| | This is sad beyond belief. It makes it clear that NO amount of political change will ever secure our freedom if it does not include taking the control of money and the size of the budget away from politicians. No administration and no legislative body should be able borrow or print or tax beyond pre-set limits that they can NOT change.
In practical terms it will probably have two effects. First, it is a political precedent that will make bailouts the new congressional business. They will find ways to use this as the mechanism for bailing out other things, and if it won't stretch, they'll pass a new bailout. And they won't forget the stunning power of scaring people with the threat of a depression - from now on the collapse of the market is seen as their ally in reaching into the treasury.
Second, it sets the economic stage. As the monies flow from the treasury into the marketplace to the financiers, the lenders, and the other pork eaters, it will prevent the liquidation of bad assets, the dissolving of incompetent organizations and it will prevent the healthy correction that is long overdue. This means we will see stronger attempts on the part of the economy to rid itself of these toxic transactions - I expect a pattern of stronger and stronger attempts at correction and they are likely to arrive at shorter intervals and each one calling for more drastic interventions.
There is some limit to how much debt can be loaded up on that market place for Treasury bills, notes and bonds. As we get closer to it, the interest rates that will have to be paid will go higher to get the debt sold. I remember a time in the past, about the early eighties, where 30 year treasury bonds paid 14%. Recalculate the cost of our new level of national debt with a rate like that - all of a sudden the war in Iraq will look cheap at 10 billion a month. There are no good things down that road - it leads to hyperinflation.
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The democrats and liberals acted true to their nature. They created the problem. From FDR's creation of Fannie Mae in 1938 all the way to present mess. Then they blame the crisis on free enterprise, who was not even in the room. Then they propose a solution that isn't a solution and instead will make things worse and move us so much closer to complete statism.
The republicans and conservatives acted true to their nature. They argued, squabbled, squawked and whined... and then they said, "Me too," grabbed a handful of pork and passed this bill, just like they have for all of the others since 1938 and before.
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