Wednesday, October 01, 2008

Brave, brave Sir David Cay

Most commentary on the proposed bailout falls into one of a few broad categories: flawed but the only responsible alternative; fat-cat bailout or "socialist" market maket makeover; drop in the bucket.

David Cay Johnston, in a short post at TNR, offers perhaps the smartest response I've read: practical, prudent, brave, sceptical -- and most of all, genuinely creative in that it asks some foundational questions that seem to have occurred to very few observers:

1. Are there cheaper alternatives?

2. Are there temporary measures that might keep the credit markets liquid while alternatives are examined?

3. What risks does borrowing $700 billion pose to our future, especially if the bailout is not enough to lubricate the credit markets?

4. What is the backup plan?

It's the "cheaper alternatives" and "temporary measures" that really seem to let in some conceptual daylight. It's not that any single one hasn't been proposed elsewhere. It's the frame -- what package of measures might produce an effective impact with less risk and less long-term power formally allocated to the Federal government?

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