UNRESTRICTED POWER TO PAULSON

In addition to the President having virtually unlimited power under the mantle of fighting terrorism, the Secretary of the Treasury is asking for virtually unlimited power under the mantle of fighting another Great Depression. I've been puzzled about how these 100s of billion of dollars is going to help. As Paul Krugman put it,

I hate to say this, but looking at the plan as leaked, I have to say no deal. Not unless Treasury explains, very clearly, why this is supposed to work, other than through having taxpayers pay premium prices for lousy assets.

As I posted earlier today, it seems all too likely that a “fair price” for mortgage-related assets will still leave much of the financial sector in trouble. And there’s nothing at all in the draft that says what happens next; although I do notice that there’s nothing in the plan requiring Treasury to pay a fair market price. So is the plan to pay premium prices to the most troubled institutions? Or is the hope that restoring liquidity will magically make the problem go away?

Atrios also finds this plan to be inadequate for pretty much the same reason: buying lousy assets at REAL market prices isn't going to help fight the Crunch, buying them at inflated prices without giving the taxpayers an equity stake in the institutions is theft.