Hmm. If you could convince me that no better bailout is possible and the financial system will collapse tomorrow sans bailout then obviously I'd be grudgingly for the bailout. But I don't buy it. First of all, pace the populist-baiters, let me be clear: I have no objection to using taxpayer money to bail out the financial system. I'm under no illusions that the market price of a financial asset is necessarily the efficient price. And I share none of the anarchist spirit of unchained, free-floating wish-politics. But like, has it occurred to you that if there were real limits on Wall Street compensation, it could dramatically change the entire wage structure for years to come? And that all of a sudden, out of the blue, it's become a wildly popular, election-winning proposal? How can anyone who has spent years lamenting the 90/50 wage ratio be so eager to throw that chance away?
Second, the whole point here is that there's going to be an election in four weeks. If the Democrats, or a liberal fraction thereof, were to get together (like the Republican Study Group), write a dream bill, refuse to pass Paulson's piece of shit, and then run their campaign on "pass our bailout, not theirs," they could win an election on the issue of inequality for the first time in like 50 years. And Wall Street would see that a bailout of some sort is on its way. Hopefully by that point there would then be a lot fewer yahoo Repugs whose votes were needed for passage, and the Congress would have a mandate to pass the better bill. The point is not to jump up and down and call for end to credit money, or complain about socialism, the point is to bail out Wall Street in a way that leaves an indelible mark on the future American political economy. Doug keeps saying we need a realistic assessment of the terrain, that we're weak right now and in no position to demand better terms. What he doesn't seem to get is that it's exactly in the rare crisis moments like this that the correlation of forces can dramatically shift if someone steps in with a daring gambit.
Third, of course you can argue that we have no time for any of that, the whole system will collapse at any moment. I think that's a bit overstated (for instance, today's alarming Bloomberg roundup about credit conditions also notes that the commercial paper market for non-financial business - aka the real economy - is doing just fine) but in any case, there's nothing in what I just said that would be incompatible with periodically tiding the market over with things like, say, carefully doled out expansions to the Fed's balance sheet to help relive the pressure on its liquidity support actions. One doesn't need to take an absolutist position against bailouts to see the potential for leverage here.
SA