Of bailouts and public sell-outs
There was something touching about phase two of the $700 billion
bailout drama in the United States. When it got past the Senate, leaders
of both parties stepped up to take a bow and admit to “some pride” in
The pride was limited to the warm glow of bipartisanship. Yet, no one
who voted for it called it a good bill. They voted for it because “doing
nothing could have far worse consequences.” Some economists, like Paul
Krugman, have written bluntly that “the plan on offer is a stinker - and
He too, though, believes “another no vote would make the panic even
worse.” All those responsible for the crisis now hold the public to
ransom: give us even more money than you did earlier - or we’ll hurt you
The bill that finally got through was worse than the version the
House of Representatives rejected just days ago. There is a healthy
cynicism amongst the American public about who this deal is for, really.
But at another level, there is breath-taking optimism.
For over a week the media, though a tad more critical than usual,
have driven the idea that solving the crisis is about sensible
bipartisanship. Sit down and work it out together. And soon. Well,
that’s more or less happened.
The problem is: this is a government and a bunch of guys who could
not find a solution to a war they have waged for nearly seven years
against Afghanistan, possibly the poorest nation in the world today. A
leadership that waged a war in Iraq in which Iran - its most hated
adversary - has emerged winner.
A presidency that, according to CBS News, increased the national debt
by 71.9 per cent, or by roughly $4.1 trillion, during George Bush’s
eight years. The same bunch of leaders in the White House and Congress
sit down to fashion a strategy in seven days to deal with the most
complex economic crisis they have ever seen. That’s optimism.
Both presidential candidates, however, failed to make any impact on
that process. Barring spectacular political disasters, the economic
crisis should torpedo John McCain’s bid for the White House. McCain
sensed that when he dashed off to Washington to take leadership of the
bailout process. He failed and ended up accepting the deal.
Barack Obama missed a great opportunity to force the Bush
administration to make serious changes to the bailout plan. This was a
chance for the United States to reshape a degenerate financial system.
An arrogant administration was on the mat, Wall Street on its knees, and
Obama could have used that to push through badly needed changes to the
He didn’t. It was a time for intervention that gave the state more
regulatory power over, or even part ownership of, that system. Those
misses will come back to haunt Obama if and when he occupies the White
(‘If’ - for there is still the lurking race card to be played out in
this contest. ‘When’ - because the economic crisis has derailed the
McCain campaign with less than a month to go for the election.) Finally,
the bailout gets the burden off Wall Street’s back and shifts it to the
Treasury - and via them the public.
It is not as if there was no crisis prior to Wall Street’s collapse.
In official reckoning, the U.S. economy lost 760,000 jobs in just nine
months this year. About half a million of those before September, which
itself saw 159,000 jobs vanish - the worst for any month in five years.
In all, well over nine million Americans are out of work. These figures
do not reflect the job losses wrought by the meltdown.
Those numbers will show up later. In a striking essay in 2002, Paul
Krugman wrote that America had never been more unequal since the Great
Depression, also arguing that this was very dangerous for both economy
and democracy. The poor and the less privileged have faced a crisis for
quite some time. This year, it worked its way to the top.
Meanwhile, the Big Boys are back - wielding power again, and making
money out of it too. Guess who the Secretary of Treasury is hiring to
help carry the Great Rescue forward ? The New York Times reports that
“Paulson has recruited several former colleagues from Goldman Sachs to
It gets more entertaining. Most of the bailout work is to be
outsourced. A clutch of “selected asset management firms will receive a
chunk of the $250 billion that Congress is allowing the Treasury to
spend in the first phase of the bailout.” But, the Times implies, there
is a bright side to this:
“These firms will receive fees that are likely to be lower than the
industry standard of one per cent of assets or $1 for every $100 under
management.” Gee, they’ll accept less than standard fees on this deal.
Oh, how could they be so noble?
Meanwhile, the economic crisis continues to redraw the political
Barring dramatic and damaging developments, the crisis undermines the
importance of the presidential debates. In the vice-presidential one,
Sarah Palin fared better than anybody was willing to believe she could.
Yet, it didn’t help. Her Reaganite cliches of “getting the government
off our backs,” or on cutting spending - all these might have had
greater resonance before the meltdown (or, more likely, eight years
ago). Coming after Hurricanes Fanny and Freddie, they fell flat.
The condescension, though, continues. The media revel in pouring
scorn on a candidate they see as intellectually challenged. This same
media that supported and helped re-elect a President who probably
couldn’t locate on a map any of the countries bombed on his orders. Ms
Palin’s role was never to bring gravitas to the debates.
It was to draw in and consolidate the Christian evangelical base of
the Republicans that otherwise abhorred McCain. She has done that.
In the debate itself, her background as a TV Sports reporter and
former beauty queen meant she knew how to face the camera and thus the
TV audiences direct. (Joe Biden kept looking at the moderator, not at
the tens of millions watching the debate.) As for the ‘searching
questions’ she has faced for weeks on foreign policy, the George W.
would have a hard time explaining what “the Bush doctrine” means even
though his own name adorns it.
That’s as far as it goes, though. The economy turned things around
for the Democrats. But it’s not over till it is over. This is where the
DDT (Departments of Dirty Tricks) gets sprayed. The month of the
“October Surprise(s)” which has hit campaigns in the past.
The McCain campaign will now get shrilly negative and personal.
The attacks on Mr. Obama’s character will intensify. The Republicans
have made that much clear. Their aim is to “turn the page” on the
economic crisis (since the bailout bill has been passed). And to shift
focus to Obama’s “association and links” with ‘ex-radicals of the 1960s
and 1970s’ like Bill Ayers.
The “links” arise from Obama knowing (and having had coffee with)
Ayers, a founder-member of the Weather Underground that set off some
bomb blasts in the early 1970s aimed at property and not people. Their
aim was to target a government then engaged in bombing thousands of
civilians in Indo-China to death.
No one died in the Weather Underground’s (or “Weathermen’s”) blasts -
except for three of their own members when a bomb they were making went
off. Obama was eight years old at the time and met Ayers - they live in
the same neighbourhood - over two decades later. Ayers is now Professor
of Education at the University of Illinois.
It won’t be too easy to “turn the page” on the economy, though. More
than a million Americans have lost their homes in these past two years,
with foreclosures mounting relentlessly. This has given rise to a new
Since voter registration is linked to residential addresses, there’s
potential for mischief up ahead. Some Republicans in areas of high
foreclosures might move to get those who have lost their homes nudged
off the rolls.
The only curious thing about the economic crisis is that it has not
given Obama the kind of leads it should have. Not as yet, anyway. And
that’s where the McCain campaign takes heart. While there is life, there
And then there is always race.