It seems that the idea of creative destruction has gone out the window as
well. Apparently it is no longer creative!
Next comes moral hazard. Apparently bailing out the greedy is good economic
sense rather than moral hazard.
And government inefficiency. Apparently markets are inefficient and to make
them efficient you need government intervention.
Of course deregulation is still the norm but only with respect to
government appointed autocrats who are going to buy bad debt:
Decisions by the Secretary pursuant to the authority of this Act are
non-reviewable and committed to agency discretion, and may not be reviewed by
any court of law or any administrative agency.
More at naked capitalism..
http://www.nakedcapitalism.com/2008/09/why-you-should-hate-treasury-bailout.html
Cheers Ken Hanly
PS . How is banning short selling of financials supposed to do any good. When
people sell short when the market goes down they will buy to cover their short
position. But if there are no short positions won't the stock just tend to fall
even further since there are no short sellers who have to buy to cover their
positions?
Blog: http://kenthink7.blogspot.com/index.html
Blog: http://kencan7.blogspot.com/index.html
--- On Sat, 9/20/08, michael perelman <[EMAIL PROTECTED]> wrote:
> From: michael perelman <[EMAIL PROTECTED]>
> Subject: [Pen-l] Hey, Secretary Paulson, Whatever Happened to Shock Therapy?
> To: "Progressive Economics" <[email protected]>
> Date: Saturday, September 20, 2008, 5:17 PM
> I thought the believers in the market accepted the logic of
> shock
> therapy. You know, when country stray too far from market
> fundamentals
> they need tough medicine to make their economy strong.
>
> Consider the case of Jeffrey Sachs writing in his recent
> book, The End
> of Poverty. Looking back on his first prescription of
> shock therapy in
> the destitute nation of Bolivia Sachs had a revelation. He
> realized
> that "Bolivia's physical geography was a
> fundamental feature of its
> economic situation, not merely an incidental fact .... Of
> course I knew
> that Bolivia was landlocked and mountainous .... Yet I had
> not
> reflected on how these conditions were key geographical
> factors, perhaps
> the overriding factors, in Bolivia's chronic poverty
> .... Almost all
> the international commentary and academic economic writing
> about Bolivia
> neglected this very basic point. It bothered me greatly
> that the most
> basic and central features of economic reality could be
> overlooked by
> academic economists spinning their theories from thousands
> of miles
> away." Yet, he concluded: "Monetary theory,
> thank goodness, still
> worked at thirteen thousand feet."
>
> Sachs, Jeffrey D. 2005. The End of Poverty (London:
> Penguin): p. 105.
>
> Jeffrey Sachs is relatively liberal, as far as economists
> go. After
> all, economists today confidently tell us that Keynes is
> dead. Everyone
> has to accept the discipline of the market: the unemployed,
> people
> without medical insurance, and students facing high
> tuition. If workers
> wages fall short, they are at fault for lacking the skills
> of a
> financial manager.
>
> But wait! Now that the financial managers are in trouble,
> boy do they
> need help.
>
> I only have one question for market fundamentalists. If
> these bailouts
> succeed in putting Humpty Dumpty together again, will our
> fundamentalists agree to tax the fat cats or will they
> revise history
> and tell us that their rebuilt wealth owes everything to
> their hard work
> and intelligence?
>
> Or, what I'm afraid is more likely, is that market
> fundamentalism is
> applicable only in impoverished countries 13,000 feet above
> sea level.
>
>
>
>
>
>
>
>
>
> --
> Michael Perelman
> Economics Department
> California State University
> Chico, CA
> 95929
>
> 530 898 5321
> fax 530 898 5901
> _______________________________________________
> pen-l mailing list
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