Bailout Won't Bail Out Bernanke

Nation needs explanation of how it will help
By Sarah Quinn,  Newser Staff
Posted Oct 6, 2008 2:42 PM CDT
President Bush shakes hands with Treasury Secretary Henry Paulson after the House passed the $700 billion financial bailout bill Friday, Oct. 3, 2008.    (AP Photo/Charles Dharapak)
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(Newser) – The economic bailout plan does nothing to address the "collapse in confidence" hammering the financial system, Christopher Carroll writes for the Financial Times. Using the example of the "Bank of Rome" in August, 79 AD, the Johns Hopkins economist argues that the plan makes as much sense as expecting that the "citizens of Pompeii will repay their mortgage loans" and calls on Ben Bernanke to step up.

Carroll points out that "buying the worthless rights to the Vesuvian mortgages for $0 would do nothing to restore the Bank of Rome to health." After blasting away at Hank Paulson (Nero, in this scenario), he points out that "some important voices have been keeping mum because of our profession’s well-justified confidence in" Bernanke, and expresses hope that the Fed chairman will pacify his fellow economists sooner rather than later.