Tuesday, 30th September 2008

Where will this end?

James Forsyth 10:32am

There are few events that can break through the conference bubble but the failure of the $700bn bailout has undoubtedly been one of them. Most worryingly, no one knows what happens next.

In Washington, the bailout seems doomed. It was never politically popular to begin with and neither the Democrats nor the Republicans will want to cop the flak for passing it. It says something about President Bush’s lack of political authority these days that not only did House Republicans vote the bill down but only four of the Texas delegation voted for the bill. Indeed, politically it is hard to see what upside there is to voting for the bill.

Folk on the right, including myself, have not been keen on the bailout proposals. But something needs to be done. As the Wall Street Journal Europe puts it this morning,

“Moral hazard was yesterday's problem; today it's all about saving the financial markets. We are no friends of bailouts, but the recent steps taken in the U.S. and Europe are signs of progress as governments are adding public capital where private money is missing to stabilize the system”

So far, our political system has hardly performed better than our financial one. But there is an urgent need for action. This morning it does not seem hyperbolic to say that we’re heading into a situation where the whole bankinh system could end up having to be nationalised.

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THX1138

September 30th, 2008 11:00am Report this comment

Forget President Bush’s lack of political authority - What about McCain!

Every Member of the Arizona delegation in the House voted against the bailout.

Democrats — Giffords, N; Grijalva, N; Mitchell, N; Pastor, N.
Republicans — Flake, N; Franks, N; Renzi, N; Shadegg, N.

McOver with all his posturing about going to Washington to save the day couldn't even get Members of Congress from his home state on side.

paul freeman

September 30th, 2008 11:21am Report this comment

Pelosi mismanaged the vote, by giving a divisive rather than unifying speech. She reinforced GOP misgivings, and 95 of her own party too thought it was all bad news. Let's have a better plan.

KMcC

September 30th, 2008 11:56am Report this comment

insolvent banks must be allowed to fail. Using public money to keep them going only delays the resolution of this crisis. Well done the US Senate for declining the bailout; not so well done for creating the subprime problem in the first place, or spreading toxicity throughout the global financial system via the GSEs.

TrevorsDen

September 30th, 2008 11:57am Report this comment

Are you blind deaf and dumb Mr THX1138?

The Democrats have a majority in the House. They led the talks which led to this bill being published. And nearly 100 Democrats voted against it.

Maybe they think Pelosi is an over-manicured tw#t as well?

NorthernJohn

September 30th, 2008 12:10pm Report this comment

it does not seem hyperbolic to say that we’re heading into a situation where the whole bankinh system could end up having to be nationalised.

I have never heard anything more hyperbolic. The nationalised banks (Northern Rock and B&B) had excessive reliance on property and a track record of offering crazy mortgage deals - 125%, buy-to-let, self-cert. Remaining banks have more diverse businesses so they can withstand the losses on property.

Let's not have any more "hyperbole". The banks can get through this, but talk like that won't help.

Lest we forget, everyone will suffer from the nationalisation of banks - think how many pension funds have financial shares.

PhilM

September 30th, 2008 12:14pm Report this comment

Pelosi made a monumental f*ck up with that pre-vote speech. At a time of such volatility, fragility and hypersensitivity, that was a crazy rant. Get the bill passed and then sound off. She is a loose cannon.

But those stupid Republicans should've known better than to let her get under their skin. Shame on them for allowing themselves to be swayed by her.