the tindog coffeehouse

You know the problem with that whole $700,000,000,000 bailout plan floated by Washington? It just wasn’t branded right.

At least according to some PR people:

“‘Bailout’ connotes failure, and Americans hate failure,” Mr. Benett said. “There is nothing redemptive about a bailout. What if this had been called a ‘rescue’ from the beginning? Or the ‘Save Our Homes Act’? Supporting a ‘rescue’ is a bear of an entirely different species. It is not only a redemptive act, restoring things to their rightful order — it is heroic.”

See, putting the U.S. economy $700,000,000,000 more in debt and preventing the market from adjusting itself is heroic!

Oh, OK. That makes it all better.

Is it OK to “let” your kids win? Last night my 5-year-old daughter Erin and I played a board game, and I won. Immediately she began crying because I didn’t let her win. I offered to play again, telling her she might win this time, but she wasn’t having any of it.

I’m reminded of that scenario this morning as I read about the federal government’s $700,000,000,000 (let those zeroes sink in for a second) plan to bailout the financial sector. Under the hastily proposed plan by Treasury Secretary Henry Paulson, the federal government would buy up a bunch of bad assets from banks in order to keep them from having to suffer the consequences of their actions.

But should it?

The Bush administration says that it’s necessary in order to end the financial crisis we’re in, but there’s no guarantee that the plan will work. But even beyond the question of the plan’s efficacy is the question of whether we should be letting these financial institutions off the hook in the first place.

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A new poorly-worded Texas law now (possibly) requires computer repair shops to obtain a private investigator’s license in order to do their jobs (a process that requires either a criminal justice degree or a 3-year apprenticeship under a licensed P.I.).

Depending on how the law in interpreted, anyone in Texas who performs any kind of data analysis in the course of fixing a computer must have a P.I. license or face a $4000 fine, a year in jail, and a $10,000 civil penalty. Simple hardware repairs, such as swapping out memory or a power supply, would not require a license, but anyone who has done any kind of computer repair work knows that such repairs are only a small part of the job.

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The Consumerist has posted a great explanation of how the repeal of the Glass-Steagall Act in 1999 led to the subprime mortgage disaster we see today.

The act, passed in 1933 in direct response to the factors that led to the Great Depression, provided several reforms, including establishing the FDIC and authorizing the Fed to regulate interest rates in savings accounts. The act also prohibited commercial banks from merging with investment banks. (Wikipedia article here.)

In 1999 the Gramm-Leach-Bliley Act was passed, which repealed the prohibition on commercial and investment bank mergers. As a result (per The Consumerist):

Now, on the one side they could sell mortgages to homeowners, and then invent fancy investment structures which they sold on Wall Street. Because they were “covered” on both ends, banks felt free to sell increasingly dicey mortgages, just so long as another sucker was picking up the garbage. This sucker was picking it up because he had a plan to repackage it and sell it to another sucker, and so on. Eventually we end up with no-doc stated income interest-only option-ARM no money down mortgages being repackaged as “sound investments” being sold as “stable assets” for city pension plans to park their money in.

Footnotes: As the comments in the Consumerist post point out, John McCain voted for the Gramm-Leach-Bliley Act in 1999, and one of the authors of the bill, Phil Gramm, is McCain’s chief economic adviser. And another commenter (quoting Bloomberg) pointed out that Barack Obama had said that Glass-Steagall should not be restored.

President Bush is expected to sign the recent energy bill passed by Congress which would require auto makers to increase the fuel efficiency of their cars to 35 mpg by 2020. Sounds good, right?

The AP is reporting how manufacturers will be “getting creative” to meet those figures, rolling out more advanced hybrids, using “cylinder deactivation systems,” and experimenting with lighter materials such as carbon fiber and aluminum. Still sounds good, doesn’t it?

Until you realize what this really means for consumers:

But Merkle noted that all of these alternatives will not come cheaply. Clean diesel and hybrid technology typically adds several thousand dollars to the cost of a vehicle, and more lightweight parts will also carry additional expenses.

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