Bailout Roundup: Senate Style

Well, poor ol’ Harry Reid is going to get a crack at the bail-out bill (and precisely because we keep being told that this is a “rescue” bill, dammit, we will continue to refer to it as we always have).

Now, the bailout bill has grown considerably since the failed House version (from 3 pages to 451… of absolutely viable and credible line items, we’re sure) including more “sweeteners” designed to get more conservatives and liberals who opposed the House version onboard. “Sweeteners” include tax breaks, Alternative Minimum Tax protection for the middle class, aid to rural schools and, of course, provisions requiring insurance companies to cover mental health treatment as they do physical illnesses.

Guess what? Still not buying it. Still not buying it because a) it hasn’t corrected the fundamental flaws of the House version, as in, giving the SecTreas Czar-like powers over the financial sector of the nation’s economy, b) does not appear to address some of the bad actors in this mess such as those two houses of ill-repute Fannie Mae and Freddie Mac and c) we’re still not convinced there is the crisis that our esteemed leaders would have us believe.

Now, this post was going to be titled “Just because we write a blog doesn’t mean we know everything”. The purpose of the post was to give some equal time to some folks whose opinions we hold in high esteem regarding the bailout and their support of it. KT made some good arguments in favor of the bailout but effectively scotched our post because he has become skeptical of the real need of the bailout and weighs in here on the nature of his skepticism, which revolves around this apparent canard of a liquidity crunch. Carpe Diem posts on the matter of this alleged credit crunch here.

At least locally, businesses such as Sleep Train Mattresses, Frye’s Electronics and Toyota of San Diego (with a 39% sales drop over the calendar year) are still offering 100% financing for their products for those that qualify and for those that don't you may be asked to put up 5-10% down. Da Horrah! Bottom line: Lending happens and its happening quite a bit more frequently than you might think.

Also, about those runs on the banks and the panic that would seize this country if we didn’t do something? We’re approaching two weeks in this “crisis” and Congress has yet to affect any bailout legislation and we haven’t seen the “panic”. Perhaps one reason why is that with more on-line banking, “panics” lose their telegenic Depression-era appeal which is critical for the herd-mentality tipping-point required for all self-respecting panics.

When there are physical runs on banks, the fear feeds on itself causing otherwise unaware depositors to become terrified and then vote with their feet to assail the doors of that bank. However, in the case of an online Flash Bank Run, this secondary effect does not occur. In the lack of TV news, most people ended up hearing about Etrade's woes, staying home in droves.

Finally, a few words regarding terminology. We’ve seen the term “socialism” thrown around quite a bit with respect to this bailout, particularly by those opposed to the bailout. We’ve steered clear of the term, not because we do or don’t believe this bailout will put us on the “slippery slope” to the same, its because its irrelevant as far as we’re concerned. If an idea sucks, then the idea sucks. One does not have to dress-up this bailout in any finery and throw it out there as red meat to us ravenous capitalist pigs for us to hate the idea. We understand the horribleness of the bailout - don't waste any ammo. Like “family values” which we’re all for and “socialism” which we’re all against, we still cringe whenever we here pols use these terms. They’ve lost their meaning and have become hackneyed and tired words for people who can’t articulate their positions. There, that felt so much better.

P.S. We're extremely disappointed Senator McCain has not distanced himself from the bailout bill and offered a sensible alternative. He has lost an outstanding opportunity to set himself apart from the President and Suit and further his rep as a Maverick. We realize that he perhaps thought the stakes were too great but, damn... what an opening he had.

UPDATE #1: Bailout bill passes in the Senate, 74-25 where it will now go to the House where resistance is said to be softening for a vote there on Friday. Both McCain and Suit voted for the bill.

Tax breaks, help for rural schools and disaster aid for the Midwest and South... a little something for everybody. But as Sen. Judd Gregg (R-NH) said, "This is the way government's supposed to work, folks, and it did.", though your definition of "work" may vary.