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Do Something…Anything! Now!

Representative Barney Frank (D, Mass.) says of the on-going financial crisis,

I think we have to recognize the reality that we don’t have a choice now of debating whether this is a good or a bad thing.

Okay, how about we shoot every third person on Wall Street. That’s something. Moron.

Although this sounds familiar,

“Bailing out the financial system may sow the seeds for a future economic and political crisis,” said Jon Danielsson at London School of Economics.

Hmmm where have I heard this before?

The other danger is that even if the US banking system is bailed out, there will still be problems elsewhere in the world.

Wouldn’t that be a hoot. We blow $700 billion and then the financial markets still collapse due to the way financial markets are basically a global market these days. Money well spent!

This is one of the other problems with government intervention, they just don’t look at the whole picture, consider the future and all the rammifcations of their actions. Grab the nearest thing that looks like it might work and run with that. And when it doesn’t work, don’t accept responsibility, say it wasn’t enough and increase whatever the bad policy is. After all it is a crisis and something must be done now, even if it is wrong.

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About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research.

Comments

  1. Alex Knapp says:

    Okay, how about we shoot every third person on Wall Street.

    That’s actually a more sensible policy than Paulson’s bailout plan…

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  2. Dave Schuler says:

    For the last couple of weeks I’ve been emphasizing the global nature of today’s financial system and the inadequacy of our national regulatory institutions. However, that doesn’t answer the question: what should we do?

    If your position is just let the chips fall where they may, that’s both irresponsible and unrealistic. Something will be done because it’s political necessary to do something. Chastising administrations for failing to act in response to economic hard times is a commonplace however ineffective government action is.

    So, what’s your plan?

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  3. Alex Knapp says:

    Dave,

    I agree that we can’t let the chips fall where they may. But I also don’t think that we should go charging in before the situation has been assessed and some ideas at least brainstormed around, rather than just assume that since Wall Street demands a bailout, we should give them one yesterday.

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  4. Steve Verdon says:

    Dave

    And I think it is simplistic and irresponsible to continue to bail these people out whenever they screw up.

    Yeah something will be done. Chances are it will be expensive, dumb, and/or wont work.

    But hey, it will be realistic and responsible…I guess whatever that is worth.

    Meh.

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  5. Dave Schuler says:

    There is some elapsed time between instanter and, practically speaking, Inauguration Day 2009 in which action must be taken and I’m in favor of prudent discussion and reflection on what the action will be during that period. Judging by the events of last week I think that time is measured in days rather than weeks.

    Operationally, there’s little difference between waiting until the catastrophe has already occurred and not acting at all.

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  6. Steve Verdon says:

    I’m dying to here your solution to the moral hazard problem.

    Oh I know, lets bust up all these corporations so that no financial corporation has more than say…mmm…200 employees tops. That way nobody is too big to fail.

    Corporatism here we come! Yay, it has worked so well for the Japanese.

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  7. anjin-san says:

    How about splitting the difference somehow? Give the Fed 150 billion to use at one, and let’s take a little time and give some thought to how to proceed from there…

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  8. Always keep in mind the words of Governor William J. Lepetomaine, “We have to protect our phoney baloney jobs here, gentlemen! We must do something about this immediately! Immediately! Immediately! Harrumph! Harrumph! Harrumph!”

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  9. Steve Verdon says:

    Yes because that is the responsible and realistic thing to do.

    Blah.

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  10. Alex and Dave make more sense than Steve. Doing nothing might lead to utter chaos and then we’d just chastise the administration for being too Hoover-esque (and, remember, it is the executive branch leading this bailout). We should wait, however, and take a more measured approach. And, for heaven’s sake, it will be okay if we let a few of these companies fail and some investors lose their shirts. There must be consequences.

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  11. Dave Schuler says:

    I’m dying to here your solution to the moral hazard problem.

    Oh I know, lets bust up all these corporations so that no financial corporation has more than say…mmm…200 employees tops. That way nobody is too big to fail.

    Unfortunately, that solution is beyond our grasp. In order to compete in a global market we’ve got to allow mega-corporations including mega-banks.

    My solution to ths moral hazard problem is to start considering alternatives now, distinct from the bailout, get things stabilized, and then implement an attempt at a solution. Repeat as necessary. Doing otherwise will just create too much misery including lots experienced by folks who’ve done everything right.

    The neo-classical synthesis does not claim that it will make everybody happy nor that some people won’t be destitute, nor that welfare is maximized, only that welfare is optimized. In the near term that’s not always an acceptable solution.

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  12. Steve Verdon says:

    I like Austin’s idea, lets just print up an extra $700 billion and be done with it. We’ll inject it into the economy via the Fed.

    Problem solved.

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  13. Bithead says:

    Yes because that is the responsible and realistic thing to do.

    It’s what Chuckles the Clown Schumer wants. Doesn’t that give you a clue as to the validity of it?

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