The sight of Republicans and Democrats rapidly agreeing with each other is always cause for anxiety, especially when it happens less than two months away from a leap year election. This is the most partisan time on the political calendar, a time when Congress usually comes to a legislative ceasefire on account of neither side wants to give the other any more ammunition. Yet, in the span of just a week, we’ve gone from bailouts for AIG maybe being a good thing to already being old news as the government agrees to assume staggeringly huge chunks of bad private debt in an effort to get the financial system moving again. Even more ominously, both sides of Congress look prepared to blindly agree to this in less time than it usually takes them to rename a post office.
The current economic news can probably only be genuinely understood by <0.1% of the population and I certainly don’t belong to that group. As such I will make absolutely no judgments on the relative merits of the currently proposed bailout, its chances for success, or even a proper definition of “success” in this context. I’m only going to point out two extremely simple things which can be understood by anyone. Moreover, I’m going to number them, set them apart from my usual paragraph structure and put them in bold (which I normally avoid). Adding additional words around these two simple facts, however complementary they may be, would just distract from them and there has been far too much of that already.
#1 - The exact same government officials who allowed this mess to fester until it was a threat to the global economy are the same ones who are now planning the bailout.
#2 – The federal government always underestimates what its activities will cost therefore whatever estimates you see ($700 billion, $1 Trillion, eleventy billion) are far short of the true cost.
That’s it. Those two things are all you need to know. The guys in charge suck at their jobs, and the federal government has a pernicious habit of underestimating costs dating all the way back to its inception. (That the current Administration has taken that heritage to dizzying new heights of squander and dishonesty goes almost without saying.) My hope is that this is the last double-barreled both-fingers “Fuck You” from Bush the Younger to the rest of us. We’ll see.
End Note: Not that he needs any praise from me but if you want a layman’s explanation that is both clear and credible look no further than Paul Krugman’s blog. It’s short, to the point and written by a man with a stellar track record of ferreting out this Administration’s disasters before they become widely known.
