Yes... and no; I think it's worth remembering that Paulson, however reluctantly, is the architect here, a Bush Administration official with longstanding ties to investment banking. To call him, or his vision of this, "liberal" seems like a stretch, at best. This is a "solution" that we all generally lurched towards, mostly in desperation, and mostly because every other proposal tanked. In a matter of hours, or days. To say we got here in the smart way... I don't see it.

We also, still, don't know if this will work, or if it's the right answer. We think it is, and the markets seem to believe it... but if something goes wrong (like another bank fail), I'd say bets will come off. We still have to actually dig through the mortgage debt. We don't know how bad the books of these banks are, in large measure (and we may not for a while, if the relaxing of "mark to market" rules allows them to pretend that their debt isn't worthless).

We also haven't asked, or answered, some hard questions about what it means when governments own the banks. About owning the largest credit card issuer, or the most home mortgages. Are fovernment officials really prepared to dive in and re-regulate the inustry? We don't actually know, and I'm not sure there's a good answer here. In a better world, we'd have discussed this more fully and sorted this out more thoroughly; as it stands, we're relying on the wisdom of folks like Paulson(!), Gordon Brown(! - as in who got us into this mess?), and Alistair Darling. Reassuring? Not exactly. Liberal? Seriously? I don;t think we can, or should, call the response to the financial crisis a triumph of liberalism, both because it may well not be liberal... and we also may not have a triumph.

Where are the calls for an invesigation? When Enron and WorldCom did dirty deeds, Congress had no problem prosecuting the bad guys. Why not with these giants?

My belief is there will be no investigation because the Democrats, who run the place, will not ask for any. If they did, it would lead back to Barney Frank and Chris Dodd.

Can't let *that* happen.

But Paulson is not the architect here. he had a plan to buy mortgage-backed securities. The Democrats in Congress inserted a provision -- over his objections -- to allow for direct recapitalization of banks in return for equity (remember Krugman saying "no equity, no deal?"). The markets nearly committed suicide in response to the Paulson plan, so he moved to the Democratic plan. But that doesn't make him its architect.

Indeed, yes, but no. Yes, the folks who had the clearer-eyed public picture of what was going on were center-left liberals. No, they were not 'right' so much as that ideologues on the right were wrong, wrong, wrong. The person I know who predicted most of what happened in the CDO and CDS markets years ago is a Nixon Republican. I, who got a lot of other things right (but missed predicting money-market runs -- whew, punk rock) am a loony leftist. Being 'right' didn't mean being center-left, it meant opening your eyes and thinking things through.

As for 'profoundly socialist', in well-worn words, this carries out socialism -- on a stretcher. Real capitalists nationalize. Right now, even anticapitalists want to fix the system. Systemic collapse means widespread misery, and we loony leftists generally believe that widespread misery is bad. Real capitalists nationalize. Real leftists help them, then like good Wobblies, go back to building a new society in the shell of the old.

..and as a quiet little aside: shoo, fly. If we could all ignore the troll except to mock him for being an idiot, that would be nice.

Real trolls get a response. Idiot trolls just get mocked.

Circumstances may have forced Paulson to adjust his plan, Ezra... but the plan is Paulson's. No Democrat said "bring all the bankers in to a room and force them to take your money" as a proposal. That some liberal economists felt that direct bank investment was a better route means that Paulson may not be doctrinaire... but it doesn't make him liberal. And it doesn't make his plan... not his.

And wcw is right - what we have here is the intersection of captalists believing in taking money from anywhere in a crisis, and liberals belief in trying to minimize mass pain.

And El Viajero, sadly, is not wrong, either: there should be investigations, and we should let go where they will. I don't think it's liberal or conservative to be in favor of investigating how we got here.

..because, of course, he is wrong. Dragging frauds in front of Congress served no purpose after the tech bubble burst but grandstanding, when the real work was done by existing laws and courts. Congress's job was to repair accounting standards and corporate controls, which had nothing to do with those hearings.

Similarly, here dragging frauds in front of Congress serves no purpose but grandstanding. Congress's job is to repair regulatory standards and banking controls, which have nothing to do with any mooted hearings.

My advice next time you find yourself agreeing with an idiot troll: take a sip of water, close your eyes, take a deep breath, and think again. Idiot trolls are essentially guaranteed never, ever to be right about anything. All they want is to engage your reflexes, not your brain.

I am disappointed to be the one to tell you this one succeeded with you. Better luck next time.

Shorter wcw: "weboy's a moron for asking for an investigation into the largest and most expensive fraud on the American Taxpayer in history".

This is all fine, but the capitalists and free-marketers still get to take credit for the previous 250 years of unprecedented economic prosperity, right?

You do realize, don't you, that in this case 'liberals' do not include Feinstein, Schumer, Biden, and Obama just to name a few?

As to those fawning over Paulson, the reality was that he had to be dragged kicking and screaming:

...While Paulson and the Bush administration continued to fiddle around with their original scheme to buy toxic paper as markets around the world plummeted in response, the British, by stark contrast, “went straight to the heart of the problem — and moved to address it with stunning speed.” All of that led Krugman to ask: ”Has Gordon Brown, the British prime minister, saved the world financial system?”

And as Mark Landler’s New York Times article details this morning, Paulson was basically forced into following the British model — as well as the litany of other remedies for which Pearlstein bizarrely credits Paulson as the leader — because European governments acted first to enact them, leaving Paulson with no choice but to follow along:
...
So what is Pearlstein talking about when he gushes with praise that Paulson — who Pearlstein has been defending from the start — “has moved faster, more aggressively and more deftly than any of his international counterparts in doing whatever was necessary to stabilize the financial system”? That is just false. Economists — including Nouriel Roubini, Brad DeLong and Krugman himself, along with people like George Soros — were urging this approach long before the bail-out was passed while Paulson was rejecting it....

Show the first clue about facts and I'll bite. 'Til then, make like a nice troll and go away.

From now on I'm going to make sure to list Great Britain as a fellow liberal. ("Most liberals, including myself and Great Britain, agree that...")

i am perfectly happy to see a congressional investigation (or any other kind, as long as it is professionally done). i have no doubt that it will not find that barney frank and chris dodd caused this problem because they didn't: only true idiots mouth such moronic drivel.

and i have no doubt that god could engrave reality on tablets of stone and hand them down at sinai and pathetic little morons like el viajero will say that god is biased and the tablets are part of a gigantic liberal coverup.

how people as stupid as el viajero learn how to type and use a computer is a mystery that i still haven't solved.

as for ezra's point: not only liberals were right. as someone else mentioned above, anyone who used their brain as anything other than a receptacle for right-wing piffle could see a disaster looming (although seeing the scale of the disaster was something that only a few accomplished).

sadly, much of america had its head filled with right-wing piffle for quite some time: el viajeros are the result.

"... and will now sign into law the most profoundly socialist measure this country has seen since the 1930s"
They signed that measure 11 days ago. There hasn't been any new legislation, unless the Members have been floating around the Capitol building, passing bills, without me noticing. Paulson is using the powers granted to the Treasury with the new law, but just in a different way than originally planned, and rightly so. If the Administration could have realized this before the FIRST vote on the legislation, the domestic and world markets would have fared MUCH better (selfishly, I would have, too, because working all weekend on failure legislation ≠ fun).

Wouldn't it be better to wait to see until this plan actually changes anything before people go congratulating those who backed it? I think it's a disastrous and blatantly illegal plan, which in the long run will make things worse, much worse. I see no evidence that it addresses any of the real problems. On the contrary, it just papers them over, increases the deficit, undermines the dollar and does a lot of other damaging things.

I used to respect Krugman, DeLong et al. Not any more. I don't think they have a clue as to what to do, or understand the first thing about economics. And I don't think they really care about anything other than protecting their own personal investments, and especially the endowments of their universities which pay them so very much money. As always, liberals talk a lot, but when push comes to shove they always support the corporates.

More important than ever that people stand up to the liberal-neocon conspiracy and vote third party.

So wait - the indictment of conservative economic views comes down to a post by Powerline blog criticizing a Paul Krugman column warning about a housing bubble? Powerline, a blog by lawyers, is the proxy for conservative economics, and Krugman spoke for all liberals in his prescient warnings? And all these liberals then did nothing why?

Well put Mr. Klein. It's exactly how I see the situation.

This campaign has been hilarious. Obama dusting off his shoulder like Jay Z. Tina Fey as Palin. Conservatives hysterical over ACORN like it's some nefarious communist/scientologist cult. Phil Gramm saying the nation is a bunch of whiners, McCain saying the economic fundamentals are strong right before before we have the biggest financial crisis since the 1930s.

Ardent free marketers have been discredited.

you're wrong, ezra, about it being 'liberals' who were right. i am a liberal who's been following this disaster for years, and saw next to no 'liberal' outcry. on the contrary, as mike says above, dems were abettors. but even among commentators. krugman's warnings were mild, tentative, and infrequent, really, next to those of market insiders like bill fleckenstein (read his recent book on greenspan), marc faber, jim grant, etc. and i hate to tell you what some of their politics are. roubini describes himself as a conservative, if i remember correctly. yes, there was soros. but it has been heartbreaking to watch liberal ignorance. this debacle is something liberals missed completely.

The country has no control over how the trillion is actually spent. How is that "socialist," let alone "profoundly socialist"?

First off a Dem is not necessarily a liberal (unfortunately). Perhaps after 30 years of the free market dogma, many Dems capitulated to the now discredit free market ideology (that it can regulate itself).

Liberals, like Delong and Krugman (and props to myself) have consistently argued against unrestrained free markets. We saw this coming and unfortunately knew that it would probably take a calamity like this to final get the wingnuts to be discredited. Even after non stop writings a warnings from the like of Delong, Krugman, Dean Baker, Robert Kutner, and many many others.

Paulson and just about every other conservative economist (as well as know nothing Republicans in Congress) were adamantly against direct capital injections into banks. Paulson is in fact on record stating this. So to call TARP 2.0 Paulson's architecting acumen is to deny reality.

As far as prosecuting CEOs and other persons responsible for this mess.. What would the charges be? Unfortunately they broke no laws! Does not that indict the free market ideology itself, in that the financial system and its actors can act legally and yet bring down the entire global financial system?

The point is not how many liberals -- let alone Democratic politicians (not the same thing, as noted above) -- accurately predicted this particular collapse or foresaw how it would play out, although some came close. The point is that conservative ideology is based on a set of misunderstandings about the world, the economy, the real causes of prosperity, etc., that ensures that, in the end, conservatives are always wrong -- as further detailed here: http://conservativesarealwayswrong.googlepages.com/home

how people as stupid as el viajero learn how to type and use a computer is a mystery that i still haven't solved.

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