But the hard-sell of President Bush and the US Treasury Secretary felt too much like the pressure patter of a door-to-door hawker. Their message was crude: “Trust us. You are in a terrible place. Only we can get you out of this mess. No need to check the details. Hurry now, or it will be too late. Here’s a pen. There’s the dotted line. Just sign.”I heard a quote by my Congressman, Roscoe Bartlett (R-MD), when commenting on teh bailout plan "it privatizes profits but socializes losses" which is exactly dead on. This bailout takes the risk out of any future risky behavior by banks because a precedent will have been set for the bailout and no one will learn the lesson about taking future risks.
But with the President’s ratings so low, few would let him leave the House with anything more than small change. Congress asked, not unreasonably: “If you guys know so much about banking, how come we are in such trouble?”
Having spent most of the year telling America, contrary to mounting evidence, that the US economy was just dandy, Mr Bush’s credibility is threadbare. When making statements, he’s beginning to look as if he doesn’t even believe himself. As for Mr Paulson, his long association with the jackpot culture of Goldman Sachs is, in the eyes of many outsiders, a gilded millstone.
Predictably, the refuseniks have been pilloried as ill-informed nihilists. They have been lambasted for failing to understand the consequences of their actions. They are, according to the Big Bail-out Brigade, condemning the rest of us to be buried alive in the rubble of a disintegrating banking system.
Try a different take. Yes, the West’s financial infrastructure is in severe distress. Yes, more banks are going to crumble. Yes, there will be a recession. But allocating $700bn (it would almost certainly turn out to be more) to a clean-up programme for toxic assets, in effect socialising the poison of private greed, has no merit other than to delay the inevitable. No amount of federal cash can rewind the X-rated horror video.
Only when banks fail will the lesson be learned.