Some reaction around the web to the Bush administration's latest bout of socialism. Bryan Caplan:
If a Democratic president were backing a $700B bail-out, I have to think that Republicans would be crying "Socialism!" But if a Republican president does the same, the bail-out's natural enemies keep silent out of loyalty or in-group bias. It's a lot like the contemporary Republican reaction to Nixon's price controls - if our boy is doing it, how bad can it be?
Hmm. Conservatives abandoning all principle and intellectual honesty because of Republican in-group bias? Couldn't happen in America in the 21st century, could it? Mark Thoma:
To me, what's important is to get this rescue in place as soon as possible, to compensate taxpayers for any risk they are assuming, and to be sure that if the bailout does cost money, that the people who did nothing to cause the crisis and who did not benefit from it are insulated from paying for it. The particular mechanism for extracting payment for the bailout is less important and will likely be dictated by the politics, some solutions will be more politically viable than others.
1. We are not "giving" people anything. We are taking money from taxpayers and spending it on other taxpayers. Again, I feel like I need to say that to keep my libertarian union card.
2. Bernanke and Paulson don't think of what they are doing as charity. It's more like an entrepreneurial business, where they intend to buy what they think are undervalued mortgages assets, which they believe they can finance profitably.
They may be right, but if they took their business plan as written to any bank or VC, they'd be laughed out of the office. The plan is utterly vague, untested, and there is no proof that they have or can find the executive talent needed to run a pilot program of this kind, much less scale it up to $700 billion.
Count me in too, among those screaming "no!"
In an effort for transparency, I'd like to see a website that listed each transaction purchased by the government. This could list the details of the asset, the PAR value, the selling institution, the underlying characteristics, the originators of the loans, the price the government paid (and eventual sold the asset for) and any other relevant detail.
Let’s not be railroaded into accepting an enormously expensive plan that doesn’t seem to address the real problem.
(Photo: Bruno Vincent/Getty.)