Tuesday, September 23, 2008

Can't win for losing

Fed Chairman Bernanke says that failure to pass the trillion dollar bailout will threaten the economy. He may well be right, but experience with bailouts in other economies suggests that passing it may do the same thing; at least for a number of years.

Although most Americans treat the idea that what applies elsewhere may apply here too, Finland, Sweden and Norway faced a similar crisis in the early 1990's and the 5 years of economic misery that followed may provide a lesson to us. The Nordic bank bailout didn't end the recession which continued to deepen as unemployment rose. Would a recovery have occurred without the bailout? I certainly can't say, but if the Bernanke/Paulson plan is implemented, the new president may well have to deal with the continuation of the problems caused by deficit spending and revenue reduction for his or her entire term.

If by some miracle, Barak Obama is elected, the Republicans certainly won't show any restraint in blaming the cesspit that laissez faire supply side economics dug, on him and on the Democrats. Continuing recession may even persuade voters to return to the party that caused it - and make no mistake, most Americans do blame the Republicans for this mess.

If McCain wins, they'll blame the Democrats for everything, whether the bailout is implemented or not. They can, as always, depend on the loyalty of their flock and impugn the more objective voters as Libarals and Elitists. They will get away with it.

In short, I think it's hard to see a Democratic win in November as a win for the Democrats. It's hard to see an unqualified win for Americans no matter who wins.

No comments: