Economists are virtually unanimous in believing that the proposed bailout, TARP, buying "toxic" securities, is the wrong approach. Some think it might be the best we can do now, but that's politics, not economics. Others think the bailout would be worst than nothing at all. That's what I think.
There is no emergency. As economist Dean Baker points out, the Fed and FDIC already have the power they need to fix a true seizing up of the credit markets. Any real problem could be handled in a matter of hours. Dr. Baker also believes that TARP would be worse than nothing at all, and could itself cause another Great Depression.
Economists Brad DeLong, Nouriel Roubini, and Paul Krugman all believe that temporary nationalization of failing firms, which has been proven to work over and over, with the best example being Sweden a decade ago, would be much better than TARP.
Another approach suggested at University of Chicago is an expedited bankruptcy procedure.
As Dr. Roubini says, Congress should be getting advice and assistance from the nations top economists in this matter. Take the time to do things correctly. The long term future is at stake.
Wall Street is deliberately trying to bluff, smelling the possibility of a trillion dollars in free taxpayer money. Don't listen to Wall Street. Call their bluff.
Charles Peterson