Time to throw even more skepticism onto the pile I laid out a couple hours ago.
First, Matthew Yglesias asks why, as Bernanke claims, it is a bad thing that some firms won't participate in the bailout if there are punitive measures. I mean, if firms are in a good enough financial position to choose whether or not to participate, then why do they need help at all?
I just heard Ben Bernanke saying that there should be no "punitive measures" for companies that participate in a bailout because that might discourage firms from participating. But that would be the point, right? That if some measure of bailing out is truly necessary then the money will be provided, but it shouldn't just become handouts for bankers. Punitive measures mean that only firms that genuinely have no alternative will enter into the program, and their corrupt or inept managers will be duly punished. Firms that would merely prefer free money to no free money will, by contrast, stay out of the program and avoid punishment but suffer some financial loss. What's the problem with that?
Second, Jim Romenesko asks if the credit markets are about to seize up unless we do the bailout, then where on Earth are we going to borrow $700 billion on credit from anyway?
(Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)
Ask this question -- are the credit markets really about to seize up?
If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.
If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?
None of this makes any sense. And I stand by my biggest piece of skepticism at all: why do we have to do this now, instead of in 119 days when we will have a new President? Apart from the rash of holiday spending that always boosts the economy during the final two months of the year, what exactly will happen in the intervening four months? Seriously, what will happen? Can anyone who isn't a pathological liar provide an answer to that question?
Maybe I should re-title this series "is there really a crisis?" I admit that there might be, but there are a lot more questions than answers at this point. In fact, I can't think of a single answer that has been made. So far, it is all a lot of arm flailing from the same people who told you about WMDs. |
