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What Bush is really saying

My favourite commentary on all the financial mayhem of the last few days and hours is this, from Scrappleface:

“To sustain this shining city on a hill,” Mr. Bush said, “we need to rescue the ignorant, irresponsible folks – from Wall Street to Capitol Hill to Main Street – who got us to where we are today. We must guarantee that no American suffers the soft bigotry of being forced to live with the consequences of his bad decisions.”

The president, in remarks to the news media clearly aimed at reluctant Republicans in Congress, said, “Our financial system rests on a foundation of huge banks, brokerage houses and quasi-governmental agencies that followed Washington’s lead by gambling on long-shot, poorly-collateralized investments. Now this glorious way of life is threatened, and we must act to preserve it.”

“We need to guarantee that the structures, systems, people and products that got us to this point won’t be tossed on the ash heap of history,” said Mr. Bush. “If these giant companies fail, then America will be left with nothing but thousands of small to mid-sized financial firms that made prudent investment decisions during the past 15 years.”

I’ll skip the next paragraph, if only so that I can say read the whole thing without having already stolen the whole thing, but the final paragraph demands inclusion:

“It is a moral imperative that we guard the civil rights of these idiots,” he said. “If we fail, then we face the specter of free market capitalism run amok, and millions of Americans will feel the painful lash of personal responsibility across their backs.”

One of the reasons I like this is because it makes me laugh, while at the same time allowing me still to be Thinking About It All, rather than just escaping into pure escapism.

One thing I do strongly believe (“know” would be putting it too strongly) that is relevant to all this mess is that the Great Depression was not caused by the Wall Street Crash, but by the mistaken things done before and after – especially after – the Wall Street Crash. To say that the Crash caused the Depression is that old folly of blaming the messenger for the message. It is now clear to us all, to those to whom it was not clear at the time, that the mistakes made during the previous few years have done a lot of damage. But I fear that the mistakes being made right now will prove even more costly.

And if I had to decide about all this, right now, knowing only what I know now, I’d say: let the market now do its job. The economy has been fatally mixed in recent years. Unmix it. If you have just lost your shirt, the taxpayer won’t buy back so much as a button for you. Yes, cruel, and I certainly wouldn’t say that every shirtloser has been stupid, as Scrappleface’s Presdent Bush does. And such cruelty is certainly not how you win elections. But far more cruel would be (will be?) changing the rules of the entire game for the worse.

Update: Von Mises Institute Bailout Reader.

6 comments to What Bush is really saying

  • spidly

    eliminate corp tax, dividend tax, ax mark-to-market rules. just get the hell out of the way and we’ll be fine.

    OT this is super cool

  • RRS

    And so it came to pass that those trading in the Great Bazaar were inflicted with diseases and disorders so common among them that all feared an epidemic.

    Many traders came to realize taht they could not be sure of the contents of the packages of goods they traded amongst themselves and for their clients. Being men of great self-assurance, they reasoned that if they did not know, nether could others know – and the packages might all be contaminated and ultimately untradable.

    So it was the Great Bazaar and the trading within it, which the peoples of all tribes had used for their commerce ceased.

    Knowing the basic needs of all tribes, the two Grand Viziers, with the support of the Shah, proposed to set up a new bazaar, with tables attended by specially chosen men, who would be funded from the resources of the kingdom (which were then mostly promises to extract goods and services from the population over many generations). At those tables the new men would buy from the old traders after appraising contents of various packages originating from the Great Bazaar. Then, it was said, with great conviction, that trading would begin again in the Great Bazaar, and all traders there would take care to know what was in the packages of deaings.

    But, the men representing the Tribes (of differing interests), joined by the men of the Sheiks, rose up in the Majlis assembled and declared the wrath of the populace. To use the resources required their assent, which would not be given without conditions (of which there were many and varied – as well as imagined). Some wanted new tents for some tribes; others wanted to be freed from the terms of purchase for tents that had taken, but not yet paid for; others wanted the traders at the Great Bazaar punished because they had made great wealth in bringing to the populace things which the populace desired, but could not afford, or as then thought, did not need. However, the populace continued to find and buy many things, services and amusements they did not need.

    So it came to pass that chickens died in cages, uneaten; milk soured, despite rising costs, tents were taken, and the tellers of tales told many stories of personal woes throughout the lands – though life went on, and the people worked and found ways to exchange with one another as they had in times not far past.

    But, they continued to choose men for the Majlis who could not, or would not, deal with such matters in a straight forward manner. Thus eventually . . . .

  • John_R

    Congressman Shadegg (R Az.):

    But I think that in some ways the question doesn’t matter any more. Because Secretary Paulson chose to raise the matter in the way he did — that is, to go public in a very high-profile way, not just with his concern, but with a kind of Chicken-Little, the-sky-is-falling kind of demand — it became a self-fulfilling prophecy.

    That is to say, once the secretary of the Treasury announces to the world that there is a pending financial collapse, perhaps as great as the Great Depression, and Congress must act — he has sent a signal that essentially tells world markets that Congress must act. I will tell you that has been one of the most frustrating things about this since the very beginning…

    H/T Volokh(Link)

  • Frederick Davies

    Mr Micklethwait,

    One thing I do strongly believe (“know” would be putting it too strongly) that is relevant to all this mess is that the Great Depression was not caused by the Wall Street Crash, but by the mistaken things done before and after – especially after – the Wall Street Crash.

    Maybe you should use “know”; see here.

  • Laird

    spidly has it exactly right.

    And thanks for the OT link. Cool!

  • (UK-centric, admittedly)

    While I know precious little about the world of high finance, I’ve been keeping every device capable of receiving BBC Radio 4 tuned to same, over the last few weeks; it’s pretty obvious that the events of this month, are pretty shortly going to be taught to kids in history lessons (assuming that the future has schools in it, of course).

    The thing is, I’ve so far had a realisation which is vexing me, and I’m wondering what your take on it, is. As “Bradford, Bingley and Brown” is set to merge with “National Rock” – before divesting itself of branches and capital investment portfolios back to the private sector – am I alone in seeing the resulting entity, state-owned and composed almost entirely of questionable mortgage debt, as the UK’s equivalent of Fannie Mae?