Bailing Out the Miscreants

I've been trying to formulate an opinion on the massive financial upheaval in US markets this week, but it hasn't been easy. On Monday and Tuesday came news of collapsing firms in the insurance and banking/brokerage industries. Then the guv'mint stepped in and rescued AIG...the very same government that for so long has shoved the idea of "free" markets down our throats. And now comes word of a $700 billion plan for the Treasury to buy up troubled mortgage holdings from banks.

The plan is huge in size, and is alarming in its lack of transparency:

The proposal was stunning for its stark simplicity: less than three pages, it would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, allowing the Treasury to buy and resell mortgage debt as it sees fit.

So the Treasury gets a blank check to buy troubled mortgages and mortgage-backed securities from the largest and most powerful financial institutions in the country...the very same institutions that lobbied for the repeal og Glass-Steagal, the creation of the securitized mortgage market, and almost total deregulation of financial markets. In other words, the very same firms that created this mess in the first place. And the free market idealogues like Bush, McCain, and the Grover Norquist types infesting Washington are looking more and more like complete idiots every day. Taking the hands of government off the marketplace didn't lead to freedom and prosperity for all...it led to disaster, while those who were already rich got away with even more money. Simply put, they were wrong.

The next question is how we're going to pay for all of this. That problem will likely fall to the next president...and it certainly means higher taxes, but for whom? If McCain is elected, my bet is on the middle class and poor shouldering the entire burden through fewer deductions, increasing use of regressive taxes, and perhaps even an increase in their tax rates. Under an Obama administration, I'm not sure what would happen, but I suspect the burden would fall more heavily on those who can afford it. Another option for footing this bill? Stop the Iraq war. From the article:

A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent in direct costs on the Iraq war and more than the Pentagon’s total yearly budget appropriation. It represents more than $2,000 for every man, woman and child in the United States.

Can we afford to continue the pointless war of choice in Iraq with a financial crisis breathing down our necks? Should I have to pay $2000 for the mistakes of rich people and an administration I didn't elect? Or should we simply end this idiotic adventure in Mesopotamia, cut our considerable losses, impeach George W Bush, and focus on our own significant problems? The writing's on the wall, folks. We ignore it at our own peril.