Warren Buffett thinks the bailout is necessary. In fact, his advice to Congressional leaders may have been what convinced many holdouts to back it. The stock market certainly thinks it’s necessary: I thought I’d heard on the radio that it’d been up at first. What actually did happen is that it dropped 300 points in the first twenty-odd minutes, then held relatively steady within a few dozen points of the 10,800 mark until 1:40 pm (which was around the time it became clear there would be no deal), when it dropped to 10,480. Fifteen minutes later it was back over 10,800 again, but then entered a yo-yo period and wound up at 10,365 –a 777-point loss for the day, the worst point loss ever (though not the worst by percentage of market value; that honor belongs to the Black Monday of 1987). Paul Krugman thought and still thinks that a) a deal is necessary and b) the dead deal is as good a deal as we could have got with Bush in office:
… [The plan] passes my test of no equity, no deal; that, plus the danger of financial panic if it doesn’t go through, makes it worth passing, though celebration is not in order.
Overall, Dodd and Frank succeeded in pushing Paulson a fairly long way back; probably as good a deal as they could have gotten. But someday we’ll have an administration that actually proposes good policies to start with.
If we do not turn this back now, we will leave any hope of compromise and conversation, any hope of debate, and will turn instead to darker means which will destabilize the very foundations of our society. Strikes, and even violence, will grow over the coming months, as people are told that the people must pay in full, the debts that the powerful have washed clean.
This is beginning to look like an updated version of Rashomon. Who do we believe?