Rethinking the financial bailout

I was inclined to reluctantly support the financial bailout because the AIG and Fannie and Freddie bailouts were engineered pretty well and while taxpayer dollars were put at risk, it was still plausible that we would get a return on our investment. (We received an actual stake in the institutions.) I therefore was inclined to trust Paulson and Bernanke on this one. The details of this one, the mother of all bailouts, are starting to sound really bad and needlessly generous. Our minimun standard should be saving the economy in the cheapest manner possible.

Here is some early commentary on this.

Paul Krugman says No Deal to this deal.

Brad Delong lists some potential deal breakers.

Sebastian Mallaby, worringly, calls it A Bad Bank Rescue, and gives some plausible (cheaper) alternatives.

So, yeah, I am starting to think this could become a huge mistake. Let's hope the Democratic Congress pushes back and improves this thing.