In Krugman I trust:
I'm extremely skeptical that the Paulson Plan, or any variants therof, will do any good. It seems like a waste of money that will cripple any initiatives the next administration would like to pursue. But some sort of bill will probably emerge and while early modifications of the Paulson Plan were tepid, it appears that much better legislation is in the works. But is it good on the merits or merely less-bad than the Paulson original? (see John Cole
How does one judge the proposals?
I'm going to sit back and let Paul Krugman evaluate them and if he gives one of them the A-OK, then I'm on board.
I agree; while I don't place 100% trust in anyone, Krugman needs to be listened to.
I wish those who are against the bailout would give their solutions instead of just pooh-poohing what's is being suggested.
Maybe there hasn't been enough time to offer up what might help our this particular situation, but people like Krugman should at least be able to offer some initial ideas on how he things things should proceed.
Reading Warren Buffett's take on this through a CNBC interview, I think there are ways to make the most of the situation IF the US Treasury buys assets at reasonable value. Obviously that is a big if. Does Krugman believe that NONE of the assets are worth buying?
What if the US Treasury partnered more with financial institutions that steered away from toxic assets. The Treasury could trade reasonable interest payments for off-loading risk to private companies. The Govt can even make profits from such partnerships tax-free, if the interest payment is fair.
The Treasury could buy equity stakes in companies seeking help but also offer a rebate if the return is above a fixed amount over a fixed period of time, to make things more palatable and to keep equity in the market.
The Govt has two major advantages: 1. It has purchasing power. 2. It does not need to seek high returns and can make private profit tax free if the interest payment alone is fair.
If it can loan out its purchasing power and seek reasonable returns from companies able to squeeze out maximum returns.
Does anything like that sound the least interesting?
go to FEDupUSA.com they have a solution and lots of info and links to help people understand whats at stake here.