Bailout plan passes the House 263-171
Article added on October 3, 2008; last update at 23:08 Riga time
Today came the end of Kill Bill.
No, that's not another
movie, but the House of Representatives approved the amended bailout bill it
first had rejected. The plan to rescue Wall Street and therefore also main street, was highly
After a first and close 228-205 No by the House came a clear 74-25 Yes by
Senate. Both presidential candidates
voted for the
“Emergency Economic Stabilization Act of 2008”.
The 451 page document has been both improved and worsened from the initial 3
page blank cheque demanded by Secretary Paulson.
As written before, a
“plan” seems to have to be a big in order to find approval.
Anyway, two days after the Senate, the House of Representatives approved the $700
billion - in fact a $850 billion package including tax cuts and pork - financial
markets rescue bill by 263-171. 172 Democrats and 91 Republicans voted in
favor of the bill. 62 Democrats and 108 Republicans voted against it. Only 218 yes votes would have been needed.
Given the urgency and appeals from the president, congressional leaders
as well as the presidential candidates, the number of 171 no
votes is still high and indicates that nobody is really happy with the bill.
The sentence so often heard is surely correct: the costs of inaction are
greater than the costs of the bailout plan.
It remains unclear whether the $700 billion bailout of the financial
markets, of Wall Street, of bad mortgages, of predators in the
housing market and of people living over their means will end the
financial and general economic crisis.
Market, consumer and voter confidence has to be restored. The financial
market will be calmed for the moment, but nobody knows how many bad debts
are out there, and how much the mortgage and financial meltdown may cost
taxpayers in the end. Will a hard and long recession follow or can it be
The underlying problem of overspending in the United States has not been
addressed properly. The state, the government and the parliament, banks and other
corporations, and last but not least American consumers have been living
over their means for decades and have to pay the price now.
If the $700 billion bailout turns out to be just a gimmick without resolving
the underlying fundamental problem, it will come back to haunt the United
States executive, legislators, regulators, CEOs, consumers, taxpayers and
voters sooner rather than later.
The people of the United States have to face the truth: the financial hubris
has to come to an end. The
lack of budgetary discipline, of financial discipline of corporations and
individuals with mortgages too high for them to afford and consumers with loads of debt on their
credit cards, with hundreds of billions of goods, services and money more
imported than exported is unsustainable.
The plan to rescue the Detroit motor industry is another dubious result of
the current financial crisis. It violates elementary principles of economic
liberalism. Still, the crisis could be a chance for a fresh start in a new
direction with electric and hybrid cars, with small and efficient cars
instead of gas guzzlers.
At the same time, the American motor industry worker has to face another
truth: American cars lack the quality of German and Japanese cars. The
quality problem is rampant in more than one sector of the American economy.
US companies are masters of marketing. However, too many of the products
they sell are only average and not state of the art.
The US economy is freer than most other economies of the world. If it
remains that way, the country will come back quicker than many competitors
think. Obama's recipe of subsidies and protectionism is not the answer.
Given the fact that America is the world's number one polluter and energy
squanderer, Obama's call for free trade only with nations and companies
respecting certain environmental standards is cute. It is up to the United
States to show more energy efficiency. The potential is gigantic. My
educated guess: demand for non-renewable energy could be cut by one third.
Instead of teaching others, the United States have to go back to an old
principle of leadership: lead by example. Although not the messiah, John
McCain comes closer to that ideal than Barack Obama, the master of
grandstanding without a record.
sheet music from the Great American Songbook.