Later On

A blog written for those whose interests more or less match mine.

Financial crisis overblown?

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UPDATE: A very interesting post that complements David Sirota’s post discussed below.

Yesterday I blogged about the plea from 150 economists that Congress NOT rush into a bailout. I also had a post with quotations from various economists arguing that a bailout is not needed. And today there’s this  post by David Sirota:

Harvard’s Elizabeth Warren has the story on former top IMF and Federal Rerserve official Ken Rogoff (now a top economist at Harvard) saying the liquidity crisis is a creation – an illusion of a crisis actually CAUSED by the prospect of a $700 billion bailout proposal, rather than a bailout proposal being proposed in response to a natural emergency. Here’s the key point:

Ken said that his many friends in investment banking said that there is plenty of money to invest in financial services, but right now it is “sitting on the sidelines.” Why? Because the financial services industry does not want to pay the terms demanded. As he put it, why do business with Warren Buffett who will negotiate a tough deal, if you believe that the government will ride in soon with cheaper cash?

This follows a McClatchy newspaper story noting that “A funny thing happened in the drafting of the largest-ever U.S. government intervention in the financial system: Lawmakers of all stripes mostly fell in line, but many of the nation’s brightest economic minds are warning that the Wall Street bailout’s a dangerous rush job.”

This should really be the last straw for anyone still wondering whether this whole thing is a manufactured emergency designed to enrich the wealthiest people on the planet. And yet, both parties seem to be slowly but surely moving toward passage.

Keep contacting your members of Congress and telling them the simple message: Hell no.

Written by Leisureguy

27 September 2008 at 8:03 am

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