Monday, September 22, 2008

Krugman and Kristol agree: bailout package bad

As Yglesias points out, it's not often that left-leaning economist Paul Krugman and Neocon right-winger William Kristol (whom I normally abhor) write columns that basically say the same thing: the proposed bailout in its current form is a bad idea.

But I’d urge Congress to pause for a minute, take a deep breath, and try to seriously rework the structure of the plan, making it a plan that addresses the real problem. Don’t let yourself be railroaded — if this plan goes through in anything like its current form, we’ll all be very sorry in the not-too-distant future.

But is the administration’s proposal the right way to do this? It would enable the Treasury, without Congressionally approved guidelines as to pricing or procedure, to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion There are no provisions for — or even promises of — disclosure, accountability or transparency. Surely Congress can at least ask some hard questions about such an open-ended commitment.

And I’ve been shocked by the number of (mostly conservative) experts I’ve spoken with who aren’t at all confident that the Bush administration has even the basics right — or who think that the plan, though it looks simple on paper, will prove to be a nightmare in practice.

This criticism is coming from both left and right, so I don't think it's motivated by partisan considerations. Nobody thinks giving Paulson a $700 billion blank check is a good idea. If he's so smart and capable, why are we in this mess?

Everyone also agrees that something huge does need to be done. But we deserve to get something for our money. Accountability should be the bare minimum. In return for buying crap assets, the government should at least get lots of equity and/or regulatory control. That way the taxpayer might get something in return for this massive outlay of cash. Just letting people off the hook for their bad decisions is deeply unfair.


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