Congressional leaders met last night with Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. They were informed that, in order to avoid an imminent financial catastrophe, as much as $1 trillion would be needed.
The measure would essentially work like this:
We the taxpayers, in order to form a less chaotic union, establish good credit, insure mortgages, provide for the economy, promote welfare of our banks, and secure the blessings of not-losing-your-house to ourselves and our posterity, do ordain and establish a multi-hundred-billion dollar program to allow the federal government to basically buy all the bad mortgages off of every financial institution in the country.
It would be the biggest federal bailout in human history. It also reflects a bizarre occurrence, where one of the most conservative, free-market Presidents in American history is taking a step that smells distinctly of Marx and Engels. As Jonathan Martin cleverly notes, "We're all Socialists now."
It would also completely derail any plans that either Senator Barack Obama and Senator John McCain have - you know, just in terms of little policy details like spending and taxing. This changes everything - quite possibly hinders the ability for Obama to invest $150 billion in green technologies or to begin working towards universal healthcare. Also makes McCain's trillions of dollars in tax cuts for the wealthy even more ill-advised.
For context on how the two candidates must be feeling right now, go watch the West Wing episode "The Cold" (season 7), when President Bartlet sits the two candidates (both oddly reminiscent of Obama and McCain) and explains to them his plan to send 150,000 soldiers into Asia. When the financial reality of this plan hits them, the Republican candidate remarks, "I can say goodbye to my tax cut. Your education plan is certainly off the table."
The very news of this potential bailout sent stock markets around the world skyrocketing - Britain and China apparently saw their biggest gains in history.
I'll be back with a fuller post later this evening or tomorrow morning. I just felt that I should throw my two cents about this situation into the pot.
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