Republican's (temporarily) to the rescue + Moshe Adler on toxic $700 B pill

Counterpunch continues to publish some of the best analysis I've seen:
Here's Moshe Adler on why Bush $700 B bailout is, surprise, surprise, exactly the wrong medicine.

And the claim that the credit system is clogged is not true because there is no object that can be removed in order to clear it. What is true is that the securities that Wall Street invented are toxic. But this is precisely why they should remain where they belong, in the vaults of those who created and pushed them. Otherwise they will poison the rest of us, the poorest among us the most.

There is no doubt that economic uncertainty leads to low investments and low borrowing. There is also no doubt that mortgage-based-securities are partially responsible for this uncertainty, although the rising price of oil plays an important role as well. But, as Keynes pointed out during the Great Depression, nobody knows how to restore lenders and investors? confidence once it has been lost. And, in all likelihood, passing the mortgage backed security to the government will decrease, not increase, this confidence.

Thank goodness there's been at least a delay. The worst part is that the Democrats were all too ready to sign on the dotted line no matter how malevolent the pill; and it's the Republicans who stopped it. Does this mean I need to vote Republican? After all we vote our pocketbooks, and they, temporarily at least, saved my pocketbook!!?? What is going on??

The great fear of course is that Bush and Cheney will do what's necessary to get the rebels back on board and the monster will go forward this weekend.

Adler continues with what will happen when the toxic baby is born.

If the government acquires these securities, it will be left to a government employee (or, more likely, to a private contractor) to decide when ?the price is right? to sell them. But the volume of these securities is fantastically large, and nobody knows how to price them anyway. The effect on financial markets will be colossal. Business schools will start teaching new courses devoted to predicting the behavior of this bureaucrat. New financial instruments will be invented to take advantage of this new "expertise." The government employee herself will either succumb, or be accused of succumbing, to an overwhelming temptation to sell the old-new securities for prices that will benefit those closest to her. The calls to regulate the new-new securities and to monitor the government employee in charge of selling the old-new securities will be deafening. The level of economic uncertainty will increase many times over, and unemployment will increase along with it.

Read more:
www.counterpunch.org

September 26, 2008
Return to Trickle Down
Bailing Out Wall Street Won't Save Main Street

By MOSHE ADLER


PS: Here’s Bush on the economy [if he doesn’t get his $700 B added to the national debt].
“This sucker’s going down.”
Isn’t it clear that that’s exactly what he wants?