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David Brooks on Bailout Plan

September 30, 2008

David Brooks with a scathing critique of both Democrats and Republicans regarding the failure of theBailout Bill.

And let us recognize above all the 228 who voted no — the authors of this revolt of the nihilists. They showed the world how much they detest their own leaders and the collected expertise of the Treasury and Fed. They did the momentarily popular thing, and if the country slides into a deep recession, they will have the time and leisure to watch public opinion shift against them.

He underscores the foolishness of revolting against this bill given the financial crisis. Markets have continued to tumble under the unnecessarily prolonged economic uncertainty. In the face of wobbly leadership and House nihilsts, Brooks calls for stabilizing authority:

What we need in this situation is authority. Not heavy-handed government regulation, but the steady and powerful hand of some public institutions that can guard against the corrupting influences of sloppy money and then prevent destructive contagions when the credit dries up.

The Congressional plan was nobody’s darling, but it was an effort to assert some authority. It was an effort to alter the psychology of the markets. People don’t trust the banks; the bankers don’t trust each other. It was an effort to address the crisis of authority in Washington. At least it might have stabilized the situation so fundamental reforms of the world’s financial architecture could be undertaken later.

A wise and eloquent word.

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8 Comments leave one →
  1. ChrisC permalink
    September 30, 2008 9:48 pm

    Sadly,

    The true underbelly of this crisis has not been revealed by the media. It’s pretty simple.

    We as a nation, and as individuals have lived an UNSUSTAINABLE lifestyle. Someone has to pay eventually. People in debt. Companies in debt. Govts in debt.

    Our nation, financially, is BROKEN. We have printed so much money in the last 8 years I am surprised that our $ is worth anything.

    Anyway, we need to suffer the consequences, try to move forward and not repeat the mistakes we have made.

    Sorry for the rant.

  2. October 1, 2008 9:08 am

    Hey Jonathan,

    i tried to make this short; for readers who want to hear another take from experts and not some random guy, check out the links at the bottom.

    i rarely disagree with your perspective on things, however, i think the above viewpoint is seriously misguided.

    David Brooks, in his op ed piece, makes a couple of statements that are quite troubling. the first and most notable is this:

    “Treasury Secretary Henry Paulson is a smart moneyman, but an inept legislator.”

    Paulson may be a smart money man, after all, he was once the chairman of Goldman Sachs, but he’s also a crook who is trying to swindle the American people for $700 billion.

    And why?

    Two nights ago, Gretta Van Susteren asked Newt Gingrich if Paulson had a conflict of interest. The NY Times reported that a closed door meeting took place at the NY Federal Reserve Bank and the only person from the private sector at the meeting was the current chairman of Goldman Sachs. On the table for discussion was the $85 billion help package for AIG. Goldman Sachs has a $20 billion dollar stake in AIG.

    To that Newt responded, “…when you have a former chairman of Goldman Sachs who wants to have unlimited ability to spend money, and you have the current chairman of Goldman Sachs the only private-sector person in a room, which, by the way, two weeks later, the U.S. government put up $85 billion to help AIG, in which Goldman Sachs has a $20 billion exposure… when the average American understands this, they are going to be so angry at this Congress if it passes a deal to give Secretary Paulson money.”

    but, more importantly, i disagree with Brooks’ assertion that the House’s “no” vote was a rejection of leadership.

    at the end of the day, government exists to serve the people, not the people to serve government. simply said, voters should be the leadership that congress listens to. we elect them and send them to Washington to watch out for our interests. once there, they should fight for us. when millions of people call and email expressing their concern with the plan – which is widely regarded by brilliant money people from all walks of life as the wrong solution – congress is obligated to listen & respond in kind. that’s what they did and they should be applauded, not reprimanded.

    Here are a few links to items of note:
    The Susteren-Gingrich discussion
    A Harvard economics professor’s take on the bailout
    Ron Pauls remarks on the house floor from Monday
    a great interview with RP from this morning on CNN

    Call your Senators, write them an email. They are voting this evening, so time is short. Let them know what you think they should do, one way or the other. They are looking for leadership and we the people are who they listen to.

  3. October 1, 2008 10:15 am

    Thanks for your remarks, Trey. I’m certainly concerned about any undue private sector favortism, as well as a fan of voters influencing leaders. You are correct to point out that the bill failed because of voter influence. Both the NYTimes and the Washington post recorded strong voter opposition to this bill.

    However, the need for fast action has not been met. The first bill should have been more carefully prepared so as to avoid financial market and global economy shock. So, in a sense I agree with you, the voters were heard, but in another sense I am disappointed with the bill our leaders came up with. First should have been best in a crisis like this.

  4. October 1, 2008 11:35 am

    But therein lies the dilemma. You seem to be supporting the position that government intervention is the only means to getting out of the mess.

    Three decades of terrible fiscal policy (government intervention in the marketplace) is what got us into this mess to begin with – from going away from the gold standard as a measure for currency in the LBJ era to the housing for all Americans at all costs mentality of the Clinton administration.

    I believe it is bad logic to think that the path into the mess is also the way out. As Jeffery Miron (link 2 above) points out, “Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.”

    As long as the government continues to discuss consequence avoidance plans, the market is going to react to that talk. In a sense, bailout talk perpetuates the problem – it does not cure it. Investors will continue to chase risky investments because they know their bets are hedged; the government will come to the rescue if things go bad.

    To some, this sounds like a plan of inaction. I think it is a plan of decisive action; let the market correct itself. It will be painful, it will be scary, but it will be for the best.

    God has designed the world around cause and effect for a reason. We know the cause and we are terrified of the effects – so we are artificially avoiding them. But we can’t forever. Not letting the bubble pop, not letting the market adjust down and stabilize is simply going to mean we are delaying (and potentially magnifying) the ill effects of our nation’s foolishness.

    If we were talking about it in personal terms, you would never encourage me to artificially avoid dealing with the root cause of my sin. You would encourage me to face the consequences head on and deal with the root and pray all the while for grace. I believe that we should encourage our national leaders to deal with the root here as well.

    Private investors need to buy up the bad paper. As

  5. October 1, 2008 11:38 am

    **can’t figure out how to edit my comment above.

    the last line can be disregarded.
    the plan of inaction I reference is the plan I’m in support of – no government intervention.

  6. October 1, 2008 12:01 pm

    Thanks for your thoughts, Trey. I think the government should act for our good in this situation in line with Romans 14, but I don’t think that is the only solution. And honestly, I really don’t care that much about the finer points. I’m glad you’ve enlightened all of us to those, however, and am grateful for your thoughtful reflection on the issue, a real model for critical, theological, engagement with culture.

    At the end of the day, a financial crisis is probably what the soul of American needs most. Our idolatry will be revealed and the sufficiency and supremacy of Christ made clearer. That said, I am not remotely advocating Armageddon doom-gloom on anyone, but rather, a knowledge of God in Christ that is sufficient and satisfying in all trials, whatever they may be.

  7. October 1, 2008 12:22 pm

    Oh, I do think that it is unethical for the government to print extra money just because they can. Regulations need to be enforced, consequences dealt for mismanagement, abusive financial practices.

  8. October 1, 2008 1:02 pm

    I also don’t want catastrophe to come to anyone’s house. I’ve been a long time supporter of Dr. Paul and had a familiarity with his positions. My personal quest to understand the issue more clearly came about when the fear mongering started a couple weeks ago.

    To me, it seemed that government was ruling with a heavy hand and using our worst nightmares as a tactic to shove bad legislation down our throats. Turns out, they weren’t as bad as I thought, but they also weren’t as noble as I’d hoped.

    I just want to make sure that people hear an opinion that doesn’t get much air time (although in recent days it is increasing) in the mainstream media.

    I’m not sure my thoughts are all that enlightened, let alone enlightening. I am with you on one thing unwaveringly; I hope anyone who finds themselves here see’s Jesus first – because keeping your bearings in the coming storm demands you have a trusty compass and He is the only trustworthy thing.

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