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"Despair over Financial Policy"
Economist's View —
...
More on the bank plan, Paul Krugman: Why was I so quick to condemn the
Geithner plan? Because it’s not new; it’s just another version of an idea that
keeps coming up and keeps being refuted. It’s basically a thinly disguised
version of the same plan Henry Paulson announced way back in September. ... ...
Scrutiny Starts For The 'New Paulson Plan'
Moon of Alabama —
... — and found wanting — a couple of weeks ago. The zombie ideas have won.
... This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work. More Krugman: It’s basically a thinly disguised version of the same plan Henry ...
Readings
Paul Kedrosky's Infectious Greed —
Must read –> Madoff Employee Breaks Silence (The Daily Beast) The Roar of the Crowd: Sports, not religion, is the opiate of the masses (ChronicleReview) The fiscal vacuum at the heart of the Eurosystem and the fiscal abuse by and of the Fed (Buiter) Lebanon boasts the world's largest hotel suite (Latimes) Why I hate the latest bank plan (Paul Krugman) Thinking about the history of radical scientific hypotheses (SmartSet)
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Get With the Program Krugman
The Distributed Republic —
... Paul Krugman is finally, very late in the game, criticizing just some of the economic madness that has been going on for the past twenty years. He points this out in his article, More on the bank plan. He does so for all the wrong reasons. ...
Ireland Faces A Tough Budget And Some Hard Decisions
Spain Economy Watch —
... Before going ahead, I would draw attention to a Paul Krugman post yesterday, since I agree with this almost more than I can say. The basic point is that the Obama-Geithner plan looks like it may well not work, because people are buying up assets which no one really knows the value of. The thing is why has the banking system dropped so much in value. ...
Geithner's Plan, a Gigantic Confidence Game
Mish's Global Economic Trend Analysis —
... is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.Krugman Followup More on the Geithners' bank plan. Why was I so quick to condemn the Geithner plan? ...
Japanese Land Prices Hit 1984 Level
A Fistful Of Euros » A Fistful Of Euros —
... Land prices have, of course, lain at the heart of the ongoing Japanese deflation problem. Do people still think they know what all those toxic assets lying about out there are actually worth? I mean, Japanese land values are just about to go below prices established more or less 25 years ago. So in property market terms at least, it isn’t the lost decade anymore, we’re moving in to the “lost quarter century”. ...
Lunchtime Links 3-23
Rolfe Winkler —
... Geithner’s Op-Ed announcing his plan (WSJ) Bless his heart, Timmy really thinks his private-public partnerships will work. It’s positively comical that he’s arguing “private” money will help make this work when, under one of the programs, investors would only contribute 7% equity to the partnership vehicles while the other 93% of the capital structure would be financed with government borrowing…
Krugman explains why Geithner’s plan is flawed (NYT) Two great posts from PK ripping ...
Of Raising Rates and the Stakes
Global Economy Matters —
... the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience. Macro Man offers nothing but a sigh, Paul Krugman is in despair, Calculated Risk also seems skeptical that this is the right approach ...
What’s Plan B?
The Baseline Scenario —
... Paul Krugman, by contrast, is strongly against the plan, first because he thinks it has no chance of succeeding, and second because he thinks there is no Plan B. “I’m afraid that this will be the administration’s only shot — that if the first bank plan is an abject failure, it won’t have the political capital for a second.” ...
Of Raising Rates and the Stakes
A Fistful Of Euros » A Fistful Of Euros —
... the assets from banks that are still operating and assume a larger share of the losses. Our approach shares risk with the private sector, efficiently leverages taxpayer dollars, and deploys private-sector competition to determine market prices for currently illiquid assets. Simply hoping for banks to work these assets off over time risks prolonging the crisis in a repeat of the Japanese experience.
Macro Man offers nothing but a sigh, Paul Krugman is in despair, Calculated Risk also seems skeptical that this is the right approach ...
