Tentative cheer: Paulson may have been dragged kicking and screaming into doing the right thing to rescue the financial system.Thus Paul Krugman -- and the right thing by his lights? "Taking ownership stakes in many United States banks."
So now Uncle's goin' partners with the mugs -- and the people's elite friends are delighted. In greater deeper pwog-space it's all about properly managing the bail. Like in this case using the "Swedish model" -- where Uncle makes an equity play and gets a little upside potential on his dime.
Okay, so that's better than just transferring the toxic shit onto Uncle's books, and full-face dollars to the Street creeps. But look, gang, whatever the form here, the headline still reads: WALL STREET HEGEMONY SAVED! Orthrian two-headed rule means any real bypass operation shall not pass.
Oh, and that "Swedish model"?
The original equity bail in Sweden circa 92-93 was a pure lemonade maker. Only sick-ass banks got bought into, and run from the gubmint corner office.
Jacob Wallenberg, the curly-topped super-saurian in the silk suit above, a man of means and global connections, got to keep his private bank all to himself.
Here's another nice turn, from another pwog who has ideas about "managing" the crisis. The Mephisto-like Greg Mankiw sez, in effect, that yup, equity from Uncle is the only way:
"Other economists have suggested that the government inject capital itself. That raises several questions. First, which firms? The government does not want to put taxpayer money into “zombie” firms that are in fact deeply insolvent but have not yet recognized it. Second, at what price should the government buy in? Third, isn’t this, kind of, like socialism? That is, do we really want the government to start playing a large, continuing role running Wall Street and allocating capital resources? I certainly don't.What a miracle -- an Immaculate Injection!
Here is an idea that might deal with these problems: The government can stand ready to be a silent partner to future Warren Buffetts.... Whenever any financial institution attracts new private capital in an arms-length transaction, it can access an equal amount of public capital. The taxpayer would get the same terms as the private investor. The only difference is that government’s shares would be nonvoting until the government sold the shares at a later date.
This plan would solve the three problems. The private sector rather than the government would weed out the zombie firms. The private sector rather than the government would set the price. And the private sector rather than the government would exercise corporate control."