“Is Henry Paulson a crony-communist or a businessman? The answer could be the difference between economic disaster and recovery. Understanding Paulson’s role in stopping — or fueling — the credit crisis requires a review of two axioms from Economics 101: 1) A credit crisis occurs when banks stop lending and 2) The amount banks can lend is a multiple of the capital in their vaults. Therefore, ending a credit crisis means prompting new lending — and that means maximally increasing bank capital. … If Paulson pays banks exactly what their mortgages are worth, he will not increase banks’ capital … he will merely convert one asset (mortgages) into another (cash), making no impact on the credit crisis.” [editor’s note: Sirota has this one down cold; perhaps it takes a confirmed socialist to recognize a commissar? - SAT] (10/10/08)