But no guarantees, of course.

Saturday morning on NPR a focus group of undecided voters, gathered by the network to watch the Presidential debates, now were asked to give their reactions. Most of them said the debate had helped them get closer to deciding which candidate they prefer. But one rather grumpy-sounding fellow disagreed, complaining that he didn’t hear either of the candidates put forth a proposal for resolving the finance-industry crisis now being debated in Washington.

Well, mister, if all the king’s horses and all the king’s men haven’t been able to figure out how to put the economy together again, let alone whether to take any action at all, how can you demand that any one person, even a candidate for President of the United States, know what to do?

Frankly, I’d rather have a President who doesn’t claim to know it all, who is willing to hold off making a decision until all the information is in — and who understands the potential harm that might result from acting recklessly or in haste — than one who doesn’t think he needs more information, nor to listen to more opinions, who trusts his “gut” feeling.

We’ve been there, had that, and it didn’t work out too well, did it?

Late Sunday the Congressional leaders of both parties, after working through the weekend, announced that they had agreed on a plan to “unclog the arteries” of lending and investment institutions so that money for home and business loans would begin to flow again.

And why the rush? Here’s where it gets dicey.

The reader may recall that the subprime crisis wreaked a bit of havoc recently, with one effect being that the most egregious lending practices were ended and lenders started insisting that their borrowers be qualified and capable of paying off the loan.

Over the last few weeks now, as banks and investment companies began to fail and others go all wobbly, stock market values began to bounce up and down, and loans became harder to get.

Then, abruptly, just over a week ago President Bush and his Secretary of the Treasury came out and proclaimed a dire situation, asking Congress to immediately authorize them to take $700 billion of taxpayer-backed money and use it to buy unknown quantities of unmarketable mortgage-backed securities of undefined value held by banks and investment companies; no less was at stake than our homes, jobs and pensions, not to mention our ability to buy a new car.

In this case, it seemed, the smoking gun would be the mushroom cloud kicked up by imminent economic collapse across the country and indeed around the world.

Just like the WMD’s of yore, no one can prove or disprove any of this. Although there is plenty of agreement among respected economists that something must be done quickly to add fresh money to the system and remove moribund securities from their inventories, there are almost as many equally respected economists who disagree; some disagree about the need for speed, others about the whole idea.

No one knows exactly what the problems are, or how to fix them. Most in Congress feel obliged to take the President and Paulson seriously, without evidence to the contrary.
A few in Congress and in the press have dared to ask how the situation got so dire without anyone noticing, given that this came up so suddenly. As economist Paul Krugman suggested, you have to wonder where the grownups have been all this time.

But now the President and Paulson definitely had everyone’s attention; howls of protest arose from Democrats and Republicans in Congress, and from citizens all over the country at the mere idea that taxpayers should bail out the fat cats of Wall Street.

The candidates for President reacted in respectively characteristic ways. Obama stayed in communication with Paulson and Congressional leaders by phone and offered his conditions for support; John McCain did a bungee jump from his campaign into Washington but we still don’t know exactly what he thinks of it.

Yesterday’s announcement laid out the changes to the Paulson plan that would be acceptable to both Republicans and Democrats in the House and Senate, giving it a fair (though not certain) chance to pass.

The improved plan includes slowing the distribution of the funds by providing them incrementally; establishing a Congressional oversight board as well as a special inspector general to protect against fraud or abuse; protecting what will be considered an investment by taxpayers that must be paid back, and requiring that taxpayers benefit from any future growth in the assets that are purchased through this program; providing for renegotiation of mortgages wherever possible, to keep families in their homes; and banning golden parachutes and unearned bonuses for executives of the participating companies.

Since economists don’t all agree, and since the folks in Congress don’t all agree, and since everything the Administration is about to undertake (if the legislation passes both houses of Congress) is based on assumptions, estimates, best guesses, computer projections, and just plain opinion, I guess I’m equally entitled to offer my opinion. After all, with all the disagreement out there I’m sure someone higher up will share it.

My sense, from a local real estate broker’s experience and point of view, is that this is not so dire a situation as we are told. The real estate market is very slow, to be sure, but houses are still selling to qualified buyers.

Yes, it would be nice to have business pick up and yes, it’s harder to get loans if you are only marginally qualified, but isn’t that the way it’s supposed to be?

If I’m wrong and the legislation passes, after which miraculously everything gets (and stays) better, pass the Tabasco and I’ll eat my words.

With all of this, the point that advocates for the plan keep making is that this promise of a bailout is needed to reassure “the market,” to help the economy stabilize.

That begs the questions: What if the market, like some child who is terrified of the unknown, decides not to be reassured? Or what if we did nothing, but let nature take its course?

I’m going to slip into a somewhat partisan outlook, and wonder if the emergency is a product of the Administration’s desire to help out Wall Street. But of course that couldn’t be true, could it?

One thing I do know is that I don’t know the answers, and it looks like we won’t get to find out.


Originally published September 29, 2008