Dean Baker at TPM Cafe with a piece that may help with The Alchemist and Dawkins' questions:

While the editorialists are busy denouncing members of Congress for surrendering to the vulgar masses, it's a good time to quickly check the score card. The United States is in a recession and facing the worst financial crisis in almost 80 years because the folks currently in charge were out to lunch.

...

The main problem in recovering from the recession will be finding ways to boost demand other than household consumption. In the longer run, this will mean reducing imports and increasing exports. In the short-run, we will have to rely on government stimulus to help spur growth and reduce unemployment. The Democratic demands for stimulus were not extraneous to the legitimate goal of a bank bailout bill. Fiscal stimulus must be central to any serious effort to boost the economy.

The weakness of the banks contributes to the downturn, but they are not the core of the problem. We would still be facing a recession even if all our banks were flush with cash. Hence the hype about the urgency of the bailout was an invention. It would be good to get our banks in order, but it also would be good to send $100 billion to state and local governments to support infrastructure projects and other spending.

...

How do we go about getting the banks in order? Almost every economist I know rejects the Paulson approach and argues instead for directly injecting capital into the banks. The taxpayers give them the money and then we own some, or all, of the bank. (That's what Warren Buffet did with Goldman Sachs.)

This isn't about begging for a sliver of equity as a concession for a $700 billion bailout, this is about constructing a bank rescue the way that business people would do it. We have an interest in a well-operating financial system. There is zero public interest in giving away taxpayer dollars to the Wall Street banks and their executives.

If Secretary Paulson constructed a package that was centered around buying direct equity stakes in the banks, he could quickly garner large majority support in both houses. Better yet, Congress could just construct its own package centered on buying equity stakes and send it to President Bush. If he balks, we can just threaten him with stories about the Great Depression

.


Krugman!™ it may be noted, agrees with Baker's assessment of what should be done. He was only weak-kneed about the possibility of it actually happening due to the "trickiness" of the politics, a totally separate question. Now that the PDF Plan has been dynamited even he concedes that it might be wise to go, y'know, craft a plan that will actually solve the fucking problem. It seems there's an emerging consensus among non-rapist economists about equitable and effective solutions, but Krugman in my opinion has the politics exactly backward.

Krugman is terrified that the Dems be seen to be the sole authors of whatever package is finally passed lest it become a massive political liability and fuck up the election in favor of the GOP. But now there is actually a perfect political opportunity for some ever popular economic populism. The Bushites and now McCain are completely discredited. Whatever fallout results from the non-passage of this current bill can easily be blamed on them and the House Republican hardliners. Especially if the Dems actually propose a decent non-rape plan.

As I see it, Krugman has two main issues. For one, he's been beaten like a red-headed stepchild for the last eight years like the rest of us, and is so traumatized that he can't see how much the terrain has shifted and how little GOP bullshit is flying among the hoi polloi. For two, he's a good technocratic managerial liberal and defaults to the belief that the more democratic the process is, the less likely it will yield a good result. Hence his, admittedly tepid, support for this shitty bill conceived and gestated in the such an autocratic manner.

The process, as Greenwald pointed out so well, is rotten to the core, and anything that comes out of Bush, Paulson, Pelosi, Dodd and Franks in a room with no windows bears a heavy heavy burden of proof. (As would anything coming out of a room with Sanders, Kucinich and Conyers in a room with no windows.) Any citizen worth her social security card should be incredibly suspicious of it.

But the sky is falling! There's no time for process! The Apocalypse is nigh! Here Baker's last graf is key: IF Paulson and the Dem leadership were as afraid of the plan not passing as they wanted everyone else to be, they might have offered a less politically offensive plan that would have had a higher probability of passing. That they didn't is, I think, extremely telling. A better bill could have gotten the necessary Dem support and made the House Republican opposition irrelevant.

I'd like to be clear that while I don't agree with Abote that all of this makes it more likely that the House Reps will get their super-psycho provisions in the final bill, I also don't think we're going to get even close to some Magical Platonic Pony Plan of Justice. The Dem leadership is bought and paid for, and it doesn't serve their class interests in any case to do something that will help the middle-class more than the over-class. However what we saw today wasn't to be lamented, it's to be cheered. It was a little breath of democracy. Granted, probably a final fetid air bubble escaping the decaying lungs of a drowned corpse and rising anemically to the surface, but still.


And now, by popular request: