Krugman: Does it really take $700 billion to create “price discovery”?
Good question from The Shrill One:
Here’s the thing to notice: this isn’t what we know Paulson is thinking, it’s an attempt to infer, based on very few clues, what Paulson might be thinking. Why doesn’t he just tell us? The two striking things about the Paulson push since last Friday have been (1) demands for complete discretion, with zero accountability and (2) a complete refusal to explain the theory of the case — to explain why this thing is supposed to work, so that we can have an open discussion of whether he’s right.
No more taking this administration on faith — and Paulson’s performance over the last few days has made it clear that yes, he is a Bush administration official, with the trademark inability to take responsibility for his own actions. Explain what you’re doing and why — or get out of the way, and let Chris Dodd and Barney Frank write the plan.
A further thought: This “price discovery” stuff is, when you think about it, closely related to the face-slap theory of central bank intervention. And $700 billion is a lot to pay for slapping markets in the face, yet again.
OK, maybe, instead of slapping them, we could try the grapefruit approach?
Krugman for Treasury Secretary!
NOTE No, I'm not holding Cagney up as a role model...