As public discussions of the bank bailout shift around, I find myself increasingly doubtful that our political system can pull together a package that will both win Congressional approval and make any impact whatsoever.
Now it seems to be turning out that Hank Paulson's initial instinct--to have the government buy up bad debts so that banks feel comfortable extending credit again--was the right one. But the notion of the public assuming so much bad debt was so politically unpalatable that Paulson quickly shifted gears to inject the government money straight into the banks.
And now, with banks accepting mounds of our cash, we're all grousing that the banks are handing out bonuses! (Such grousing is justified when it comes to ridiculous upper-management bonuses, but taking the bonuses out of the banks' pay structure would leave thousands of mid-level bank employees facing foreclosure on THEIR homes as well.)
It's difficult to imagine an effective bank bailout package that wouldn't be demagogued by conservatives. At this point it seems as though the government is going to need to BOTH inject more money into the banks (practically to the point of taking them over) AND quarantine bad loans. How on earth can that be sold to the pissed-off American public?
Just for starters, I think Obama's gonna need another infomercial...
Ted
· 9 months ago
My sense is that the stimulus package will pass (I might be eating my words soon) and it will have an effect on the economy. Consumer spending is down (but savings is up -- so that's good), mass layoffs and the push toward p/t work seem to be the norm, and banks (as you point out) aren't using the bailout money to reestablish trust in the system. At the risk of repeating myself, I think a "big gesture" by the government is all we have left. The free market mavens don't really have much beyond tax cuts, and the "corrections" in the market are contractions that diminish needed optimism. Americans are right to be pissed off by the behavior of bankers, but if Obama lives up to the hype about "getting the message out" about his stimulus plan and "Part II" of the bank bailout, he may be able to sell it.
Maybe instead of an infomercial, Obama ought to do a webinar.
Laluna
· 9 months ago
This would be a good topic to take up with your Uncle, he being a economic major. Unfortunately I don't have a comment about the stimulus package, I'll just bide my time and see what occurs. On the lighter side, the photo of Desmond, I bet you can do a wicked impression on that one.
All Comments
Now it seems to be turning out that Hank Paulson's initial instinct--to have the government buy up bad debts so that banks feel comfortable extending credit again--was the right one. But the notion of the public assuming so much bad debt was so politically unpalatable that Paulson quickly shifted gears to inject the government money straight into the banks.
And now, with banks accepting mounds of our cash, we're all grousing that the banks are handing out bonuses! (Such grousing is justified when it comes to ridiculous upper-management bonuses, but taking the bonuses out of the banks' pay structure would leave thousands of mid-level bank employees facing foreclosure on THEIR homes as well.)
It's difficult to imagine an effective bank bailout package that wouldn't be demagogued by conservatives. At this point it seems as though the government is going to need to BOTH inject more money into the banks (practically to the point of taking them over) AND quarantine bad loans. How on earth can that be sold to the pissed-off American public?
Just for starters, I think Obama's gonna need another infomercial...
Maybe instead of an infomercial, Obama ought to do a webinar.