Great Statesmen Still Required

I stated that I would be disappointed in Cohen if he voted for the Bailout Plan. Well, he voted for it. Today his congressional office sent a youtube link of him kind of explaining why he voted for the bill. I was hoping for a fuller explanation, what we got gave me grave doubts about what will come.

In the video, Cohen says we face a severe economic crisis. This would be true. The credit markets are seizing up because banks will not loan to each or to the general public. The banks are hoarding money just like me burying my life savings in the back yard. There are numerous economists who have correctly predicted the financial crisis we are and have offered suggestions about how to deal with it. If you want to read a sampling go here. The troubling things is that Cohen seems to be listening to Paulson, who's been wrong on almost everything and used to be chairman of Goldman Sachs, and Tom Friedman. Tom Friedman, the guy that married a billionaire heiress and who was way wrong on Iraq. Why him? How many Friedman units does he think the crisis will last? I’d have been a lot more reassured if Cohen would have said Paul Krugman, who I've come to disagree with but still respect and listen too.

I have been reading a ton about this crisis and I generally give more credence to the economists that predicted this. Top on my list was Nouriel Roubini. Here’s what he has to say about the bailout and why he is opposed. I have also been concerned about using this crisis to consolidate political and economic power in the hands of few Wall Street entities. I don’t like fascism. (Isn’t funny how opponents of the Bailout Bill on the right are worried about socialism and opponents on the left are worried about fascism.) This blog also argues why the Bailout will not solve the credit crisis.

As for the political implications of supporting this Bailout Bill, it seems pretty dumb to me. It seems to me that the republicans are in disarray and the public is seeing them as blocking progress on addressing the crisis. All they really have is more of what got us into this mess and obstructionism. With the Bailout Bill blown up, why not present a serious bill which works and doesn’t take us down the Japanese model that lead to ten years of deflation during the 1990’s. Roubini describes it and has examples of where it worked. The problem is that the plans stick it to people that got us into this mess and we can’t have that can we?

The other political problem I have with the Bailout Bill is the schism which will develop in the Democratic Party. You can see the fissures forming. Cohen, in mention Friedman, seems to be casting his lot with the Rubin-Wall Street wing of the party. The labor side of the party, populist progressives like David Sirota, are opposed to the Bailout. If the Democratic Party goes for the Bailout Bill, Democrats will give republicans a weapon to hit them with but more importantly, if Obama really does want to do progressive reform, Democrats will have fiscally handcuffed the implementation of those policies. So yeah, I am very disappointed in Cohen’s vote and the reasoning for it. I'm still looking for a great statesman.