Paulson & Detroit

[Ma'ake]

Given Paulson’s (now apparent) hesitance in buying up bad debt on Wall Street, I wonder if they’re hoping to blunt the worst part of that problem just by flexing muscle, having the credible “threat” to apply a lot of resource, if need be. Since a sizable part of the market’s behavior is volatility based on emotion, the backstop might help steady that front. (We’ll see).

Detroit – whatever these guys ask for, *maybe* give them a fraction, in exchange for some equity, force them to make dramatic changes to their game. Has to be a loan, not just a gift. We bailed out Chrysler in the 80s and it worked pretty well, but Lee Iacocca ran that ship and made it work.

The credit card companies don’t deserve much help, IMO. They’ve been making bank for years on high rates. The sheer amount of $$ involved scares me, though.

Micro self-interest provides the muscle to drive the economy very well, but along with the mortgage debacle, this credit card iceberg is another indication that intelligent, measured management & regulation of this engine is a must at the macro level. How did these institutions get so far out on a limb? They certainly had the noodle-power to avoid this, but not the self-discipline to step away from the trough of greed.