Even the most razor-sharp of hewers to the party line must be having a tremendous amount of psychic agony in trying to follow the script. If cognitive dissonance can cause actual, physical pain, then now is surely the time for it to do so. John McCain is praising the bailouts and buy-outs of major American financial institutions to high heaven, while at the same time calling for even less regulation---ostensibly because there are still a few banks that haven't managed to glut themselves into bankruptcy in the thunderdome of American finance. The goal, it seems, is to become such a massively, hideously huge part of the economy that you can't be allowed to fail. If your company or service can accomplish this quickly, it need never even provide the service it would have ostensibly used---in a classic economy---to actually generate cash. The administration and party that miss no opportunity to denigrate the utility of government are now shouting over each other, exhorting the government to buy as much indescribably bad debt from their friends and cohorts as fiscally possible. The cry "won't someone please think of the children?" is a powerful emotional lever to shut off all rational discussion of the pros and cons of an issue; "won't someone please think of the economy?" is equally effective, targeting as it does the pocketbook instead of the heartstrings. The article, <a href="http://uggabugga.blogspot.com/2008/09/1.html" source="Uggabugga" author="Quiddity">$1.2 trillion</a>, cites Barry Ritholz as saying that <iq>[t]he deregulation movement is now an historical footnote, just another interest group, and once in power they turned into socialists.</iq> It is hard to disagree. The socialism of the Democrats & Republicans (and their power base) is, of course, their very own. That they control our entire political process is not new. That they routinely practice massive corporate welfare, while, at the same time, dismantling social welfare, is not new. That they relentlessly support the socialization of risk and the privatization of debt is also not new. If you've been paying attention to what's actually been done in America---not just what has been <i>said</i> will be done, which is often not nearly the same thing, soaked as it is with platitudes and lies---over the last century, then the bailouts do not come as a surprise. Knowing that they will do it makes their prancing about in the nude, proclaiming the beauty of their robes no less nauseating. Will all these bailouts work? Will the near-constant prattling from the media that bailouts are just what the doctor ordered and that we can all go back to consuming ourselves silly work? Who knows? Irrational exhuberance is perfectly capable of buoying a rotted economy, as we have seen several times over just the last quarter-century. The economy is mostly belief-driven anyway. The only reason many schemes tend to succeed instead of fail is that people, in general, pay off their debts and work very hard. Were they not to do so (as the neocons nearly constantly accuse of the poor in their holy war against the have-nots), the entire house of cards would have collapsed long before it was able to get into trillions and trillions and trillions and trillions of dollars of increasingly shaky derivatives debt. But that was yesterday; on Friday, bold new plans arrived for handling the economy correctly in the future: by personal fiat of the Treasury secretary, as described in <a href="http://dealbook.blogs.nytimes.com/2008/09/20/the-bush-administrations-700-billion-rescue-plan/" source="New York Times">The Bush Administration’s $700 Billion Rescue Plan</a> and <a href="http://www.politico.com/news/stories/0908/13676_Page2.html" source="Politico">Dems on bailout: Include homeowners</a>. Because of the urgent requirement to save investment banks that have gambled themselves into a deep hole, the secretary will have the power to <iq>buy and sell the toxic mortgage-related assets without any additional involvement by lawmakers</iq>. No approval by any elected officials, just an appointee doling out $700 billion as he sees fit, presumably without any consideration for personal gain. The secretary is only required to inform Congress that investments were made within three months, but that's just a formality because the decree also states that: <bq>Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.</bq> Oh, and the debt ceiling kind of got raised to about $11.3 trillion, as well. Oh, and this bill has to be passed as quickly as possible because the <i>crisis is <b>dire</b></i>. Con-men also use time-pressure to force bad decisions; this is no different. So, there you have it, the treasury secretary is authorized to buy up nearly a trillion dollars of bad debt, at his own discretion and his decisions cannot be retracted or questioned. Hypocritically, free-marketers are behind this proposal, dangling the hope that the government will be able to turn this debt around, even though <i>private</i> financial companies are seemingly unable---or unwilling---to do so. Either they're (A) retracting the main plank in their ideology---that private industry does everything better than the government---or (B) they are blowing a lot of smoke up America's ass in order to get them to take their crap investments off of their hands.<fn> As pointed out in <a href="http://www.voxeu.org/index.php?q=node/1670" source="vox" author="Luigi Zingales">Why Paulson is wrong</a><fn>, <iq>[t]he Paulson RTC will buy toxic assets at inflated prices thereby creating a charitable institution that provides welfare to the rich—at the taxpayers’ expense.</iq> And it will likely work and be passed more-or-less as drafted because <iq>the many (we, the taxpayers) are dispersed, we cannot put up a good fight in Capitol Hill; while the financial industry is well represented at all the levels.</iq> It's the same old story and, at this point, we can really only watch it all happen as decisions we don't agree with at all are made for us at hyperspeed.<fn> And who stands to benefit the most? Why the worst of the worst, that's who (as if the answer could have been anything else). <a href="http://www.brookings.edu/opinions/2008/0919_treasury_plan_elmendorf.aspx" source="Brookings Institution" author="Douglas W. Elmendorf">Concerns about the Treasury Rescue Plan</a> is highly critical<fn>, pointing out what is immediately obvious to anyone familiar with social welfare plans: that the most grossly negligent end up needing the most help: <bq>[One] problem with buying troubled debt is that it provides the most help to the financial institutions that made [...] the worst investment decisions. Banks that stayed clear of this debt or sold such debt at cut-rate prices earlier this year in an effort to move beyond the crisis would receive no direct gain from such a program, while banks that made the biggest commitments to low-quality mortgages and have delayed dealing with their balance-sheet problems would be the biggest beneficiaries.</bq> This is only a proposal, but amendments to it---like extending its provisions to using some of the $700 billion to keep millions of Americans in their homes instead of exclusively saving the gamblers or, at the very least, capping the amount of "golden parachute" money executives are allowed to suck out of the dessicated corpses of their companies before handing them over to the government to deal with---are being met with stiff resistance, if not outright derision. While the Congress seems absolutely willing to provide trillions to bail out the financial institutions, they are balking at actually providing any conditions for the bailout, like <iq>prod[ding] investors to be more willing to write down mortgages rather than pursue foreclosures.</iq> That condition alone would require the affected financial institutions to actually deal with part of the mess they created by maintaining their mortgages. Instead, they would rather just foreclose and cut their losses, no matter that millions of U.S. citizens would be thrown out of their homes. While it's not illegal to do so, it should in no way be <i>supported</i> by the government. The vast majority of both Republicans and Democrats---nestled, as they are in the pockets of these wealthy investment banks---strenuously disagree---saying that this would adversely affect the smooth and fair workings of the free market (even as they pump public cash into it). So, what could the government do instead? No one across the entire spectrum of political opinion seems to mind that the government is stepping in: even the purported free-marketers are positively clamoring for it to do so. The problem is that the government is not stepping in hard enough, trading truckloads of cash for, well, nothing much at all. A handful of worthless paper for which they <i>might</i> be able to recoup <i>some</i> of their losses. Instead, we should see: <bq>[...] a new central authority to supervise the financial institutions and compel them to support the government's actions to stabilize the system. Government can apply killer leverage to the financial players: Accept our objectives and follow our instructions or you are left on your own -- cut off from government lending spigots and ineligible for any direct assistance.</bq> That would be more like it; of course, such action remains firmly in the realm of fantasy. The plot of our movie-of-the-week is developing in a different direction. It is honestly hard to discern the difference between the US and a banana republic, except as one of scale. <hr> <ft>If, after the last dozen years of free marketers running the show, you still believe that it might be (A) or that there's another explanation, but it most certainly can't be (B), then you're a moron and part of the problem.</ft> <ft>Zingales is from the <i>Chicago School</i>, famously home of Milton Friedman and his "Chicago Boys", who would rise to fame as the primary architects of the globalized financial markets we have today. Even <i>they</i> can't see their way to approving of what is happening right now.</ft> <ft>As Texas oilman---and former gubernatorial candidate---once said of rape, <iq>[a]s long as it's inevitable, you might as well lie back and enjoy it.</iq></ft> <ft>The Brookings Institution is a think-tank dedicated to far-right economic methodology, including neoconservatism and mass privatization. Even they can't summon up enough hypocrisy to like this plan (though they've perhaps used up all of their hypocrisy in the last eight years); Congress, on the other hand, seems to be having no difficulty whatsoever.</ft>