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

[zattarra]

It sounds like Congressional Democrats agree here that just handing $700 billion to the people who helped make this mess isn't going to happen. And rightly so - right wing free market republicans broke it, we liberals need to fix it, just like in the 80s.

[kyeblue]

I find your title very misleading. Paul Krugman never call this plan "Cash for Trash".

Facing this crisis, there are only two choices, either we all go down like 1929, or we take a bold move, putting all ideology aside for now from both right and left, to restore the financial system, then restore the American economy. To me, the choice is very clear.

[kid5rivers2]

Restore it? To what?

[BillyT]

"Crises" announced by the Bush administration are always to be evaluated with a grain of salt. After what they did to the world in Iraq.

[BBDisk]

This is major highway robbery no matter how you look at it. On 9/11 we suffered catastrophe so great that we have since given up many of our civil rights for the illusion of protection and safety.

Now we face a catastrophe that will have us giving up our our financial sovereignty.

The canary in the coal mine has long since been dead, propped up by ventriloquists when the cameras are on.

This is your government at work ... against you. Every politician you've ever heard speak out against the travesties and trials of the American worker is responsible for this situation. Every one of them let it happen, if not helped it happen. Democrat. Republican. Independent. Doesn't matter.

You've been screwed. Now we're headed for a system whereby government owns your mortgages, therefore your property? Shall we nationalize everything?

Welcome to France (only with longer working years and so-so food).

Next on the agenda: The North American Union and the Amero.

[ResistanceisFutile]

Where there is this much money, corruption and out right theft will occur.

Many people made much off the mess they created. I don't want them making more.

Stop the bail out and let the chips fall where they may.

Revolution may be the result.

People have forgotten how despised, and rightfully so, bankers are and should be.

[kid5rivers2]

"...bankers are and should be."

And lawyers.

And Mc Bu sh.

[scooperss]

His successors? I doubt very seriously that there will be ANY of that 700 billion left after paulson is gone and I'm beginning to suspect it will never be seen again in my lifetime.

[kyeblue]

So you think that all americans are going to default on their Mortgage, I know I won't. Or maybe I will too if the rescue plan derails and we all going down to the hell like 1929. What we should argue about is not whether or not there should be a bailout, the point is at what price the taxpayer is paying for those assets.

[Cambridge9]

You are lucky to have a job that allows you to pay your mortgage. Not all foreclosures are the result of mismanagement or buying beyond the borrowers means. Many of these foreclosures are the direct result of job losses and/or impossible medical bills.

Obama/Biden 2008 - 2012

[heycable]

One can also discuss the type of bailout and oversight there should be, not just "the price." In your earlier post you state that there are only two choices. That would appear to be a bit limited in logic. This is not just a yes or no topic. The problem is severe and we shouldn't be making rash, emotional decisions. I believe something needs to happen. There does need to be some kind of intervention. However, I am not convinced that the current proposal is the way to go. I think it would be very irresponsible to give one person complete control of $700B. Look at the deregulatory processes that got us into the this mess in the first place. Why should one person have the autonomy to decide where that kind of money lands? Republicans consistently cry for deregulation. Now we are paying the consequences for some of those. The fat cats have there money. Yet the regular joe is left to suffer. We've seen this formula too many times recently; executives making off nice with there $$$$$ while the workers' pension plans and investment portfolios disappear.

It's time to step back, take a breath and think for a moment. $700B (call it a trillion), is too much money for one person to control.

[BBDisk]

It's not only a matter of the price that the taxpayer is paying for the assets, but how they plan to liquidate the assets.

These institutions should be left to fail, no matter the effect, and the architects of the catastrophe be put in jail.