http://www.freep.com/article/20081126/OPINION01/811260328 Out Tuesday came the latest government effort to stop the economic meltdown, this one putting the nation on the hook for up to $800 billion more in an attempt to start credit flowing again. Will it work? Who knows?
Treasury Secretary Henry Paulson, who had lately seemed to be a man lurching from one costly solution to the next, is now counseling patience. Let's give it some time, see what happens. Keep the vault closed for a while.
Remember when $1 billion was an unfathomable sum? That seems to be pocket change in Washington these days as the government and its bank buy up bad loans, bail out badly run companies and borrow ever more money in what appears to be a frantic attempt to keep a deepening recession from becoming a depression. And the almost knee-jerk answer to every mega-billion-dollar solution is either "because we can't afford to do nothing" or "too big to fail."
(Except, of course, when it comes to the auto industry, where they can hold hearings, let huge employers twist in the wind, and insist on a plan for long-term prosperity before freeing up loans that amount to a fraction of what's going to banks, mortgage companies, insurers, etc.)
Tuesday's moves involved the Federal Reserve buying up to $600 billion in mortgage-backed assets and lending up to $200 billion to investors who have bought securities backed by consumer loans such as credit cards, auto and student loans. The premise continues to be the government taking responsibility for shaky debts so that the people who made the loans or back the loans can stop worrying and start lending again -- but more smartly now.
It's true that the government, even with a lame-duck president in his final weeks of office, should not, cannot, stand idly by waiting for a new president while the economy collapses. But is what's gone on so far really a comprehensive, long-term plan on the order of that being demanded from Detroit, or more like a fire brigade trying to blast water on blazing homes one at a time before they bring down the whole neighborhood?
The incomprehensible amount of money that has moved in recent weeks between Washington and New York is supposed to be an investment in America's future. Why does it feel more like a giant shaky mortgage?
This message has been scanned for malware by SurfControl plc. www.surfcontrol.com