EDITOR OF REDSTATE
Fire Sale On Wall Street
It is becoming abundantly clear that if the Paulson Plan does not pass by market close on Friday, the world will be a very different and more unstable place come sunrise Monday morning.
The credit market is crashing. There is not enough credit in the market right now. Come Monday, if Wall Street does not have the assurance of a workable plan, the nightmare scenario that there may not be enough credit to get paychecks cashed next week may very well come true.
That is not hyperbole. That is an accurate reflection of existing facts on the ground. It is a very real possibility.
Conservatives are opposed to this plan. But there are too many distractions conservatives are tossing out like “mark to market accounting”. These distractions will not solve the problem.
If the Republicans cannot offer up a real alternative, and the McCotter plan and all other plans taking equity ownership in financial institutions are even more unacceptable than the Paulson plan, the Paulson plan is what we must consider.
If we do nothing by Friday evening, the world’s financial markets could burn on Monday — a massive market crash, the freezing up of credit, massive unemployment, etc. In a better world, the Paulson plan would pass with no add ons and with the assurance that the purchased securities would be purchased based on their present value, not over valued. The companies that made the bad deals would die. Buying the securities overvalued would not only drag out a recession for a decade, but would just roll the ball down the road to be dealt with again at a later date.
Because it does not seem likely that the Paulson Plan can pass in a way to ensure there are no overvaluations of securities and no Democratic add ons, the GOP should vote against the plan. It would, in fact, be better to let the markets burn than socialize them. New forests rise from fire. New markets can rise from a fire. But neither forests nor markets can grow when suffocated.