"The risk there is that it would not work, or at least not seem to work, and the chorus about “pushing on a string” would grow louder. But I doubt the central banks will be able to stand by if the market carnage continues very long. There is certainly enough economic weakness to justify action, and plunging commodity prices provide reasons to put aside inflation concerns."
"So we may soon have the government deciding which companies deserve short-term loans, and at what interest rates. Does this remind anyone else of central planning systems?"
"Mr. Volcker’s skepticism of the new financial system has been well known for years, and was ignored by its biggest fan, Alan Greenspan, who succeeded Mr. Volcker at the Fed.
Mr. Volcker recalled the “intense lobbying process” that had largely allowed markets to supplant banks as providers of funding with minimal regulation.
“In the U.S., the market took over,” he said. “The market has flopped.” When things got tough, he added, “everybody is running back to Mother, the commercial banking system.”
"It strikes me that is a hopeless task. There is little stability left to maintain. The Paulson plan is an effort to restore some stability. Europe has yet to come up with anything similar, as can be seen in this updated version of the article I and colleagues wrote for today’s paper.""Couldn’t he admit that, with hindsight, that was a serious mistake?"
"The state of the financial system is feeding over to economies around the world, reducing demand and threatening to produce deep recessions. There is no way to know how much that is affecting the market, but it must be playing a part."
"I’ve never seen poll results that negative. CNN says that the sampling error could be up to 4.5 percentage points, but these numbers are horrid even if you assume they overstate the gloom by more than that."
"He thinks the Fed will cut rates to 1 percent or lower, from 2 percent now. "
Great job!
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