Bailout Talking Points

The blogosphere reacts!

• David Brooks thinks we should take this opportunity to completely overhaul the financial system by hoping for the appearance of a financial oligarchy of “bipartisan” Economic Wise Men who will fix everything. Glenn Greenwald reminds him that this was basically the guiding idea before the entire financial market collapsed!
• Kos asks why some of the planned $700 bn. bailout will go to banks that aren’t even failing. TPM has more thoughts on this.
• Doubt is cast on whether or not we’re really in a “crisis.”
• Jonathon Schwarz at A Tiny Revolution sums up what I will likely find to be the most fucked up part this entire scheme:

Whatever happens with the Wall Street bailout, I hope the recipients will take $30 million and endow a Hank Paulson Chair in Free Enterprise at AEI. Then the person in that position can spend the next forty years writing op-eds and going on TV telling us how if we just deregulate Wall Street it will make us all rich! rich! rich!

I think it’s clear that the Fed/Treasury is in the wrong: for one, the problem is not simply “liquidity,” it’s rather that the financial institutions, which had little oversight, were using bad loans as collateral. Some have used that argument to assert that the people who took out subprime mortgages are fundamentally at fault, but this perverted logic ignores the fact that the entire solipsistic speculation started with Wall Street.

Now all of the die-hard free-marketeers are becoming socialists, and so it’s at such a time that socialists should be extremely skeptical: is institutional oversight really the answer? What kind of punishment should be administered? How will a bailout close to $1 trillion affect social benefits and public programs? It seems that, if anything, this period of crisis offers us a chance to rapidly re-politicize politics against the quasi-religious view that capital needs to be “sacrificed” to the totemic Market Deity. As Glenn Greenwald writes:

This was one of the central arguments of David Sirota’s book — Uprising: An Unauthorized Tour of the Populist Revolt Scaring Wall Street and Washington: namely, that while cultural wedge issues have divided ordinary American on the Left and Right, there is a growing, angry populism among both factions against the dominant Washington establishment elite that is so transparently running the Federal Government on behalf of the tiny group of corporate elite which funds and owns them. The backlash against the Paulson plan on both the Left and Right is a function of that same anger and resentment.

The Left ought to take advantage of this populist resentment and transform it into a political movement, rather than side with liberals calling for more oversight or modifications of the Republican financial agenda, such as Chris Dodd. How they might go about this, I’m not quite sure.