On Oct 6, 2008, at 3:56 PM, James Heartfield wrote:
> it won't work
Who knows? It's odd to see someone as sophisticated as Krugman pronounce it a failure less than a week after passage without the Treasury having bought a single asset.
> it avoids addressing the underlying problem
What's the underlying problem? If it's lots of bad assets on bank balance sheets, the program will address that directly. if it's renegotiating the underlying mortgages, that's going to happen, though it'll take some time.
> it rewards the institutions that created the problem
We don't know that that will happen. Besides, should we punish ourselves to avoid rewarding them?
> it increases moral hazard
That could happen, but it doesn't have to. Paulson will be gone in three months - who knows what a new admin would do?
> it is more of the same extension of credit that fuelled the problem
> in the first place
So the answer is to follow Andrew Mellon and liquidate, liquidate, liquidate?
> it deepens the US economy's dependence on credit
See above.
> it puts off the problem to tomorrow
Not sure what that means. If it means that it's going to take time to work through this, I couldn't think of anything more obvious. If it means we should have a depression today for some Calvinist moral reasons, count me out.
> it damages the credibility of the US economy
> it damages the credibility of the US government
> it damages the credibility of the US financial sector
And allowing everything to go under wouldn't?