The man has found God, or at least the right way to deal with the banking crisis.

Just about every economist who supports bailing out the banks thinks that taking an equity stake through a direct infusion of capital is the way to go. While Secretary Paulson had pushed for his buying bad assets approach, he is now playing Hamlet and flirting with the idea of going the equity route.

This is not the time for high school drama. Doesn't Paulson remember his comments from the last two weeks when he told us that the economy would collapse if Congress didn't act immediately? Those statements were not true, and obviously Paulson didn't believe them, since it has now been a week since he got his bill and we still don't have even the outlines of his plans for buying bad assets.

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I don't want to pick fights that are not really there. I know that Tom sees the right as pushing class biased policies, and agree completely that this is the issue.

However, I don't think the point is always clear to readers that the right is not anti-government, they are just against government policies that help the vast majority of middle class and poor people. I think it is important to emphasize the distinction perhaps a bit more than Tom does.

[My book on this topic seems to have been left off the great book list down below, but you can get a free download of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer.]

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The British government announced this morning that it is bailing out its banks by directly injecting capital through the purchase of preferred shares. It announced that the banks will suspend dividends and that top executives will get pay cuts.

This is what many economists advocated be done in the United States, but apparently the Bush administration never considered this route. We'll see which bailout works better.

Tom has written a great book that should help drive more nails into the coffin of the conservative movement. Unfortunately, I'm afraid that he doesn't quite put the stake through the heart, which is really what we have to do with this monster.

The problem is that Tom still accepts too much conservative rhetoric at face value. Conservatives do not dislike government or want small government. They just dislike government policies that are designed to help the bulk of the population. They want the government to redistribute income upward and they are happy to have a government that is as big as necessary to accomplish this task. The stuff about small government and leaving things to the market is just pretty rhetoric they use to fool the kids (i.e. us).

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According to the Washington Post, after the initial defeat of the bailout package in the House last Monday, Treasury Secretary Henry Paulson went to see President Bush in the White House. The Post reports that President Bush asked Paulson about "Plan B." According to the Washington Post, Paulson told Bush "there is no Plan B."

Of course this was not true. Paulson could have easily designed a bailout plan that was centered on the direct infusion of capital in the banking system, as was suggested by George Soros in a Financial Time column later in the week. Virtually every economist who has written on the bailout argued that a direct infusion of capital is a far more effective approach to dealing with the financial crisis than the approach outlined by Paulson.

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