View Full Version : Bailout questions answered by the GREAT.....

09-29-2008, 01:00 PM
Paul Krugman

Iím being asked two big questions about this thing: (1) Was it really necessary? (2) Shouldnít Dems have tossed the whole Paulson approach out the window and done something completely different?
On (1), the answer is yes. Itís true that some parts of the real economy are doing OK even in the face of financial disruption; big companies can still sell bonds (and have lots of cash on hand), qualifying home buyers can still get Fannie-Freddie mortgages, and so on. But commercial paper, which is important to a lot of businesses, is in trouble, and Iím hearing anecdotes about reduced credit lines causing smaller businesses to pull back. Plus thereís a serious chance of a run on the hedge funds, which could make things a lot worse. With the economy already looking like itís headed into a serious recession by any definition, the risks of doing nothing look