On Fri, Sep 26, 2008 at 5:28 AM, Marvin Gandall
<[EMAIL PROTECTED]> wrote:
> The Paulson plan is coming under fire from both conservatives and liberals
> as an unfair and inefficient waste of public funds. The devotees of the
> Austrian school want to leave the market to self-correct by purging itself
> of its weaker banks (Schumpeter's "creative destruction"). They oppose
> government intervention to prop up "zombie" banks and delay recovery, as in
> Japan in the 90s. This is what currently animates the Republican
> congressional revolt against rhe Bush administration.
It seems that no one likes this bailout. The Chicago economists letter
has some famous names supporting it. The game theorist perspective in
particular, is very interesting - and characteristically cynical
("There is no crisis; Wall St is just playing dead to get free
government money"):
http://www.bloomberg.com/apps/news?pid=20601087&sid=aNKGD.bJwmRA&refer=home
----------------------------------------snip
``It doesn't seem to me that a lot decisions that we're going to have
to live with for a long time have to be made by Friday,'' said Robert
Lucas, a University of Chicago economist and 1995 Nobel Prize winner
who signed the letter. ``The situation may get urgent, but it's not
urgent right now. Right now it's a financial sector problem.''
[...]
David I. Levine, a professor of economics at University of
California-Berkeley, says the current plan being discussed has the
wrong structure.
``The structure is designed for the Treasury to be the first line of
defense,'' said Levine, who studies organizations and incentives. ``A
whole lot of people made money supposedly by putting their capital at
risk, and those are supposed to be the first line of defense, that's
how capitalism works.''
[...]
Erik Brynjolfsson, of the Massachusetts Institute of Technology's
Sloan School, said his main objection ``is the breathtaking amount of
unchecked discretion it gives to the Secretary of the Treasury. It is
unprecedented in a modern democracy.''
[...]
``I suspect that part of what we're seeing in the freezing up of
lending markets is strategic behavior on the part of big financial
players who stand to benefit from the bailout,'' said David K. Levine,
an economist at Washington University in St. Louis, who studies
liquidity constraints and game theory.
-raghu.
--
Puritanism: The haunting fear that someone, somewhere may be happy.
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