[IWE] Galbraith's OpEd on what should be done about the Bailout.

[D. Scott Katzer]

Hi Ben,

Ben Tilly wrote:
> On Thu, Sep 25, 2008 at 4:04 AM, D. Scott Katzer <dskatzer@os2bbs.com> wrote:
>> A Bailout We Don't Need:
>>
>> http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092403033_pf.html
>>
>> I like it.
> 
> I know some economics.  I used to work on Wall St.  What do I think?

[...]

Thanks for your comments.  I think the public and the skeptics would 
feel much better about the need for something like this if:

1) Paulson and Bernanke had talked this way when the plan was presented. 
  (Perhaps they did in their hours of testimony and the press failed us 
by not covering it properly.  I dunno.)

2) P&B had talked about why they chose the number they did, why it was 
structured this way, etc.  Some indication that they had learned from 
Japan's and Sweden's experiences, for example.  As it is, people feel 
worse about it by the day when they read things like:
http://andrewsullivan.theatlantic.com/the_daily_dish/2008/09/dept-of-reassur.html

"[The $700B number] is not based on any particular data point," a 
Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose 
a really large number."

:-/

3) You're probably right that any explanation will go over the head of 
most people (and even most economists).  But that doesn't excuse the 
requirement that the explanations be given.  Instead, we got Section 8 
in the Treasury proposal, etc., etc.  They were shooting themselves in 
the foot (and potentially making the situation worse).

As it is, we may have the worst combination of arguments being presented 
when, in fact, something must be done quickly to prevent the sclerosis 
that we all fear.  My concern is that we'll end up spending a huge 
amount of money to buy some of these bad loans and so forth, but it 
won't make a dent in the problems of foreclosures or credit card debt or 
....

We'll see, I guess.

Thanks again for your long comments.  I've missed your essays.  :-)

Cheers,
Scott.