Monday, September 29, 2008

The Case for the Bailout

A colleague of mine told me the current proposed legislation to allow the US Treasury to spend up to $700b to purchase troubled assets from financial firms was either a "rescue" or "bailout" depending on whether you supported or opposed it.

The main editorial from the Wall Street Journal labels it a "rescue," but for Main Street - not Wall Street.

Perhaps that's the best way to characterize it - a bailout for Wall Street but a rescue for Main Street.

Here's the Journal's case for it:
it deserves to pass because in reality it is an attempt to shield middle America from further harm caused by the mistakes of Wall Street and Washington...With this vote, Congress is at last taking some ownership for the mess its policies helped to create by fueling the credit housing mania earlier this decade...We agree with those who say there are better ways to provide this public capital, but Treasury Secretary Hank Paulson's plan should do some good, and if executed properly shouldn't cost taxpayers anything close to its $700 billion showroom price.

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