Detoxification

Early next week, the Obama Administration will roll out its plan to buy up those nasty mortgage-backed securities blamed for bringing the credit markets to a grinding halt. Apparently, the Treasury Department will push for public-private partnerships to sop up the toxic soup. From the New York Times:

The Treasury Department is expected to unveil early next week its long-delayed plan to buy as much as $1 trillion in troubled mortgages and related assets from financial institutions, according to people close to the talks.

The plan is likely to offer generous subsidies, in the form of low-interest loans, to coax investors to form partnerships with the government to buy toxic assets from banks.

Wall Street Journal

*Updated March 21, 9:49 a.m.: Paul Krugman digs into the details and finds the plan seriously wanting:

And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess.