Wall Street Meltdown and Bailout

Do we really know what the risks are and the best course of action ? According to Treasury Secretary Paulsen and Fed chair Bernanke, it’s a crisis and we have to move with utmost haste.

Mr Paulson told the Senate Banking Committee that the personal savings of US citizens are at risk if the rescue plan is not implemented.

The Treasury wants unlimited authority to buy back the bad debt that is clogging the financial markets.

Fed chairman Ben Bernanke has backed him by saying urgent action is needed.

Not so fast. I know it’s not just me, because there is lots of unease about the Paulsen plan, and some aspects are a clear nonstarter.

Let’s look for another opinion over on Talking Points Memo. Interesting post there linking to David Cay Johnson.

The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?