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Worse than Iraq


The rush to hand US banks a $700B $850B bailout has been compared to a popular perception of the invasion of Iraq. After years of complaints that Bush lied, pundits not only believed he was telling a truth about a dire crisis, but joined him in urging a huge immediate response.

We are learning the purpose of the bailout was not clear. And the size was not related to any calculated need, just pulled out of the air.

But in a striking admission, [Treasury Secretary] Paulson said that buying up mortgage assets "is not the most effective way" to use government funding.

Purchasing these so-called "toxic" assets was once the cornerstone of the rescue plan for financial markets and was almost the entire focus of Congress when the package was being debated before its enactment. But almost as soon as Treasury received the money, it decided that giving capital to banks in return for preferred stock was a better use of the funds.

As a parallel to Iraq, imagine President Bush taking his “blank check” authorization to use force as a license to attack Iran and Syria.

Paulson said that he was "still comfortable" with the $700 billion price tag for the rescue plan and that he didn't need to go to Congress for additional funds.

Some of the money saved from not buying mortgage assets will now be used to shore up the market for credit-card receivables, auto loans and student loans, Paulson said.

In other words, “We haven’t run out of money, so let’s find a plausible way to spend the rest.” And it doesn’t have to banks, as originally presented. The legislation granted broad power, and now any business that sells products on time is a bailout candidate.

The Iraq parallel would be, after dropping a few bombs on Baghdad, then invading Iraq and Syria, Bush decided to attack North Korea and Somalia.

The comparison fails because Iraqi Freedom actually had a clear objective and a detailed plan. When Bush delegated to the military, they accomplished the mission with excellence. Delegating to the Treasury has resulted in foggy bumbling toward no clear end. The bailout is worse than Iraq.