jstratt

Why The Paulson Plan Won’t Work

Excellent article! I enjoyed your perspective.

When I heard Paulsen tell congress that they just had to authorize a blank check and he couldnt tell them what he would do he lost my support. It is crazy to just hand over $2000 for every citizen with no true plan that you can articulate.

I think it is possible to bail out the system without a huge long term cost to taxpayers. However it is just as easy to inject money into the system which is lost forever with additional risk added on.

You bet the government needs an equity stake! My guess is the government would do best to start small by gathering investors and supporting assets they think are good buys with a passive equity stake.

If hedge fund A is willing to buy 100 with a 5% upfront government support... go for it. Get the ball rolling with investors to create interest.

Some serious dangers to avoid include using 100% government money to by huge positions from WaMu, Leh, Merrill, BAC...

Finally I suspect Paulsen has a plan for 700 billion. He just wasnt willing to reveal it. At least I hope so.

PS I still want pounds of flesh!!!