Mussolini is for the Bailout

From Jason Kuznicki over at Positive Liberty…

Following a pattern it had set in earlier bailouts of smaller banks, the government set up a holding company, which it financed together with the central bank. This company acquired all the corporate shares held in the portfolios of the banks at the higher historical, not current prices. Thus, the government not only provided liquidity to the banking system, but it also absorbed part of its losses. It also became the largest shareholder in a number of firms. Many of the industrial firms thus acquired were themselves on the verge of failing and benefited not just from the rescue of their banks but also from the direct infusion of public money… The cost of the entire bailout was a staggering 10 percent of GDP — the comparable amount in the United States today would be about $1 trillion.

The quote is from Saving Capitalism from the Capitalists, by Raghuram G. Rajan and Luigi Zingales, p 213. The bold bailout was by Benito Mussolini. The results were as corrupt and as anti-competitive as you could probably imagine.

The bailout package that is about to be rammed down Congress’
throat is not just economically foolish. It is downright sinister. It
makes a mockery of our Constitution, which our leaders should never
again bother pretending is still in effect.

You can’t stop a problem of too much spending and too much deficits
and too much monetary inflation with more of it. So I’m positively
opposed to the bailout and believe it will just delay the correction
that is required. We need to correct the imbalances and if you
interfere, you just delay it and make it more difficult and make the
problems worse for ourselves…

It isn’t a lack of regulation that was the problem; it was the lack
of the market being allowed to work.

One more from John Fund over at Political Diary, 9/29/08

Even House leaders admit the bill is far too interventionist for
their tastes. Minority Leader John Boehner called the $700 billion
plan a ‘crap sandwich’ during a closed-door caucus of his members
last night as he exhorted them to vote for the bailout bill if their
‘conscience’ would allow it. Paul Ryan, ranking member on the House
Budget Committee, told his colleagues it ‘sucks’ even as he said he
would reluctantly vote for it.

But some members simply couldn’t stomach the prospect of voting for
such a bill. ‘I didn’t get elected to turn this country into France,’
one member told me. He added that the predictions of financial doom
by Congressional and administration leaders have been overplayed:
‘They shouldn’t have said the sky will fall tomorrow every day. It
didn’t,’ he said.

If you can’t tell, I am against the bailout the US Senate passed today. I hope the House once again does the correct thing by voting it down. I read somewhere that public opinion was against the House bill 300-1 if you use calls and emails to House Representatives as an indicator. I don’t know if that is accurate, but I do know that I do not know a person who has told me they are for it once they know what it involes.

So what can you do? The same thing you hopefully did last week. Contact your Representative in the House and tell them not to pass this load of bile. If you don’t have their email/phone number, head over to DownsizeDC. They have contact info and forms for everyone in Congress. It’s a free registration and they have a ton of great articles and ideas about how we as a nation can reduce the size of our government and generally make it more effective.

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