I’m not sure I know how to react to the news today that the House of Representatives defeated the bill giving Treasury the ability to purchase mis-priced assets from the banking system.
Phrases like “short sighted”, “small minded”, and “Hoover like” come to mind to describe today’s vote. The most accurate is probably “scared”. Americans did not support this bill, projecting their anger over a host of domestic and foreign policy issues that they see as failures, and Congress reacted to that anger.
All that frustration came home in an uproar over what people saw as their money going to rich people out East. Worse, they had lost trust in the Administration and didn’t believe the description of the situation told to them, even though it was a vastly watered down version of the real crisis we face. Their Congressmen latched on to that anger and fearing for their jobs in November, they voted “No”.
They did the popular thing, and they did the wrong thing. Today as the market collapsed, $1.1 trillion was destroyed in falling share values held by Americans. That is much more than the $700 billion that Treasury requested. So we no longer have the $700 billion, and we lost another $400 billion. I can’t think of a better definition of “stupid”.
Americans don’t know it yet, they may never understand it, but when the layoffs, store closings, and governmental service reductions start they will be angry all over again, at someone else, when in fact they could have prevented all this essentially for free. Some may bear the brunt of a bank failure that the government can’t handle. Let’s hope that the subsequent violence is contained.
The bad news is that the only good news is that this may well ensure the election of Barack Obama. Regardless of his paper thin resume and lack of fundamental policy specifics, one thing we can be sure of is that Obama will not shrink from spending his and our way out of the financial crisis that was made so much worse today. We’ll get Roosevelt all over again, and we will need him.
Personally, I always wanted to plant trees for the CCC, and I’m sure that new “Social Medicine System of America” will work just as well as Social Security does. There will be a lot of other, proably inlationary spending. The deficit will ballon, the dollar will crash. Rather than ushering in the beginning of the American Century as the New Deal did, this desperate explosion of social spending will herald its end.
Good luck Barack. America is getting what it deserves.
More from Dougist.com on the Financial Crisis