I don't think I've ever done that before. Let's see: war, homophobia, racism, climate change denial, fraud, hypocrisy. Nope, never agreed with them on any of that. Yet the $700bn plan to nationalise US banking losses put Obama on the wrong side, backing Bush despite the cost to his own plans, while the only congressional opposition came from the Republicans, specifically Senator Shelby, who said:"What troubles me most is that we have been given no credible assurances that this plan will work. We could very well spend $700 billion or $1 trillion and not resolve the crisis. Before I sign off on something of this magnitude, I would want to know that we have exhausted all reasonable alternatives. But I don't believe we can do that in a weekend."
Now, they've got absolutely the wrong end of the stick about the plan. Republican Senator Jim Bunning said the plan was "financial socialism, and it's un-American". I always thought socialism was about giving money from the rich to the poor, not the other way round as per the Bush/Paulson/Bernanke plan, but perhaps I misread Uncle Karl. While their specific concerns are not the same as mine - 180 degrees away, in fact, given my sympathies are with this lot - the conclusion was the same. This plan is bonkers and it won't work.
But now even the Republican opposition has collapsed - presumably they finally worked out that the plan was a massive give-away to their pals - and it'll all go through. Will the credit ratings agencies now do what they'd do to anyone else picking up these toxic debts, and mark down the US Government for the first time from AAA? If you're looking for signs of the impending end of the American imperial phase, that would be a pretty clear one.
Incidentally, over here, the New Labour response is as weak and captured by the markets as the Obama response. Will Hutton wrote today, backing the scheme, that "Once again, the left is coming to capitalism's rescue". Is this a model of capitalism the left should really want to rescue, even with his sea of caveats?
Brown's response was also a mass of absurdities and inconsistencies. He decried the "age of irresponsibility" which he himself has sponsored, then in the next breath said:
"I have told President Bush today that facing global turbulence Britain supports the US plan. Whatever the details of it, it is the right thing to do."
Isn't it irresponsible to support a plan like this irrespective of the details? It's the classic failed politician's response, and it goes like this. Something must be done, and this is something, therefore this must be done. We should perhaps be grateful that this time he's not recommending wasting our money. Nevertheless, this whole scenario feels as though the Joker or the KLF have been put in charge of the global banking system.
Hold on, Obama's position is a lot more sophisticated than this.
He's said that the bail out deal should not include any of the contensious points that are the position of only the Dems or Reps and that there should be a) accountability b) no money to the CEO's c) the possibility of repayment if(!) the market recovers.
MCCain has the same position except he's not for barring payment to the CEOs and seems slightly more ambiguous about sneaking in a few Republican policies whilst they're at it.
Both Dems and Reps have opposed this plan - partticularly because it's being rushed through - or at least some are trying to.
Obama's position on this is pretty good to be honest and around 1/3 of the presidential debate was on the financial crisis on Friday - personally I thought Obama won that section by having actual policies rather than sound bites and grimaces.
Hi Jim,
I haven't gotten round to the debate yet, which is embarassing, so I won't comment on that.
However, his four principles on the bailout appear to take Bernanke/Paulson/Bush's word for it, and they're not the people I'd trust in this situation. I'm personally not convinced that any of it makes any sense, and the only thing I'd be doing if I were President (ha!) is supporting those homeowners by covering their mortgages, probably for limited periods and probably in exchange for equity shares that would pay out only once the market rose.
The bulk of this is still just bailing the companies out, which simply rewards the gamblers and gives the whole of American finance a massive dose of moral hazard.