This is not good news. Could it be that what terrorists could not do the USA is doing to itself? And to us…
Read Joseph Stiglitz on these matters; this came my way via one of the items in my Google Reader, and appears in one of the better US left sources (intelligent left, if that is not a redundant pairing).
…Finally, we need to impose a special financial sector tax to pay for the bailouts conducted so far. We also need to create a reserve fund so that poor taxpayers won’t have to be called upon again to finance Wall Street’s foolishness.
If we design the right bailout, it won’t lead to an increase in our long-term debt–we might even make a profit. But if we implement the wrong strategy, there is a serious risk that our national debt–already overburdened from a failed war and eight years of fiscal profligacy–will soar, and future living standards will be compromised. The president seemed to think that his new shell game will arrest the decline in house prices, and we won’t be faced holding a lot of bad mortgages. I hope he’s right, but I wouldn’t count on it: it’s not what most housing experts say. The president’s economic credentials are hardly stellar. Our national debt has already climbed from $5.7 trillion to over $9 trillion in eight years, and the deficits for 2008 and 2009–not including the bailouts–are expected to reach new heights. There is no such thing as a free war–and no such thing as a free bailout. The bill will be paid, in one way or another.
Perhaps by the time this article is published, the administration and Congress will have reached an agreement. No politician wants to be accused of being responsible for the next Great Depression by blocking key legislation. By all accounts, the compromise will be far better than the bill originally proposed by Paulson but still far short of what I have outlined should be done. No one expects them to address the underlying causes of the problem: the spirit of excessive deregulation that the Bush Administration so promoted. Almost surely, there will be plenty of work to be done by the next president and the next Congress. It would be better if we got it right the first time, but that is expecting too much of this president and his administration.