To quote a phrase you may have heard once or twice around these parts this year, "YES WE CAN!"
A number of diarists today have described some of the negotiations and pushback by Congresscritters to the Hank Paulson must become god NOW! Wall Street bailout. It turns out, according to at least one inside source, there is a lot of opposition to the bailout among the Congressional rank and file on both sides of the aisle. It's the leadership whose knees are quaking.
I called my Congressman and Senators today. If you haven't made your calls yet, do whatever you need to do to remind yourself to call first thing tomorrow. I can tell you that my sibling unit called, and the Congresscritter's office was surprised by the grass roots opposition they were learning about, and were taking notice.
Not only are constituents opposed to the bailout, the financial markets themselves gave it a cold reception today. More below the fold.
Lot's of follow-up commentary today by econo-bloggers right, left, and center. I won't bore you with a long list, but let's start with this hopeful note by Prof. Paul Krugman:
Can the Paulson juggernaut be stopped? I’m starting to think yes. Paulson displayed a lot of arrogance here — he basically marched in and said Daddy knows best, don’t worry your pretty little heads about the details.... And he overreached, especially with that demand for immunity from any review.
Now we’ve had a lot of pushback from economists and financial analysts, and the realization has sunk in that this particular daddy has shown very little sign of knowing best. So there’s a real chance to do something quite different.
Yesterday I told you that the "gold standard" for understanding the bailout bill was a blog called "Naked Capitalism." Included in that long description was an email from a Congressional insider, which has itself generated a lot of attention, because in it the staffer confided that Paulson intends to overpay for the securities he will buy with taxpayer $$$$$. Well, today a Congressional staffer followed up:
From the members' meetings that I've been in today, I can tell you that large portions of the rank and file from all across the spectrum really don't like this bill. Leadership is trying to ram it through, and Barney Frank, who's been great all Congress has totally turned into Paulson's lapdog. Very disappointing.
And just so you know that there are patriotic GOPers in league with us on this issue, from
TPM Muckraker we learn:
Rep. Scott Garrett (R-NJ), a member of the House Financial Services and Budget Committees, is strongly opposed to the administration's plans to bail out Wall Street an aide confirmed to TPMmuckraker.
But as I said, it isn't just rank and file Congresspeople and economic and financial bloggers who loathe this bill, the financial markets themselves by their action today, proved that they too loathe it:
the markets are voting massively against the bailout. While the fall in the Dow is almost inconsequential (260+ points as of this writing), given the monster rallies late last week, the dollar is tanking, and more important for domestic politics, oil has gone up $25 a barrel so far today. That should give Congress and the Administration plenty of cause for pause. Voters will be mighty unhappy with again-hugely-pricey oil.
We said before that the dollar (more accurately, oil as the anti-dollar trade of choice) would constrain policy options. Will Bernanke and Paulson take heed?
OIl went up $25 today. The dollar tanked. Gold also advanced. Let me quote from an econ blogger across the aisle, blackhedd at RedState, who accurately pointed out:
This is precisely identical to increasing the size of the money supply by printing new money. It’s inflation. The Treasury has said that they expect to finance the Bad Bank’s purchases of MBS by issuing new Treasury debt. Maybe half a trillion dollars’ worth of new debt.
There’s no way to sugarcoat this. It’s as if you went to the track and you lost money, and your rich uncle gave you an amount of Monopoly money equal to what you lost. (Minus a discount, just to teach you a lesson.) Except that the Monopoly money can buy stuff just like real money can.
....
What would the risk be? Well, if the Bad Bank pays too much for the portfolio, we risk a massive and destructive inflation. That’s a real danger.
....They will err on the side of overpaying.
In other words, it isn't just that the $1 trillion or more might be wasted or without effect, that money, printed out of thin air, makes the dollars in your wallet and your bank account worth less and less. Very quickly. The world will simply not accept payment in dollars that have turned into clownbucks.
As the US dollar takes it on the chin, as a direct consequence of the proposed bailout, Congresscritters might want to ask themselves how much they want to be held accountable by constituents for $10/gallon gas, or impossibly expensive heating oil this winter. That might give them the fear of the real G%d they need to oppose this bailout of Mammon.
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ALSO: Kossack Tirge Cat supplies video and a transcript of Democratic Representative Jim Garrett opposing the bailout.