Paul Krugman - Op-Ed Columnist - New York Times Blog
Here's the thing: it's very hard for Congress to originate complex financial rescues, so it's normally up to the executive to put things together. Unfortunately, Paulson came up with an awful plan. Ideally, the Dems would have ripped the thing up and started over, but that was never realistic. So instead they made it significantly better, but still building on the original, misconceived structure; it became better than nothing, but not good. And then it failed in the House, so the Senate has larded it up, with stuff like SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN. I think that Congressional leaders know that it's a bad bill, but feel compelled to defend it, because they're (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the "hold your nose caucus."
Here's the thing: it's very hard for Congress to originate complex financial rescues, so it's normally up to the executive to put things together. Unfortunately, Paulson came up with an awful plan. Ideally, the Dems would have ripped the thing up and started over, but that was never realistic. So instead they made it significantly better, but still building on the original, misconceived structure; it became better than nothing, but not good.
And then it failed in the House, so the Senate has larded it up, with stuff like SEC. 503. EXEMPTION FROM EXCISE TAX FOR CERTAIN WOODEN ARROWS DESIGNED FOR USE BY CHILDREN.
I think that Congressional leaders know that it's a bad bill, but feel compelled to defend it, because they're (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the "hold your nose caucus."
His attitude seems to be that the bailout is inadequate and fundamentally misguided, but a necessary bandaid to hold things together until an Obama administration comes in.
And we might as well cling to that hope, seeing how there's fuck all else we can do. The fact is that what we're experiencing right now is a top-down disaster. -Paul Krugman
It took three years of Hoover's mismanagement for the national real economy to crater after the 1929 debacle, and a good case could be made that the appearance on the world stage of the Bernake-Paulson minstrel show actually made things worse-accelerated the process.. The need for action is apparent. The need for the Paulson plan, rammed through with unseemly haste, with few alternatives discussed effectively is not only stupid but politically very dangerous for everyone, on either side of the aisle, in both the short term and the medium term. The need for the Senate to throw another 100 billion at it, to bribe the holdouts in the house? Like bribing a man to put out his burning house. A good bill could have been worked out in the house and passed, --even with a small majority- and sent to the senate, where it would have been probably vetoproof.
As well--are we to assume that the two largest holders of US dollar reserves will do nothing---forever? The catalytic event that most of us have been waiting for is the failure of these two to continue top carry our tab. Inaction on the part of the Dems or Repugs is easier to rationalize than hysterical haste. This sounds like either a Naomi Kline moment or the intervention of the guys with the checkbook- China and/or Japan to me. Or both. Capitalism searches out the darkest corners of human potential, and mainlines them.
