Over four months beginning in early August, Kearsarge planned to visit Nicaragua, Colombia, Panama, the Dominican Republic, Trinidad and Tobago and Guyana, delivering free medical and engineering assistance to isolated, impoverished populations. It was actually the second phase of Operation Continuing Promise, which began in May when the amphibious assault ship USS Boxer made a humanitarian run down the Pacific side of Central and South America, eventually treating around 14,000 patients and conducting 127 surgeries, while an accompanying force of Seabees rebuilt eight schools and repaired roads.

Continuing Promise is just a single chapter in a much broader U.S. military "medical diplomacy" initiative in Latin America that began in earnest in summer 2007, with the four-month deployment of the hospital ship USNS Comfort. That trip resulted in some impressive figures: 1,170 surgeries, 32,322 immunizations and 24,242 pairs of glasses handed out.

—David Axe, Seapower Magazine

What a good idea.

I don't think there was ever a point when my reaction to the 9/11 attacks was a desire for my country to invade another country. I was in China when it happened, and my reaction for the first day or so was, "that's awful." Then America went insane, and my reaction was, "please stop going insane"¹. All of my reactions since then have been variations on a theme: please stop waging war to stop violence, please stop destroying our liberties in the name of saving them; please stop torturing people; please stop disappearing people; please stop developing the apparatus of a police state; and so forth. But I digress.

What I want to say is that I feel stupid right now because, for just a moment, I bought into the fiscal crisis conventional wisdom. I don't say that there is no crisis, but when I first heard about the $700 billion rescue plan the other day, my initial reaction was, "gee, I guess we need to be talking about something like that." It took a few days to cycle through "wait a minute, this bailout plan looks pretty bad" to "wait a minute, why are we arguing about the details of the bailout plan instead of its premise and justification?" And I'm embarrassed to admit that it took me most of a week to proceed to the reaction I should have had in the first place. When the same administration that used pure, baseless fearmongering to start a war that has among other effects enabled a company the Vice President recently led and remains financially entangled with to flagrantly steal billions (tens of billions?) of dollars now tries to use fearmongering to justify a massive transfer of taxpayer wealth under the exclusive, unaccountable, and secret supervision of a Treasury Secretary who recently led and almost certainly remains financially entangled with a company which stands to receive tens (hundreds?) of billions of dollars, the only proper response is, "go fuck yourself."

Is there a crisis? Surely. Does it put the economy of the United States and the world at risk? The fact that a pack of proven compulsive liars who stand to make tremendous gains say that something is true does not make it false. I may not be qualified to figure out this whole thing out on my own, but I did just finish a degree that included serious doses of international development, and included a solid year of reading economics bloggers, including Nouriel Roubini. So I do feel qualified to call bullshit when I see it, and to assess the opinions and credibility of experts. Here's my two ¢s:

• Jim Romanesko writes in a memo to the press: "The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise." If we are arguing about executive pay and whether or not the US taxpayers get an equity stake in the institutions they bail out, the debate is already over and the criminals have won. Gus's lecture notes from his "Venture Capital and Private Equity Investments" class from business school say, "Many people find it difficult to think of concepts or issues that the page does not already list. There is a tendency to edit what you see, rather than to create fresh ideas or radically different approaches." Perhaps Paulson took a similar class many years ago.
• The need for a bailout, especially a massive bailout, is not proven. It's tempting, but ultimately childish, to take the mere fact that proven liars Paulson and Bush are arguing for it. Still, every day that passes with the sky still above our heads gives us more information. Let's take a moment to thank the founders for designing a legislative system that can, without any meritorious individual performers, still perform a vital governance function of slowing over-hasty reaction.
• If a bailout is required, there are much better ways to do it than raising money through borrowing the equivalent of a one-time 50%+ tax increase and then giving the money, no strings attached, to the people who lost it in the first place. For example, government-mandated debt restructuring.
• The crisis is the consequence of deregulation. This seems fairly self-evident. Pure capitalism is not a stable system. Perfect competition and frictionless markets don't exist, people are not rational utility-maximizers, and most real systems are not "close enough" to perfect to be well-understood through purely rational economics. Market failures are the norm, not the rare exception. Markets need parameters and boundaries to be stable and healthy over the long term. It's true that bad regulation can kill markets. It's also true that a lack of good regulation kills markets.
• The repeal of Glass-Steagal contributed to the collapse. That seems likely. The counter-argument, that repeal "made it possible for JP Morgan to buy Bear Stearns and for Bank of America to buy Merrill Lynch," just doesn't make sense to me. Of course it's better for a financial institution comprising a monstrous fraction of the US financial system to be acquired rather than to collapse, but isn't the size of the institution part of the initial problem? Now we have a small number of giant institutions, all "too big to fail", and thus all big enough to blackmail the taxpayers. This is bad, not good. The Washington Post notes: "Smaller Banks Thrive Out of the Fray of Crisis".
• The bailout, and in particular the Paulson plan, represents the apotheosis of corporate democracy: heads I win, tails the taxpayers lose.
• Dani Rodrik points out that "The rough rule of thumb for emerging markets is that banking crises are associated with an output loss of around 10%".

So, to summarize, the bailout plans feels more like an opportunistic greed reflex than good public policy. It would transfer more money to private interests than the Iraq war did, although it should be noted that it at least wouldn't require tens of thousands of American soldiers and others to spend years killing each other to provide a pretext for wealth transfer. It's not proven that we need such a bailout; and if we do, the current administration certainly cannot be trusted in any respect. If you think this is hyperbole, remember that Paulson told Congress last Tuesday that, "We gave you a simple, three-page legislative outline and I thought it would have been presumptuous for us on that outline to come up with an oversight mechanism. ... So if any of you felt that I didn’t believe that we needed oversight: I believe we need oversight." But the proposal said, "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

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1. Here's a letter I wrote to my representatives on 18 Sep 2001