George Will on the Bailout
By Alan Stewart Carl | Related entries in Congress, EconomyThe essence of this crisis is lack of knowledge, including the inability to know who owes what to whom, and where risk resides. In such a moment, government’s speed should not vary inversely with its information. With government’s prestige, measured by approval ratings of the president and Congress, at a historic low, government is taking on unprecedented responsibilities. Henry Paulson, a.k.a. the Fourth Branch of Government, is intelligent and indefatigable and has as much pertinent experience as could be hoped for. But no one has ever had much experience that is pertinent to the tasks that would be assigned to him by the three-page legislation that would give him almost complete discretion over at least $700 billion.
A lot of people are demanding action right this second. I’d prefer that our elected representatives do their jobs and do the best they can to get this thing right from the beginning so we don’t have more problems down the line. If temporary measures are needed to keep markets afloat, then temporary measures can be taken. But I’m in no hurry to throw around $700 billion.
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September 24th, 2008 at 1:30 pm
Alan,
I have no idea what he’s referring to when he says; “This crisis is a lack of knowledge, including the inability to know who owes what to whom, and where the risk resides.” That statement is ridiculous. The only knowledge they lack is of the future – how do you price these securities no one wants to own, ie; what are they worth?
As to where the risk lies, that’s simple – wherever these currently worthless securities reside. The Gov, or we the people, are on the precipice of taking on the full weight of that risk. If this rescue plan goes through we’ll know exactly where the risk lies – in everybody’s back pocket!
I agree with the rest of this quote, and I would add a sentiment that I’ve heard recently – Why us? Why, after the Wall St. Investment banks have reaped huge profits on writing these Mortgage Securities, should we now have to take on the huge responsibility of trying to create a market for them now that they’re all but worthless. They gotta lot of explainin to do!
September 24th, 2008 at 2:01 pm
September 24th, 2008 at 3:09 pm
Ben, I think there is a lot more risk here than just the 700 billion. We’re talking about a massive expansion of government power. There is inherent, unpredictable risk in that as well. Unintended consequences, if you will.
September 24th, 2008 at 5:23 pm
gerryf,
I agree that this problem has been incubating through past administrations, including Clintons, as you had Paul Volker, so worried about deflation, lowering interest rates to the point of creating the Great Credit Society.
ExiledI; One can’t help but wonder how differently the world would’ve been if the last 8 years were under different leadership – let’s say Pres. Gore. Ex-Pres. Clinton talk about this recently and said what you had was all this credit available at super low rates and nowhere to better put it to use than in the Housing market. Too much for too long made for ‘creative’ marketing techniques to allow greater numbers of people to get first mortgages that they never could’ve gotten before. What we should’ve been investing in is the Energy alternatives we so badly need now.
I know, hindsight is 20/20, but who could argue that Gore wouldn’t have pushed in this direction. Certainly more than this current Admins. I know, it’s crazy to lament for an Al Gore administration- Wow, I’m losin it !!