No deal (Paul Krugman)

[babsbunny]

http://krugman.blogs.nytimes.com/2008/09/20/no-deal/

hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, 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?

Here’s the thing: historically, financial system rescues have involved seizing the troubled institutions and guaranteeing their debts; only after that did the government try to repackage and sell their assets. The feds took over S&Ls first, protecting their depositors, then transferred their bad assets to the RTC. The Swedes took over troubled banks, again protecting their depositors, before transferring their assets to their equivalent institutions.

[mdmc]

1. no deal

[rosesaylavee]

2. I do not like the idea of the Treasury Secy have UNLIMITED

power to act - no oversight of Congress. We do not elect this person and I would prefer at least the semblance of a democracy, thank you very much.

If this absolutely positively HAS to happen, there needs to be some language in there saying this is a temporary bill - to be reviewed in 60-90 days.

:thumbsdown:

:edit to add, just sent a fax to Senator Dodd's Washington Office to that effect. This needs to a temp fix if agreed to at all and this Treasury position needs some kind of oversight that is better than quarterly reports to Congress.

[glowing]

3. I sure hope Keith and Rachel are all over this on Monday.. Tell the truth

bastards.. and NO deal sounds like the good deal at this point.. It sounds to me this plan was lying around for a while, much like the Patriot Act that just needed dusting off as it came off the shelf.. Fuck the fascists bastards and remove them before it gets any worse.

[Democrats_win]

4. Wow. We don't know what we're buying from these crooked firms.

These firms are notorious for over valuing these "assets." Krugman is right, we need to seize these firms first as was done in the past. Can you believe what a disaster this will be should we not seize these firms first?