BERNAKE, PAULSON URGE SPEEDY BAILOUT reads the headline right now at MSNBC.
Speedy. Gotta do it. Right NOW.
But why? I find myself influenced by today’s NYT op-ed:
With all due respect to Mr. Paulson, who is widely regarded as a smart and fine man, we need to slow this process down. We got into this mess by handing out mortgages like lollipops to people who paid too little attention to the fine print, who in many cases didn’t understand it or didn’t care about it.
And the people who always pretended to know better, who should have known better, the mortgage hucksters and the gilt-edged, high-rolling, helicopter-flying Wall Street financiers, kept pushing this bad paper higher and higher up the pyramid without looking at the fine print themselves, not bothering to understand it, until all the crap came raining down on the rest of us.
Yes, the system came perilously close to collapse last week and needs to be stabilized as quickly as possible. But we don’t know yet that King Henry’s fiat, his $700 billion solution, is the best solution. Like the complex mortgage-based instruments at the heart of this debacle, nobody has a real grasp yet of the vast implications of Mr. Paulson’s remedy.
Obviously, we need to move fast. But not so fast that we make a bad situation worse. And certainly not so fast that we reward those who precipitated this mess in the first place. When you consider that the people who got us into this mess are largely the people who are now advocating a "no strings attached" bailout, you should err on the side of caution. Expedited caution.
UPDATE: Matt Yglesius wonders why Paulson needs all $700 billion this week, since he can’t possibly spend that much even by the end of October. So why not give him some, monitor how it goes, have a second stimulus later, etc…..