1) Are they uninformed enough to genuinely believe that this is the right course of action, or…
2) Do they know the truth, and are trying to dupe the majority of the population (who remain ignorant) in order to keep their vote?
It can only be one of the two, and both make me sick.[/quote]
I am an optimist, so I think it is a combination of both.
Given the prospect that large bank failures could bring down our entire economy (For example I’ve heard/read somewhere that the top 4/5 banks hold over 80% of deposits in the country), I want the government to try and (nationalize/prop them up/bail them out/insert your proposal here). Similarly, as counter intuitive as it sounds, because our economy is over dependent on debt and consumer spending, the short term solution is more consumer spending backed by government debt. As I heard it explained, we are now saving ~6% of our income while having negative savings less than a year ago. Savings is good and will address many current problems long term, but the sudden shift is causing massive stress to our economy. You know, keeping the patient alive so that we may apply medicine and all that. I appreciate the arguments that there will be a lot of government waste, and that government is incapable of tuning the spending to produce results, not to mention can we trust the public not to forget this lesson if and when the stimulus/bail out works. Certainly we will likely have high inflation afterward. Still, I am fearful enough that I am willing to take the risk. I have some trust in the Obama administration in crafting more policy correctly than not, though I don’t have a good track record. I also gave Pres. Bush the benefit of the doubt that he might know what he was doing with Iraq back in 2001-2003.
With regards to 2). I am a bit of an elitist and I think that people ,like banks, want government to stay out of their way/not take their money until times are bad. We don’t elect politicians that tell us the truth. We want services and low taxes (California budget being the prime example). Besides, do you really expect people in Michigan and underwater home owners in Cali to accept their political leader telling them “Sorry, you’re screwed, you were dumb or unlucky, we aren’t going to sink any more money into you?” at a time like this? In my opinion what separates a great politician from a merely good one is the ability to deceive the public or even compromise his/her ethics enough to get to/stay in office in order to do the right thing in the grand scheme of things. My favorite example is Lincoln willingness to compromise on slavery to save the Union, and later over ruling his cabinet in enacting emancipation.
Again, maybe I give Pres Obama too much credit, but I suspect they know their mortgage program will only delay the inevitable, but maybe that delay will allow some AIG counterparties to unwind with less collateral damage, allow a few banks to be reorganized in an orderly fashion. If the homes are coming down anyways, delaying a few months is an acceptable cost for a chance at an more orderly restructuring of the world economy.
