In what U.S. Treasury Secretary admitted was a â€œhumbling, humbling time â€ for the country, Congressional members of Americaâ€™s two major political parties spent the weekend hammering out a rescue package for the nationâ€™s financial beleaguered system. The plan, if ratified as expected by Congress, calls on the U.S. government to spend up to $700 billion purchasing â€œtroubled mortgage assets of crippled financial firms .â€
With world economies increasingly tied together — and global stock markets waiting in baited breath for what happens in the United States — political leaders like Britainâ€™s Gordon Brown have begun promising  tighter regulations to protect tax payers from continuing to shore up financial institutions who take on so many risky loans. Bloggers from around the world have begun their analysis on the political and economic maneuverings.
Weâ€™ll start with the big picture stuff first. Palestinian Pundit  argues when the reigning political class canâ€™t face up to the scale of this crisis, it's time to find a new system. Perhaps thereâ€™s a bearded guy in the British Museum Reading Room  as we speak.
Financial meltdown spells the end of the free market model. It is a gift for any leader prepared to advance a new agenda.
In a post with an eerily similar argument, Russian-American writer Laurence Jarvik  quotes a piece slamming the Ivy-league elite in the United States. Is he slyly saying this government bailout should be viewed as a class issue?
The Reference Frame , a blog from Lubos Moti, from Pilsen in the Czech Republic feels that most U.S. politicians lacked the stomach to let these companies die their natural deaths. Rational markets aside, however, the pols acted like most people would.
The U.S. administration could in principle be more sensible – at least in isolated cases – and it seems that it is the case right now. The markets started to behave like if we lived in another Great Depression – and we're technically far from anything like the recession (the last U.S. GDP growth was 3.3% annualized): they seem to be as mad as hysterical women in the asylum or as global warming alarmists. And it's just good that someone is trying to stop them…
If companies like AIG had been allowed to go bankrupt, it would be cleaner from a market perspective but it could have influenced many other innocent players. Maybe, the U.S. economy could be the first one to face serious problems. And we could say that other economies won because they were stronger. Well, I understand that Paulson et al. wouldn't like this outcome and they have the right to do something about it. In this sense, Paulson behaves as a skillful manager of a huge company (the U.S.) and big financial institutions are branches of his company.
These interventions probably help the global economy, too, at least in the short-time and medium-time perspective. In 20 years, the interventions they are just doing may have slightly negative consequences but they may protect us from five bad years etc. which could be more important than what happens in 2028. These guys have already allowed Lehman Brothers to die – which means that they allowed the laissez faire principles to be more healthily destructive than during any other previous administration. So I am not going to criticize the U.S. administration for the newest “socialist” bailouts because others would have to be criticized as well.
From Rae Ann , a comment:
…it's just very frustrating when those big companies, who really don't have much to do with my own life other than their ripple-effects, get saved despite their terrible management. It would really be much more fair to seize the millions of dollars of assets of their crooked bosses (and we can be sure that all their assets were not only in the ‘value of stocks’) than to use taxpayer money. We've been forced into investing in something that we don't want, but you can be sure that we'll never ever see any dividend checks for our trouble. Yes, I understand that such a thing as AIG would cause market collapse if it didn't get saved, but I still don't like having to pay for it.
Talk Turkey , a blogger born in Instanbul now living in southern California, takes us on a history tour of the Savings & Loan Crisis  of the 1980s and early 1990s. The good news:
Taxpayers eventually made their money back. Read ahead for the bad news.
When the Government invested in solving the S&L crisis in the recent past, the people actually made money, based on the net gains some years later. And this one is sure to follow the same path. In the end, the taxpayers whose money is being used to instill confidence and stability in the markets will profit in the long run.
But here's the danger . . .
The current crisis involving financial institutions cannot really be measured in terms of any leveraging of the illiquidity. There are no tangible assets, so to speak, on this one. The cash standard may backfire on those who hold it too long.
And in the past, the banks and financial institutions, as well as the corporate giants, had a say in how the Government acted, based on their self-interest. But the tide has turned. The Government will now dictate how the banks should behave. While this sounds like a great win for the people, it might be a way for the Government to rid the banks off its back to accomplish its higher calling, only to be followed by not sharing the spoils with the public. Hence, the powerful police state that I've been trying to warn everyone about for the past few years.
Letâ€™s get to the political implications of this. (It is an election year, remember?) Jewish blogger Richard Silverstein of Tikun Olam  takes John McCain to task for claiming to â€œclean up Wall Street.â€
How, pray is John going to fulfill his promise â€œnever to put America in this position again?â€Â Is he an economic Svengali who will simply will Wall Street to health and prevent another bout of this malady??Â And how does he propose to â€œclean upâ€ Wall Street?Â He and his Republican brothers have done nothing to address similar previous economic implosions and corporate malfeasance in the past seven years.Â Why should anyone trust that McCain would know what the hell he was doing in addressing a crisis of this magnitude?Â And keep in mind all this happened on George Bushâ€™s watch.Â Given McCainâ€™s closeness to Bush, what would the former do differently??
Wall Street faces the greatest crisis perhaps since the 1929 Crash and John McCain canâ€™t move off his stump speech and acknowledge the crisis. He canâ€™t rise to the occasion because he and his campaign have political arterial sclerosis. Partly itâ€™s his age I have no doubt. And partly itâ€™s the kind of campaign heâ€™s decided to run.
And, for Obama:
All of which provides Obama a golden opportunity. He and his advisors should come up with the equivalent of an domestic economic Marshall Plan. Something that will show the American people that he is engaged with the moment. That he understands the true danger we face. And that Osama bin Laden and Al Qaeda pale in comparison to this economic danger. Obama needs to show gravitas in the face of McCainâ€™s cluelessness.
From Israel to New York City, Sultan Knish  points out in a prescient two-week-old post that businessmen and their money have long been flocking to the Obama campaign, which is never a good sign.
In America business leaders pumped huge sums into Obama's campaign in the hopes of creating a tame non-threatening America that would be positively perceived overseas.
Of course promoting liberal candidates also means higher taxes, but that is less of an issue for corporations which are increasingly bypassing their home countries maintaining less and less infrastructure and funds there anyway. It is small to mid size businesses, their competitors, who bear the brunt of high taxes, not the multinationals whose creative accounting and lobbying insures they will come out on top anyway. And if they don't, the lobbying will assure them a government bailout.