The very idea of saving Wall Street while letting Main Street go down in flames is going to be a tough one to sell for many reasons. One, why should taxpayers save the Wall Street fat cats who earn those multi-million salaries? Two, what ever happened to the moral hazard thing I studied at school? Three, having to sell one's Porsche or house on the lake is not a signal of a sad event when so many regular folks are having to sell their homes at rock-bottom prices. And last, it would be nice to see some of those pompous MBA-holders seeing how the real people live: within their financial means.
Though I have never personally met Paulson (I did see him one day when he popped into my office for a visit so many years ago), the US Democratic-controlled Congress will never allow the Bush White House to ride into town and save the people. Not going to happen. The Democrats will do their very best to let this drag on until the elections.
Perhaps the US government can nationalize Bear Stearns and then, recapitalize the firm to the tune of a couple of trillion bucks and then, go out and buy up all the distressed mortgages throughout the country. This would allow good people to remain in their homes and try to work out their mortgage problems. And for those who choose to walk away, the US government can use all those homes as 'mark work projects'. Those empty homes will need to be fixed up and resold. All that work is going to help a lot of unemployed people.
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