Comments on: The $700 billion Paulson Plan is dead on arrival

By: Paulson is handing out free money like candy to a baby - Credit Writedowns

Paulson is handing out free money like candy to a baby - Credit Writedowns — Sat, 09 May 2009 00:47:54 +0000

[...] that this was an ill-conceived freebie for the financial services industry. See my post, “The $700 billion Paulson Plan is dead on arrival.” As a result, this bill initially was rejected by the U.S. House of Representatives.However, [...]

By: Andy

Andy — Thu, 23 Oct 2008 13:56:00 +0000

How a month can change things or show the futility of good intentions. We have now spent close to 2 Trillion dollar on Government interventions and yet the Dow is down 25%. So becoming a bailout nation has not solved our problems. Only time will clear the mess and a recession is inevitable. Paulson tried, but it was too late.

By: vasjpan2

vasjpan2 — Tue, 30 Sep 2008 21:01:00 +0000

What has happened in the last quarter century is that the central banks have become the counterparty of last resort. When people panic, the Fed moves in and provides liquidity (1987, 1990, 1998, 2001..). The question is how does this square with the Fed’s original role (elastic currency d%Credit/d%Y)? Is this theoretically sound? Does this put the Fed in the moral hazard of creating liquidity bubbles (Bubble Act of 1720) that only lead to the next crisis? Is the Fed supposed to be the shock absorber of panics until people come back to their sences? Is that what they really meant by elastic currency? Is there a way to formalise this role as an automatic stabiliser so we don’t have to deal with hysterical obfuscation at every crisis?

By: pej

pej — Wed, 24 Sep 2008 20:35:00 +0000

I will try to post my view sometime soon, didn’t really had a chance to do much today. But my view is that congress shouldn’t care of the markets nor intervene there. The markets have been going up for the past 5 years while the standard of living of the actual people have been decreasing a lot. Congress should put the citizens above the markets. The current system is unsustainable anyway, so we have to let the markets do their destructive work, which is actually only the start for a new, better society.

By: Edward Harrison

Edward Harrison — Wed, 24 Sep 2008 20:02:00 +0000

thanks, pej. What’s your view here? I would note that Congress does need to do something soon or we are going to see problems in the markets.

That said, I don’t like Paulson’s proposal.

By: pej

pej — Wed, 24 Sep 2008 14:22:00 +0000

Very good analysis. Thanks indeed