This recession is not a failure of market economics. It is a reassertion of market economics after a decade in which we paid ourselves more than we were producing, and funded it precariously and temporarily by complicated credit instruments that it took a while for the market to rumble. Now a prosperity that always baffled ordinary citizens has collapsed. The collapse of confidence is not irrational; it’s the correction to a long run of irrational confidence. All that stuff about the emerging Asian giants wasn’t just phrasemaking for party conference speeches. It was true. We’re falling behind. We face a mountain of debt: the difference between the life we are able to sustain and the life we were enjoying.
Professor Reynolds: The “stimulus” isn’t about fixing things — it’s an embodiment of Rhett Butler’s theory of wealth accumulation in bad times. My take remains this one: “This is not so much a stimulus, as a massive transfer of wealth from the politically unconnected to the politically connected.”
And just in time to prove the point, this:
BOSTON HERALD: Barney Frank’s Hypocrisy:
Ah, the dirty little secret is out. That $700 billion TARP (Troubled Asset Relief Program) bill was in part simply a variation on congressional pork – except this time the recipients were banks with friends in high places.
One of those powerful friends was Rep. Barney Frank (D-Newton), chairman of the House Financial Services Committee. And one of the recipients of a $12 million infusion of federal cash was the troubled OneUnited Bank in Boston – a bank that had already been accused of “unsafe and unsound banking practices.” Its CEO, Kevin Cohee had also been criticized by regulators for “excessive” pay that included a Porsche.
Frank admits he included language in the TARP legislation specifically designed to bail out OneUnited. He also acknowledges contacting officials at the Treasury Department about the bank’s bailout application.
Our own Chris Dodd’s identical efforts in protecting his favorite banking contributors is missing from the Herald’s coverage of Barney Frank, but now that Dodd has released the loan documents from his Countrywide deal he’ll no doubt receive the attention he deserves. What? He still refuses to produce them? What’s he hiding?