Preemptive Intervention. By: Mark W Adams

I've been reading opinions on the Bank Bailout proposal on and off most of the day, catching up on things I marked for later reading and moving on.  And then finally I read Sebastian Mallaby's column in the Washington Post that so many others has referred to elsewhere, and it stopped me cold.

Remember the Bush Doctrine, that thing Sarah Palin so embarrassed herself over even after Charlie Gibson explained it to her?  The idea that we could, nay should invade other nations not just if they possed an imminent, verifiable threat (as Palin interpreted it to be) but that we had every right to conquer another country to prevent them from becoming a threat.

The Doctrine of Preemption.  It justified our fiasco in Iraq and threatens Iran to this day.  Now read this and tell me if it doesn't give you chills.

In 1989, [during the post Keating Five Thrift Bailout -Mark] there was no choice. The federal government insured the
thrifts, so when they failed, the feds were left holding their loans;
the RTC's job was simply to get rid of them. But in buying bad loans
before banks fail, the Bush administration would be signing up for a
financial war of choice. It would spend billions of dollars on the
theory that preemption will avert the mass destruction of banks. There
are cheaper ways to stabilize the system.

We are about to give the Treasury unbelievable discretion and funding on what to buy and how much to pay for it.  That's the same problem the financial geniuses have, valuation and when to purge the poison.  If they knew what the Shitpile was worth, they could balance their books and trading would go on as usual. 

It stands to reason that we'll be paying less than the face value, but more than the investment bankers could get even if anyone else would buy it.  Now there are all kinds of ways to value something, but anything short of an actual arms length sale is merely an estimate, an appraisal.  Which means that without a market to sell these mortgage backed securities, they are indeed worthless.  We are literally flushing the equivalent of the entire Pentagon budget into the sewer.

So if you hear anyone selling financial equivalent of "Iraq's oil will pay for the war," laugh at them and move on.  There is no "upside" for the taxpayers to participate in.  They are clueless -- as is John Boener who is pushing this for Secretary Paulson.  Paulson's problem is that he thinks this is the end of the world, since this is the only world the Goldman Sachs alum knows. 

A menltdown of the great financial houses will be the end of Secretary Paulson's world, to be sure.  But other than showing me old black and white pictures of depression era soup lines, they really haven't made the case that this is the end of our world too.

There's a list of companies out there at risk, I'm sure.  Real companies that make real stuff, not these phony baloney Wall Street casinos that all survive picking each other's pockets.  So why won't they tell us who else will go under if the banks fail?  You can't tell me they don't want to start a panic.  Panic is a prerequisite for even considering a Wall Street rescue.

Will home prices tank further if there's no bailout?  Will they rise if there is?  Will it be harder to get a home or car loan without the bailout?  If you really can't afford to pay back the loan, it should be. 

Are GM and Ford doomed if they can't finance the next quarter?  If the markets were as transparent as they should be, any concerned investor would already know the answer.  Is Halliburton teetering on the edge of ruin if suddenly they can't afford a loan next week?  Say it isn't so ;-)

What is at risk in the so-called "real economy" that the administration is approaching this as it does all it's bad ideas, like the Patriot Act, FISA, the AUMF and MCA?  Everything's a fucking emergency with these guys.  Nothing good ever comes from this dance we've seen way too many times now.  Nothing.

If this thing was so urgent, Why didn't we hear from Bush for more than two minutes before Thursday -- after they'd figured out how they could use this latest crisis to line the pockets of their friends one last time -- and this time those pockets will need to be exceptionally deep to haul away their booty.

I'm beginning to seriously doubt there's any kind of real crisis at all.