This is a little long, but also scary. Howard Simons writes for Real Money.
Howard Simons
What Would Lincoln Say?
9/23/2008 2:04 PM EDT
One of the parts about this whole bailout plan that has my Libertarian knickers in a twist is the unbelievable request by the administration to place their actions over court review and outside of the bounds of legal challenge. That is nothing short of an Enabling Act, the name given to the 1933 vote by the Reichstag to make Hitler the legal dictator of the Weimar Republic. The actual name of the law contained the phrase "removing the distress of the people and the Reich." Really; who wants a distressed Reich lying around?
Lincoln faced a similar situation in his search for a general. McDowell, McClellan, Pope, McClellan again and Ambrose Burnside had failed. He turned to Joseph E. Hooker and in a letter dated January 26, 1863 wrote:
"I have heard, in such a way as to believe it, of your recently saying that both the army and the government needed a dictator. Of course it was not for this, but in spite of it, that I have given you the command. Only those generals who gain success can be dictators. What I now ask of you is military success, and I will risk the dictatorship."
Where have Paulson's and Bernanke's successes been to-date? At each and every step of the way they have told us the problem is contained and that each and every step was going to be sufficient. It is no accident the current and worst phase of this crisis can be dated to the decision to nationalize the GSEs and in an unexpected move wipe out the preferred shares held by many banks as part of their capital base.
I am not interested, as I have written before, in playing the blame game; spin it long enough and they may find I was responsible for this mess. But if I am a member of Congress and am presented with an ultimatum to cough up $700 billion for a hastily contrived plan cobbled together by a crew surely in the throes of sleep deprivation and totally bereft of those "successes" noted by Lincoln, I am going to demand something more. And if I voted for the money - money comes and money goes - I would deserve nothing short of eternal damnation if I even considered signing my name to a piece of paper abrograting the Constitution of the United States. Some things are worth preserving, and that document is at the top of the list.
Finally, to slip a third historic analogy into one post, students of World War I may recall how Hindenburg and Ludendorff emerged by 1917 as de facto rulers of Imperial Germany. Ludendorff's 1918 offensive achieved many tactical victories, but was a colossal strategic failure. By all accounts, he ceased to function by July 1918 and yet refused to release his command. Would we be inviting the same?
To conclude, I do not see where writing ourselves a $700 billion check with a promise to pay ourselves back at a later date after we finally achieve a singular victory is evidence of anything other than psychotically self-delusional behavior. Not that I might have a strong opinion on the matter. |
