Fairness in Bailouts – Follow-Up

In my prior post on the "bailout" plan, I said: "The bill is huge. In fact, it is too big (unless it is necessary)." To the extent that I said the bill is too big, I was wrong. I was wrong precisely because it is necessary that the bill be big.

The problem seems to be confidence. A too small bill will leave a doubt as to whether enough resources are being set aside to get the job done. We need a bill big enough to convince people it will work. And that will then increase the chances it will work.

We do not know if the bill will work, but the likely results of either too small of a bill or not doing anything are worse.