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I'm very sympathetic to the point of view that says we shouldn't be rushed into anything. And David Cay Johnston suggests that you're not even seeing the first inklings of a spillover to "Main Street":
Ask this question — are the credit markets really about to seize up?If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why oh why would taxpayers be bailing out banks that are continuing to sell these toxic loans?It's a good question, particularly given the fact that we're dealing with a bailout that is, as Johnston, says, the "equivalent of a one-time 55 percent income tax surcharge" (of course, we'll borrow the money, so it won't be paid back now, but will cost even more over time). Weirder, the actions of Paulson and Bernanke don't match the urgency with which they describe the situation. If Wall Street were teetering on the brink of collapse, their only hope of survival a $700 billion emergency action from the government, they'd be in a state of total desperation and Paulson and Bernanke would be able to dictate terms. As it is, they're instead creating a package meant to entice firms into participating: They'll buy assets without demanding equity, purchased the assets at "maturity" rather than current prices, protect them from congressional oversight, etc. If Wall Street is in a position to haggle, it's hard to imagine it's also about to collapse. The only way to square that circle is to assume that the traders in charge are betting that they can dictate terms because if they go under, the economy tumbles. If that's true, we're looking at a Dead Man's Gamble -- a final, career-making trade that's leading these guys to play Russian roulette with the entire American economic system. And if that's the case, Paulson and Bernanke should simply run them over and have Congress strip their autonomy.
