On Olbermann a few minutes ago (that basement classroom with the heavy paper over the windows and camera sure has come in handy lately!) a phrase popped out of my mouth: “Stockholm Syndrome”, with regard to the bailout rescue.
Here’s the thing: it’s very hard for Congress to originate complex financial rescues, so it’s normally up to the executive to put things together. Unfortunately, Paulson came up with an awful plan. Ideally, the Dems would have ripped the thing up and started over, but that was never realistic. So instead they made it significantly better, but still building on the original, misconceived structure; it became better than nothing, but not good.
And then it failed in the House, so the Senate has larded it up, with stuff like SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
I think that Congressional leaders know that it’s a bad bill, but feel compelled to defend it, because they’re (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the “hold your nose caucus.”
So am I for the bill? Yuk, phooey, I guess so. And I’m very angry at Paulson for putting us in this position.
Reminds me of a show I watched last night about an outlaw motorcycle gang. They had thrown a guy out and he hadn't done the right thing and blacked out the full-size tattoo of the club patch on his back. They gave him the choice of 'fire or knife?'. He chose fire and they burned it off him with a cutting torch.
At least he got a choice before the pain was inflicted, unlike us.
Also from PK, in a lighter vein:
On a lighter note, great story in the WSJ about how canned mackerel has emerged as the medium of exchange in America’s prisons. Sure to be a case study in the next edition of every single principles of economics textbook.
Mackereleconomics. Smells fishy to me...