I think it will work super well for a subset of the population. It might or might not work, to some degree, for the rest of us.
Isn't it odd how the ONLY solution were were offered was the Paulson plan? No consideration of any alternative that would arrive at the same goal without bailing out Wall Street. Remarkable how the same folks that got us into this magically know, withing hours, the exact right way to get us out and how no consideration was made after the first bill failed to taking another route.
Amazing.
Charon
First... Let me say that I DO NOT support the bailout plan. I believe in free market capitalism and that means NO Govt. direct intervention in free markets. If they wanted to work with accounting rules or help structure an exchange to facilitate the sale of supposedly toxic assets or eliminating the capital gains tax to promote the purchase of distressed real estate..... any number of things the Govt. could have done WITHOUT writing giant checks would be ok with me.
There is no question that we are in a serious mess. We can debate the hows and whys of where we find ourselves but the fact remains that 2 weeks ago Paulson and Bernanke were facing the very real fact that the financial system was neck deep in doo-doo and it was rising. BAD BAD things were about to begin happening and once the system stopped teetering and actually began to collapse the fall would be VERY difficult to halt. Time was the critical factor. If action was to be taken and be effective it had to be IMMEDIATE and OVERWHELMING.
So they sought a desperate plan to try a last ditch all out effort to restore confidence, buy time and lubricate the system to begin functioning again. The situation demanded not only extremely rapid action but action on an overwhelming scale that would "shock and awe" the global banking system into having confidence that risks were being mitigated and the operating basis upon which the global economy depends would remain intact. The Paulson/Bernanke plan was effectively a last ditch nuclear strike aimed at stopping the destruction of the worlds credit markets.
They had an impossible sale to close. They could not come right out in public hearings and say "we are on the edge of utter collapse and if this is not passed right freaking now then we are on an express train to a complete financial system collapse and a global depression like this planet has never seen". If they did say that.... they might trigger the very thing their purpose is to avoid. But by not spelling out plainly for the rather dense politicians the dire and immediate nature of the crisis they were doomed to have their sales pitch fail.
So they put together, very quickly, a simple and giant plan. The plan HAD to be VERY quick, very simple and HUGE if it was to accomplish the goal. So thats what they took to the Hill. Then they got shot down. Washington simply does not move that fast. So it dragged on.... the problems sped up and got worse.... the plan got all muddled up and turned into something lacking the shock and awe but bloated with plenty of baloney.
By the time it did pass, over 2 weeks had gone by and the window of possibly opportunity relative to preventing the worst case scenario had closed. Credit markets went from slowing down and getting tight to being locked down.
At this point, I doubt the plan makes any difference. I also doubt the Treasury will end up spending even the initial $250 Billion allowed as it will become obvious that the time frame for doing so having the desired effect will have passed.
I do think most of the flack that Paulson is catching is not warranted. Hank Paulson is not the bad guy. HE does not need this job..... or need money or need power. The guy EARNED his way to being CEO of Goldman and he is a freaking genius. I would MUCH rather have him in charge of funds to be used for any sort of bailout than the criminals and idiots in Congress!
If "I" were going to get to structure a bailout for this mess.... rather than put Treasury in charge of it I would have created an entirely new temporary Govt. agency much like Resolution Trust Co. from the SnL bailout days. Then I would have done whatever was required to convince Paulson and Bill Gross to agree to co-head up this new agency and run it until this mess is cleared and the agency can be disbanded.
IF you want to get real solutions to serious fiscal disasters..... go out and get the absolute BEST talent in the world and put them in charge of fixing it. DO NOT put Washington politicians in charge of the day to day operations or all you will get is PORK chasing more PORK. Bill Gross has not only almost single handedly invented the modern bond market but he has managed the largest bond investment fund on the planet EXTREMELY successfully for decades. HE is the kind of leader we need working for US.... the people.... to get this fixed.
Fang
