US Outlook: If you're having trouble trusting mainstream politicians in the UK, you should come over here.
We've just witnessed one of the most staggeringly cynical political ploys I've ever seen in the battle over Wall Street reform, but I'm happy to report that in the past few days it has comprehensively failed. Republican threats to block legislation on Wall Street reform have crumbled. That was why President Barack Obama was able to speak soothingly to finance industry bosses on Thursday, safe in the knowledge that he is close to having laws in place that will dramatically crimp their profitability and the risks of them causing another financial meltdown.
Until the eruption of public joy over the fraud charges for Goldman Sachs, which reminded them just where public opinion lies, Republicans had been largely working with Wall Street lobbyists. Behind the scenes they worked to water down provisions that regulate the derivatives trading at the heart of the 2008 panic and to block consumer protections that will prevent toxic debt products going into the financial food chain in the first place. In front of the cameras, they framed their opposition as a principled stand against "endless taxpayer bailouts" – a brazenly false characterisation. Everything in the proposed bill works to prevent financial firms getting to the point of needing a bailout, and legislates for the recovery of any public money that has to be spent to wind them down if that effort should fail.
Make no mistake, the legislation that looks likely to emerge from Congress in the next few weeks is not the answer to the excesses that inflated the credit bubble and led to such devastation when it popped. But it is a framework in which regulators here in the US and internationally can work to fill out their tougher regime of oversight, disclosure rules and financial penalties for excessive risk-taking. We'll have to keep an eye on those lobbyists just as sharply in the second phase of regulatory rule-making as we have on their attempts to mould this legislation on Capitol Hill.
The lesson from the undiminished potency of the word "bailout", with its Pavlovian ability to stir public anger, is that our financial language is not much more sophisticated now than it was in the pre-crisis era, when insane things were happening on Wall Street while democracy had no tools to discuss them. We are talking with a bit more confidence about liquidity and liquidation, leverage and securitisation, but it's going to be a long, hard educational slog. For now, it seems, Republicans can use the word bailout without fear that people are even going to call them on the details.