Strengthening Constitutional Self-Government

No Left Turns

It Was Really, Really Dumb

...for so many Republicans to vote against the "bailout" or "rescue." Dean Barnett gives the reasoning of the two factions who voted against it. Neither is impressive. Sometimes you have to have the courage to just do what has to be done, even if it’s unpopular and somewhat contrary to your basic principles. It’s the ordinary guy, obviously, who’ll take the biggest hit if a Depression-type meltdown actually occurs. And that would hardly be the ticket to the Republicans doing at least not terribly in the election. If you scroll down, you’ll see that Bill Kristol recommends that McCain once again suspend his campaign until something is done. I’m not forgetting that lots of Democrats also voted NO for very different and even less credible reasons.

Discussions - 59 Comments

1) The Republicans did not vote it down. It was a bipartisan defeat. Stop repeating Democratic talking points.

2) Time will tell whether the bills defeat was good or bad. Nobody has a clue at this point.

Does anyone else notice Bush's total inconsequence as a leader or a figure here? He is past lame duck status. After death the toenails continue to grow for a matter of days. Even in a corpse something finds a way to push itself out. That is Bush. He has become the post-mortem toenail-growth president.

Conservatives are having an ideological nervous breakdown. You have National Review suporting a bailout that in their hearts they know is wrong. You have "principled" conservatives arguing that they will take a depression on their own terms rather than stablity at the price of the bailout. I wonder if this combination of confusion, desperation, oppurtunism and recklessness is anything like what liberals went through in the late 1970s?

From Pete's post, does it follow that Democrats should now pass this bill without additional Republican support? I think so. I was just listening to Lou Dobbs. Disgraceful demagogy.

Peter is right. There is blame on all sides. Still, in fairness, there is a vast difference between being imprudent but correct in principle and being both wrong in principle and outrageously imprudent.

The biggest thing these Republican legislators are guilty of is forgetting that they were elected not simply to reflect the will of the majority of their constituents (who, apparently, burned the phone lines over the weekend) but to do what is, in their considered judgment, in the best interest of the country. Sometimes this means disappointing those who elected you. But sometimes those who elected you are wrong about what you should do. If you simply bow to them, they were wrong to elect you. We could govern by poll if we were only after that level of thinking.

Pete rightly points out a couple of factions.

Peter and Julie: why are you so excited to have the government buy $700 billion in overpriced mortgage backed securities? Nobody knows the value of these things, but Paulson, and apparently you, want to buy them. What will the government do with these securities? Hire a big bureacracy to manage them, likely made up of the same fools who bought these MBS's in the first place. Why bailout idiots, you'll only reward failure.

If you, and the government, were serious about keeping business private instead of trying to control the private sector (or just grasping at straws as the NR and other conservatives currently are), you would advocate a "bailout" where the government would merely step into the commercial paper market and float short term loans to businesses on the credit market. This would stave off job cuts and keep the private sector working until the private finance market cleared. Then government could get out of the market...instead the current bailout will lead to long term entrenchment of government in the market.

One of the likely effect of the financial crisis is its effect on conservatives' self confidence. I don't mean professional economists, just regular walking around conservatives. Ever since the early 80s, most conservatives have assumed that low taxes, low regulation and a stable currency would produce high growth, low unemployment and broadly rising living standards. There might be an occasional reccession but it was short and the upward path would soon be resumed. It was their economic fighting faith. Bush's second term exposed cracks in this view. Income and business taxes were cut but living standards stagnated for large parts of the economy. Then this financial crisis and none of the usual answers seemed to apply. Some conservatives went for a Big Government bailout. Some just stood on free market principle and damn the consequences. No one offered a way out that was both plausible and conservative. The public is noticing. There will be consequences.

I'm not an economist, so maybe this doesn't make any sense, but to me this all seems to be a product of our materialistic culture, not simply economic policy. We are a culture that has to have the biggest and best of everything, regardless if we can afford it. We have extended ourselves on credit because we just HAD to have that new pair of jeans, even though we have 10 pairs in the closet at home. This idea has permiated our society so much that people are neglecting their duties as parents and citizens so they can have the best cell phone and the nicest car. Why is it government's problem to fix this...shouldn't we all just tighten our belts and only buy what we need, rather than what we want?

Ever since the early 80s, most conservatives have assumed that low taxes, low regulation and a stable currency would produce high growth, low unemployment and broadly rising living standards.

This assumes that we have been in such a period; we have not. You, like the GOP, forgot low spending. High government spending undermines low taxes and an otherwise strong economy. Secondly, your hypo assumes a stable currency. Our currency has consistently lost value and become less stable over the past 20 years. While it has only declined noticably in the past 4 years, the only think that kept the dollar stable through the 90s was Asia buying up tons of them. Government spending through the 80s, 90s and 2000s caused debt that and was only stopped from destabilizing the dollar b/c foreign countries were willing to gobble up U.S. debt. When they became less willing, the problems caught up quick. I'm a conservative, and I'm not soul searching. Conservatives who believe that high spending is ok are the ones who need to be soul searching.

Our business tax--35%--remains one of the few highest in the world. Our income taxes remain extremely progressive. What's this crap about how "low tax" America is? And low regulation? Did you ever hear of Sarbanes-Oxley? Regulations are tight-too tight. Those bad unregulated hedge funds kept the economy going for the past 10 years, and they will likely clean up this mess if the government doesn't make it too much worse. Now all this is the truth, and must be told. Were I a politician, I would think of a more clever way to put it for the public. As it is a blog that only a few read, prudence can easily be sacrificed.

What's the answer? 1. Cut business tax-double taxation is extremely inefficient and leads to companies leaving. 2. Balance the budget-for some reason people thought the national checkbook was immune from the problems our personal checking faces. The result has been unstable currency and and increased financial regulation.

Well I came over here to see what the Ashbrook folks would have to say. NRO is too predictable and boring. There the Establishment "cons" are shilling for the Establishment (I'm shocked! Just Shocked!) and fretting about their stock portfolio.

I figured if I came here I might find someone who would tell me it is "prudent" to gut the Constitution and loot the treasury in order to postpone the inevitable fall of the Fed's counterfeiting shell game. Well you didn't let me down.

First, please tell me what Article and section of the Constitution authorizes any of this. (What authorized Fannie and Freddie or 90% of what the government does for that matter, but that is for another day.)

Second, you can not fix a problem caused by the Fed printing money out of thin air and government regulation by printing more money out of thin air and adding more regulation. You simply prolong and worsen the inevitable fall of the whole house of cards.

There is NO solution to this never ending cycle except abolishing the Fed’s funny money scheme, spending only what we take in, and returning to sound money. Getting there will be hard and well above my "pay grade," but it is the only "prudent" option.

Here is Kevin Gutzman, author of the PIG Guide to the Constitution, on a Constitutional money system. Read and enjoy.

Here is one of those letters that had Congress feeling the heat. Apparently not enough heat, because my Congressman voted "aye," one of only two of the Georgia delegation of 13 to vote for this boondoggle.

I am with Julie on this. The Republicans are more than Pence and I have heard some rather articulate congressmen speak about why they did not vote for the bill.

Big Question Barnett seems not to wonder about: Why did Pelosi bring a bill to the floor knowing she did not have the votes? Sounds like Pelosi is at least an enabler to Republican intransigence and that makes the majority culpable.

Clint, some fine points but are our income and business taxes higher or lower than when the economy was in better shape in the 90s? When have conservatives recently prospered by taking on high spending per se (as oppossed to high taxes)? Do you really think that a capital gains tax cut and balancing the budget without tax increases (which would require hundreds of billions of spending cuts this year alone)would solve either the financial crisis or the economic anxieties that preceded the crisis? Thats what I mean by the crisis in conservative ideology. The answers of the recent past are not in themselves sufficient for the problems of the present (though cutting businsess taxes and government spending are still good ideas), and acting as if they are only prolongs conservative estrangement from political reality.

And this is a more plausible account of the events.

One word: Prudence.

One other tangential point: I do not believe for a second . . . not one second . . . that Pelosi and Co. did not do this entirely on purpose. It is in their interest--or so they think--to perpetuate the crisis. They only care about re-gaining political power. She introduced it so she could vote in favor of it and then gave an incendiary speech (the only such speech given by any member in the leadership) laying blame at the feet of the Republicans in order to guarantee that it was defeated. She knew that she could not persuade the Dems who are opposed to it because it was not socialist enough (e.g., Kucinich). But, if she had really cared for the future of her country, she had some hope (which she deliberately squandered) of persuading Republicans on the fence. Instead she chose to offend them with a diatribe blaming them for the problem. She is not even in the ballpark for the title of statesman. The woman is a disgrace.

The last time McCain "suspended" his campaign, he lost 5 points.

In as much as we're 30 days out, ----------- I modestly suggest suspending any future suggestions of McCain campaign "suspensions."

It's time for McCain to cut the cr*#, and unwrap a growth-oriented economic package.

The discussion has to morph from the bailout scheme itself to the only economic plan capable of paying for it, and that's a ROBUST growth plan.

The battle must shift, otherwise the GOP, burdened as they are with Bush and with all things Bush, will go down to a resounding defeat.

Somebody needs to clue in the senior Senator from Arizona that a real economic plan consists of far more than earmark reform.

And JULIE, what of the GOP's obligation to the truth?

It's one thing to be asked by the Democrats to participate in a bailout plan. Isn't it quite another to be asked for the sole reason of providing political cover for the party responsible.

Don't the American people have THE RIGHT to the truth?

Nancy Pelosi and Harry Reid have been engaged in a scheme to prevent the American people ever understanding just how deep the Democrat leadership has been involved in this nightmarish scandal.

Doesn't the GOP have the OBLIGATION to take those actions necessary to make sure the American people arrive at an understanding of the truth.

Where does the truth figure in, in all of this?

It's not the GOP's responsibility to pass legislation through Congress on this. Reid controls the Senate; Pelosi the House. They wanted majority status, they wanted chairmanships, they wanted the status and the cachet that flows with majority power. Well they have it.

So let them address the problem, let them pass their bailout, let them do as they will, ------------- and let Republicans stand against, --------------- and let it be taken to the people.

This is no issue to blur party differences upon, ESPECIALLY when the Democrats have taken NO action that remotely suggests a reform agenda to make sure such graft and greed ever occurs again.

The Democrats created this nightmare. And the Democrats look to make sure such nightmares descend again.

And yet Republicans are somehow obliged to go along with a bailout plan few are convinced will work.

Count me out.

BEFORE any bailout plan passes Congress, shouldn't legislation be passed that will make sure America can easily handle the new obligations she's assuming. Wouldn't that assuage Republican concerns? But where have the Democrats proposed such commonsensical measures.

julie, i completely agree on pelosi, which it's why it's so depressing to see the Republicans grab on to her bait.

RE: #15: Prudence is in reference to? Just for clarity sake.

Also, more evidence against Dean B's contention.

You have National Review suporting a bailout that in their hearts they know is wrong. You have "principled" conservatives arguing that they will take a depression on their own terms rather than stablity at the price of the bailout.

Looks like conservatives are damned if they do and damned if they don't with Pete.

Some conservatives went for a Big Government bailout. Some just stood on free market principle and damn the consequences. No one offered a way out that was both plausible and conservative. The public is noticing.

The public knows only what the MSM tells them. And none of this is being told to them. They ARE being fed a lot of garbage about how deregulation caused the bank failures.

Ever since the early 80s, most conservatives have assumed that low taxes, low regulation and a stable currency would produce high growth, low unemployment and broadly rising living standards.

We don't have low taxes, low regulation and a stable currency.

Do you really think that a capital gains tax cut and balancing the budget without tax increases (which would require hundreds of billions of spending cuts this year alone)would solve either the financial crisis or the economic anxieties that preceded the crisis?

That's like asking "do you really think that taking two asprin will cure that rash?".

The causes of this mess are not that obscure and they have straightforward if painful solutions. Here's a link to a discussion of one problem.

You need to broaden your circle of conservatives if you're only hearing about a capital gains tax and a balanced budget.

"But, if she had really cared for the future of her country, she had some hope (which she deliberately squandered) of persuading Republicans on the fence."

That's right. Because only people who support more Fed counterfeiting really love their country.

"No one offered a way out that was both plausible and conservative."

Because there is no conservative way to bailout financial recklessness and irresponsibility. Conservative should want to conserve the Constitution, I would think. My question is still on the table. What Article and section authorizes this?

What the politicians do or don't do is completely irrelevant at this point. The 35 year orgy of debt and massive leveraging on a national and global scale will now be dealt with. The greed has given way to fear on a macro scale. You can't solve the debt problem with more debt. The markets are adjusting assets to this reality. It will be very painful but no government intervention will stop this massive unwinding and debt liquidation. It now appears Obama will carry the day and the Reid-Pelosi-Obama axis of socialism will be complete. As their policys are inacted in 2009, it may get whole lot uglier!

Sorry about the doubling down.

JERRY, this wasn't "greed" run amok. Greed is checked by risk, and often punished harshly.

This was Washington playing their favourite game of "let's stack the deck."

Washington, BY LAW, PROHIBITED risk from being taken into account on certain loans, WHICH left the banks between the Devil and the deep blue sea. Either refuse the loans, and have the lawyers and Sharpton out front of their headquarters crying "racism," OR making the loans, fearing the worst, but hoping for the best. They made the loans, and now, a decade hence, ------------------ we're in up to our neck in debt.

That's what happened. This wasn't generalized greed.

This was the Democrat party at work on our financial markets, --------- and per usual with them, it didn't take too long before it turned into a nightmare.

The GOP needs to reject root and branch any deal with the Dems on this, unless they let the GOP dictate the legislation.

As a sine qua non to the GOP entering into ANY deal on this, they must first force the Democrat leadership to PUBLICLY confess their role in the creation and continuation of this utter nightmare.

Remember that Fannie Mae and Fannie Mac were both explicitly excluded from Sarbanes-Oxley... and hence why this whole mess happened.

Much of what Clint above has said makes sense, as well as the comment that what needs to be done is not a direct buy by the taxpayer of bad money, but flooding the system with short term liquidity/cash to help keep companies and banks afloat as markets readjust.

Also here is a time for political action, in that the GOP Congress need to put forth as a unified campaign to fix the system if you vote us in strategy, ala Contract with America. Its not too late. Willie Horton the Dems and the Black Caucus as those who corrupted the GSEs into the political tools they became and say enough is enough.. we need real change. Not Obama and his pals continual fleecing of the American people which has put us now in this current crisis. This is not only about ACORN, ACORN is merely one outgrowth of the whole way Congress has been force to throw money at those who use racial politics to extort from the systems.

Julie: one word--Wisdom.

Pete, you have some history on your side. Personal income taxes are lower now, although I don't believe the business tax--35%--has changed for a long time. [Ireland has a 12% corporate tax, Israel 27, Finland 26, Sweden 28, Hong-Kong 17]

There's too much to discuss in all our posts, so I'm going to focus on one area where you, and later John, misunderstood me. I said that we need to cut business tax--i.e. do away with as much double taxation as possible. (I didn't say anything about the capital gains tax.)

In America corporate investment is taxed twice. First at the corporate level where earnings on the investment (corporate profit) are taxed at 35% and secondly at the individual level where capital gains and dividends are taxed 15% when distributed to stockholders. Thats an effective 50% tax rate...hardly low. I believe that individuals should pay taxes and that taxing corporations is merely a hide the ball trick by the government so that we really can't tell how high our taxes are. Since Bush quite sensibly unified the capital gains and dividend rate at 15% (fairly low), I would make no changes to could even raise them slightly w/o me getting too upset.

Here's a smart economic, and I think good campaign issue. "Cut the corporate tax and close 'corporate loopholes'." I said the current corporate tax rate is 35%, but the effective rate, i.e. the rate that corporations actually pay, is about 18% because Congress writes in a bunch of loopholes for their pet policies. The problem is that international corporations see the 35% rate and think whoa, stay away from America. The 'loophole' system is inefficient. First businesses spend money in ways that are inefficient just to get tax breaks, so these tax loopholes have messed up the market. Corporations might profit more short term because of a tax benefit, but longterm that activity is not a wise investment. Having almost 20% worth of loopholes effectively means that Congress has at least a 20% say in how corporations spend their money. Furthermore corporations spend billions on accountants and lawyers who shoehorn different frivilous expenses into these loopholes.

The answer is cut the rate to say 20% and provide NO LOOPHOLES/EXEMPTIONS. Under this scenario we would collect just as much if not more tax. International corporations would see that America has a competitive tax system. And, most importantly, there would be no false incentives for inefficient action, no wasted fees on accountants and lawyers. Are you telling me that isn't effective economic and electoral policy?

To reiterate, I never mentioned the capital gains tax, which is an investment tax. The 600 pound gorilla on the current economy is the high corporate business tax. That is where double taxation (both of corporate and individual profit, which is the same money b/c corporations exist to create individual profits) needs to be attacked most.

Good Morning.

I want to speak to you No Left Turns people about this stuff. We need a big plan because it's a big problem, Texas big. So keep on talkin' and thinkin'.
We could have a uh, uh, uuhhh, fantabulous markit if congress would pass something and your retirements would be uh, securer. It is remarkulous that the bill was not passed with overheeping measurements. The administration will work big time on another bills passagment because of it's bigness and the American people need the confidence to spread to the rest of the world, like places in Asia and Europtania.
If this fails again it will have severe impactations on these countries which will in turn reverbetrate to pension funds and could even affect your retirement.
I support doin' something. I think it's a hole-istic thing to, uh, doo....

God bless the United States!

Thomas Sowell made a comment in an article this morning that I found interesting - let Fannie Mae and Freddie Mac collapse under the weight of their bad decison-making process and let the private market forces take over. There is STILL liquidity in the market; banks are not going to stop making loans to cover payrolls or prevent you from buying a new car. There's still too much money in the process.

Get rid of the coercive Community Reinvestment Act, allow the free market to intervene and STOP PANICKING! That's what the MSM wants everyone to do so their media darling, Obama, will get elected. Fear of the free market forces will get the Dems what they want - more money for teir pet projects, like forcing banks and other lending institutions to give out loans to people who have no ability to pay for them. The rest of us, earning a living and paying ALL our bills on time, will face decades of higher taxes if this "bailout" passes in any form. The Dems will say "we will take care of you and pay your mortgate and your credit cards (OBAMA HAS SAID THIS PREVIOUSLY)" if you can't pay because some Republican has voted to send your job overseas. Last time I checked, a corporation didn't exist to give you a job; that's a by-product of making money for the shareholders of the company. The corporation needs to stay in business. We may not like their choices but that's reality.

The trouble with Dems is that they have buried their heads in the sand until recently, hating George Bush rather than doing anything constructive. That collective hatred lost them the White House in 2004 and it will lose it again. They've relied on their constituency base to also hate George Bush and direct all their animosity onto Republicans as if they ALL agree with the president. SURPRISE! Hey, we're free thinkers minus the dope!

We tax incomes and business profits - the small business owners is taxed twice. We pay far too much and get far too little in return. If the government as $700 billion laying around for a corporate bailout, why not once again return it to the tax payers so we can pay mortgages, credit card bills, car payments and for Susie's braces? If the government is once again willing to give away money, maybe try funneling it toward the people who REALLY need it. Just a thought...

Real, political, Wisdom is in knowing the limitations imposed by reality. Republicans gave up their right to alter very much of that reality when they lost the elections in '06. So Dan is right that they have some real obligation to tell the truth and that they cannot simply be doormats for Nancy. (I heard that screed of hers, btw . . . and much as I believe the right thing to do IN THESE CIRCUMSTANCES was to vote for the measure . . . I confess that her smug remarks would have made that one of the hardest things I'd ever had to do.) But there will be time to tell a different story later. Or, possibly, not. Sometimes life and politics are tragic. This is why elections matter. This is what happens when you lose them. The risk of being wrong on this one--even if it is for your so-called "principles"--is too great. Just ask yourselves how long it took to make free market principles respectable in public conversation after 1929 . . . It was what, 50 years before we got to 1980? And we still have not recovered from what took place in the interim. Indeed . . . this whole mess is intimately tied to it. I'm not sure I want to ask my principles to take such a long and bumpy ride--possibly never to recover. I'd rather see them live to fight another day.

To Julie and Peter: the claim that Pelosi deliberately caused the bill to fail is a conspiracy theory that distracts from the basic logic of the bill: the first preference of many members was to vote against the bill but to have it pass anyway, so they could both enjoy the benefits of the actual package and run against the "moneychangers" on Wall Street and a Washington that does their bidding. The folks in that category just cut it too close, and Boehner blew the whip count. The Dems got the votes they thought they would get, Boehner didn't.

Congressmen are running for reelection. The pressure from home was against a "bailout" and $700 billion is a big number. That Pelosi is a fathead is a bit of cover for doing what taxpaying voters (or the noisier ones, anyhow) wanted their representatives to do. Given that anyone with a pension or mutual fund or anything like that is part of Wall Street does not seem to have occurred to those "anyones". You guys all are aware - right?

I visited one of Red Phillips' links. Yes, you would have to hold that the bailout would have been unconstitutional, if like Red Phillips' guys you're a modern-day strict Jeffersonian on federal powers, and thus reject 1) all Hamiltonianism, 2) the federal power to print (as opposed to coin) money, and most importantly, 3) the McCulloch v. Maryland decision's interpretation of the "necessary and proper" clause.

If a Bank of the United States is constitutional to support armies and navies and to regulate interstate commerce, than so is a Paulson-style bailout. Even if you're a "it's mostly bogus juriprudence since the switch in time of 1937" guy, you have to accept that. Not that being a "it's mostly bogus jurisprudence since the McCullogh decision of 1824" guy isn't a possible and coherent position. But when such guys start shouting "unconstitutional!," they might at least signal or acknowledge the somewhat atypical provenance of their position.

As for the rest, I keep my feeble-on-economics mouth mostly sealed. Dan's main arguments seem right, and something about this "pass the bill or face economic armageddon out of the blue" is sketchy, so maybe it was good that Rebpulicans fought the bill, but who really knows? God help us. And, almost any way you slice it, i.e., even if God hears our plea and does guide our leaders to make a mostly-right decision, the mere fact of the crisis already experienced means Obama will win.

I love prudent people b/c they are always predictable; they always make the same arguments; always support the status quo as much as possible. This makes them 1) followers and 2) useful tools for the leader and/or zeitgeist.

I'm beginning to come to the conclusion that the government should do nothing, absolutely nothing, and let Wall Street fall, {but interestingly, very interestingly, Wall Street is gaining back some that it yielded yesterday...}.

I like JENNIFER's observations.

You realize we're being driven into a panic, and we're supposed to support a bailout plan that might achieve nothing, NOTHING. There's no guarantee this plan will work. NONE!

An official at Treasury was asked up on The Hill how exactly Treasury was going to use the trillion dollars, ----------------------- TREASURY HAS NO IDEA yet how they're going to distribute the money, nor the criteria they're going to use to determine who gets funding and who doesn't. SHOULDN'T THAT PROVIDE PAUSE for all those lambasting Republicans who voted against the bailout plan yesterday. Treasury hasn't a clue what they're going to do, but somehow they're to be provided unlimited power and the proverbial gold of Ophir.


Treasury not having a clue, I suggest we embrace lesser measures, the results of which we can reasonably be confident in.

I think the GOP should sieze this issue, expose the Democrats involvement in the creation and continuation of this nightmare, and take it to the people, whose intuition I trust more than the Dems at Treasury.

We need a deal right now. The Clarion Fund and their thoughtful DVD Obsession: Radical Islam's War against the West has set me straight. We need the financers to keep trading monopoly money so we can have a huge military to spread peace in the world and safety at home. You people speaking on rights and principles must be with Al Qaeda, I hope you all like pink underwear you terrorists. God bless the Clarion Fund and their concerned private citizen who wishes to go nameless. Probably becasue the terrorists would eat his children if his name was leaked.

And JULIE, if the story of this nightmare isn't told now, if the truth isn't put out there now, -------------- then it won't ever happen. Bork was ripped apart, and his reputation never came back.

The truth isn't going to somehow seep into the public consciousness months and years down the line. The media isn't going to tell that story, documentaries aren't going to be made, nor will Hollywood, about this issue, film some equivalent to The China Syndrome over it.

It's now or never. We'll fight for the truth now, or we'll have to live with being blamed for it for the rest of our lives.

How many people know the real story of Vietnam, the real story of how Congressional Democrats effectively ENSURED a Northern conquest of the South? If that story hasn't been told, ------------- what hope do we have about this one.

Too many here are far too confident about this plan that probably won't work, even if implemented.

Over the course of GW's tenure, has there been a single time when legislation was pushed on the basis that "something had to be done," that was in fact something that people desired, wanted, or was useful. EVERY time Bush has gone to that well, it's been a disaster in the making. And this time is no different.

I prefer inaction to this Democrat created nightmare, and this even worse Democrat created "solution."

This whole damn "solution" is a contrivance of Democrats at Treasury and up on The Hill.

And I say the hell with it, the hell with them.

TAKE IT TO THE PEOPLE! And that's what Dick Morris advises too.

BRUTUS, ---------- is this really the time...............?

Well, Dan . . . you know that I agree with you about Giuliani. I was all over the possibilities presented by his candidacy . . . but now those are no longer possibilities. And I feel like much of what you say about "telling the truth" is about as practical as pining for G.--if that's all you've got. By all means tell the truth. Scream it, write it, propagate it, and then repeat it. I just don't think that it will get through in time (if ever) for it to change the whole drama and guarantee a happy ending. In fact, I'm not even sure what a happy ending would look like. It really looks like we're going to get some kind of a crap sandwich, as Jonah notes. How crappy do you want it to be?

I actually just recived my copy of Obsession today. Since I don't subscribe to any of the newspapers they went ahead and mailed it to me. The fear mongering are connected and it I think that it is the time. BTW, Obsession is a who's who of CIA assets and MI5 agents. I guess its the time to borrow a trillion dollars from banks at interest to bail out the banks---------------are we living in a science fiction novel?

I love right wing agitators because they are always predictable; they always make the same arguments; they always support the status quo in that they work against the principles they claim to support by putting off all reasonable people who might otherwise be persuaded. This makes them 1.) caricatures of themselves and their principles and 2.) stooges for the left-wing zeitgeist and its leaders. On the other hand, knowing--as I do--that Clint is a smart guy and capable of better than this sort of snarky comment, I continue to hope that I will soon see it.

Carl, both the Federalist and the anti-Federalist agreed that the federal government could ONLY do those things specifically authorized. When the anti-Federalist would warn of some potential abuse, the Federalist would respond by assuring them that that couldn't happen because that authority was not specifically delegated. This is common knowledge, and not really debatable. That is indisputably the original intent of the Founders unless you are a conspiracy theorist who thinks the Federalists were being intentionally deceptive and were trying to sneak something through.

Now the fact that our illustrious elected leaders quickly went astray here is clear, and Gutzman amply documents this lamentable fact. But that doesn't change the original INTENT. We do still care about such things, don't we?

As an Articles of Confederation guy myself, I am not crazy about the "necessary and proper" language, but it was clearly not the anything goes loophole that it is interpreted to be today.

The Feds could raise an Army and a Navy because that was authorized. They could not charter a bank because that was not. This is really elementary.

Those of us who point to the unconstitutionality of most modern programs are not promoting an eccentric reading. We simply think following the Constitution is not optional. Most others, even most conservatives, have ceased even pretending to care.

Julie, why is it agitating to point to the Constitution or decry Fed funny money, but it is not to simply chant prudence and wisdom? Does context determine it? If you came to my peleoesque blog ( and said prudence and wisdom would that be agitating? Is their some governing body somewhere who determines what all the “smart” and “level headed” people agree on and what is just ideological agitation? Is prudence and wisdom like pornography, you just know it when you see it? Help me out here.

Just trying a little shock to warn you off the sin of "Prudence". Endless evil has been done in the name of doing good. The first moral principle is always that you do no harm (or no evil). Once you short change this great principle and put everything on the broad balance of "doing justice," then its not hard to figure people out. When they break down first principles in the name of prudence, nothing stands between themselves and their own prejudices. As soon as you know their prejudices, you know exactly what they will do in the name of prudence. This is what Solomon warned of, advising man to keep God's commandments. No amount of prudence can replace the source.

Clint . . . really, not to belabor this but you just don't seem to understand that true prudence is not in violating first principles (that would be calculation) but in preserving them; in carrying forward the seed, as it were. Endless evil has been done in the name of doing good, you're right. But it's funny to hear you say that because evil of this description is almost always committed by those who think that prudence is a sin and that their principles are so sacred that they admit of no accommodation to reality. That because the best is not possible, the good should be scorned. Bearers of such strong principles often forget about another sin: that of pride. They think that it is beneath them to accept the limitations of this world and angrily insist that the world that will not live up to their principles is no world worthy of them. And yet . . . they continue to show up and engage with this world. I am glad that they do. This means that there is hope and that, eventually, they may come around.

Julie, we've been over this a lot haven't we? I think history is on my side. What you say about the proud follower of principle doing evil is not without example: John Brown, McVeigh, or even Islamic Terrorists. But do you seriously think that their stubborn wrongs are as serious as the wrongs of the Machiavellian princes who practice prudence? [Stalin, Mussolini, Gregory VII, Henry IV, Peter the Great, and enless others] I know that you try to claim that it is mere pragmatism when the result is bad.

In what way do you perpetuate capitalism with the $700 bailout? If you argue this, then you are on the side of TR-a man of both great pride and principle who thought that capitalism could only be saved by moderating it with social reforms. Perhaps that is the prudence of which you speak.

The wise and principled man doesn't fool himself with the future prudent "perpetuation" that he does not control and cannot see. This is why the founding was wrong...their prudence (postponing equality to start the nation) led to the civil war. Had they been brash and principled, the Civil War would not have happened. Lincoln himself moved from prudently slowly freeing the slaves, to brashly freeing them all. His Second Inagural shows his coming to grips with man's inability to foresee the future and practice evil in order to perpetuate the good. It doesn't work, the seed that you sow will grow tares.

Lincoln himself moved from prudently slowly freeing the slaves, to brashly freeing them all. Uhhh . . . no. He only "brashly" freed them all (though, in fact, Lincoln was never "brash" and he did not free all the slaves--he only freed those within territory not already back within Union control) because it 1.) came into his power to do so as part of his war powers and because 2.) in his considered judgment it served a significant military and strategic purpose. Of course, Lincoln also knew that slavery was wrong and he wanted to see it ended. But he was prudent about securing that victory and, as a result of being prudent, he actually got to see that victory. John Brown, as you mention, was less successful. So were Garrison, Stowe and a host of other abolitionists. None of them were as spectacularly unsuccessful as was Brown . . . but the result, had it been up to them, would have been the same for the slaves--minus, perhaps, the few dead ones killed in the raid on Harper's Ferry. Though who can say what might have happened to the country had Lincoln not moderated the passions of those abolitionists? I often wonder what might have been had he been around to moderate them further during Reconstruction . . .

But when it comes to the question before us today of whether prudence dictates that we go with this particular "bailout" or wait a while and go with some other plan that may (or may not) be better or whether it demands that we stand on this hill and die here I cannot say with certainty. I am no Lincoln and my understanding of the particulars in all of these plans is as limited as anyone's. I have only said that it appears to me that we are going to have to accept some very imperfect solution to a problem we do not yet fully understand in order to avert consequences that are, probably, too severe to endure for the sake of making a fine speech that (it seems likely to me) will quickly be disregarded and, then, later blamed for the coming difficulties. You seem to forget that sometimes perceptions are reality in politics. I do not agree with a TR version of capitalism--as you suggest or at least in the way that you characterize it. But your characterization of TR's version of capitalism is, in fact, the kind of capitalism that we do now have, isn't it? Do you think we are going to undo that in a day or even in one election cycle (particularly in an election cycle that we are not exactly commanding)? On the contrary, I think that the circumstances in which we live and with the political sentiment we now contend, we have many long days ahead of us. It is possible to discredit a principle by being too earnest, by saying too much too soon, and by confusing caution with pusillanimity.

So the emancipation proclamation was prudent and cautious, boy that's a new one.

This bailout is stupid, and the next one is likely to be as well. If the government were to take any action, it should only to be to support the commercial paper market (most profitable businesses carry short term debt at different times in the year to keep proper cash flow) so businesses can have short-term cash. We're talking about "main street" small businesses that need these loans for operating expenses. The current bailout is truly about "wall street" and, as the people have sensed, it is wrong. How is it politically prudent to support a bailout that 70% of the country opposes? You're the one who needs to be arguing the virtues of the plan because the default will of the country, like me, is against it. Saying "I don't know" isn't an option for the side who loses.

If the GOP wanted real prudence, i.e. wisdom, they would limit government involvement to commercial paper, saying that they are only using taxpayer $ to the extent necessary to support "main street" businesses. Say "we won't bailout wall street and their poor decisions in mortgage backed securities, but we will make sure that their poor decisions harm main street." To this end, to hell with the financial crisis, just make sure that business has the short-term cash to operate (money market/comm paper provides this) and let wall street fend for itself, they'll sort it out soon anyway and we won't end up rewarding those who failed like the current bailout will.

Perhaps the history of the EP is news to you Clint. I don't know what to say about that other than that it sounds like you should read more about it.

The distinctions you make above would be lovely to make and certainly would be a political winner . . . but I'm not at all sure that they can be made as neatly and distinctly as you would like. Who is "Wall Street" and who is "Main Street" exactly? And even if you could make absolutely clear distinctions between them, how would you (realistically) negotiate the thing to reflect them? And do you really buy the argument that all of Wall Street is to blame and none of Main Street is? And, moreover, if there were a way of laying blame only at the feet of the deserving, it seems to me that Congress would have to step up and get in line for the flogging first. In the meantime, a decision needs to be made some degree of speed. And I think there was a Freudian slip in your last paragraph. I am sure you meant to say that Congress should say that they will make sure that "Wall Street's" poor decisions in mortgage backed securities will NOT harm Main Street. But I do wonder if what you suggest might not do what you actually wrote and harm it.

Perhaps you studied the "EP" too much at the expense of econ. The solution of the government stepping into the commercial paper market would keep the basic production economy afloat by providing the short-term operating loans all business needs. (What really worries serious economists isn't the outcome of investment banks or AIG, but rather the fact that the Money Market i.e. Commericial Paper broke dollar [worth less than face] for the first time ever). Any bailout that goes beyond commercial paper will unecessarily reward bad actors who bought mortgage backed securities and end up bailing out rich people that Congress likes. It will also permanently (or at least long-term) entrench government in the market.

It is true of course that Wall v. Main Street rhetoric is goofy, but that is the practical overlay needed to make the political sell. And, if the plan were designed correctly that would be the result. We want people who made dumb mortgages to suffer (main), we want the people who sold and bought these flawed mortgages to suffer (wall). The part of main stree that we don't want to suffer is the cement maker, trucker, etc who's business can't get a business loan b/c the credit market is froze. Filling the commercial paper market would bailout the latter. Your plan, the current foolishness, will bailout all three at the expense of us all.

P.S. this new spam filter sucks and I hate reading garbled up words. There wasn't much spam on this blog, so whats up?

What about the cement mixer (or the university professor, trucker, engineer, or even state employee) with a 401(K) or series of mutual funds that are heavily invested in all this bad paper? This is what I mean about being careful in who you call Wall Street and who you call Main Street. It's just not that neat a distinction any more. I suppose you can say that these folks should just eat it--it's part of the risk of investing. And, to a point, I agree. But the damage this will do them and to the overall economy is very real and cannot be discounted because you think they "deserve" it. The full meaning of "deserve" in this situation looks very dim, indeed.

And I will be the first to concede that I should have studied more economics (though not less Lincoln). I should have studied more mathematics too . . . and probably, if you ask my family, more cooking. But we all have to have our limitations and, besides, I'm not dead yet.

And for the record . . . I'm a big fan of this new filter. You have no idea how many "enhancement" ads I've had to wade through on some occasions.

Ha, well that filter complaint was meant for Ben. A few ads are quicker to skim past than this dumb spammer.

Your reference to the common man being invested in stocks is not the problem [Professors are not common men income or otherwise]. I'm worried about keeping him in a job. You can't magically bring back the value, and a bailout with the common man's tax $ doesn't solve the long term value. You're just using the government to force Peter to pay Paul, or perhaps in this case making Peter pay Peter, just with an inefficient gov't as middle man.

The real estate market is down, and the market must write down value and bottom out. The only spot for gov't intervention isn't in long-term investment value, but in making sure that the engine, the production of GDP, doesn't stop because the credit market is weak

this is of course only my and some other's opinion. I think it is reasonably clear, and I think with the right gloss, it could be politically successful. The current plan will be neither successful politically or economically.

I'm worried about keeping him in a job too. (Though, you're right, there are many professors I wouldn't mind seeing lose theirs.) Why aren't you worried about the real losses in his portfolio?

I don't think you will get a plan that does not engage in mixing up Peter and Paul. Maybe you are right and we can get a better one. But I hope we don't get it too late. I do not look forward to looking at our 401(K) losses tomorrow evening.

All I know is that there was a man named Paul who said this was going to happen and is an economist. He did not get any real support and no one wanted to hear what he had to say. Now you are stuck with a living stereotype of Old Conservative Reactionary as your candidate. Lets vow to not let this happen again and think outside the box for 2012. Start to idendtify someone now and build them up. That and pray the Mayans were wrong about 2012. It would be funny though if they were right and even in the multicurtural society no one took them seriously. This entire saga takes me back to a passage in Revelations about "Kings without Kingdoms" being punished in the end. More interesting reading though can be found in Lenin's writing about how Capitalism will turn into Socialism.

masked ad- is my password this this random or a sort of cyber wegi board im supposed to interpret.

I'm pretty tired of this discussion. What is the big deal with some short term 401k losses? You didn't really lose anything. People's 401K's were inflated with unrealized gains that were spurred in large part by a large real estate bubble. When real estate prices dropped, everyone realized their assets were not as valuable as they thought. Of course this includes a lot of MBSs that had worked their way throughout the market.

Nothing the government can do will change the value of assets. Assets (particularly land) are worth what they are worth, and they are currently going through an adjustment. Your 401K had a bunch of false gains in it, and the market has found out and is adjusting. What I keep trying to explain is that the only fear should be the credit market freezing the cpntinued production of wealth. I don't care about current 401K value b/c that is going to be the same no matter what. Sure you can puff it up with foreign debt, taxes, or deficit spending, but you can't actually change the real value. Appealing to Aristotle or Lincoln won't change that. 401ks won't be significantly harmed as long as the production of wealth doesn't significantly slow. Let the market bottom out at 9500, as long as people are producing, we'll earn it all back in 3-5 years. And this time it will be in products that have actual value.

The bailout is just trying to put lipstick on pick. You can pass a bailout and take money from somewhere (yourself via taxes, or borrow against your kids with foreign money) and then pretend that your 401k is worth the same as it was. (This will only be pretend b/c the actual value of the market will be augmented only by the gov't) Or you can take you 20% loss on your portfolio and then the market will figure out the correct value of things and go back to work. If the bailout happens and we keep pretending that your portfolio is worth 10k when in reality it is only worth 7 or 8k, this hurts main street even more. That makes for a volatile market, and means that the insider/smart money will beat you and me every time. We won't even be able to invest b/c we won't be able to put a real price on anything.

This needs a discussion rather than a blog apparently since people think that we can somehow magically save unrealized profits. Your 401k was overinflated, the market found out, it will adjust, and provided we don't socialize the production, you will be fine. ON the other hand, mess around with a bailout and it will be years before we know what the actual value of the assets in your 401k are, and as a result the market will flop like a fish out of water. Information runs the market. So whos really looking out for main street? Its probably not who you think.

I am sympathetic to the argument that 401(K)s were/are unnaturally inflated and I know only too well how artificially inflated are the costs of homes (especially where I live). And I'm not terribly worried about our own 401(K)--suffer though it did--because we are young and we have plenty of time to make it back and, anyway, we're conservative investors. But I would probably have a very different view if I were set to retire soon or if I had to retire soon due to bad health or something like that.

Your cheerful scenario assumes that the market will recover real value--but how will that happen if credit freezes? This is what I really fear. You say it is also your fear. So we both are after the same villain. Why do you disbelieve all those experts who say that credit will freeze if we don't do something soon to stop it? And why do you think we are likely to get something better by waiting? I don't want to defend the particulars of this proposal and, I acknowledge, I can't. But as I look around I see people I trust saying that this may be as good as it gets--crap sandwich though it is. Why are they wrong? And I worry that every day that goes by without some solution is another day to add more crap to the mix. Considering who is running the show, I have no expectation that crap will be removed. And why should I trust someone who tells me that prudence is a sin?

Undecided means we are confused especially if both candidates are qualified for a specific position. However, it is normal to have a winner and to have a losser.
Whoever wins, it is expected that he will have good economic plans for the community and the economy.

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