Alternative Solutions Diverge From Administration's Approach

[babylonsister]

Alternative Solutions Diverge From Administration's Approach

By Anthony Faiola and David Cho
Washington Post Staff Writers
Wednesday, September 24, 2008; Page A01


To hear Henry M. Paulson Jr. and Ben S. Bernanke tell it, there is only one plan to save the economy -- use $700 billion in taxpayer money to take the worst of Wall Street's assets off its books.

But leading economists and financial analysts argue that there are a host of alternatives that would reduce taxpayers' liabilities and perhaps more effectively address the urgent crisis in financial markets. Although these experts concede that the clock is ticking, they say other approaches have been dismissed too quickly.

While the government's plan is built around buying troubled assets, other options offer sharply different visions.

One approach seeks to reduce taxpayers' liability by offering collateral-backed loans to troubled banks, leaving them to work out their own solutions. Another idea is to have the government set up a profit-driven investment fund with the aim of infusing the financial system with cash without taking on bad debt. Still others suggest radically different tactics of directly helping homeowners by reducing mortgage principal or bolstering banks by suspending capital gains taxes.

The administration has said it is willing to negotiate key parts of its plan -- including a possible concession allowing the government to take equity stakes in financial firms in exchange for bailing them out -- but senior officials stand by the fundamental approach they have adopted to solve the crisis.

"They presented this as a comprehensive, decisive solution, but it's clearly not comprehensive and probably not decisive," said Simon Johnson, a former chief economist at the International Monetary Fund and a professor at Massachusetts Institute of Technology.

more...

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092303695.html

[aquart]

1. AND they've had this take-the-money-and-run bailout READY FOR MONTHS.

Just like with 9/11, they knew it was coming and DID NOTHING except to plan how to use it for their own political and piratical goals.

[babylonsister]

2. I read that yesterday; that's truly disgusting. I honestly

think they think they timed this perfectly to make the most of the pre-election timeframe. Maybe they weren't expecting so many complaints.

And having known about this for months, they could only come up with 3 pages for a $700B bailout? Something is very wrong with this picture. And what's the option if the bailout doesn't work?

[Inuca]

4. I did know about that

and I followed the news pretty closely. Do you have a link?

[babylonsister]

5. Here's the one I read yesterday:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=132x7156244

[Inuca]

7. We typed these replies at the same time :-) n/t

[Inuca]

6. Never mind, I just saw the other thread n/t

[Inuca]

3. I know too little about these things

to be able to have an even partially informed opinion, so I will abstain from judging the content. The one thing though that drives me nuts though is the timing. I refuse to believe that the various main actors were not able to figure out that something major is happening before it reached the point of maximum urgency (assuming that it is indeed the case, which again I cannot judge). Even ignoring the election issue for a moment, to have this thrown in COngress' lap one week before the scheduled recess smells to high heavens. And actually even this is related to the elections, the huge majority of these people have to go out campaigning, maybe they will stay a few days longer, but they cannot delay the recess for too long. So even under the most rosy scenario, whatever they decide to vote on (the chances of not voting on anything are practically zero I think) it's going to be a half baked and most likely very imperfect bill.

[Gin]

8. Last night I was listening to the News hour ( I think) and a guest

had this suggestion that other countries have used..LOAN the money...make them pay back with interest...suspend all dividend payments until the loan is repaid...and there were other things...but I thought that sounded smarter than throwing money at a BOTTOMLESS pit.