Paul Krugman’s Op-Ed – Cash for Trash

by James & Miel on September 23, 2008 · 0 comments

Given the gravity of the current financial crisis, I wanted to do a bit of follow up on James’ last post on the Paulson/Bernake bailout plan.

One of our commenters tipped me off to a fabulous op-ed piece in the New York Times by Paul Krugman, called Cash for Trash. His piece gives a very good summary of how we got into this mess and why the current plan won’t work.

The main things that I picked up from the article were:

  1. Mr. Paulson is demanding extraordinary power for himself.
  2. If the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place.
  3. This is a taxpayer-financed bailout with no strings attached — no quid pro quo on the part of those being bailed out.
  4. Mr. Paulson is also demanding dictatorial authority, plus immunity from review “by any court of law or any administrative agency.”
  5. Krugman also gives a four step view of the financial crisis.

These are the highlights, but I highly recommend checking out the full article.

Miel

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