Ezra Klein at The American Prospect blog offers some good summaries of the problems with the Bush/Paulson bailout plan, and links to more necessary analysis. This, unfortunately, is the sort of thing that tends to be a done deal (and Klein’s post on Senator Dodd suggests just that), but on the off chance that understanding the situation a little better now is useful, I recommend you check it out.
As we rush our way through the bailout argument, it’s worth being clear on the distinction between losses and collapse. The crisis is not about the possibility of Wall Street suffering sustained losses. It is about the possibility of Wall Street seeing a series of firms collapse. But Paulson is conflating the two…. The problem with the bailout plan is that we’re supposed to be buttressing Wall Street against the possibility of collapse, but Paulson went a step further and constructed the government’s approach to help protect against loss….
Anyway, read up and down his recent set of posts. It’s sobering, but instructive.
[Photo courtesy of wwhyte1968]