counterbranding, slow economists, etc
This is the state of our great republic: We’ve nationalized the financial system, taking control from Wall Street bankers we no longer trust. We’re about to quasi-nationalize the Detroit auto companies via massive loans because they’re a source of American pride, and too many jobs — and votes — are at stake. Our Social Security system is going broke as we head for a future where too many retirees will be supported by too few workers. How long before we have national healthcare? Put it all together, and the America that emerges is a cartoonish version of the country most despised by red-meat red-state patriots: France. Only with worse food.
They keep writing that piece, over and over and over. It’s attributable to the stupidity of the people who write for the respectable papers and magazines, their pavlovian ass-covering refusal to think for even a few seconds. That said, despite it’s actual origins, it has the look of a perfect last ditch PR campaign concocted in the dark recesses of one of the Madison Avenue imaginariums, doesn’t it. They starve the beast, reward their cronies, and the American public walks around thinking “Jesus, this is what France is like? This is socialism?”
One really does wonder also about economists. I’m not going to name names – because it’s potentially libelous – but I’m pretty sure one very prominent econoblogger (used to work in the Clinton admin, now teaches) who has been consistently wrong about this whole thing has actually pulled posts from early last week and from the week before. It shouldn’t come as such a surprising relief finally to see Krugman (not the one I’m talking about) come forward against what is happening.
The Paulson plan calls for the federal government to buy up $700 billion worth of troubled assets, mainly mortgage-backed securities. How does this resolve the crisis?
Well, it might — might — break the vicious circle of deleveraging […] Even that isn’t clear: the prices of many assets, not just those the Treasury proposes to buy, are under pressure. And even if the vicious circle is limited, the financial system will still be crippled by inadequate capital.
Or rather, it will 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. Did I mention that I’m not happy with this plan?
The logic of the crisis seems to call for an intervention, not at step 4, but at step 2: the financial system needs more capital. And 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.
I’m aware that Congress is under enormous pressure to agree to the Paulson plan in the next few days, with at most a few modifications that make it slightly less bad. Basically, after having spent a year and a half telling everyone that things were under control, the Bush administration says that the sky is falling, and that to save the world we have to do exactly what it says now now now.
But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.
Really doesn’t seem all that difficult to see this for what it is… except, apparently, for anyone in a position to say something about it. Thankfully PK’s getting there, but too little and too slow and too late, I’m sure.