A Bridge Loan Or A Pier Loan?

It’s called a "bridge loan" not a "pier loan" because it gets you somewhere you’d like to be. 

The Wall Street Journal had an interesting article describing a round-table meeting of some great minds on the current financial crisis.  Apparently during the meeting they polled the panelists.  Anyway, this quote jumped out at me:

Yale’s Macey seemed to be a “no” (the votes were cast electronically) as he drew a distinction between successful bank bailouts, like that of Sweden in the 1990s, and unsuccessful ones, like Japan, also in the 1990s. A successful bailout clearly identifies who is getting bailed out and exactly how the bailout would save the system, he said. In Macey’s estimation, Paulson’s plan to buy up masses of mortgage securities is too vague to succeed. It isn’t clear who is benefiting, bank depositors, or bank management, or mortgage holders, he said, and the plan fails to directly ensure liquidity and solvency for financial institutions.

I agree with Macey; this $700BB proposal just seems too random and vague.  Where are the Ross Perot style charts that show how this will work?  Reminds me of that book, The Shock Doctrine, by Naomi Klein.

If Wall Street were a company and the US Government was their venture capitalist then this would be a scenario where the VC would dribble out money in a month-to-month bridge loan until such time as the company could show a clear path to stability/growth.  There is no way a company could (or should) raise a large round of financing (at any valuation) in a large crisis.  Congress should take a similar approach and fund Wall Street month-to-month and not in one giant $700BB tranche.