Good analysis of bailout

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Dave Wilson" <dave () wilson net>
Date: September 21, 2008 9:52:04 AM EDT
To: "David Farber" <dave () farber net>
Subject: Good analysis of bailout

I'm speaking solely for myself here...

Paul Krugman, an economist who writes a column for the NYT, also  
writes a blog (how does this guy get his real work done? Actually,  
Dave, how do *you* get *your* real work done :-) ?)

Anyway, Krugman has a very interesting analysis of the bailout  
proposal here:
 http://krugman.blogs.nytimes.com/2008/09/20/no-deal/
Summary: He's terrified.

With regard to a question asked Saturday (how much will this cost)  
Krugman has a diagram here:
http://krugman.blogs.nytimes.com/2008/09/20/follow-the-money/
explaining where the money will come from and how it will be used,  
that gives a better feel for how the bailout will be funded. It also  
explains why it's difficult to even estimate costs at this point,  
since the entire process is supposed to take toxic items off balance  
sheets, hold them, massage them, and then put them back on the market  
at a later point for sale. As David M. Herszenhorn writes in Sunday's  
NYT, "The ultimate price tag of the bailout is virtually impossible to  
know, in part because of the possibility that taxpayers could profit  
from the effort, especially if the market stabilizes and real estate  
prices rise." http://tinyurl.com/3rhjsj

I personally think that's wishful thinking to the point of delusion  
myself, but it's certainly true that in the past when governments have  
taken over failing companies to steady markets and later disposed of  
their assets taxpayers have technically come out ahead.






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