Krugman is fairly satisfied with the bailout plan - "sufficiently not-awful"..can be fixed next year

TARP draft

So there’s a draft version of the bailout out there. Pretty much as expected. Section 113, MINIMIZATION OF LONG-TERM COSTS AND MAXIMIZATION OF BENEFITS FOR TAXPAYERS, is where the rubber meets the road — it’s where the plan says something about how the deals will be done.

As I read it, Treasury can
(1) conduct reverse auctions and suchlike
(2) buy directly — but only if it gets equity warrants or, in companies that don’t issue stock, senior debt

My view is that (1) will be ineffective but also not a bad deal for taxpayers — firms that can afford to will dump their toxic waste at low prices, the way some already have on the private market, and taxpayers may end up making money in the end. Firms in big trouble will probably stay away from the auctions. The plan’s real traction, if any, is in (2), which is a backdoor way to provide troubled firms with equity — and the bill seems to say that taxpayers have to own this equity, although I wish it was clearer how much equity will be judged sufficient.

Not a good plan. But sufficiently not-awful, I think, to be above the line; and hopefully the whole thing can be fixed next year.

Add: House staff tells me that there are significant changes from this draft. More info when I get it.

http://krugman.blogs.nytimes.com/2008/09/28/tarp-draft/

until he started showing up on Olbermann. I actualy listened to him and once he gets out of the space of partisan analysis, he's really a very brilliant man.

It's easy to get back into happy-to-read-him-land with economics.

election, Obama and a Congressional majority could vastly improve it early next year.

I'll recommend this thread so hopefully it'll get seen. Try cross posting this in GD if it isn't there already.

I've made a personal pledge to steer clear of the bailout back-and-forth over there. :hi:

Indeed. Let's hope more changes improve it. Rest assured, once Barack is sworn in, he'll fix what needs to be fixed.

them, but Wall St. pays their bills."

The American people OVERWHELMINGLY do NOT want this bailout - in any form that it's being discussed. No one in Congress with any clout is standing up for the people. NO ONE.

Warren Buffett thinks there should be a bailout, and Barack Obama thinks there should be a bailout, and the Dem Chair of the Banking Committee in the Senate thinks there should be a bailout, and both my Nebraska Senators (one a smart fiscally-conservative Dem who's not up for re-election this year, the other a smart fiscally-conservative Repub on the Banking Committee who's retiring) agree there should be a bailout...then there should probably be a bailout. For those DUers totally opposed to it, please list all the really smart people (besides yourselves) who oppose the bailout in all forms.

I'd rather be safe, and do it now, than sorry we didn't do it later on.

It's totally unfair to the individuals who made mistakes and DIDN'T get bailed out. But an unfair bailout is preferable to a collapse that leads to all of us going down in flames.

And if Krugman and Buffett think it's necessary, I'm willing to take their word for it. I'm qualified to express an opinion about whether it's fair, but not to determine whether it's necessary.

It lets the government pay more for "troubled assets" than the seller paid:
============================
(e) PREVENTING UNJUST ENRICHMENT.—In making
purchases under the authority of this Act, the Secretary
shall take such steps as may be necessary to prevent unjust enrichment of financial institutions participating in
a program established under this section, including by preventing the resale of a troubled asset to the Secretary at
a higher price than what the seller paid to purchase the
asset. This subsection does not apply to troubled assets
acquired in a merger or acquisition, or a purchase of assets from a financial institution in conservatorship or receivership, or that has initiated bankruptcy proceedings under title 11, United States Code.

============================

he's about the only person on the planet that I do trust on the issue of the bailout.

For one thing if Krugman likes it and McCain votes for it the Freepers will be displeased!

Thanks for posting this Jefferson_Dem -- please post Krugman's updates as they come.

I distrust Paulson deeply because he is Goldman-Sach's man.

I distrust this entire approach of a trickle-down bailout.

I am very interested in what Krugman has to say.

:scared:

senselessly? F**k Krugman and Buffets opinion - it's biased in CLEAR FAVOR of the UPPER CLASSES.

It's his area of expertise. If he thinks the plan will keep there from being a major meltdown, then it must be okay.

As I read it, the real problem is that the crisis has been building for a while but just went critical last week. I'd rather them quickly pass a plan that will help then go back and do a real reform plan to address the underlying causes of the crisis. A nationalization plan or forming a national government run bank would be better than this plan but would face a lot of opposition and Bushie would veto it. It will take time to sell a better plan that includes a comprehensive reform of the financial markets.