Paulson and Bernanke say if there's no bail-out of Wall Street, then we're headed for a depression.Prove it.
What's remarkable in the last week is that there has been no detailed scenario presented to make the case of Paulson & Co.
It doesn't even have to involve the entire banking and securities business. And with Paulson and Bernanke's track record of failing to see, warn, and protect against the credit crisis, they deserve no deference in this matter.
What's absolutely necessary is a basic step-by-step explanation of why, for example, Hewlett Packard can't get a loan. We're told that there will be a freeze-up of credit. In what particular way? And even if a bank can't provide a loan, why is buying crap paper from the bank necessary? Why isn't a separate loan facility (e.g. another bank with better balance sheets, or a newly created bank) the solution?
For contrast, look at global warming. The science can be complicated, but it can be explained in a few broad strokes: More CO2 in the atmosphere traps more light-energy from the sun. Yes, there are other factors (soot, sulphur compounds, cloud formation), but the basic thrust is clear. We're not seeing anything like that with the financial situation.
Until a credible case, with fact and figures
, can be made that bailing out the banks is necessary, then the $700 billion bailout should not be even considered.