ongress passed, and President Bush signed, the $700 billion plan to save our economy, said the New York Daily News in an editorial, but “our fates are decidedly uncertain.” Implementing the “ill-conceived” plan now falls to Treasury Secretary Henry Paulson, who "is certain to overpay” for the toxic mortgage-backed securities that are clogging up the credit markets.
If he doesn’t pay more than market value, the bailout probably won’t work, said Chadwick Matlin in The Big Money. But we won’t know the plan’s details until Paulson tells us, “two days after the first troubled assets are purchased.” There are some good reasons for this lack of detail—but there’s also the “nagging thought” that “Paulson himself doesn’t yet know what he’s going to do.”
Well, “the devil is in the details,” said Robert Litan in The Atlantic online, but in the short term we’ll be able to tell how effective the bailout is by looking at the “TED Spread,” or the difference between interest rates on inter-bank lending and safe short-term government debt. If the TED narrows, this “riverboat gamble” will be off to a good start.
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