26 September 2008

Good news and bad news

Well there is some good news and some bad news.

On the good side it looks like the version of the plan drafted on Thursday does contain provisions for the Government taking equity in the assisted firms and for some additional oversight of the Treasury - see Paul Krugman again.

On the bad side, a lot of rank-and-file Republicans are saying they can't support it as it stands because it involves the Govt playing too large a role in the financial system. (Doh! I thought that was the whole point?)

I thought the bipartisan approach of the last few days was too good to be true - we almost never get it in the UK, and it looks like it's a rare thing in the US as well. What would be most amusing at this juncture would be if the plan failed due to Republican intransigence, and then the crisis really did escalate into a wave of banking failures on the eve of the US election. Given that the more the economy takes centre stage, the more Obama pulls ahead in the polls, if he can blame the Republicans for collapsing the plan, we could be looking at an Obama landslide.

Of course the consequences of a major US slump wouldn't be at all amusing... looking forward to mass unemployment anyone? Probably the BNP is rubbing its hands with glee but the rest of us will be in a bit of a pickle.

Of course, one explanation for the Republicans' intransigence is that they figure the McCain/Palin ticket is a lost cause and they have abandoned hope of winning the Presidential election, instead opting to be the wrecking crew. Trying to make economic conditions as difficult as hell for Obama in the next 4 years so that the electorate will blame him and they can come back with a landslide in 2012.

That is a real concern, actually: the US is gonna need some very tough medicine after the economic lunacy of the Bush years, and the question is whether people are still going to blame the Republicans even after Obama gets in (if he gets in), or direct their anger at the incumbent. The US could still be in a deep slump by 2012, and the prospects for a right wing demagogue - a Huckabee/Palin type, or even worse (Stillson from The Dead Zone) could look real strong. Or am I just being too pessimistic?

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