Lying About Bailouts

Republicans have made a lot of political hay over the claim that the bank bailouts never posed systemic risk.  They don't spend a lot of time providing an argument for this claim - most likely because it's so indefensible.  They just skip to the logical conclusion that anyone who supports bailouts wants to waste taxpayer money buy giving it to greedy Wall Street.  This also plays into the idea that Democrats don't want anyone to ever fail because they are, well, pansies. 

Of course, TARP was enacted by Bush, but he can be written off as not a "true believer".  The important thing is that future bailouts will never be necessary because there is no such thing as systemic risk.

Jon Chait argues that systemic risk would always require a bailout, and any sane administration - whether Republican or Democrat - wouldn't hesitate to come to the rescue.  Yet by sticking to the dishonest claim that systemic risk can't happen, Republicans get to have their cake and eat it too:

The only answer to the dilemma is to try to prevent systemic failure from happening in the first place, which is the purpose of financial regulation. But this is the genius of the "bailout bill" charge. You can't honestly promise that any regulation, however well-designed, can guarantee that no bailout will ever happen again. And when you try to address the "bailout bill" charge on its own loopy terms, you wind up lending it credence.

This is no different than the Republican tactic on most issues: take a false or dubious premise and run with it.

• Global warming - doesn't exist so Democrats are just trying to scrounge up tax revenue.

• Immigration - it's an existential threat so we need to limit rights and expend vast resources, and Democrats actually favor illegal immigration.

• Supply side economics - cut taxes on the rich and slash spending because the increased growth will ultimately increase tax revenues.

• The stimulus - Keynes who?, Democrats are recklessly spending and that's just what they do.

• The bailouts - institutions didn't pose systemic risk so bailing them out was simply a handout, a socialist takeover of the banking industry even.

So if the bailout was unnecessarily before, it will be in the future. This is an outright lie. And any Republican president in the future will bail an institution out in a heartbeat. But if you pretend there was no systemic threat, you can accuse Democrats of wanting to pay banks billions.

Republicans kind of lucked out on the timing of the crisis. Because TARP happened so close to the inauguration, they managed to sell idiots the lie that Obama was responsible for the bailout. If this had happened even a year earlier, it would have been a lot tougher.

Starving the Beasts

The California fiscal crisis is reminding me of the truly least among us - the mentally ill.  I worked for years serving this population, first delivering meals for people with AIDS (a large portion of which were “triple diagnosed” – AIDS, drug addiction & insanity) in San Francisco, then basically handing out meds in a temp home for the insane in Portland. There is a case to be made for ending the abusive nature of institutionalization and patients’ rights, but from what I’ve seen the pendulum is has done a 180.

So now instead of inhumane institutionalization, we have inhumane de-institutionalization. I can’t tell you how many people I saw who were in no shape to manage their lives, let alone their meds. The Tenderloin of SF consists of block after block of slum single-occupancy rooms filled with this population. Nurse Ratchet is now an immigrant Bangladeshi family behind a padlocked office and everything else a patchwork of non-profits struggling to provide services.

I’m sure this situation is repeated again and again in cities across the nation. And I fear in CA its gonna get real bad real soon. The Moral Midgets are finally coming to preside over a great failing state, and the shit rolling downhill will wipe many over the cliff. Starve the Beast is literally being translated into “starve the beasts”. And yet they have the nerve to paint horns on Obama.

In many cases, the best these folk can hope for is permanent incarceration.  Suffering the slings and arrows of prison may in some ways be safer than the anarchy of a 6th floor ghetto hotel, or the cold terror lurking within the bushes beside some freeway overpass.  And for many more, this will be the inevitable result when society fails to offer even the most basic supports.  If one is lucky, an opening may appear on a waiting list for one of the few quality. comprehensive service centers that exist in some communities.  But even many of these are likely to soon disappear.

I'll leave you with the trailer for Frontline's April 2009 piece The Released, which I highly recommend.