Posted in Rants on September 21st, 2008 by Ed

One of the great truisms in life (and a staple component of my oldest stand-up routine) is that anyone compelled to introduce a statement with "Now, I'm not a racist, but…" is about to say something really, really racist. Things that are not racist do not need "I'm not a racist" as a qualifier. In practice, of course, this is usually an intro to a statement along the lines of "…but I really think we need to start killing more Mexicans."

Similarly, I am entirely convinced that Our Leader's half-assed scheme is in fact a bailout simply by virture of the number of times we are being told it is not a bailout. A genuine Not Bailout would not have to be preceded consistently with "This is not a bailout." Were it not, it would not look and behave like one. Instead we have something that looks, feels, and acts like a bailout enveloped in reassurances that it isn't.

Here is how I interpret the proposal: the Treasury Department would be given authorization to spend nearly a trillion dollars buying worthless mortgages "at market value" without even a hint – literally, not one word – of new regulations to create the charade of trying to prevent this from recurring. This is right-wing economics in a nutshell – government regulation is the antichrist, but its handouts are demanded. The benevolent, Divinely Inspired hand of the market cannot accept government meddling and rules, but it sure as hell can accept government cash. Check that. It's actually your cash. This sort of thing happens around the world with some regularity (see Sweden's banks) but the response is usually for the government to take over the institutions and run them responsibly before ponying up to pay down the bad debt. This is just taking money out of your pocket, handing it to some jackasses who gave a crackhead a $300,000 mortgage, and telling them to go on their merry way. "Racketeering" might be a better term.

The problems here are so transparent that the bailout seems like some kind of joke. First, the entire problem is that people are refusing to accept "market value" (i.e., half of whatever over-inflated price they paid) for their homes. We have too many $500,000 mortgages on homes suddenly worth $225,000. Offering $225,000 isn't going to solve anything. What this will amount to is either very few mortgages being bought (unlikely) or the government bidding against itself until it pays far, far over "market value" for this worthless crap (very likely). Second, we don't have $700 billion. That's larger than the annual budget of the Pentagon. It's larger than the cost of the entire Iraq War. It's almost 20% of the entire Federal budget. The only way to create $700 billion out of thin air will involve A) selling more Treasury paper to China, as if they'd buy it, and/or B) whipping out the printing press and printing more money. Third, seriously? No new regulations? No promise to maybe consider looking into thinking about enforcing the ones already on the books? Just a hearty chuckle, telling the financial industry "You sure fucked that one up!" as we hand them a check for three-quarters of a trillion dollars?

What no one seems to understand (and what the GOP is in full crisis mode to delay until after November) is that these institutions need to be allowed to fail. The consequences will be dire, but the consequences of these idiotic schemes to keep the patient alive on the heart-lung machine for a few more weeks at a time will be far worse. The patient is going to die anyway, and this Mugabe-style "Debt? Just print more money!" plan is going to make things even harder on those stuck footing the bill when the inevitable happens. And when it does, whether it's 1929 all over again or something milder, of course we will see Mrs. Republican, Mr. Free Market Worshiper, Mr. More Tax Cuts, Mrs. Supply Side Economics, and Mr. Get Big Government Out of Our Lives front and center, hands outstretched, awaiting the handouts that inevitably follow the disasters that their policies cause.