December 10, 2007
And for the Rest of You…
…a nice lump of coal in your stockings. James Howard Kunstler on the Bush-Wall Street (or do I repeat myself?) plan to clean up the subprime mess:
Anyway, this argument is academic because the Hope Now Alliance is just a political sham. The purpose of it is not to save the hapless occupants of over-leveraged houses, but first to buy a little more time so that the worker bees in the financial industry can justify awarding each other multi-million-dollar Christmas bonus packages, and second, to postpone the "workout" of all this bad investment as far into the future as possible.
Posted by Jerome Doolittle at December 10, 2007 05:05 PM
Paul Krugman does some back of the envelope calculations in his blog -- http://krugman.blogs.nytimes.com/ -- to estimate how small an effect the Paulson plan will have. "So we’re almost surely looking at less than $10 billion in losses avoided [and]estimates of subprime losses to investors are currently running in the $300 -$400 billion range." The White House gets the appearance of action without violating the sanctity of the market. And as you point out, a few extra millions to mop the sweaty brows toiling in the engine room of finance.
A bag of coal may not be such a bad gift these days, given the price of heating oil. There are lots of supplemental coal stoves around here, near the anthracite mines, and some coal-oil convertible furnaces.