Thoughts on the Financial Crisis

What Hilzoy said. I have no faith in any fix to the current financial crisis that is conceived by members of the Bush Administration. I also have no faith that the Democratic Congress will do anything to protect homeowners and taxpayers in whatever fix they eventually approve. There is nothing in the behavior of this Congress since taking over the majority in 2007 (check out their vote on FISA) that leads me to believe that the response to this crisis will differ from the response to 9/11; in a panic to look like they are doing something, they will do the worst thing possible and give Bush a blank check. The blank check then led to the Patriot Act, a plausible but poorly executed war in Afghanistan, and the catastrophe in Iraq. Who knows what the consequences will be this time.

It is an indication of how illiberal our financial and political climate is that whatever fix the Congress does come up with will almost certainly not contain any kind of debt restructuring relief for homeowners. The Democrats will be willing to excise any such measures from the bill that passes, promising to come up with another bill later on, but we know that such a bill will never see the light of day.

And finally, to echo Hilzoy, if we can cough up a trillion dollars for a war in Iraq without any regard for its effect on the budget, if we can bail out Wall Street for another trillion without regard to its effect on the budget, then it's way past time to give heed to any objections about the cost of enacting a national health plan. Cost clearly is not an issue that needs to ever be taken seriously again. For too long, Democrats in Congress have tried to clean up the budget messes created by their Republican predecessors, foregoing their own social programs because it wouldn't be fiscally prudent to add good debt to bad. Screw that. The door's off the treasury now.