WHY THE GOVERNMENT WON'T SOLVE THE CREDIT CRISIS
Yesterday I posted how the Government could solve the credit crisis
http://www.talkingpointsmemo.com/talk/blogs/resistance/2008/11/the-government-could-end-the-c.php
Interesting article tells you why they won't.
An excerpt
DJ: Why isn't anyone listening to these ideas?
CC: The point is that they have made huge errors in the design of their assistance plan and they were forecastable errors.
For instance, Paulson doesn't want there to be a stigma [around capital injections.] Does he really believe that by getting J.P. Morgan to participate, he creates the perception that JPM and Citi are the same?
Does he really believe that injecting preferred stock into banks is socialism but buying assets at above market price isn't? Does he really believe that?
There actually is a stock of knowledge about this. The scandal is that when Congress has been considering this, not one independent economist has been allowed to testify. Do you know why they weren't? Paulson and Bernanke didn't want anyone causing problems.
DJ: Wait, that sounds like a conspiracy.
CC: Democrats didn't want anyone [economists] testifying because it was before an election and no one was willing to stand before that bulldozer known as Paulson. No one wanted to make tough political decision before the election. They didn't empower any experts to come in and testify. Why is that? They were playing politics, too. That's what we're dealing with-a complete leadership failure in Congress and the administration.
Don't underestimate the role of politics in the decision not to fix things.
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