Just a week after announcing that it was absolutely essential for the government to buy up all the toxic mortgages and that no other solution was possible, treasury secretary Henry Paulson has now ditched his plan and is going to (partially) buy the banks. This move effectively nationalizes them. The British government did this over the weekend and it led to a huge stock market rally in Europe. Paulson II caused the Dow Jones index to jump 936 points yesterday, its biggest one-day gain in history. While Paulson will never admit it, the plan to buy the banks was originally proposed by the liberal Democrats. However, he steamrollered them into submission and they voted for his plan because without it. he said, the sky would fall. Government ownership of the banks is a hallmark of socialism, of course. Who would have thought that the October surprise was for the Bush administration to come out of the closet and become overt socialists three weeks before a hotly contested election? The reaction of the Republican rank and file is yet to come. No doubt this subject will get a lot of play in tomorrow’s third and final presidential debate.
Paul Krugman Wins the Nobel Prize for Economics
Princeton professor of economics and New York Times op-ed columnist has won the Nobel Prize for economics. Krugman has been a vociferous and unrelenting critic of George Bush and John McCain, especially their economic policies. While Krugman got the prize for his work on the impact of global trade, this award will only enhance his prestige and increase the size of his megaphone.
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