This is a rather confusing issue. I've flip-flopped on it a few times as I've begun to figure out what it's all about and what the consequences of passing (and not passing) this bill are.
Best I've been able to come up with is the 'amputate the gangrenous foot' analogy as to my feelings about this bill. You wish it hadn't gotten to that stage but now that it did you have to take drastic action to keep it from getting worse.
At this point the best we can hope for is: 1) fix the issues that allowed this to get out of hand. 2) punish the primary people responsible (i.e. don't punish the bank -- but punish the people behind the bank decisions)
'2' probably isn't going to happen to enough people though.
My question to all who support this plan: what are you going to say when everything you claimed would happen if the plan wasn't passed comes true anyway?
The number to watch next week is the LIBOR. If it doesn't come down pretty sharply it'll mean the plan has failed.
I'll be delighted if it does come down, but it seems to me improbable that the relatively modest capital injection the plan entails is going to do the job. One of the things you'll find in all the commentaries now that the plan has passed is the prediction "more banks will fail". That risk is why the LIBOR is at or near record highs, and until the risk of bank failure is materially reduced we aren't likely to see much change.
The plan was passed in such a desperate, thoughtless hurry because of the belief that it would promptly unfreeze credit markets. I don't know why people believe that. It will take months before the risk of further bank failures really starts to drop, and the market will want to see some time without any banks failing before it will believe no more banks are going to fail.
So my prediction is that the economy is going to tank anyway, and the effect of this plan is simply to burden future generations of Americans with another few hundred billion or more of debt.
My hope is that Obama has a team working right now on how to deal with the problems he will face as president right now, so when it becomes clear that this plan has not worked he will have something that is better thought out ready to propose.
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no subject
Best I've been able to come up with is the 'amputate the gangrenous foot' analogy as to my feelings about this bill. You wish it hadn't gotten to that stage but now that it did you have to take drastic action to keep it from getting worse.
At this point the best we can hope for is:
1) fix the issues that allowed this to get out of hand.
2) punish the primary people responsible (i.e. don't punish the bank -- but punish the people behind the bank decisions)
'2' probably isn't going to happen to enough people though.
no subject
The number to watch next week is the LIBOR. If it doesn't come down pretty sharply it'll mean the plan has failed.
I'll be delighted if it does come down, but it seems to me improbable that the relatively modest capital injection the plan entails is going to do the job. One of the things you'll find in all the commentaries now that the plan has passed is the prediction "more banks will fail". That risk is why the LIBOR is at or near record highs, and until the risk of bank failure is materially reduced we aren't likely to see much change.
The plan was passed in such a desperate, thoughtless hurry because of the belief that it would promptly unfreeze credit markets. I don't know why people believe that. It will take months before the risk of further bank failures really starts to drop, and the market will want to see some time without any banks failing before it will believe no more banks are going to fail.
So my prediction is that the economy is going to tank anyway, and the effect of this plan is simply to burden future generations of Americans with another few hundred billion or more of debt.
My hope is that Obama has a team working right now on how to deal with the problems he will face as president right now, so when it becomes clear that this plan has not worked he will have something that is better thought out ready to propose.