Hank Paulson likes to insist that the hundreds of billions of dollars his Treasury Department has handed out to banks is an investment program rather than a spending program. The difference, for the Treasury Secretary, seems to be that he expects the government will see a positive return on the investment.
Steve Randy Waldman says that this is bunk. Of course it's a spending program. What's more, it's a spending program subsidizing past consumption.
All of the iffy securities that are weighing down the banking system represents money already spent on real projects or consumption. When the government purchases a security, it is taking the place of the party that originally fronted money for that expenditure. Every penny of government "investment" is retroactive expenditure on housing, real-estate, consumer credit, whatever.