Nicholas Beaudrot]

As far as I can tell, a bunch of this is about (a) the spectacle of free money for Wall Street (which I agree sucks), and (b) the prospect that the big outlay will kill the chance at health care or energy spending. And I have some real worries about (b) ... if the bond hawks show up again and start pushing up interest rates, I'm going to be standing with the ones who say "the us govt just saved your bacon. It's time for you to take one for the team; we're not going to be bullied into scaling back health care and tax cuts again". But I have faith that the Democratic coalition is way stronger than it was in 1993.

But the other part of (b) is that a lot of people don't seem to get that the US is actually buying assets that it can reasonably expect to sell for most if not all of the $700B outlay its making. Which is either stupidity or willful ignorance.

[Sir Charles]

I see your swallowing Neil's line. (My guess is that these assets are certainly not of the hundred cents on the dollar variety, but that a substantial amount will be recouped.)

It's funny though -- this morning I had that very thought about Obama's middle class tax cut -- it will be just like Clinton's, the victim of the bond hawks. Well hopefully Obama will tell whoever tries to play the Greenspan role to fuck off -- or something suitably "ethnic."

[Shock Mouse]

B) is interesting. On one hand, people may be skeptically of the idea that "Wall Street will totally get your money back", for obvious reasons.

But really, arguments that we can't have new big social programs are just political arguments, and not solid reflections of balance sheets. The government will be out that particular cash for a while, so people might use the argument we can't afford new things. But if it's in sound investments, it's no sillier to bank on that money than future tax dollars or many other government investments.

More importantly, even if we are out $700b, right now is a fantastic time for the government can borrow money. The US government can really borrow as much money as it likes until the market is so flooded with T-bonds that we stop getting a good deal on bonds we sell. But today, weeee... everyone on Wall Street wants T-bonds. They're the rock of stability in a sea of sewage of risk. Fiscally speaking, it would be fantastic to start building national infrastructure and UHC right now.

[Trevor J]

"Which is either stupidity or willful ignorance."

Be nice, Nick. Some of us were simply, and justifiably, suspicious, given that Paulson, Bernanke, and Bush were the only ones who initially seemed to be making this claim.

[Shock Mouse]

Sir Charles shows the skepticism I alluded to. And frankly, much will depend on how good a deal the bureaucrats negotiate. I think Hank Paulson got a decent deal with AIG, but honestly none of us know. Oh, and where the economy next goes.

I think very probably: this will cost us some money, but not $700 billion. An educated guess will be that it costs the government from $50 billion to $350 billion.

(Also, fuck dense Republicans like Norm Coleman who say this may generate 10-20 times what we invest anyway. Snake oil salesmen like him are why the market is unregulated, and no one trusts honest economists right now.)

[Nicholas Beaudrot]

"Be nice, Nick".

I'm sorry. I have been distracted too much by Jerome being an assclown over at MyDD. Heck, for a while I thought it was a straight-up cash infusion, or that we would end up buying the assets for more than we could ever hope to sell them for.

[Neil the Ethical Werewolf]

Wooo! People are swallowing my line. I can see it in your eyes... you want to own a bank!

Okay, seriously, I'm encouraged by both the government's past record with bailouts and by Paulson's work on AIG when he had a free hand. He got 79.9%, which was the most he could get without triggering weird legal issues, and secured an interest rate of 11.5% on anything borrowed, plus 8.5% on anything not borrowed up to $85B.

If we can get deals like that, we need to play this for all it's worth. We're probably going to lose money on the loans themselves, but if we can get majority stakes in big banks that'll put us over the top.

[Corvus9]

I see this more as a split between the strategic left and the more empathic left, than between any ideological preference. The people who are more into the progressive politics ends, people like kos, Stoller, and if I am reading Nick right, Jerome (I avoid that assclown like it was 1348) are against it, in any sense, and don't really seem to care what the fallout it, or seem to see the fallout will be beneficial in some strange way. On the other hand, all the Respected Economists, like Krugman, Galbraith, DeLong, seem to think a bailout is necessary to avoid disaster, and those of us more prone to think in terms of risk management or to personalize the reality of what might happen are just trying to feel out what might happen and wanting to avoid the worse. Then, of course, there are the really passionate lefty types, and they seem to be flying off into populist fits, which means sticking it to the man, even if sticking it to the man ends up sticking ourselves.

Or something. I don't know. I guess I just think this is a matter of personality, not ideology.

[litbrit]

Then, of course, there are the really passionate lefty types, and they seem to be flying off into populist fits, which means sticking it to the man, even if sticking it to the man ends up sticking ourselves.

Once again, you demonize people who disagree with you. Yes, some people are flying off into a populist rage, but some of us are what you might call careful readers, and we think the language of the bill is wishy-washy, vague, and devoid of any real regulatory teeth. Saying we're willing to stick it to the whole country is insulting to my intelligence, and I resent it.

[Nicholas Beaudrot]

I think Corvus has it about half right. There's a strategic left that says this is bad politics, and there's a more hard-nosed, fewer big business giveaways left that's joined them. I would point out that this group thinks the downside is bad but not terrible. Then there's the half-a-loaf left (I don't want to say pragmatic) that sees the downside risk as terrible and something to be avoided at almost any cost.

[Corvus9]

litbrit, I was thinking specifically of Stephen when I wrote about populist fits. Anytime an argument about the crisis starts using the horror of the situations people are dealing with now, I don't think people are making an appeal based upon strategy, but on emotions. I am actually fairly sympathetic to this state, since I am far from immune to it, myself, but I think it is erroneous to use it to guide the policies that are coming out of Washington. Yeah, things are bad for a lot of people, but I don't want it to be like that for more people, and if letting the bad guys ride off into the sunset means a whole lot less people ending up in dire straits, that's a trade-off I am willing to take. Since I see this rage as leading to bad decision making, yeah, I am a little piqued myself, and can get a little uncouth. Sorry about that.

I think having a critique that "the language of the bill is wishy-washy, vague, and devoid of any real regulatory teeth" is a different category, and one I did not enumerate (and I didn't do a good job of enumerating anything anyways, and just kind of rambled). If that's your argument, then I don't see how you should be offended by me saying that some people are letting their emotions get the best of them.

Unless, of course, you actually are letting your emotions get the best of you. This really does read more like a populist rant than a cogent argument about how this is the wrong bill at the wrong time. You are using a populist appeal to democracy in action to support what is more likely just the righteous fury of the people, the fact that this spooked the politicians, and that this fury might be based on misinformation (such as thinking this will actually cost us 700 billion).

If you want to say the bill sucks, that's fine. I think exactly no one is completely happy with the thing. So the question isn't is, if a bill is needed, how do we get a better one? And, if we can get a better one, will it be in time?

[Corvus9]

Also, I agree with Nick. Count in me the half-a-loaf squad. You are right that pragmatic is a bad word for it, it's just the only one I could think of that was close to what I was going for. It's not only that I think the downside would be terrible, it's that I think the downside is most likely to affect those who are least able to cope with the effects. And I think I might be one of them. When I start getting nasty about this, I'm sorry. It's just the fear talking.