Explaining Paulson's plan better than Paulson.
TARP, Baby! Veteran Fannie Mae critic David Smith builds on Andy Kessler to explain why Paulson's "troubled-asset" purchase plan may make sense. The taxpayers could even make so much money that the governement could fund ... national health care! (Take that, Jim Lehrer.) ... As usual, Smith's post is exceptionally easy to follow for those (like me) who don't understand fancy financials. ... It's a particularly useful antidote to Krugman's critique--which seems to assume, in at least one of its forms, that the government will only pay the current, going, distressed market price for the assets it buys. Smith argues it could pay more than this going, "immediate" "market" value and still a) be driving a reasonably hard bargain, b) boost the economy by freeing up capital, and c) make money down the road. ... In part that's because the market in "troubled assets" isn't completely rational right now, something that shouldn't surprise leftish economists. In part it's because, as Smith and Kessler note, the government (unlike an ordinary purchaser) can goose the economy to make sure its "troubled assets" regain some of their value. ... Two obvious problems: 1) Goosing the economy usually means inflation. Kessler is not wildly convincing on why this isn't a threat; 2) Smith seems to assume that of course real estate will bounce back if the economy does. But why? A bubble is a bubble. A growing economy didn't bring back the tech stocks that were overpriced in the 90s--unless someone got rich off their old Pseudo.com stake without telling me. ... 5:11 P.M. link
Monday, September 29, 2008
If Nancy Pelosi had wanted to screw Sen. McCain, could she have done a better job? Just asking! ... 8:19 P.M.
Mo' Rezko: He "has been quietly visiting Chicago's federal courthouse, setting off" ... you know. ... speculation! ... [Do you really think Rezko is going to impact the election?--ed Seems unlikely. I have no inside info. But a contingency worth following.] 7:08 P.M.
McCain sure brought those House Republicans along, didn't he. They love him over there! ... P.S.: The failure of the bailout in the House today helps Obama, no? The longer economic turmoil leads the news, the longer Obama gains an advantage--at least that is the pattern so far. ... P.P.S.: Just as the vote vindicates McCain's declaration, last Wednesday, that the bailout bill was in deep trouble (despite Dem announcements of a "deal") it undermines his claim to have saved the day. ... [If the bill really was in trouble, why were McCain's actions last week a "stunt"?--ed The stunt wasn't spotting the trouble. The stunt was trying to delay the debate. Whether McCain's intervention helped or hurt the negotiations, nothing required him to punt on the debate. One bit of evidence, of course, is that, in the end he didn't punt on the debate, and did fine.] ... 11:32 A.M. link
The L.A. Daily News on its city's seeming unshrinkable downtown education bureaucracy:
Photograph of John McCain on the Slate home page by Alex Wong/Getty Images.