Here’s what the genius who has come up with the plan to save us said last March.  It would be interesting to know what happened in the last 6 months that so drastically changed the situation–in other words, have they all just been fiddling while Rome burned, or is this whole thing a crock.  Why does an emergency massive bailout come out of the blue all of a sudden?  I can’t wait to read a book on this in a couple years–hopefully we won’t be in a depression by the time it comes out.

Articles after the split . . .

Paulson upbeat despite economy woes

WASHINGTON (CNN) — The U.S. economy is going through a “tough patch,” Treasury Secretary Henry Paulson said Sunday, insisting that the proper steps were being made to turn things around.
Treasury Secretary Henry Paulson says the No. 1 priority in the economic arena is to minimize instability. An upbeat Paulson refused to say whether he believes the economy is in a recession. “I’m not focused right now on what you call it,” he told CNN’s “Late Edition with Wolf Blitzer.” “We know the economy has slowed down, and the American people know it’s slowed down. So the important thing is, what do you do about it?”

A number of economists have said they believe the U.S. economy is already in a recession, which many economists define as two successive quarters of negative economic growth. A top Senate Democrat, Charles Schumer of New York, Sunday accused President Bush of having failed to act on the nation’s critical economic troubles in a way “reminiscent of Herbert Hoover” around the time of the Great Depression. But Paulson said the $170 billion economic stimulus plan President Bush signed last month “is going to make a real difference” starting in May, when the first electronic payments are to be made. The rebates will put the money in the hands of individuals in the hope that they will spend it and boost the faltering economy.

Though the country lost 85,000 jobs during the first two months of 2008, Paulson said those figures did not tell the whole story. “Remember, we had 52 months where we added jobs to the economy; unemployment is 4.8 percent,” he said. “If the stimulus package works, we will add 500,000 to 600,000 additional jobs this year.”

Home foreclosures are also up as the subprime mortgage market continues to founder, with 223,000 reported last month versus fewer than 140,000 in February 2007. But Paulson again expressed confidence. “We’ve been focused on that early,” he said, citing legislation in Congress to help 300,000 struggling subprime borrowers. Some lawmakers have said the administration failed to address the mounting problem when it should have. Critics of the new legislation believe it may not help as many borrowers as the government suggests.

Paulson said the tumble in home prices resulting from the mortgage mess is not necessarily bad. “We had a number of years where there was unsustainable appreciation in home prices — California, Florida, Arizona, Nevada — and we’re seeing a correction right now.” Paulson acknowledged that the dollar is weak, having dropped to a historic low against the euro amid inflation fears, but he downplayed its long-term significance. “Every economy goes through some ups and downs,” he said. “We are going through a tough patch right now in our economy. The long-term fundamentals are strong, and they compare favorably throughout the world.”

Paulson defended last week’s decision by the Treasury to bail out Bear Stearns, an investment bank heavily invested in the subprime mortgage market, but would not say what might have happened had the government failed to step in. “I’m not going to speculate about what-ifs,” he said. “I’m just going to say our clear priority right now — our No. 1 priority, everything we’re doing in the economic arena — is to minimize instability, minimize spillover into the real economy.” He acknowledged that the nation’s capital markets have been going through turmoil “for a while,” but described the setbacks as “bumps in the road.” “There are going to be unpleasant surprises, you’re going to find that an institution or so has problems and, when they do have problems, you work to deal with it,” he said, adding that handling the matter occupied much of his weekend.

Paulson’s positive view was countered by Schumer who accused the administration of having failed to take steps that have already moved the economy into recession.  “The president is, indeed, behaving like Herbert Hoover,” Schumer told “Fox News Sunday.”“We’re in the most serious economic problem we’ve been in in a very long time, much worse than 2001. The president’s hands-off attitude is reminiscent of Herbert Hoover in 1929, in 1930.” He added, “There is no confidence by Democrats, Republicans, leaders of Wall Street, leaders of Main Street in this administration. And it’s a real problem that builds on itself.”

Paulson defends Bear Stearns bailout

WASHINGTON: The U.S. treasury secretary, Henry Paulson, defended on Sunday the Federal Reserve’s decision to help rescue Bear Stearns, the teetering Wall Street investment bank. He sidestepped questions about whether other financial firms were on shaky ground and the possibility of additional interventions of this kind, saying, “I’m convinced that they’re going to come out of this situation very strong.”

Paulson also sought to send a calming message that the administration of President George W. Bush is on top of the turbulent situation. “The government is prepared to do what it takes” to ease turmoil in the financial system and minimize any damage to the U.S. economy, Paulson said during a series of broadcast interviews. The Fed’s intervention “was not a difficult decision. It was the right decision.”

The Fed, using a procedure from the Depression era of the 1930s, raced to the aid of Bear Stearns on Friday alongside JPMorgan Chase. Bear Stearns had made a fortune in mortgage-backed securities but faced a possible collapse after those investments soured. Wall Street plunged as fears spread about whether other big firms were in jeopardy. “When you go through a period like this,” Paulson said, “policy makers need to balance various consequences.”

Some critics contend that the Fed’s move was akin to a government bailout – something the Bush administration has repeatedly said it is against. “Well, every situation is different. We have to respond to the circumstances we’re facing today,” Paulson said. “And my concern is to minimize the impact on the broader economy as we work our way through this situation and, again, the stability of our financial situation.” The financial system, he said, is “more fragile than we would like right now.”

Bush planned to meet Monday with his advisory panel on financial markets, whose members include Ben Bernanke, the chairman of the Federal Reserve, and Paulson.