From AFP today:
The 700-billion dollar Wall Street bailout plan, put together last week by the U.S. administration, would allow the U.S .Treasury to sell new debt to buy vast amounts of mortgage securities and other “toxic” assets that have clogged the financial system.
That’s just one of the 3,938 results that come up when you do a Google search for “toxic assets.”
It’s the term du jour — a clever way for Secretary of the Treasury Henry Paulson to make his mad scientist concoction seem palatable to the American people.
Like a protagonist on an “ER” episode, Paulson races to save the financial system from a fatal blockage caused by toxic assets. Will the patient make it? Paulson’s remedy is to pump at least $700 billion into the clogged system in exchange for the toxic assets. Kind of like clearing blocked arteries or administering a colonic. You provide the punch line here.
The trouble is, the taxpayers get stuck with the toxic mess. Has it occurred to anyone that this constitutes double jeopardy for Americans who already had to swallow a bad dose of subprime mortgages and then came down with a terrible rash of foreclosures? Now, they’re being asked to eat a hastily concocted Wall St. rescue, despite the fact that policymakers stood by as homeowners suffered the ill effects of the first toxic asset epidemic.
I say let’s get a second — and third — opinion before Congress rubberstamps the legislation Paulson’s trying to push through this week. We need the input of lawmakers who will make sure that the plan includes help for homeowners in danger of defaulting, those who’ve already lost their homes, and the communities suffering from the pain of empty houses draining their quality of life and shrinking their tax base.
The Chinese are getting slammed for their latest poisoning of consumer goods — melamine in baby formula. Horrifying and meriting international outrage. Lots of reasonable people have reacted to poison dogfood, toothpaste, toys, and now baby formula by saying no to Chinese products.
Similarly, Americans may well decide that Dr. Paulson’s bailout elixir may be as hazardous to the nation’s health as the assets he’s trying to purge from the financial system.