[lbo-talk] Jon Stewart's bailout idea

[Matthias Wasser]

Ignoring the bad incentives - which we can avoid if everyone, indebted
or not, gets the debt rebate and can put it into savings - this is a
bad idea *for a stimulus* because it's all long-term. It's basically
giving everyone a tax cut - the worst kind of stimulus - and mandating
that it not be spent.

As a way of restoring equity it might not be a terrible idea. The most
obvious problem would be that it would encourage overborrowing in the
future, but again, extending the credit to all could nix that effect,
and in any event it should be cancelled out by reduced willingness of
the banks to give out easy credit (at least relative to TARP's
incentives.)