Reaction to last night’s “bedtime story” was generally positive, but there were others who objected strongly.
Your story was pretty helpful. While there are many articles about political posturing, etc, there are very few to tell us what the heck is going on. I suspect that is because most journalists have absolutely no idea.
Here, however, is the flaw in the story. You assume that the govt will be a good steward of those properties. I foresee massive, massive corruption and inefficiency. That is why centralized, command economies don’t work in the first place. For the plan to be a moneymaker, the players would have to be incentivized correctly, and that does not happen in the federal govt. Witness, eg, the scary reports that ACORN is to get a huge chunk of change. I have been tepidly tolerant to the idea of a bailout, though not understanding what is going on. Now I am concerned at the long term consequences, and wonder whether we would not be better taking our medicine for awhile.
A reader less enamored of the post:
I’m usually a tremendous fan of yours… it’s sad to see you backing something as patently socialistic as the Paulson plan.
The idea that we ought to play the slot machines with taxpayer dollars is insane. Even IF we could make a hefty return on such a gamble, it would be no better than a crack head taking their welfare checks to play the lottery.
Actually, worse than all that is the abhorrently BAD precedent this kind of intervention would create (combined with borrowing $700B – 1.?? Trillion).
Of course, I’m probably just one of those young heathens in flyover country that just doesn’t “get it.”
Anyway, I’m just disappointed.
I just want to observe that “I think that, on balance, this plan is better than the disastrous consequences of doing nothing” is not a synonym for “the only people who disagree with me are young heathens in flyover country who don’t get it.”
Another reader observed:
– Johnny Bank, in return for taking Uncle Sam’s money, must allow Uncle Sam to be involved directly as an equity partner in that bank, until… well…we’ll get around to fixing that later. You know, like how Uncle Sam always goes away once he’s not needed anymore.
– The Irresponsible Brothers walk scot free. No penalties, no punishments, maybe they even show up down the road and try to buy the properties again. But this time they can afford it because their once $500,000 properties are now going for $250,000. It’s the American Dream!
(On the first point, I would note that the Resolution Trust Corporation actually did dissolve once it had accomplished its mission. Maybe if we establish an “RTC 2.0″ institution, we build the offices with a bomb in it set to go off in several years.)
Your fairy tale left out a critical part. Mr. Banker didn’t just go on a bender. President Saxaphone and Mr. Community Organizer kept Mr. Banker locked-up in the Community Redevelopment Cottage until he agreed to make the loans.
A lot of e-mails were inthe vein of the above one, saying what about Fannie Mae, Freddie Mac, (no storybook names needed there), what about X, what about Y, what about Z, etc. One, I would point that passing a version of the Paulson plan doesn’t mean Congress can’t take to those other issues (preferably with a budgetary meat cleaver). Two… you can’t address every angle that contributed to this mess in a bedtime story.