Paul Krugman: Paulson's $700 Billion Plan Called "Cash For Trash"

NY Times :

Some skeptics are calling Henry Paulson's $700 billion rescue plan for the U.S. financial system "cash for trash." Others are calling the proposed legislation the Authorization for Use of Financial Force, after the Authorization for Use of Military Force, the infamous bill that gave the Bush administration the green light to invade Iraq.

There's justice in the gibes. Everyone agrees that something major must be done. But Mr. Paulson is demanding extraordinary power for himself -- and for his successor -- to deploy taxpayers' money on behalf of a plan that, as far as I can see, doesn't make sense.

Read the whole story: NY Times

Comments

[ILibertine]

I am expected to believe the theories of one of these "experts' that has been at the helm during the evoluton of this matter? Mr. Krugman is right. Rather than tolerate another flim-flam under the guise of having to do something quick, let's step back and logically consider something for awhile rather than react. Let's ensure the taxpayers are adequately reimbursed through tax rebates proportionate to the decline in their purchasing power through the Feds unrestrained printing power. Let's make certain credit interest and corporate profits are regulated and taxed in the process. All of this crisis smacks of herding a scared legislature into corporate pockets. What else is new? Perhaps just that we're Fed up .

[Imnot2blame]

Wall Street couldn't get their grubby hands on our social security, so they figured out another way to get the taxpayers money using another scheme.

[LemonMeringue]

Yes and they timed it so they would steal our 401Ks just before the biggest bubble of baby boomers was set to retire.

[Sparky123]

The result of this will be that the U.S. will sink into a third world country with many people homeless and hungry. People will lose their jobs, retirement funds and goods will be too expensive for most to buy.

[darylwalmsley]

these baby boomers were the ones who voted all these idiots into office in the first place. the "greatest generation" (the ones who lived through the great depression and won WWII) must be pissed at their incompetent excuse for progeny. instead of them having fought the fascists "there so we won't have to at home", here we are with them heading all our institutions. 30+ years of trickle down financial planning will be a bitter pill to swallow come retirement time. younger generations will be smarter to keep their pensions (ameros, no doubt) safely tucked away under the collective mattress.

[Sparky123]

Good point. Doomsday!

[itmaybetoolate]

Read Naomi Klein's "The Shock Doctrine." Here we go again.

[Sparky123]

A depressing read, but worth the effort. One sane voice out there in the wilderness.

[elcojonu]

Patch the thing up until after the election; THEN, do something right, reasonable and lasting.
Things done in haste VERY SELDOM TURN OUT RIGHT; I wouldn't trust the Bush crew to walk my dog .
We're been sold a bill of goods; CAVEAT EMPTOR !

[U R 1 2]

See McCain understands the problem in this country. You see, Washington is out of touch with the common people.....the man on the street. They have no idea what regular people are doing or thinking on a regular basis. You know, just this morning, McCain was in one, I forget which one, of his seven houses and was telling that to his valet, Alejandro, as he was dressing the aged senator. Very telling! rotfl

[berensma]

This is probably a very good time to write your representatives to tell them exactly what you think:

http://www.senate.gov/general/contact_information/senators_cfm.cfm

https://forms.house.gov/wyr/welcome.shtml

[Sparky123]

What good will that do? They are all in bed with these same people who planned all of this. Hopeless.

[SurrealPumpkin]

Elections coming up, it will do a lot of good.

[Coralsea]

"And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place. "

That's brilliant. Taxpayers should get a return on their investment--to pay for health care,etc. After the dust settles from this debacle, the American people should find themselves the rich owners of several banks, etc. Privitization and the "ownership society" has been a massive FAILURE.

[TheBlackCat]

That is the line that struck me the most as well. I don't understand how congress is even considering a no strings attached bailout. If we are bailing out these companies due to economic necessities, at the VERY LEAST the CEOs who created this debacle should have their golden parachutes stripped and redirected to pay down the debt they incurred and the taxpayers should see a return on their investment if the bailout does go according to plan.

Trickle down economics never ended up working, guess now we're doing trickle up! Why don't they just stop with the semantics, name themselves nobility, the rest of us peasants, and we can start delivering 10 pieces of gold and some chickens at the first of every month?

[Sparky123]

These CEOs put those congress people in office, don't forget! Scary.

[dredger]

I read the text of the bill last night- what a joke. Its like a bank robber handing the teller a note that says "give me 700 Bn in unmarked bills and, by the way, you can't send the cops after me". The Bushies have proved time and again they are not good fiscal managers, so why should we trust them with a credit card with a 700 Bn limit?
Cash for trash is one of those succinct terms that sum up the situation in a single phrase. And thats exactly what Hank Paulson would do, bail out his rich buddies by paying way too much for the crap they so carelessly bought. The concept of privatizing profit and socializing risk has been around for a while but this is its ultimate expression.

[U R 1 2]

It's almost painful to watch McCain trying to 'deal' with this economic nightmare. He runs about, flapping his arms like a ruptured duck, screeching, "I was against the bailout before I was for it!" "It's all Obama's fault!" "I don't know much about the economy!" "I'm going to form a committe!" "I don't know how many houses I have!" "The fundamentals of our economy are strong!"........BLAH BLAH BLAH BLAH!!!!
.............. You start getting embarrassed for him to the point of being horrified at how bad it makes him look. And then you remember he's trying to be our country's president and you become horrified for America.......or you just become horrified!

[DanmaxKL]

Bingo U_R_1_2. You hit the nail on the head. I couldn't of said it better. He cuts a rather pathetic figure trying to explain away his gaffes.

He has simply got his talking points caught up around his ankles, or else he is actually forgetting his briefings from his so called advisers. That does then raise questions about .. yes,you guessed it-his age!

As previously mentioned by me in a earlier comment, I am no ageist but McCain is a man running for president and his age is making it clear for all to see that he is in way above his skill set.

[blaqntelligence]

I second DanmaxKL's BINGO!
Couldn't have said it better myself.

[Larry of Corrales]

Absolutely right on the money. Hopefully Congress will read this column.

[CAPTAINSKIPPY]

Last chance to Hedgeyourmoney.

[Pendragon2008]

EVERYONE, Republican or Democrat, please watch this:

http://www.youtube.com/watch?v=MO6P_yjKFR4&eurl=

Bear in mind, as written, the bailout does not benefit ANY taxpayer, ANYWHERE. It gives the US government free reign to buy bad debts with public money; $700 billion is just the START.

This bailout gives Bush, Cheney and their banking institution cronies free reign to directly siphon wealth out of the hands of people who work for it, and place it in the hands of the already fabulously wealthy and fabulously greedy.

This isn't financial crisis, this is financial CRIME.

View the movie; Google Shock Doctrine and Bilderberg Group, and you will be able to understand EXACTLY how we got here, and what is being done to the American public. This is not a conspiracy theory, it is all out in the open.

For a glimpse of the future of America according to these people, Google for North American Union, Amero. This crisis is the first step towards devaluation of the dollar and the ushering in of a new currency, at the expense of the Constitution. These people are quite literally STEALING the American Dream from ALL present and future generations.

Bush knows this; he knows this is going to come out, so he's already prepared his bolthole in South America. Once the truth gets out, the whole world will be looking to hunt these people down once and for all; and the world will be a better place with them all in JAIL.

[Pendragon2008]

Just the fact that Paulson is asking for $700 trillion to START, plus immunity from review “by any court of law or any administrative agency" tells anyone this is a CRIME IN PROGRESS.

[U R 1 2]

AMEN....AND AMEN!!!! Well said!

[nellieh]

The Republicans want NO oversight and the Treasury Secretary wants full control of what happens to whatever billions or trillion of money will be used. Wasn't he on Wall Street with a financial institution when all this crap was going down? Yeah, that's a good idea. He, and only he by himself, will know what is best to do with dispersement of billions or a trillion of money taxpayers will owe. If the Democratic congress goes along with this "plan," they will deserve the scorn that has and will be heaped upon them. Look back on this administration and see what NO oversight has allowed. Since Phil Gramm is as responsible as anyone, along with Greenspan, UBS's USA holdings should be exempt from any bailout should it come. It's funny I haven't heard of them exposing any of these cretins, just companies.

[Pendragon2008]

EVERYONE, Republican or Democrat, please watch this:

http://www.youtube.com/watch?v=MO6P_yjKFR4&eurl=

Bear in mind, as written, the bailout does not benefit ANY

taxpayer, ANYWHERE. It gives the US government free reign

to buy bad debts with public money; $700 billion is just

the START.

This bailout gives Bush, Cheney and their banking

institution cronies free reign to directly siphon wealth

out of the hands of people who work for it, and place it in

the hands of the already fabulously wealthy and fabulously

greedy.

This isn't financial crisis, this is financial CRIME.

View the movie; Google Shock Doctrine and Bilderberg Group,

and you will be able to understand EXACTLY how we got here,

and what is being done to the American public. This is not

a conspiracy theory, it is all out in the open.

For a glimpse of the future of America according to these

people, Google for North American Union, Amero. This crisis

is the first step towards devaluation of the dollar and the

ushering in of a new currency, at the expense of the

Constitution. These people are quite literally STEALING the

American Dream from ALL present and future generations.

Bush knows this; he knows this is going to come out, so

he's already prepared his bolthole in South America. Once

the truth gets out, the whole world will be looking to hunt

these people down once and for all; and the world will be a

better place with them all in JAIL.

[Sparky123]

Very true. They planned this a while back.

[gwismyhero]

We can sit here and comment until teh cows come home or we can do something productive. Write to your congress representatives and tell them NO BAIL-OUT FOR WALL STREET! Those CEOs may be out of jobs, but they still have more houses, cars, etc. than any of us combined. We don't need ot feel sorry for them. We need to fel sorry for ourselves that we're being robbed BLIND by our own government.

[Bobrobert]

Depression 08

Stop the crap and admit the truth.

WE ARE IN A DEPRESSION - WAKE UP AND SMELL THE BILLS.

Big brother is broke - if a bail out comes it will be paid with CREDIT!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

What economist in his right mind would agree to fight a depression with credit?????

Check out you Economy 101 books at the library - then make sure you can more for this winter.