John writes
"You use the tools you have. This administration was NOT going to offer a better tool within the time-frame required. If you believe otherwise you may as well believe in elves."
I think elves might have constructed a more compelling case for the bailout than you just have.
[WS:] You want a more compelling argument, James? How about this, people hate uncertainty, and since the beginning of history they tried to avert it by whatever it takes. When they lacked the know how or technology to control it, they resorted to magic and religion that at least gave them an illusion of certitude. It has beed quite eloquently argued by Bronislaw Malinowski in his anthropological work on Trobriand islanders, as well as by Lee Clarke (my prof at Rutgers) in his anthropology of modern risk management http://books.google.com/books?hl=en&id=g8DmObyfQY4C&dq=mission+improbable&printsec=frontcover&source=web&ots=iJtsJvrTRU&sig=I1UcedjboiSnAjPw2CmWnNUEM40&sa=X&oi=book_result&resnum=4&ct=result#PPP17,M1
The cureent financial crisis is no different. Nobody really know what is the nature or extent of the problem, or what to do, if anything, to avert it. But such uncertaintly is unacceptable for "the markets" - something has to be done, even if that something amounts to nothing more than a magical ritual (market "rationality" is a modern form of magic anyway.) So abrakadabra, and we have the $700 bn dollar bailout that somewhow is supposed to "solve" the credit problem. Nobody can exatly tell how, but then doing something is better than doing nothing because it creates an illusion that "something is being done" so we can stop worrying and go about our daily lives.
One may object to the price tag of this "market magic," but that is nothing unusual. We spent billions of dolloar on all kinds of magic rituals that are supposed to bring us peace of mind, health and security, from "star wars" to prisons, and to a myriad of snake oil remedies that are supposed to keep is phusicaly and and emotonally healthy and ward off demons of illness. $700 bn is really pocket change compared to what we spend on these other modern day magic rituals. Wojtek
--------------------------------------------------------------- "When a candidate for public office faces the voters he does not face men of sense; he faces a mob of men whose chief distinguishing mark is the fact that they are quite incapable of weighing ideas, or even of comprehending any save the most elemental — men whose whole thinking is done in terms of emotion, and whose dominant emotion is dread of what they cannot understand. So confronted, the candidate must either bark with the pack or be lost. [...] All the odds are on the man who is, intrinsically, the most devious and mediocre — the man who can most adeptly disperse the notion that his mind is a virtual vacuum. The Presidency tends, year by year, to go to such men." - HL Mencken ----------------------------------------------------------------