Paulsen, Bernanke and Bush (oh my) all spouted a variation on the "we had to do it" meme. We had to print off about seven hundred billion dollars to save America and the world from much greater turmoil down the road.
And roar the bull did, as the Dow slingshotted back up after a couple of days of catastrophic losses. The TSX composite was up 848 points in a single session as investors fell all teary-eyed over their government saviours and gave them sloppy puppy-kisses. These would be the same investors who have been on a Dawkins-esque crusade against government intervention ever since...well, ever since the last time the government had to step in and save the financial system from itself...the savings and loan crisis.
See here, I would have thought a financial system in such grave disarray as to require an infusion of $700,000,000,000.00 would wince at the pain of that injection. There will be pain, make no mistake of that. Inflation and dollar devaluation will be the first order consequences, with many more down the road.
But the reaction of the stock market wasn't contrition (a halt to the slide) or even relief (a modest uptick); it was euphoria. That bothered me--the psychology seemed wrong, somehow. The more I thought about it, the more I began to suspect that this whole situation had been planned.
Upon reflection, it pretty much had to be. Warren Buffett warned the Street in 2003 that they were playing with financial time bombs and weapons of mass destruction. (You'll recall that latter phrase had some currency at that time.) When Buffett speaks, wise people listen: he didn't get to be as rich as he is by being stupid.
Did they listen? Hell no, they only redoubled their efforts to stretch the financial system, ignoring all the ominous creaks and cracks, until it was on the verge of collapse. I know humans are shortsighted and greedy, but that kind of takes the cake, doesn't it?
Unless the whole point was to drive the financial system to the brink and dangle it over the edge, then position themselves as the only people who knew how to fix the mess they created.
Turns out there are free-marketeers in a meltdown, because that's exactly what's happened. Here's HousingPANIC's take on things, and a very sobering take it is. They're calling this bailout the "Financial Patriot Act":
The Patriot Act of Finance, otherwise known as Paulson's $700 billion bailout bill, if passed in its present form, will be the nail in the coffin for an America by, for and of the people. Just like the Patriot Act appeared to be written before 9/11, so does this Patriot Act of Finance appear to be written before the housing crash. And yes, both were rushed through a panicked Congress and complacent media in the middle of the night.
What this Act essentially does is cede control of the American financial system to Hank Paulsen, who will then presumably loot it and distribute it among his banker cronies. Don't believe me? Read the thing. Paulsen's being given virtual carte blanche to buy up all the toxic debt he can, seven hundred billion at a time, then turn around and sell it to whomever for whatever price he chooses.
Meanwhile, this "bailout" only postpones the economic ruin--perhaps by mere weeks, perhaps by as much as a year. Hold on to your hats, folks: the roller-coaster ride isn't finished yet.