For the past several weeks voters were told by the White House, the so-called leadership of the Democrats and Republicans in Congress, and numerous pundits on the airwaves that America faced utter economic collapse unless a $700 billion bailout plan conceived by Treasury Secretary Henry Paulson was approved immediately. Skeptics of both the “crisis” and the purported “fix” were denounced for not understanding the economic turmoil that would flow from delay of even a few more days.
Two weeks ago we were told that failure to pass the proposed legislative “blank check” over the weekend would cause a one-third decline in the stock market come Monday morning. Nothing passed. The market slipped down, but not nearly as much as the “experts” had predicted. And when the bailout plan was rejected by the House the stock market actually went up! In fact, once the legislation was finally forced through Congress later in the week the market reacted with an even more dramatic decline than met the rejection of the original planned bailout. I guess we now know not to rely on the geniuses in Washington when it comes to “playing the market.” (Although some of them do have an impressive track record of results in the arena of cattle futures and the use of “insider information” to produce profits.)
The bailout plan ultimately approved by Congress and signed into law by President Bush is scant on details and doesn’t actually address the fact that the fiscal mess was created in large part by government rules and regulations that directed banks and lending institutions to loan huge sums of money to people who had no proven capacity to pay it back. Needless to say, the failure to deal with the problem while throwing tons of other people’s money into this bailout scheme has produced some outrage from those “other people” — the taxpayers!