Sep 22nd, 2008 at 8:51 am
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September 22nd, 2008 at 9:10 am
Well, the two columnns are similar in that they are both critical of the plan. But other than that, I wouldn’t say the analyses are very similar. Kristol is rightly worried about accountability and transparency. Krugman is more concerned that the economic fundamentals of the plan aren’t right, that the Paulson plan only addresses to devaluation of mortgage-backed securities, and doesn’t do enough to provide the market directly with more capital. Kristol, as a Republican political operative, is also worried about John McCain, and recommends that he call for padding the bill with crowd-pleasing tokens that really have little to do with handling the current emergency.
Could I also note that no matter how this plays out, Kristol and Krugman will probably both land on their feet and have good jobs.
September 22nd, 2008 at 9:14 am
The more I read about this plan, the more cynical I am about what the real intent is. Why the rush to enact a plan which is unaccountable to anyone? What’s Paulson going to be doing in 6 months when he’s out of his job? Get another job on Wall Street? How many shares of Goldman Sachs stock is he holding, and is it a conflict of interest? If the market needs more capital, I’d rather the government directly lend the money to those who need it rather than assume those worthless debt that the banks are trying to foist onto us. If the Democratic controlled Congress rolls over and plays dead, there’s no forgiving them. I’m going to buy my pitchfork and some tar and feathers….
September 22nd, 2008 at 9:16 am
On the contrary, thank you Paulson. Suppose Treasury had hobbled together language that was not egregiously awful, just sort of OK, with some bad elements that could play out badly but were too arcane to get a majority of people exercised. Then the political impetus to take the opportunity to get it right wouldn’t exist. Be grateful the draft is crap (unless, of course, it gets passed as is, in which case I withdraw my comment!)
September 22nd, 2008 at 9:23 am
The big mistake Paulson made is asking for this much money up front. Had he asked for $100B this week, and then another $200B next month, so on and so forth, is there any doubt he’d eventually get all he thinks he needs (and more)?
September 22nd, 2008 at 9:36 am
My favorite part of the Kristol column:
I love how he says this on a page in which Krugman’s column also runs. Add to this the fact that almost NO experts outside of the DC beltway, and precious few inside, are “onfident that the Bush administration has even the basics right,” liberal, conservative, libertarian or otherwise.
This speaks more to the lack of ideological variety in the people Kristol talks to than anything else.
September 22nd, 2008 at 9:43 am
I just wanted to put the word out.
I’ve heard that mortgage funds are going to be bought for 30 cents on the dollar, to prop up the ailing institutions. As a patriotic citizen, I volunteer to pay off my mortgage at that rate right now. I’m sure other citizens would be glad to take this patriotic step too, if given the chance. I’m sure this infusion of cash, and elimination of debt-on-the-books would be a positive boon during this credit crunch.
So, where do I go to do my patriotic duty?
September 22nd, 2008 at 10:07 am
So when will see the competing Obama plan? Can’t he offer one? Why the nibbling on the edges stuff? If this is as bad as everyone agrees it is, where is the opposing bill? Congress can vote for A)the Paulson/Bush plan or B)the Krugman or ???/Obama plan.
September 22nd, 2008 at 10:26 am
“And I acknowledge that there are serious people who think the situation too urgent and the day too late to allow for a real public and Congressional debate on what should be done.”
~Bill Kristol
Okay – we all agree Bill Kristol is a genius and it’s
too late to debate that.
But what’s up with his cultish invoking of the phrase “serious
people” all the time?
September 22nd, 2008 at 10:54 am
From the Wikipedia entry on Henry Paulson:
Career highlights
Paulson was Staff Assistant to the Assistant Secretary of Defense at The Pentagon from 1970 to 1972.[6] He then worked for the administration of U.S. President Richard Nixon, serving as assistant to John Ehrlichman from 1972 to 1973.
He joined Goldman Sachs in 1974, working in the firm’s Chicago office. He became a partner in 1982. From 1983 until 1988, Paulson led the Investment Banking group for the Midwest Region, and became managing partner of the Chicago office in 1988. From 1990 to November 1994, he was co-head of Investment Banking, then, Chief Operating Officer from December 1994 to June 1998;[7] eventually succeeding Jon Corzine (now Governor of New Jersey) as its chief executive. His compensation package, according to reports, was US$37 million in 2005, and US$16.4 million projected for 2006.[8] His net worth has been estimated at over US$700 million.[8] Paulson has personally built close relations with China during his career. In July 2008 it was reported by The Daily Telegraph that: “Treasury Secretary Hank Paulson has intimate relations with the Chinese elite, dating from his days at Goldman Sachs when he visited the country over 70 times.”[9]
Nixon, Ehrlichman, Goldman Sachs, the Chinese elites, Bush — and we’re supposed to give him unfettered access to the U.S. Treasury?
September 22nd, 2008 at 11:05 am
My favorite part of the Kristol column is this: “to purchase hundreds of billions of dollars of financial assets, and hire private firms to manage and sell them, presumably at their discretion.” Who would these “private firms” be? Maybe the firms that already hold the mortgages?
This is my prediction: Treasury pays 60% of what Bank “A” thought the mortgages were worth, pays Bank “A” a 10% fee to manage the mortgages and then Bank “A” sells the mortgages back to Bank “A” for 25% of original value, all perfectly legal. Does this sound about right? I wonder if Bank “A” gets a bonus for a quick flip of the mortgages?
September 22nd, 2008 at 11:10 am
adolphus — you’re misreading the Kristol quote. He talks to a bunch of conservative experts, and they aren’t at all confident that this plan has the basics right, or that it won’t be a nightmare. Not sure how this becomes ironic when Paul Krugman writes on the same page as he does.
September 22nd, 2008 at 11:48 am
adolphus — you’re misreading the Kristol quote. He talks to a bunch of conservative experts, and they aren’t at all confident that this plan has the basics right, or that it won’t be a nightmare. Not sure how this becomes ironic when Paul Krugman writes on the same page as he does.
Krugman says “Some are saying that we should simply trust Mr. Paulson, because he’s a smart guy who knows what he’s doing. But that’s only half true: he is a smart guy, but what, exactly, in the experience of the past year and a half — a period during which Mr. Paulson repeatedly declared the financial crisis “contained,” and then offered a series of unsuccessful fixes — justifies the belief that he knows what he’s doing? He’s making it up as he goes along, just like the rest of us.”
I bet a lot of people Kristol was talking to were ideologically against regulation too. A lot of “experts” were wrong about a lot of stuff.
It’s still funny to see Comrade Paulson nationalizing large chunks of the economy and to see Goldman Sachs and Morgan Stanley lining up to be regulated more.
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