This will be the first of many inebriated posts.
In his reply to my post below, Atticus makes a few errors:
1) It's great that you "respect the fact that he's shown a willingness to adjust his strategy." I guess I do too. However, if an abusive husband stops beating his wife, that's a great step, but the husband should still be condemned, not praised. Well, maybe that's a bad example for me to make. Nevermind.
As bitter and jaded as I am, I'm not ready to praise a politician who made a historically awful decision merely on account of subsequent corrections.
2) I'm not sure what debate you're referring to, but the core of my post was not about "what extent (if at all) the government should intervene in the free market."
To be petty about it, the mortgage backed securities market was never free market, because Federal housing policy is fucked. To be clear, government transferring wealth from the masses to the elite isn't the free market, it's bad government. Fannie and Freddie were Government Sponsored Entities and everybody saw their securities as being implicitly backed by the government, and we've seen that promise come to fruition. Taking for granted that douchebags want the federal government to subsidize home ownership over unpatriotic forms of shelter such as apartments: why does the tax code create an incentive to have more mortgage debt, instead of subsidizing home ownership directly?
Substantially, my post was not about the extent of government intervention. For all of its potential flaws, bank recapitalization is at least plausible. I'm not confident that the current schemes are going to do any good, but I'm not sure they won't. Paulson's plan, on the other hand, was explicitly dumb. It could have been $700,000,000 instead of $700,000,000,000. It would still have been dumb. With the lower sum he might deserve to go to a higher circle of hell, but it's still a circle of hell.
3) While politics isn't about policy, Paulson's plan doesn't even deserve that explanation. The gas tax holiday was retarded policy, but at least the clique vying for the popularity contest was every American who drove a car. Paulson's bailout was for his tiny circle of Wall Street frat brothers. It was not packaged to be popular with voters. McCain and Hillary pandered to voters with the gas tax rubbish. Paulson rammed his excrement through with intimidation. If anything, concerns about the "troubled minds of consumers" are another angle for attacking Paulson, not defending him.