Krugman and Simon Johnson don’t care much for this treasury plan. Any thought of debating this over at the economist with one of them?
[I would love to. I stress that this is what I, at the moment, *think* that the plan is–I could be wrong…] I think it would be great to have some good economists go over the pluses and minuses of the treasures approach to solving this issue. Krugman seems to feel that this would be a good solution is all we had was a bank run undervaluing the toxic assets rather than the toxic assets being properly valued at the current lower rate. Given how much real estate and stocks have gone down, it would seem 30 cents on the dollar would be about the right value for assets which are so complicated it is hard to figure out what the proper risks of the asset are. My take on the treasury rescue plan is that they figure either this will work or the Fed will resort to inflation to reduce everyone’s debt level.
