new nobel laureate paul krugman has a new op-ed column at the new york times, lauding gordon brown and alistair darling’s quick & decisive “equity injection” plan to support british financial institutions.
meanwhile, in the blink-free-zone:
But when Henry Paulson, the U.S. Treasury secretary, announced his plan for a $700 billion financial bailout, he rejected this obvious path, saying, “That’s what you do when you have failure.” Instead, he called for government purchases of toxic mortgage-backed securities, based on the theory that … actually, it never was clear what his theory was.
but later, i think krugman gets at exactly what paulson’s theory was:
It’s hard to avoid the sense that Mr. Paulson’s initial response was distorted by ideology. Remember, he works for an administration whose philosophy of government can be summed up as “private good, public bad,” which must have made it hard to face up to the need for partial government ownership of the financial sector.
I also wonder how much the Femafication of government under President Bush contributed to Mr. Paulson’s fumble. All across the executive branch, knowledgeable professionals have been driven out; there may not have been anyone left at Treasury with the stature and background to tell Mr. Paulson that he wasn’t making sense.
heck’uva job, guys.
update: there’s a great set of quotes here from paul “kranky” krugman.
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