I know you probably didn't come here seeking reassurance on Congress' failure to enact the bailout bill, but I actually think we're better off without it.
Economist Nouriel Roubini writes that:
A recent IMF study (pdf) of 42 systemic banking crises across the world shows how different crises were resolved.
In only 32 of the 42 cases was there any government financial intervention of any sort; in 10 cases systemic banking crises were resolved without any such action. Of the 32 cases where the government did recapitalise the banking system, only seven included a programme of purchase of bad assets/loans (like the one proposed by the US Treasury)....
In the Scandinavian banking crises (Sweden, Norway, Finland) which are a model of how a banking crisis should be resolved, most of the recapitalisation occurred through various injections of public capital rather than a government purchase of bad assets.
Purchase of toxic assets – in most cases in which it was used – made the fiscal cost of the crisis much higher and expensive (as in Japan and Mexico).
|RGE Monitor via the Guardian|
So now I think we follow DR's suggestion and the Dem's should enlist some economists and write a good bill to solve the crisis.
On a constitutional note, I've always wondered why appropriations bills must start in the House (Art. 1, Sec. 7), but I think I just figured it out the Founder's reasoning today.
The Republicans in the House didn't vote for it because they couldn't sell it to their constituents. Voting for this bailout would have been political suicide for many in the House. It didn't matter what Pelosi said, the buyout of corporate stupidity was never going to work on Main Street where US Representatives have to live and campaign.
I'm not an economist, but I've been listening to a few recently and I think this bill was the sort of wrong-headed approach that the Bush administration is justly famous for. Fuckers.