Bush's bailout plea
James Forsyth 8:58am
President Bush’s dramatic statement to the nation last night was aimed at persuading recalcitrant House Republicans to support the bailout bill. His bald statement that without immediate action by Congress, “America could slip into a financial panic, and a distressing scenario would unfold” was meant to create the political pressure to bring them into line.
Today, Obama and McCain will join key Congressional leaders at the White House to try and hammer out a deal. McCain in a bold but risky moved has pushed for postponing the first presidential debate on Friday until Congress reaches a deal. Obama has cleverly responded by saying the president should be able to multi-task. (Indeed, the events of the past week have shifted the presidential race in Obama’s favour in a potentially decisive way.)
The three main obstacles to be resolved are oversight and accountability, cost and the potential for rewards for failure. Paulson’s plan gives the Treasury and the Fed remarkable powers. He says these are needed because it is an emergency. But there is going have to be some kind of oversight, perhaps by a commission of Washington wise men as The Washington Post proposes. The plan is also going to have be altered so that it does not appear to be corporate welfare for a financial sector that has, in large parts, behaved irresponsibly. Expect Alan Meltzer’s plan to offer loans which would have to be repaid before dividends or bonuses could be awarded to gain traction in the coming days.
PS To read the Archbishop of Cantebury's article on the moral message of the current crisis click here
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anthony a
September 25th, 2008 10:27am Report this commentwas it just me or did he have too much makeup on when making that statement?
Frank Pulley
September 25th, 2008 12:21pm Report this commentMark Steyn in The Corner (National Review Online) yesterday:
" ... FDR put the "Great" in the "Great Depression". Lots of other places - from Britain to Australia - took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That's why in other countries they refer to it as "the Depression", but only in the US is it "Great".
(I'm confident President Obama will be able to bring us the world's first Totally Awesome Depression.)
Ian C
September 25th, 2008 12:50pm Report this commentCan we have a full analysis of the bail out plan?
It seems to me, that once again, Paulson and Bernanke are not very good salesmen - it is a case of Paulson saying "Trust me I'm an Investment Banker"!! and Bernanke suffering the consequences of the Greenspan 'put' without being able to say so.
Trafalgar
September 25th, 2008 1:25pm Report this commentFrank, I always look forward to your comments but this depression is purely of the Republicans' making.
These guys have spent and borrowed like there's no tomorrow and yet the gap between rich and poor is wider than ever. And these chumps have led us into an illegal war that has damaged foreign relations for a generation.
hmmm. Who else does that remind you of?
RMH
September 25th, 2008 1:31pm Report this commentThe plan is rubbish, unless it has huge oversights and kickbacks, and probably equity for the citizens of the US.
For 700bn you would want something in return.
McCain is floundering, and hopefully he will blow up totally and we can have someone even tempered, intelligent and reasonable in the White House.
The myopic muppet in number 10 will take a while longer.
Any chance you can say how long McCain has avoided the Senate for, how many votes he has missed so far this year....
Craig Strachan
September 25th, 2008 5:49pm Report this commentMcCain wants to delay the debate because he has nothing credible to add on the economy. This is a guy who was saying ten days ago that the economy was fundamentally sound.
Frank Pulley
September 25th, 2008 5:58pm Report this commentTrafalgar
I'm not an economist: I was quoting Mark Steyn, whose common sense, wit, writing and prescience I admire. Late of this parish and I wish he would return. Why don't you ask him about your assumptions?
As for 'the War' being responsible for insider trading; reckless betting on futures; unsecured suicidal lending by the banks; greed and hedonism; then panic on the stock markets and electioneering partisan politics being played out in a global financial crisis, I think Mark could well disagree with you. With respect, :-) WTF has that got to do with the war?
Moreover, nobody knows what would have happened if Saddam had not been made an example of and whacked after the 9/11 atrocity. One thing is sure, it scared the skitters out of Gadaffi, which was no bad thing. Ask the relatives of the Lockerbie victims!
Bush, on advice, did what he thought was necessary. I agree with him, even though after the act the fog of war was thicker than usual and still remains somewhat misty today.
One of the most satisfying pictures I ever saw was that bearded Stalinist murderous braggard being dragged from his hidey-hole. The only criticism I have about that is that he was still alive when they took him out. On the other hand he deserved to be humiliated before he was topped, so the charade afterwards also served its purpose - up to a point.
The mighty Boosh might bear some responsibilty for lax fiscal and market regulation, but so does every other leader in the Western World, including ours (if 'leader' he be - not obvious)- he's a prime villain in this mess. Most of the rest of us have quite a lot to answer for, also, with our over-consumption and let-the-good-times-roll attitudes.
Nah, Trafalgar. Not with you on this one. It'll pass, as will Boosh. No guaranteee there will be a replacement that's better; odds on it will be worse. Remember the message: England expects every man to do his duty! Let's not kick the ankles of the allies; there are plenty enemies out there to contend with - and the priority at the moment is to urge the Septics to vote for anyone but Obama. There are enough Marxist idealogues in charge and straining at the leash here; God help us all if one occupies the Oval Office.
One last point, we seem to have gone a bit cold on Islamic jihad. I think our in-house posters seem to think then jihadists changed their minds, or something adare waiting now for capitalism to implode (who could blame them). I keep trying to remind Coffee Housers that Armydinnerjacket is working himself to a nuclear lather, but nobody seems interested anymore. Back to basics, guys!
Craig Strachan
September 25th, 2008 6:00pm Report this commentExtraordinary that Bush should say that the entire U.S. economy is at risk. And hard to see how, after eight years in office, this can be seen as anything other than an admissison of the most abject failure.
TGF UKIP
September 25th, 2008 7:29pm Report this commentFrank Pulley, what a splendid, splendid chap you are. Agree with every word, but you put it so much better than I ever could!
Dewey67
September 25th, 2008 7:46pm Report this commentPresident Bush just put us all on the Push Line and rolled the dice. We are doomed, he is not lucky at ALL! Get this moron out of office!
Ian C
September 26th, 2008 5:42pm Report this commentTrafalgar, frank is right on this. Even adding all the debt taken by USA Plc and prospectively another $1trn they are nowhere near as indebted as European countries -especially this offshore island.
Their error was letting the good ol' American salesman loose on the housing business and then being clever enough to hide the consequences for a couple of years by slicing and dicing the mortgages with no means of repayment. The actual level of o/s debt is not that dramtic. it is the way that it was smeared around ever bank that has caused the contagion.
This of course all induced by Greenspan who took far too many risks with low interest rates. And those at the top took too much out as their salesmen were also, which is too frequently a measure by which CEO's judge their own pay levels.
This whole thing has a very simple explanation - and a very complicated cure.
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