FREE MARKET FAILURE
The trust problem

From Princeton economist and New York Times columnist Paul Krugman's blog Conscience of a Liberal:

The two striking things about the Paulson push since last Friday have been (1) demands for complete discretion, with zero accountability and (2) a complete refusal to explain the theory of the case — to explain why this thing is supposed to work, so that we can have an open discussion of whether he’s right.

The whole premise of the bailout push has been “We’re the grownups, we know what we’re doing, just trust us.” Sorry, but that’s how Colin Powell sold the Iraq war. Fool me once, shame on you, fool me twice … you shouldn’t get fooled.

And that, by the way, is why Paulson’s whopper about oversight matters. On one hand, the secretary poses as the adult providing supervision, with no need to explain his decisions; on the other, caught with his hand in the cookie jar, he offers childish excuses.

Click here for the rest.

We should all be amazed by the White House's audacity here, but, of course, we're not. As Krugman observes, this is typical Bush behavior going back to at least 9/11, and probably earlier--remember Cheney saying something to the effect of "now the grownups are in charge" shortly after they took office? That they would drop a proposal on Congress with the potential to become a massive giveaway to GOP cronies rather than a desperately needed shoring up of the US financial system is simply how these guys do business. I guess if there's anything amazing in all this, it's that this move shows they have far more contempt for the American public's intelligence than had been previously understood--previously, you may recall, it had been understood that the White House believes that Americans are stupider than shit.

It should also be noted that this "do as we say without questioning" bailout plan is as good an example of Naomi Klein's "disaster capitalism" thesis as it gets. That is, with the news that the White House bailout plan has existed already for some six months, and is only now being revealed to the public, to be hastily adopted under crisis conditions, that is, rammed down the people's throats without warning or discussion, is exactly how Klein's "Shock Doctrine" works. Once major distaster occurs, rush in before anybody else can even think, spouting out plans previously hatched in conservative think tanks that sound coherent and effective on the surface, while demanding adherence-or-else. Then forcefully impose such psychotic right-wing theory on frightened and battered populations. They did this with the Patriot Act. They did this with Afghanistan and Iraq. They did this in New Orleans with Katrina. They tried, and failed, to do it with Social Security--the problem there was that there isn't actually a crisis with Social Security, and the public failed to bite at the fear-mongering bait.

And now they're trying to do it again.

Fortunately, people in Congress, from both parties, are sick of all the lying bullshit. Right-wing ideological purists hate the market intervention; Democrats can't stomach the hundreds of billions going out to massive businesses without any oversight at all. Whatever it takes. In the end, Wall Street's going to get the money, which will infuriate the aforementioned purists, but I'm very thankful for their delaying skepticism at the moment. Once the dust clears, a coalition of Democrats and not so pure Republicans will pass the bill by a most likely veto proof margin. And I'm pretty sure it won't be free money for irresponsible assholes in suits. Big strings will be attached, and that's a good thing.

But still, what Paulson offered last Friday was just so insulting...

(Naomi Klein discusses this current financial meltdown in terms of her book The Shock Doctrine on Democracy Now here.)

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$