It’s difficult to assess whether members of the House of Representatives have been sufficiently educated since torpedoing the flawed but nonetheless absolutely necessary Henry Paulson “bailout” plan last Monday to follow the Senate’s example and pass the damn bill tomorrow. Obviously, if this wasn’t just weeks before a national election—where pols’ jobs are on the line—the legislation, nose-holding and all, would’ve sailed through the slippery hands of Nancy Pelosi and John Boehner. What’s especially galling about all the rhetoric spilling out on the tube and the Internet in the last two weeks is the “Wall Street vs. Main Street” trope, as if a very serious recession won’t impact non-wealthy Americans far more severely than the Gordon Gekkos in New York City. It’s simple: when cash is king and no banks (the remaining ones, at least) are lending money to small businesses (or homeowners), it’s the “little guy” who gets screwed by layoffs, more onerous restrictions on debt and increases in the cost of living.
Somewhat amazingly, for all the rubbish about bipartisanship we hear from John McCain and Barack Obama—not to be cynical, but it’s hard to believe that particularly pleasant sounding campaign promise will come to pass no matter who wins the presidential election—it’s the media that’s coming together. Today, New York Times columnist Nicholas D. Kristof, a congenital liberal— but less vindictive than op-ed colleague Paul Krugman—gave his blessing to the bailout. Sure, there was a lot of excess rhetoric about Wall Street greed (as if everyone involved in the financial industry is a crook), but this makes sense: “Wall Street urgently need to undertake its own housecleaning, for the public revulsion toward it undermines its own long-term interests. But, for now, the priority is to get credit flowing again in the arteries of commerce, even if that means saving the jerks.”
On the other side of the political divide, Rich Galen, a Republican political consultant who writes a subscription-only blog when not working for a political candidate (he was an adviser in the comet campaign of Fred … right, Fred Thompson), often has some interesting insights. The following, from Sept. 26, wasn’t one of them: “As far as I’m concerned Moe, Larry and Curly couldn’t have done any worse than these Wall Street jerks [apparently the operative word] with their slicked back hair, tailor-made shirts and suits, custom-fit shoes, gold cufflinks, and Hermes ties. And that’s just the women.” That trite bit of demagoguery off his chest, Galen also endorsed the bailout, speculating that the country, and by extension, the world, could fall into a depression because of this “financial pickle.”
So I hope the speechifying for constituents is over and something gets done—and fast. The far right zealots and other naysayers have been (and may still be) in a state of denial of the inter-connectedness of the U.S. economy. No one is safe. That’s what the critics, whether it’s politicians or Nation-like populists or ideologically pure conservatives don’t get: they’re going to get slaughtered too in the absence of some kind of hodge-podge bill. The ship is sinking and they’re not on shore. This is not a time for principle … because principles on the bread line don’t impress anyone.
Finally, while it wouldn’t bother me one iota to see some latter-day Ivan Boeskys do a perp walk or get wiped out, let’s recall several years ago, pre-Fannie and Freddie and Lehman and Goldman Sachs and Wachovia and Bear Stearns and Washington Mutual, when complaints were at a minimum. A Wall Street Journal editorial today, while not excusing fraud and near-fraud in the financial world, made this point:
The U.S. is living through the aftermath of a classic credit mania, one that all of us enjoyed while it lasted. We don’t remember many protests when home price were rising by 15% a year, or when interest rates stayed at 1% for a year and real interest rates were negative for far longer […] Credit markets are ceasing to function by any normal standard, with banks refusing to lend to one another, much less to credit-worthy borrowers on Main Street.
John McCain has probably lost the election for his off-the-cuff behavior during this ongoing crisis, calling for Chris Cox’s scalp, suspending his campaign and bobbing and weaving on the merits of the bailout plan. Barack Obama has been calmer, and at least is urging his Congressional colleagues to pass the bill. I’m still nervous that Obama, if elected, will get rolled by foreign adversaries, but this fiscal conservative won’t deny credit when it’s due.