I guess we will have to, the big problems Gov't created will need big money solutions. How often have we seen gov't having to fix problems it created? Such as "orphan drug" programs to help drugs whose development now made prohibitively expensive by excessive regulation? Or teen and minority jobs programs to help hire low-skilled workers priced out of the market by stupid and discriminatory minimum wage laws?
Gov't injecting itself in economy nothing new to us.
Most of this financial mess has been a snowball since the failure of Fannie Mae and Mac several weeks ago. The setup for that failure goes all the way back to 1968 when LBJ made Fannie private to cook the books--taking the costs off so the gov't budget looks better (but everyone understood that the liabilites remain).
But less there be any misunderstanding let's make it clear that deregulation played no role here. And no regulation is required in the future--we need to expose these lenders to the full risks.
And less there be any misunderstanding, the Great Depression was caused by two Federal Reserve banks infighting, which caused them not to print money to cover in-coming shipments of gold as rules required, and that then created a catastrophic fall in the stock of money and the Depression. This is well acknowledged and understood by all monetary economists of many political stripes. Read some of the classic academic works on it cited in this article, if you want to learn and be acquainted with the facts, history and science (a task I acknowledge as difficult for liberal democrats like Obama).
Many have warned about this coming trainwreck.
I don't like this type of "bailout"--too much of a bailout, like what socialist Sweden did in their financial crisis. The fall-back "plan B"--having Fed inject lots of liquidity (balanced out elsewhere and later so not affect inflation) and FDIC buying toxic loans and helping banks is better. How Chile handled a similar problem is also better. Here's renown economist and monetary expert Allan Meltzer on it:
"...what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them. People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans. I think that's the way -- if we're going to do this, then that's the way we should do it."
Gov't injecting itself in economy nothing new to us.
Most of this financial mess has been a snowball since the failure of Fannie Mae and Mac several weeks ago. The setup for that failure goes all the way back to 1968 when LBJ made Fannie private to cook the books--taking the costs off so the gov't budget looks better (but everyone understood that the liabilites remain).
But less there be any misunderstanding let's make it clear that deregulation played no role here. And no regulation is required in the future--we need to expose these lenders to the full risks.
And less there be any misunderstanding, the Great Depression was caused by two Federal Reserve banks infighting, which caused them not to print money to cover in-coming shipments of gold as rules required, and that then created a catastrophic fall in the stock of money and the Depression. This is well acknowledged and understood by all monetary economists of many political stripes. Read some of the classic academic works on it cited in this article, if you want to learn and be acquainted with the facts, history and science (a task I acknowledge as difficult for liberal democrats like Obama).
Many have warned about this coming trainwreck.
I don't like this type of "bailout"--too much of a bailout, like what socialist Sweden did in their financial crisis. The fall-back "plan B"--having Fed inject lots of liquidity (balanced out elsewhere and later so not affect inflation) and FDIC buying toxic loans and helping banks is better. How Chile handled a similar problem is also better. Here's renown economist and monetary expert Allan Meltzer on it:
"...what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them. People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans. I think that's the way -- if we're going to do this, then that's the way we should do it."
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