Monday, November 17, 2008

Bailing out on bailouts

Bush administration decides to not use $350 of the $700 billion dedicated to bailouts. Instead they're leaving that for Obama's administration to do with as they see fit. Good grief. Paulson's whole idea, with Congress' approval, was that this money needed to be spent immediately, wasn't it? That was what, four weeks ago? six? I so with that Obama would on Jan, 21, 2009 say that we're not going to apply the money to bailing out failing companies, but instead will use it to commission infrastructure projects. I don't have high hopes that that will happen, but I can dream.


Scooter said...

Kinda makes sense if the rumors are correct about His Majesty Paulson staying on. I still don't like any of it but I also kinda get equating the financial system with utilities as I think Krauthammer did on Friday. Can't let utilities fail being the logic.

This is driving me nuts.

Stephanie said...

I doubt very much that Paulson will be invited to stay on. Not a soul on either side is thinking he's the answer.

Haven't read Krauthammer's piece yet but will.

Scooter said...

Not on this side, anyway.

Stephanie said...

Well, I concur with Krauthammer that the Big 3 should not be bailed out. (I guess the result of not bailing them out will be that they'll declare bankruptcy, which will leave their supplies holding the bag.) I agree in part because of the slippery slope he describes.

He doesn't say much to describe why he sees the money industry as analogous to the utilities -- he just states that it is. I'd like to hear more about that. Maybe he just thinks it's obvious that there could be no other source for credit.

I've got no basis for this, and I'm ready to be corrected, but I can't shake the sense that there exist two economies: one that is the stuff of ordinary people (where we make tens or a few hundreds of thousands of dollars and we spend most of it on houses, cars, clothing, food and entertainment), and another that is the stuff of a rarified few (operating on money amounts that are one or two orders of magnitude greater than ordinary folk) and that the lion's share of losses are in the rarified arena. Of course, the two economies are linked, thanks in huge part to the 401k laws that have funneled huge amounts of capital into the markets that might not have been there otherwise and because of jobs. But I feel like leaving the free markets to themselves would yield normal ups and downs, but it's that second economy that is big enough to cause the gargantuan swings that brought crisis.

Scooter said...

Interesting about the two economies...and it "feels" right.