Tag Archives: bailout

Let Greece Go to the IMF

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The members of the eurozone and the EU have apparently decided that they must heroically rescue Greece, that this is better than having the IMF do it.   Senior figures in Brussels feel that the latter alternative is unthinkable.   I am a little confused about why.   Martin Wolf writes in the Financial Times this week that to bring in the Fund  “would demonstrate that this is not a true union at all.”    But the EU and EMU and not true fiscal unions.  If the citizens of Germany and other more successful countries were willing to bail out the Greeks, then fine;  the EMU would be ready to be a fiscal union.  But they are not; so it is not.   Given that reality, what is wrong with something that “demonstrates” it? read more

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How to Make TARP Politically Acceptable: Add a Tax on Securities Transactions

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I propose that the Congressional leadership re-introduce the Trouble Asset Relief Program accompanied by a major new policy: a small tax on securities market transactions. This will accomplish the political goal of aiming a silver bullet into the heart of the (understandable) popular outrage that blocked passage of the TARP bill on Monday. It will simultaneously accomplish the fiscal goal of raising revenue in the future. This is revenue that the federal government would have sorely needed even before the bailout arose and will need even more if the taxpayer is to be protected against the risk of heavily subsidizing the financial sector. read more

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An Emerging Consensus Against the Paulson Plan: Washington Should Force Bank Capital Up, Not Just Socialize the Bad Loans

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In time of war, there is a tendency for both political parties to rally around the president, as we saw (all too well) in Iraq after September 11.In time of financial panic, there is often a similar inclination.The two presidential candidates, for example, are being careful in their statements.I don’t blame them.The issues are too complex to be taken on inside the context of a political campaign.Both candidates realize that the danger of a verbal misstep that the other side can try to blame for worsening the crisis is far greater than the likelihood that either one will come up with a brilliant solution that will gain widespread support or will solve the problem, let alone both. read more

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