Monday, September 29, 2008

There is a God, and Democracy does Work!

Okay, I was kidding about those two things, but the House's devastating vote-down of the Bush bailout plan does show that the American people are not the pathetic doormats the administration takes them to be. It isn't so easy to terrorize them into making a decision that they have no time to think about.

The administration's attempt to turn America into a Mussolini-style corporate state has failed, at least for now.

Big losers here: Bush, Paulson, McCain, Obama, the mainstream media, people who make bad economic decisions. Winners: Ron Paul, the taxpayer, the internet, people who make good economic decisions.

The mini-crash this caused in the stock market was exactly what should be expected -- in fact, it wasn't as bad as I thought it would be. This is what the market should have done two weeks ago, but was artificially delayed by the fact that investors were being offered this gigantic welfare check by Paulson.

Obviously, we should do something, and soon, to fix the system. What we should not do is enable people who have made faulty economic decisions to shove their costs on to people who have made good decisions. That (aside from the obvious ethical issues) would only make the real problems worse in the long run.


Anonymous said...

I'm having a hard time wrapping my mind around this problem. I personally hold alot of stock market index fund in my 401K. Is this bailout about helping the American people or the people on wall stret or both? My suspicion is both but there is such a backlash against wall street and this bill is being lead by millionaires Bush, Pelosi and McCain. Will wall streets possible demise lead to a more democratic economy for everyone or are we all about to suffer? All I know is that as a country we are badly extended militarily, our auto co's are screaming for corporate welfare and alot of money has been made through shady investment. My question is will true justice prevail or are we in for a real disaster? Or is this disaster partially made up?

Lester Hunt said...

Believe me, I hear you. I too still have some positions in the stock market. I am not an economist and it would be stupid for me to give financial advice, but I can tell you what I am doing: I have cashed out accounts that I will want to spend within the next year or so. Longer-term investments are still (to some extent) long on the market.

In the long run, the market will of course recover. Stock prices are ultimately about real things: real machinery, real patents, real copyrights, etc. The real values are still there and not going anywhere soon. In the long run, people who bet on America growing have always won -- even during the Great Depression.

As to the bailout plan, I thought it was based on the wrong theory. Even after the improvements, it still seemed to be about transferring the costs of making bad decision onto the shoulders of people who had made good decisions. The fact that it was too much like a transfer from Main Street to Wall Street was part of the problem. A bigger and deeper problem, for me, was that it was a transfer from the wise to the foolish. No package of fixes should do that. However, we do need a whole array of repairs.