Countdown to breathing space or disaster: Congress decides

Whether you think they’re fighting for crumbs of social justice or fiddling while Rome burns, this is the biggest test most politicians will ever face in their lives. The Executive is not doing well. Bush is playing the role of President. Both presidential candidates are still playing politics. Nobody knows how much the bail-out will cost.
According to one our cleverest commentators Anatole Kaletsky in the Times, US Treasury Secretary Hank Paulson has suddenly switched from White Knight to Darth Vader: “There was no such thing as a Paulson plan. Not only did Mr Paulson not know what he was doing. He did not know what he was talking about.”

But don’t despair. Focus and power has shifted to where the Money is voted, to the folks on the Hill. Congress has only twenty four hours left before the financial crisis becomes a disaster. I don’t know if this sentence is literally true but I wouldn’t want to test it. I’ve just heard a member of Congress’s Banking committee say that the negotiators are closing in on an agreement but Congress is waiting to see what the agreement is before they decide how to vote. That seems reasonable.

The UK and all other lesser powers simply have to hang about, dreaming their dreams and fearing their fears. Two interesting pieces in the Guardian. Seamus Milne, the paper’s house Marxist makes the case for Brown leading a left revival:

“Genuinely new policy announcements were thin on the ground in Tuesday’s speech, and there was nothing remotely of the necessary scale or symbolism of, say, a windfall tax or price controls on the gas and electricity companies. Brown’s pledge of fairness will be hard to stomach for millions of public service workers facing cuts in real wages while huge City bonuses continue to flow without restraint.
But Brown and Labour are fighting for their political survival and there is no other way to go.”

The chances of this happening are round about degrees absolute. On the international front, a sober Tim Garton Ash meditates on Bush’s path “ from hubris to nemesis ,“ hubris being lies and self-deception over Iraq and the attempt to “create our own reality,? and “the vertiginous unreality of hyper-leveraged Wall Street investment banking over the past decade.” The consequence has been the damage done to American “soft power” the world can ill do without.

Meanwhile at home Robert Peston keeps his feet on the ground and his eyes on the screen, telling us:

“The reluctance of banks to lend longer than overnight to each other – as described in my earlier note on interbank hysteria – will surely force the Bank of England to take corrective action.
If it does nothing, well then the cost of money for all of us – in the form of the interest rate we pay on loans – will soar.