Paulson: Um, change of plans on the bailout money

The money bit (pun intended) comes at 1:15. It seems the Troubled Asset Relief Program will no longer involve, er, troubled assets, but rather injecting capital — which, per Slublog, sounds like a good idea to one of the very few bloggers able to comment on this mind-boggling subject beyond the level of ideological boilerplate. (Me not included.)

Notably, Paulson didn’t mention a bailout for the auto industry, which The One appears to favor. Next in line after them: American Express. The boss would disqualify people like me who supported Bailout v1.0 from leadership positions in the party going forward because of the perverse incentives we’ve created, but I’m with Megan McArdle (as usual): Why should bailing out the financial industry, whose failure would present a dire and systemic risk of failure to the whole economy, lead ineluctably to bailing out other industries, especially ones as rotten as U.S. automotive? It’s the financial equivalent of that story on pandemics that I linked in Headlines: When catastrophe strikes and resources are scarce, you think hard and choose the “essential” entities that must be saved to keep society running. The country’s credit industry qualifies; the auto industry doesn’t. Or so it seems to this ignoramus. Read McArdle to see why a bailout won’t help GM, even if it does go through.

Exit question: Paulson insisted today that Bailout v1.0 went a long way towards stabilizing markets. Is that true or not? Whoever lost the bailout debate in September was bound to claim that the other side accomplished nothing by their action/inaction; bailout opponents will doubtless point to the enduring credit crunch and the fact that the Dow is hovering at 8300 as I write this. What makes you think things wouldn’t now be much worse if you’d had your way, though? I’m asking earnestly because I’m not sure I’m right, whereas bailout opponents seem very, very sure they’re right, which strikes me as odd given what I said earlier about there being relatively few people who understand all this.