Paul Krugman, as usual, wrote a clear article in the NYT yesterday about Paulson’s plan to fix the economic crisis. Paulson used to be the CEO of Goldman Sachs, one of the “big five” investment banks, so it’s not hard to assume where his sympathies lie. And sure enough, he wants to reward the people who caused this mess.
The plan is for the government to spend $700 billion to buy bad loans (mortgages) from the companies who own the loans to prevent them from going under. But they can’t sell them at low prices, i.e., what they’re really worth, because that would cause the prices to fall even further due to the huge sell-off. So the government, actually tax-payers, is going to overpay for the loans so we can pretend that we bought something that is worth more than it really is. Where does this extra money go? To the shareholders and executives of the companies, of course. I wish I could run a business into the ground, pocketing salary and bonuses along the way, and then have the government buy my company at a profit.
Democrats want time to review the plan and make changes, crazy ideas such as not allowing the thieves to benefit. Today George Bush awakened from his week-long sleep and urged Congress to stop thinking and start approving the plan. If there’s one thing you can say about the Bush administration, it’s that they always take care of their own in a crisis.
On a side note, Al-Qaeda must be laughing at us. Between the dot-com bubble and crash, Enron, Worldcom, the sub-prime mortgage mess and now the financial industry tanking, we’re doing more damage to ourselves economically than they could hope to do.