Following up on the reviews of Tim Geithner’s latest plan, why do we keep coming back to this idea? The modalities are different. But fundamentally it’s a different twist on the original TARP idea — use government muscle (either in dollars or guarantees) to buy the ‘toxic assets’ from the banks at prices pretty close to the high prices the banks want to believe they’re worth rather than the much lower prices that a lot of economists (and let’s remember, the market) say they’re worth. So, if it’s such a bad idea, why do we keep coming back to it.
I posed this question to Joe Stiglitz back in early February. And this is what he said …
You can see the rest of our Stiglitz interview here.
Late Update: Some of the responses to this post assumed the title was a rhetorical question. Actually, it’s a real question. If it’s such a bad idea, why is the idea so persistent. Real question.
