Politicana

… says Dean Baker, at TPM’s Coffee House.

“The Banks Have a Gun Pointed at Their Head and Are Threatening to Pull the Trigger.”

There is no plausible scenario under which the no bailout scenario gives us a Great Depression. There is a more plausible scenario (but highly unlikely) that the bailout will give us a Great Depression. There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. We will not lose our modern system of payments.

I’m no economist, but really, this whole thing is starting to stink, stink, stink. One of the comments on the post, linked above, reads:

A $700 billion commitment will tie the hands of the next administration significantly. We’re a little over a month away from the election. Would things truly deteriorate so badly that we can’t address insolvent banks without this bailout over the next two months?

You want my theory? This is, in effect, an October surprise, but it’s geared to the reality of the coming Democratic Party takeover of government. Every dime that goes to the financial system today is a dime that Obama won’t be able to use to improve our lives in the coming year (at least).

Meanwhile, over at the Reality-Based Community, Jonathan Zasloff is arguing that today’s failure to pass a bill means Democrats should push harder for the provisions they want, including bankruptcy reform. If Republicans balk, the Dems can say of their November challengers, “My opponent thinks it’s a great idea for the stock market to drop 800 points!”

On the other hand, there’s Hilzoy, arguing for cautious support. And if I respect anyone in the world of blogging, I respect her. This is all very frustrating. Where do y’all stand on this mess?