The problem, however, is that the problem has become too big and needs to be solved fast. We're talking $700 billion that's needed . . . and remember, it was big news when Warren Buffett was able to pump $5 billion into Goldman Sachs earlier in the week.
There's simply not enough private capital out there -- with people willing to sink it immediately -- to solve the problem. And make no mistake. If the markets crash and borrowers remain unable to access the credit markets because the markets lack liquidity, the problem will spread to every sector of the economy. Everyone will be hurt.
Anyone who (like me) worries about the "creeping socialism" that the Paulson plan may represent needs to remember the aftermath of the first Great Depression. That's when the modern administrative state and previously unheard-of powers for the federal government came into being. Does anyone think that if we encounter a second Great Depression -- especially coupled with an Obama presidency (how, exactly, does McCain make the case for himself this fall if his party scuttles the deal?) -- that we're not going to see even more socialism than the Paulson plan represents?
Again, I salute the House Republicans' commitment to principle. But they need to tread very carefully here. It would be wrong to allow our economy to collapse -- and (just to put it in terms that make sense to politicians) politically suicidal for some conservative Republicans, who will risk being marginalized.
A deal needs to be done today.