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There’s already much debate about the merits of the administration’s plan to clean up toxic assets, but one person I spoke with – a well-connected Democrat representing a big investment firm — was absolutely crystal-eyed about the fundamentals:
Even as details are being worked out, he saw ample opportunities for his firm to make huge profits. Banks, hedge funds and other investors that take part in the plan cannot lose money, thanks to the government’s support and guarantees. Taxpayers, he said with a mix of regret and satisfaction, were getting shafted again.
Paul Krugman has it just right:
For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.
Incidentally, try to imagine if the Bush administration had floated this plan. Is there anyone from the liberal blogosphere who wouldn’t be denouncing this as a Wall Street giveaway? Particularly given the architects of the Obama administration’s plan? As Frank Rich wrote:
“Given that Summers worked for a secretive hedge fund, D. E. Shaw, after he was pushed out of Harvard’s presidency at the bubble’s height, you have to wonder how he can now sell the administration’s plan for buying up toxic assets with the help of hedge funds. It will look like another giveaway to his own insiders’ club. As for Geithner, people might take him more seriously if he gave a credible account of why, while at the New York Fed, he and the Goldman alumnus Hank Paulson let Lehman Brothers fail but saved the Goldman-trading ally A.I.G.
More from Ken Silverstein:
Perspective — October 23, 2013, 8:00 am
How pro-oil Louisiana politicians have shaped American environmental policy
Postcard — October 16, 2013, 8:00 am
A trip to one of the properties at issue in Louisiana’s oil-pollution lawsuits
Percentage of G.O.P. House and Senate members in an April 2006 poll who believed humans are causing climate change:
Bees can remember human faces, but only if they are tricked into thinking that we are strange flowers.
“All I saw,” said a 12-year-old neighbor of visits to the man’s house, “was just cats in little diapers.”
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“I hope that after reading the following pages the leaders of the Y. M. C. A. will start a campaign to induce good young men to do nothing. If so, I shall not have lived in vain.”