But wouldn’t that be asking the taxpayers to pony up for the financial class’s bad bets? And wouldn’t that usher in an era of unchecked government interventionism out of place in a free economy? Do we want the government running financial institutions with all the efficiency of quasi-government operations like Amtrak and the Postal Service?
The less the government runs, of course, the better. Still, here’s how Secretary Paulson put it Tuesday: “I have never been a proponent of intervention, (but) I just think we have an unprecedented situation here and it calls for unprecedented action. There’s no way to stabilize the markets other than through government intervention.”
What about limiting CEO pay?
Executive pay is too often obscene, but for the most part it is only a symbol of the greed and excess permeating the financial class. In terms of total dollars, stratospheric executive pay compared with the value of bad loans and losses in the financial and corporate communities is but a drop in the bucket.
And what about doing nothing?
We’re having this conversation at midweek, and there’s no telling what this do-nothing Congress will do. It may nibble the Paulson Plan to death like ducks, and adjourn having taken no action. Doing nothing can be a good thing, as in its inability to extend the ban on offshore drilling — in the sense that the less Congress does, the less harm it does.
But doing nothing — adjourning without approving the Paulson Plan or a modification of it — might further roil the financial markets, and crush the taxpayers even more, and lead to the collapse everyone wants to avoid.
Any final thoughts?
A Wall Street Journal editorial has perhaps said it best. Go with the Paulson Plan, and unshackle the Federal Deposit Insurance Corp. — whose power to handle failing banks Congress limited in 1991.
The Journal puts it plainly, devoid of any shamanistic voodoo:
“(The) taxpayers are being asked to save the day. We wish there were a way around this outcome, but the price of doing nothing now is likely to be far higher both for taxpayers and the cause of free markets. . . .
“While the Paulson Plan has risks in both design and execution, we support it as a way to defend the larger financial system if it can be passed in clean enough form to create a market. . . . What Americans deserve to hear is that, despite 13 months of credit turmoil, our resilient economy is still standing; that this $700 billion will be the best money Congress appropriates this year if it prevents a recession and crash.”