Friday, October 31, 2008
Paulson's Plan Making Things Worse
So I argue in a Sacramento Union piece. A sample:
When the House of Representatives failed to pass the original request for $700 billion from Treasury Secretary Henry Paulson on Sept. 29, the Standard & Poors 500 (S&P) fell about 8.8 percent. This supposedly proved how vital the rescue plan was for the health and stability of the economy. And yet on Oct. 15—-after the porked up $850-billion bill was passed—-the S&P fell more than nine percent, its biggest drop since the 1987 crash. It’s not just single-day plunges that have gotten worse.
In the year prior to the collapse of Lehman Brothers in mid-September, the average daily move (up or down) in the S&P was 0.8 percent. And yet since then, the average daily move has increased to 3.1 percent. If the government’s measures were supposed to restore calm to the markets, they have been a huge failure thus far. Many free-market economists have been warning that this would happen.
Comments:
BUBBLICIOUSNESS??
One thing that I don't understand about ABCT is what I call the "bubbliciousness problem".
Okay I can understand how artificially low interest rates lead to a bubble. But why is the bubble here and then 'over there'?
For example NASDAQ bubble, followed by NASDAQ burst, followed by Greenspan's-1%-to-the-rescue plan, followed by housing bubble.
Why wasn't there a housing bubble back when NASDAQ was blowing up? And why was that boom more or less confined to NASDAQ and the later one confined to real estate?? What makes one sector more "bubblicious" than another? Shouldn't ABCT lead to a more general boom?
Is there a theory of "bubbliciousness" in Austrian economics?
BAILOUT SLEUTH
On the 'Perils of Paulsonism' I found a great site that focuses on those 'transparency' issues about Paulsonism.
It's called "BailoutSleuth".
http://bailoutsleuth.com/
The recent story there on "Banks and Dividends" is another one of those 1930s screwball comedy type incidents about the bailout.
"We found that three banks that stand to receive $8.65 billion in government capital have actually increased their dividends this year, even as financial pressures mount."
Ouch!!
http://bailoutsleuth.com/2008/11/banks-and-dividends/
Post a Comment
One thing that I don't understand about ABCT is what I call the "bubbliciousness problem".
Okay I can understand how artificially low interest rates lead to a bubble. But why is the bubble here and then 'over there'?
For example NASDAQ bubble, followed by NASDAQ burst, followed by Greenspan's-1%-to-the-rescue plan, followed by housing bubble.
Why wasn't there a housing bubble back when NASDAQ was blowing up? And why was that boom more or less confined to NASDAQ and the later one confined to real estate?? What makes one sector more "bubblicious" than another? Shouldn't ABCT lead to a more general boom?
Is there a theory of "bubbliciousness" in Austrian economics?
BAILOUT SLEUTH
On the 'Perils of Paulsonism' I found a great site that focuses on those 'transparency' issues about Paulsonism.
It's called "BailoutSleuth".
http://bailoutsleuth.com/
The recent story there on "Banks and Dividends" is another one of those 1930s screwball comedy type incidents about the bailout.
"We found that three banks that stand to receive $8.65 billion in government capital have actually increased their dividends this year, even as financial pressures mount."
Ouch!!
http://bailoutsleuth.com/2008/11/banks-and-dividends/
Subscribe to Post Comments [Atom]
<< Home
Subscribe to Posts [Atom]