Calc. Risk — “Paulson Plan: Will it Work?”
by Tim Manni
Our friends at Calculated Risk posted a very interesting piece yesterday which discusses the primary proponent behind Paulson’s plan, asking and attempting to answer the simple question, “Will it work?”
Will the plan achieve the primary goal? I think the answer is yes. By removing these troubled assets from the balance sheets of the financial institutions, the banks will able to lend again without lingering doubts about their solvency and viability. At first glance, the size of the plan seems sufficient.
It is almost guaranteed that there will be unintended and unanticipated consequences, but the plan will probably achieve the primary goal. And making sure the banks continue to lend will minimize the impact of the credit crisis on the general economy.
Unfortunately the Plan fails to address the secondary goals…
