John Rapley, Contributor
I spent Monday riveted to the television, watching the US House of Representatives vote on the government's proposed bailout bill. After hours of debate, during which capital markets around the world were jittery, the news came that the vote would start. As the minutes wore on, the numbers in the nay column began to rise. Eventually, they overtook the yeas.
The gavel did not fall. Party leaders ran about furiously, trying to persuade opponents to change their votes. The economy hangs in the balance, they pleaded. But the hold-outs, Republican and Democratic, wouldn't budge.
When the House leaders acknowledged defeat for a bill they had shepherded, the stock markets plunged. The talking-heads who had spent years saying the government had to get off the backs of the people, were now saying the government's failure to take control of the economy would launch the next Great Depression.
Vote's failure
The vote's failure was cast in partisan terms, with Democrats and Republicans blaming one another; and in ideological terms, with centrists saying that free-market Republicans refused to go along with a bailout which they saw as the socialisation of the economy.
However, opposition crossed both party and ideological lines. The rebellion against the bill was an uprising that started on the main streets of the United States cities and towns. In the minds of the millions of Americans who opposed the bill, the struggle over the legislation pitted Wall Street and Washington against the ordinary American. And ordinary Americans, in their millions, called and wrote to their Congressional representatives. Reportedly, by a ratio of a hundred to one, they demanded Congress reject the bill.
Were they mad? Weren't they hearing their corporate and media titans telling them that if the bill failed, the American economy would collapse? That as odious as it was to bail out billionaire bankers for their stupid decisions, failure to do so would be cutting off everyone's noses to spite their faces?
Perhaps. Or perhaps not. Ordinary Americans, who have stood by and watched executive incomes rise many times over while their own stagnated, have cried "enough". With the markets falling and firms collapsing, they no doubt see justice being done for the misdeeds of the past. Why they should have to subsidise the folly of the past is beyond them.
The pundits are screaming that if the credit markets aren't rescued, everyone will suffer. This is true. But few now dispute that the costs and benefits of the bailout package have not been adequately explained to the American public. Nor is it yet clear that it's the best possible solution. It seemed so self-evidently good to bankers and brokers, no further justification than "trust us" apparently seemed necessary to them. And the revelation that Representatives who supported the bailout also receive, on average, large donations from Wall Street, will hardly allay concerns.
Rescue package
Congress will almost certainly produce some kind of rescue package; but not before America gets its pound of flesh. Markets have plunged. But they have not yet crashed. The excesses of the bubble may get squeezed out of the markets. The richest Americans, who own 90 per cent of the stock traded in New York, will suffer losses. This will not bother Main Street. Indeed, as oil also drops, ordinary Americans may even feel that they stand to gain.
The US economy will slow, probably for years. It may even go into recession. But that was going to happen anyways. Meanwhile, Americans are saying they will sooner sink together, than put all their resources into keeping the biggest boats afloat. That may not be sensible, but it is understandable.
John Rapley is president of Caribbean Research Institute (CaPRI), an independent think tank affiliated to the UWI, Mona. Feedback may be set to columns@gleanerjm.com.
