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Please read this most timely article from the WashingtonPost.  It seems the liquidity crisis is likely to NOT respond to current measures.  I  worry that the Paulson is still enamoured of the idea that the market will "self-correct", and with this injection of new funds confidence will magically return, banks will start shoveling money out the door, and happy days are here again..

Guess what?  I went to Wal-Mart the other day.  They had one cash register open and you could have played rugby in the aisles.  NOBODY is spending, loaning, investing, or doing anything but waiting for the shoe to drop.  

How about a minimal dead-cat bounce in the stock market, followed by a steady slide into economic paralysis, and then what new kitty will Paulson and his ilk produce?   Unfortunately, it seems that the "always wise market" theory is so deeply embedded that few remember  the insight of Keynes's General Theory:  Markets and economic demand CAN fail, and economic activity CAN freeze.  We've had a good run but need to remember that unemployment during the worst year of the Depression was close to 30%.  

I hear Republican after Republican bloviating that the problem was CAUSED by government and all we need to do is to let the market solve the problem.  Give me a shovel please, and let's try and remember that the problem was caused by a LACK of governmental regulation and supervision.

Originally posted to boatwright on Thu Sep 25, 2008 at 06:50 AM PDT.

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Comment Preferences

  •  FDR was right and (6+ / 0-)

    Ayn Rand and Milton Friedman were wrong.

    The solution is simple.  Raise taxes. Use the taxes to provide healthcare and fix the roads and bridges.  This creates employment.  People with jobs will spend money.

    In addition, we also get healthcare and we get our bridges fixed.

    We know how to do this.  we have done it before.

    •  better yet (0+ / 0-)

      Think of all the money that has been raised in the past two years for campaign spending (by all parties) - we could have fixed our roads, funded healthcare & possibly put some toward education!

    •  I'm pro FDR too (0+ / 0-)

      but the depression lasted until WWII ramped production and consumption up to incredible levels.  The New Deal helped ease the pain, but it didn't solve the problem.  When the economy stops, it's tough to get it going again.

      I admit that I am worried that the bailout will not work, but there are a lot of experts, some of them quite progressive, who say that it needs to be at least part of the solution.

      Numbers are like people . . . Torture them enough and they'll tell you anything.

      by Actuary4Change on Thu Sep 25, 2008 at 07:08:15 AM PDT

      [ Parent ]

  •  When all you are... (1+ / 0-)
    Recommended by:
    SABCT

    ...is "The Hammer", everyone & everything looks like nails.

    Float like a manhole cover, sting like a sash weight. John McCain = Old Boat Anchor

    by JeffW on Thu Sep 25, 2008 at 06:55:22 AM PDT

  •  S. 2636, the Foreclosure Prevention Act of 2008 (1+ / 0-)
    Recommended by:
    ExStr8

    What happened to the S. 2636, the Foreclosure Prevention Act of 2008 that was supposed to help home owners and solve our countries financial problems???

    Now we need another trillion dollars to bailout Wallstreet?

    It would have been less expensive to just pay off these unpaid mortgages (slight sarcasim).

  •  Naomi Klien said that Paulson was (2+ / 0-)
    Recommended by:
    ExStr8, boatwright

    picked for being a big risk taker, McCain made a big risk in picking Palin for her lack of experience.  McCain risked again by suspending his campaign.  We don't need a risk taker in the White House.  We don't need a maverick.  We need someone with a steady hand, focus and direction.  McCain has been all over the place, he shouldn't be trusted with the country.

  •  Barney Frank on Paulson: (3+ / 0-)
    Recommended by:
    ExStr8, triv33, JFinNe

    Big sticking point in negotiations:  executive compensation.  Paulson just couldn't see the problem.  

    I paraphrase Barney Frank:  "Asking Paulson to control executive compensation was like asking a Jew to eat bacon on Yom Kippur."  

    Rolling on the floor, laughing.  

    •  Negotiating over the wrong things (1+ / 0-)
      Recommended by:
      nlr

      Everyone seems to have accepted the big lie underlying the Paulson plan that buying the toxic paper held by Wall Street will somehow magically solve our problems.

      People like Paul Krugman say no, but don't question spending $700 billion. That's progress, but not a lot.

      Frank and Dodd have essentially bought the White House plan and wasted time on executive compensation instead of looking for alternatives.

  •  It's the end of the world as we know it... (0+ / 0-)

    The average Joe and Jane are going to foot the bill. While losing their homes, jobs and life savings no doubt.

  •  It was on the front page here yesterday. (0+ / 0-)

    I forget who diaried, but the answer is YES, they did pull that $700 billion number out of their asses.

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