Don’t think, just say yes
Well I’ve been thinking (and murmuring, much of the time) that this all seemed rather hasty and unconsidered and likely to end in tears. It’s all very well, but writing someone a check for $700 billion to do as he likes with is really a little bit extravagant, when you think about it. I understand that he says the situation is urgent, but all the same, this business of shouting ‘hurry up, right now, there’s no time to lose, don’t stand there talking about it and thinking about the consequences and asking foolish questions and wondering if it will work, we’re in a crisis here, give me the 700 billion dollars right now!’ looks unpleasantly like…a rather bumptious way of bouncing legislators into throwing away a very very very large sum of money. Paul Krugman thinks much the same.
Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing?
Hmmmmmm. It’s right on the tip of my tongue. No, on second thought, it isn’t.
[T]he financial system will still be crippled by inadequate capital…unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense.
And one of the tweaks that some legislators want to make is to provide help for people who can’t pay their mortgages – by for instance arranging ‘work-outs’ so that they get lower mortgage rates – say 5%. But the trouble with that is – what about all the people who can pay their mortgages (though not easily)? They would like to pay 5% too, presumably; why is it only people who took on too much debt who get to have cheap mortgages? What about people who don’t have mortgages at all, but rent their living space? What do they get? Bupkis. This seems perverse to me. I believe in subsidized housing, but I don’t believe in subsidized mortgages, and I don’t quite see why anyone does. Why stop there? Why not give tax money to people who can’t make their car payments? In a little over your head with that new SUV? Well here, we’ll just slash the interest rate, courtesy of the taxpayer. Feel better?
We can’t have national health insurance, because we just can’t, that’s all, but we can have national mortgage insurance, along with tax benefits for mortgages. Why?
if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place…But Mr. Paulson insists that he wants a “clean” plan. “Clean,” in this context, means a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out. Why is that a good thing? Add to this the fact that Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency,” and this adds up to an unacceptable proposal.