> 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.
I don't think it's so odd: he's not saying "it is a failure" but rather "if you follow the logic, it *can't* work" ... geeze, you sound like GW when he says "You can't say we've lost the war until we give up and leave" ... but okay, you get what you're looking for: we are _for sure_ going to follow this road for a while, so we'll get to see how it goes.
>> 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.
Will it do it more efficiently and effectively than, say, the accounting changes that led Wells Fargo to reconsider buying Wachovia? Because I'm all for a strong bank seeing the wisdom of mopping up a fucked one because there's money to be made in the margins of tax policy.
>> 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?
Why do you presume that not doing TARP would necessarily involve punishing us?
>> 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?
Where are you getting this certainty of doom?
You really think that TARP has now saved us from "everything going under" ...?
---
John Thornton wrote:
> I hadn't read Krugman in a few weeks until this last Sunday but his
> words of Oct. 2nd pretty well sum up my feelings with regards to TARP
> ...
Sure, but by then it was too late: he's being a realist when he says "I hope it passes, because now not passing it would be worse" -- but that doesn't mean he's changed his mind about whether he thinks it will work. The political reality is that this is the bill that was put up, and this was the bill that the market has now placed its hopes on. So sure: passing it was better than not passing it.
But it does seem that there was a time earlier when it could have gone differently. What happened there should be studied, because it's likely the issue will come up again sometime soon, and there'd better be answers by then.
One good thing about the bill-as-passed: it's a phased approach, and initial experience (and even an election) may allow for a mid-course correction. It's the only bright spot in an otherwise dismal event.
/jordan