Tuesday, September 30, 2008

A New Deal, or a New New Deal?

Certainly the second must be in the bill. I don't think you can have a new New Deal until after the Obama administration takes office. Clearly Bush and Paulson are not going to support such a thing. Since the bail out can't wait a new New Deal can't be included at this time. But the real problem with the Paulson bail out is the transformation of pretend money into real money. It would buy assets from banks at greater than market value. These assets probably won't regain the value paid for them. So money will be lost. The money to buy these assets will come from foreign banks. The American government will have to pay this money back to the foreign banks at some point in the future. A securities turnover excise tax would raise the money to do this without taking it from other sources. So this must be a necessary part of any bill that passes.
About Henry Paulson
Read the Article at HuffingtonPost

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