Glenn Greenwald’s September 20 piece on the decision processes leading to the Iraq invasion and the current bailout is right on:
I don’t pretend to know anywhere near enough — in terms of either raw information or expertise — in order to opine on the necessity or lack thereof of The Latest Plan in terms of whether the alternatives are worse. But what I do know is that an injustice so grave and extreme that it defies words is taking place; that the greatest beneficiaries are those who are most culpable; and that the same hopelessly broken and deeply rotted institutions and elite class that gave rise to all of this (and so much more) are the very ones that are — yet again — being blindly entrusted to solve this.
Of course the non-financial toll of the Terror War makes it a far greater tragedy, but the financial tab of each will be of the same order of magnitude — US$trillions.
Although the US$0.7 trillion number being cited is apparently made up, Barry Ritholtz’s guess that it could end up costing US$1.5 trillion is entirely plausible, given the systematic underestimation by politicians of wars and public works. Ritholtz’s upcoming book on bailouts will presumably have data on the misunderestimated (really) cost of bailouts. Watch his brief WSJ video interview or on his own blog.
Stop the bailout, which will only prolong the pain and ensure future bubbles. Instead take this “crisis” as an opportunity to eliminate all of the various politically imposed causes of expensive housing.
If the rent seeking dinosaurs of finance die I look forward to new mortgage products designed to hedge risk rather than play chicken with politicians (see beginning of post for how well that turns out). Incidentally, see a recent post on what current housing futures say.