Sunday, September 28, 2008

Paulson versus Obama

On tv tonight, Paulson says he wants strong oversite. Obama, in a commercial aired tonight, repeated his lies from the debate that Bush somehow held a policy of lax regulation, and this illusionary lax regulation was to blame for the financial crisis.

It's illusionary, because the "free markets" weren't really free.

Now they won't even pretend.

Blaming the Victim: The Free Market

Secretary of the Treasury Paulson followed the Keynesian and Chicago School party lines on this issue until September 18, 2008. Then, out of the blue, he announced the need for a $700 billion bailout. The implication was clear: depression is knocking at the door. Like the Big Bad Wolf in the ancient Disney cartoon, the depression threatened to huff and puff and blow our house in.

Congress is now debating whether or not to pass legislation that will enable Paulson to write checks to American banks and financial institutions to enable them to fulfill the highly leveraged contracts that they voluntarily agreed to.

Well, this is not quite true. Congress is not debating whether or not to pass the legislation. It is debating about how many new restrictions will be placed on the capital markets, and how much pork can be squeezed out of the Bush Administration as a quid pro quo. Obama is pushing for a new Section 8 housing subsidy: letting people who cannot pay their mortgages remain in their homes at taxpayers' expense.

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