So maybe the sky isn't falling?

Maybe the failure of the Wall Street bailout wasn't such a bad thing?

Early Monday, when many progressives seemed to think that the proposed $700 Wall Street bailout would pass, here is some of what they were saying:

Former presidential candidate and Congressman Dennis Kucinich of Ohio, said that "The $700 billion bailout for Wall Street, is driven by fear not fact."

David Sirota wrote about the Top Five Reasons to Vote Against Wall Street's $700 Billion Bailout.

Though the deal negotiated between congressional leaders and the White House is better than what Treasury Secretary Henry Paulson originally proposed early last week, it remains an insulting atrocity, having omitted even basic aid to homeowners, bankruptcy reforms and any modicum of future financial industry regulation.

Really, Sirota had two main reasons for his opposition to the bailout. One was that many economists actually think it would make the situation worse, and the other was that there were better alternatives.

Michael Moore wrote that The Rich Are Staging a Coup This Morning.

The problem is, nobody truly knows what this "collapse" is all about. Even Treasury Secretary Paulson admitted he doesn't know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can't figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this "bailout" package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Moore went on to argue that unpaid medical bills cause the greatest number of bankruptcies, and that if we had universal health care, the mortgage crisis may well never happened. He urged the public to ask Barack Obama to develop and promote a more progressive bailout plan. Moore also called on the public to join demonstrations against the bailout.

Meanwhile, Dean Baker wrote that Congress Endorses Conservative Nanny State.

Baker said that the plan was going to redistribute income upward, "taking money from the schoolteachers and cab drivers and giving it to incredibly rich Wall Street bankers, who are so incompetent that they drove their banks into the ground." While Baker believed the country to be in a worsening recession, he said that the bailout plan was of no use in getting us out of it.

The best argument that the bailout proponents had was that the failure to do the bailout could lead to a collapse of the financial system, leaving us unable to use credit cards or ATMs, or otherwise conduct normal financial transactions. This would indeed be scary, since it would imply a complete economic collapse. (I had actually accepted this line.)

However, on more careful thought, this is an idle threat. In the event the banking system really did freeze up, then the Fed would step in and take over the major banks. (It had contingency plans for such a takeover in the 80s, when the money center banks were saddled with billions of dollars of bad developing country debt.)

The banks would not be happy about a Fed takeover. The top executives would be out of a job, and the shareholders would likely lose their full investment. However, the rest of us would be able to carry on with our lives as we did before. After maybe a few hours of disruption, we would be able to cash checks and use credit cards and ATMs just as we did before the crisis.

So maybe the sky isn't falling after all? Maybe it would be worse if Congress comes back and passes the gol-durned thing after all?

Dave Linderoff writes about The Power of `No' and the Need to Keep the Pressure on Congress.

Maybe they're right.