Don't Listen to Krugman— This Plan Might Work

Nobelist Stiglitz blasts Obama adminstration for 'perverse' program

(NEWSER) - The Obama administration's massive public-private investment plan is good news for banks, good news for investors—and bad news for the taxpayer, writes Joseph Stiglitz. In an op-ed for the New York Times, the Nobel Prize-winning economist accuses the Treasury of "replicating the flawed system" that caused this crisis, and says that the plan is "far worse than nationalization: it is ersatz capitalism, the privatizing of gains and the socializing of losses." More»

Treasury sec lays out $1T plan in op-ed

(NEWSER) - Tim Geithner caps a weekend of lobbying for the administration's $1 trillion Public-Private Investment Program in an op-ed for the Wall Street Journal, arguing that "the financial system as a whole is still working against a recovery." For the Treasury secretary, all the previous measures will fail to work without this one, since "while this crisis was caused by banks taking too much risk, the danger now is that they will take too little." More»

(NEWSER) - The Obama administration’s new plan for dealing with toxic bank assets is “creating massive moral hazard,” Paul Krugman blogs in the New York Times. The idea of providing taxpayer money to insure the purchase of possibly worthless assets is equivalent to the poor practices laid bare in the Savings & Loan scandal of the 1980s. “This is an open invitation to play heads I win, tails the taxpayers lose,” Krugman writes. "The zombie ideas have won." More»

Stress test an Obama weapon

(NEWSER) - Banks are proving so reluctant to part with their so-called “toxic assets” that the Obama administration may have to strong-arm them into doing so, Time reports. Banks are protesting that the prices being offered—about $70 per $100 bond by the magazine’s calculations—are too low. That’s part of the reason Treasury Secretary Tim Geithner decided to make the “stress tests” public, officials say. More»

Treasury's new idea would allow private investors to profit from bailouts

(NEWSER) - Responding to charges the bank bailout privatizes profits while socializing losses, the Obama administration is exploring creating mutual-fund-type instruments that would allow private citizens to invest in toxic assets. The bailout funds, akin to war bonds, would allow the taxpayers who funded the bailout to profit along with Wall Street, the New York Times reports. "It’s giving the guy on Main Street an equal seat at the table next to the big guys," said a money manager. More»