> And what's possible in the future. Because the flipside of my argument
> that we must pass this bailout that nobody likes is that passing it
> doesn't constrain us from doing any of the things you want to do next
> spring, and in fact they will be easier then. Tobin tax, executive pay
> limitations, help for strapped homeowners, profound regulation -- there
> are better and more thorough ways to do all those things then stick them
> in this bill. And passing this will only build the momentum for doing
> those things the right way precisely because it will build class
> resentment against the rich and that they haven't paid. And doing it
> right means taking time when we have the time to take.
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One of two possibilities present themselves at this stage, at least to me,
and each would make passage of the bill somewhat of a sideshow.
The first is that events this week, especially the spread of the credit crisis to Europe, have already passed the measure by, and we're heading towards the formation of a multi-trillion international rescue fund or funds established by the EU and US with the support of the Asian and Mideast central banks. This would ultimately involve the full or partial nationalization of major international banks deemed to big to fail and the shakeout of the weaker ones. This presupposes that the global system in close to meltdown.
The second possibility is that the credit and investment freeze in the industry isn't as dire as is being made out, and the banks and private investors are waiting on the panic to produce higher levels of public assistance. The interest in Wachovia by both Citigroup and Wells Fargo lends itself to this interpretation. Wells Fargo is reportedly ready to recapitalize Wachovia even without the government support offered Citigroup.
Elements of both seem to be in play. For the most part, the banks aren't willing to lend nor investors to commit capital to financial institutions which aren't backed by public equity. Both Soros and Buffett have recently said as much. But how much of this behaviour is calculated and how much is based on extraordinary risk aversion is hard to say.