"It is an idea of a plan more than an actual plan"

[koganbot]

Again, I'm hardly a person to have any idea what to do on this matter. I think this is a situation where "getting us out of this mess in a way that provides the greatest good to the greatest number" needs to trump "make the outcome fair," but people are questioning whether the plan will do either, or whether the people creating it know what they're doing, whether it really is a plan.

Markets Soar, but New Rules Upset Traders

Some traders said they were no longer betting on the intrinsic health of companies, but rather on what the government might do next. Others simply withdrew from the market.

Joe Nocera: Hoping a Hail Mary Pass Connects

as the day progressed it became increasingly clear that the Treasury Department didn't yet know how this mechanism was going to work. It is an idea of a plan more than an actual plan. In football, they would call it a Hail Mary pass. Sometimes, of course, a Hail Mary pass is completed for a touchdown. But most of the time they fail.

Paul Krugman: Uneasy feelings and No Deal

It seems all too likely that a "fair price" for mortgage-related assets will still leave much of the financial sector in trouble. And there's nothing at all in the draft that says what happens next; although I do notice that there's nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

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There's no quid pro quo here — nothing that gives taxpayers a stake in the upside, nothing that ensures that the money is used to stabilize the system rather than reward the undeserving.

Comments

[dubdobdee.livejournal.com]

my absolutely very first response to this was that it was an incredibly sinister play:

viz
A: a no-strings bailout* passed on a "bipartisan" basis, which when it all goes horribly wrong, dems are totally as compromised as repugs
B: a no-strings bailout which dems challenge -- the market then panics, falls way further, and blame for the catastrophe passes from the bush administration to those pesky partisan dems who refused to help in the bail-out

*which in current form includes a whole raft of no-blame anti-transparency elements to clear villains of any villainy that emerges; and to hold eg paulson to no account ever

if obama is VERY DARING INDEED -- and tho i admire him in many ways i don't know that he is daring in this particular way -- he will seize this RIGHT NOW as a New Deal Moment and campaign aggressively on that (because if he doesn't seize it now, but still goes on to win, whatever is put in place right now in the twilight of the bush kleptocracy will HUGELY limit his scope for new deal-ish, or reform, or ANY ACTION to correct the rot; the rot-as-is, in addition to a legally plumbed-in departing-bush-heist orgy of no-strings-welfare-for-the-well-off)

paulson may not be a rovian crook himself, but if not he is an honest man way out of his depth and very very surrounded by crooks -- conservative (viz anti-new deal) principles are being tossed aside in this proposal... but in a seemingly highly calculated and timed way, so that the inevitable bad outfall of this sudden pro-new-deal conversion (on the part of such very bad actors) counts deeply against any considered, thoughtful, radical nu-New Deal project being set in place once obama arrives, to an emptied treasury, a highly dysfunctional market, a straitened, flummoxed and angry middle class, oil and other energy crises burgeoning, the crooks fled with their booty, and wars begun and prepared now flaming up into full reality

i am not usually this gloomy or angry -- right at the start of the iraq war i said (mostly to myself) that i considered it the first shoe falling in the tumble of the american empire, the question really being would it be a gradual queasy decline or a chaotic rout... i hoped for the former, because we will all suffer if it's the latter, but the fall of empires is generally (historically) more awful than their advance, pitiless and cruel as that can be, and the state of grown-up politics at the core of the metropole (viz washington, wall street) is hopelessly decayed, morally and intellectually, and (beside the gangster warlords in the nascent rival empires, none of which are in a healthy state themselves, financewise) no one is standing in the wings pressing to take over

still, a week is a long time in politics, and maybe by next weekend everything will be sorted and fine again, blimey

[dubdobdee.livejournal.com]

(ps above is my first and very dark rather than my only response -- i think there are a bundle of less-worse muddle-through options that could potentially play out BUT wars do happen, societies do come to pieces, bad people don't always lose and pay for it)

[koganbot]

Paul Krugman not any more positive today than yesterday.

the plan does nothing to address the lack of capital unless the Treasury overpays for assets. And if that's the real plan, Congress has every right to balk.

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shouldn't [the plan] take the form of public injections of capital, in return for a stake in the upside?

Let's not be railroaded into accepting an enormously expensive plan that doesn't seem to address the real problem.

But the Dems seem thoroughly buffaloed.

[koganbot]

Floyd Norris: Will a Crisis Create a Scandal?

The Bush administration was a little slow to decide this was a massive crisis, but they reverted to form when they did. They want Congress to give them a blank check to do whatever they want, whatever the cost, with no one able to watch them closely.

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Here purchase price is crucial. What are the safeguards to prevent cronies and contributors from getting favorable deals, either in selling assets or in purchasing them?

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Among the worst mistakes made in the savings and loan crisis was to allow the institutions to devise special accounting rules, to make themselves look better than they were and to keep them going when they should have been closed down. You would think no one would want to repeat that, but there are rumors that banks are asking that Congress allow them to stop marking assets to market, on the theory that it was having to tell the truth about their bad decisions, rather than the decisions themselves, that caused this problem.