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Can Their $700B Rescue Plan Do the Trick?

Experts say action is needed, but doubt if it will be enough

By Wesley Oliver, Newser Staff

Posted Sep 21, 2008 1:49 PM CDT

(Newser) – Forget white and blue: Uncle Sam is all red these days after swallowing hundreds of billions in bad mortgages and coughing up billions more to save strapped businesses. As the Feds strategize a solution to the mess, experts are unsure if the plan will work and how much it’ll cost taxpayers, Peter Goodman notes in the New York Times, though there "is wide agreement that a broad intervention is necessary."

“We’re deep into Alice in Wonderland’s rabbit hole,” said a Princeton economist. The Treasury’s intention to spend as much as $700 billion on the tainted mortgages, and then sell what it can, “ameliorates” the crisis “very substantially,” the economist added. But another said, “It’s not enough,” conceding, though, “it’s the first time they have done something that makes a difference.”

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Officials in Washington are devising a plan to buy hundreds of billions of dollars' worth of bad mortgages in a bid to save the struggling American economy. (AP Photo/Pablo Martinez Monsivais)

Treasury Secretary Henry Paulson is spearheading Washington's effort to deal with the US mortgage crisis. (AP Photo/J. Scott Applewhite)

"It's easy to forget amid all the fancy stuff%u2014credit derivatives, swaps%u2014that the root cause of all this is declining house prices," said a Princeton economist. (AP Photo/Rich Pedroncelli, file)

Officials in Washington are devising a plan to buy hundreds of billions of dollars' worth of bad mortgages in a bid to save the struggling American economy. (AP Photo/Pablo Martinez Monsivais)

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As the details of the government’s plans are hashed out, no hallelujah chorus is wafting across Washington, down Wall Street or through the glistening condominiums of the nation. - Peter S. Goodman, the New York Times

The financial crisis gripping the United States is the direct outgrowth of the speculative orgy in real estate that began early this decade. - Peter S. Goodman, the New York Times

You’re witnessing a sudden death instead of a slow bleed. - Jared Berstein, the New York Times

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Can Their $700B Rescue Plan Do the Trick?