In my little post about This American Life’s show about the economy, I didn’t mention any particulars.
But one thing that seemed clear by the end of the show was that buying up the debt wasn’t as good an idea as buying shares in the troubled banks. The show’s participants were skeptical about whether the government would overcome the will of powerful banks (and their lobbyists), who would rather sell bad debt than shares.
But somehow, our government may actually be doing what the majority of economist think is the right thing. I know. I’m surprised, too.
But at least some of the bailout money will go toward buying shares instead of bad debt. There’ll surely be bickering about how much is the right amount, but anything is better than nothing.
What’s probably more important, immediately, is that the government will temporarily insure commercial paper (short-term loans to companies). Maybe that’ll warm the credit freeze a bit and we can all have a very credity Christmas.