I am suitably chastened
But when Henry Paulson, the U.S. Treasury secretary, announced his plan for a $700 billion financial bailout, he rejected this obvious path, saying, “That’s what you do when you have failure.” Instead, he called for government purchases of toxic mortgage-backed securities, based on the theory that ... actually, it never was clear what his theory was.
Meanwhile, the British government went straight to the heart of the problem — and moved to address it with stunning speed. On Wednesday, Mr. Brown’s officials announced a plan for major equity injections into British banks, backed up by guarantees on bank debt that should get lending among banks, a crucial part of the financial mechanism, running again. And the first major commitment of funds will come on Monday — five days after the plan’s announcement.
At a special European summit meeting on Sunday, the major economies of continental Europe in effect declared themselves ready to follow Britain’s lead, injecting hundreds of billions of dollars into banks while guaranteeing their debts. And whaddya know, Mr. Paulson — after arguably wasting several precious weeks — has also reversed course, and now plans to buy equity stakes rather than bad mortgage securities (although he still seems to be moving with painful slowness).
So, his initial claims about taking a global leadership role are looking a lot less like grandiose hot air. Which is why I've been rather regretting this post. Not because I feel bad about being nasty about Labour, obviously. But I think I may have made myself look a bit of a tit.
(Vince Cable would have done it better and sooner, though.)
Update: Commenting on the Krugman award, John Quiggin clues me in to what may be the most exciting thing I've heard this year:
Confirmation of my long-held suspicion that Crooked Timber was somehow a big, happy conspiracy devoted to providing stuff I wanted.
Paul has generously agreed to take a part in a CT seminar on the work of Charles Stross, which should be published in the next month or so.