The Wall Street Journal reported today that Henry Paulson has abandoned his original plan to buy troubled assets from financial institutions and will now focus on the nation’s struggling consumers.
Since the original plan was crafted only a few weeks ago, this doesn’t give me that pleasant warm and fuzzy feeling that comes with knowing you’re in good hands. What has changed so dramatically in the last few weeks?
This whole situation is like the Saturday Night Live skit with the financial guru, Oscar, who just shouts: “Fix It!”
I get the sense that Paulson is making it up as he goes along. I’m all for tactical changes in real-time to ensure strategic success and ultimate victory. But what is the strategy here? It’s also not clear to me why our elected leaders are so deferential to Henry Paulson on a project of this scale. Anyway...
Economies go up and down over time. In this case, credit was too freely given, asset prices were bid up because of it, and people are unable to pay back the money they were lent. The only way to get out of this is for prices to come down and for people to scale back what they buy and what they owe.
Nobody likes a recession and it seems that nobody wants to wait for a market correction. I know I don’t. I want it fixed now. For me, the value of my 401K is half of what it was. My home value has gone down. I am somewhat worried about my job. Nonetheless, there is no other alternative we have than to be patient at this time.
I expect liberals to barrel down a government “Fix It!” path. Traditionally, conservatives have held the line on these things. Let’s hope they begin to do so again.