Sunday, March 22, 2009

Son of TARP

The Wall Street Journal explains the Obama Administration's new plan to buy bad assets off of the books of banks ("U.S. Sets Plan for Toxic Assets"). Economist and New York Times columnist Paul Krugman criticizes it ("Despair of Financial Policy"), and criticizes it again ("More on the bank plan"); economist Brad DeLong defends it ("The Geithner Plan FAQ" -- Hat Tip: Matt Yglesias), and Krugman responds to Brad DeLong's defense ("Brad DeLong's Defense of Geithner").

Since this new plan is, essentially, a return to the original, rejected, tack of the TARP plan last fall, it's also worth revisiting John Hussman's objections to the original TARP plan, ("You can't rescue the financial system if you can't read a balance sheet"). I suspect Dr. Hussman will reiterate some of those objections in his market commentary this week.

2 comments:

DaveinHackensack said...

Geithner describes the plan himself, in today's WSJ: "My Plan for bank assets".

Tim Geithner said...

If the 'toxic assets' are really worth much more than today's values then most banks won't sell them.

If they are worth less than today's market values then the taxpayers get screwed again.

What could be simpler [not counting Prez. Obama?].