Re: Why Can't The Majority Act?

[David Farber <dave () farber net>]

Begin forwarded message:

> From: "Dave Wilson" <dave () wilson net>
> Date: September 27, 2008 12:15:09 PM EDT
> To: dave () farber net
> Subject: Re: [IP] Re: Why Can't The Majority Act?
>
> Paul Krugman has an answer:
>
> September 27, 2008,  8:48 am
> Tricky bailout politics
>
> Nouriel Roubini has a characteristically scathing takedown of the  
> Paulson plan, and here's the thing: language aside, his economic  
> analysis is similar to mine. The fundamental problem in the  
> financial system is too little capital; bizarrely, the Treasury  
> chose not to address that problem directly, by (say) purchasing  
> preferred shares in financial institutions. Instead, the plan is  
> premised on the belief that toxic mortgage-related waste is  
> underpriced, and that the Treasury can recapitalize banks on the  
> cheap by fixing the markets' error.
>
> The Dodd-Frank changes make the plan less awful, mainly by creating  
> an equity stake. Essentially, this makes it possible for the plan to  
> do the right thing through the back door: use toxic-waste purchases  
> to acquire equity, and hence inject capital after all. Also, the  
> oversight means that Treasury can be prevented from making the plan  
> a pure gift to financial evildoers. But it's still not a good plan.
>
> On the other hand, there's no prospect of enacting an actually good  
> plan any time soon. Bush is still sitting in the White House; and  
> anyway, selling voters on large-scale stock purchases would be  
> tough, especially given the cynical attacks sure to come from the  
> right. And the financial crisis is all too real.
>
> So is it better to have no plan than a deeply flawed plan? If it was  
> the original Paulson plan, no plan is better. Dodd-Frank-Paulson may  
> just cross the line — let's see what details we have if and when  
> agreement is reached.
>
> If the plan looks not-awful enough, I'll be pro. But I won't be  
> cheering — I'll be holding my nose.
>
>
>
> On Sat, Sep 27, 2008 at 10:41 AM, David Farber <dave () farber net>  
> wrote:
>
>
> Begin forwarded message:
>
> From: Karl Auerbach <karl () cavebear com>
> Date: September 26, 2008 7:41:06 PM EDT
> To: dave () farber net
> Cc: ip <ip () v2 listbox com>
> Subject: Re: [IP] Re:   Why Can't The Majority Act?
>
> David Farber wrote:
>
> *From: *Ken Deifik <kenneth.d () roadrunner com
>
> It's already become a populist issue among know-nothing voters:
>
> Know nothing is a rather broad brush.
>
> I'm not an wizard on economic issues.  Nor am I an expert in medicine.
>
> But once upon a time I had a substantial spinal injury and it was  
> recommended by my doctors that I try acupuncture to see if it might  
> reduce some of the ancillary pain.
>
> So I went to Acupuncturist A.  She started sticking pins into my  
> toes and uttering what sounded like gibberish about how the aura of  
> my shakra is focused around my foot and that the energy would  
> emanate to my spine.  Sounded like nonsense.  She accomplished  
> nothing except to leave me with sore feet.
>
> Acupuncturist B was rather more scientific - he admitted that he  
> didn't know how the pins affected things but that he had learned  
> through experience (and training) that certain locations, usually  
> near the affected area, do produce relief.  Much to my surprise his  
> treatment worked.
>
> The point I'm trying to make is this: even though we "know nothings"  
> may not comprehend the deep meaning of economic processes, we do  
> have common sense.  And we can distinguish between so-called experts  
> who themselves don't have a clue and those who, even if they don't  
> comprehend everything, do have more experience, knowledge, and  
> wisdom than we have.
>
> So far the bailout seems to be more like the person who tried to  
> solve my spinal pain by manipulating metaphysical auras and shakras  
> in my toes.
>
> If the issue is mortgages that people are having trouble paying or  
> are finding that they owe more than the home is worth then the  
> common sense notion of proximity suggests that the cure should be  
> applied near that problem and not at the very remote site of the  
> speculative firms that have bought financial instruments N levels  
> removed from the house and the person living in that house.
>
> What I want is a clear explanation why the best method of cure is to  
> stick pins in a part of our economic system that is so far from the  
> causative event.
>
> Absent that kind of clear explanation is it any wonder that I am  
> skeptical?
>
> By-the-way, it seems that in the race to pour money onto the  
> financial system we've forgotten that we continue to flush cubic  
> money down the toilet of a couple of wars.  Perhaps we should say  
> "our problems at home are big enough that we have to stop solving  
> other peoples' problems for a while."
>
>                --karl--
>
>
>
>
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