The markets are in a downward spiral and looking for some adult supervision. They will not get any from Washington.
The current credit crisis resulted from easy money policy and interest rates that were too low. This provided lenders with non-market incentives to over commit (including not doing diligence - a substantial amount of subprime mortgages foreclosures involve fraud) and viola! problems. The "solution" of easing the cost of credit (lower interest rates) and coming to the rescue does not provide the market medicine needed; Clinton's moratorium on foreclosures doesn't either; and each "solution" convinces the markets (US and world) that we are stupid or unserious about the problem.
The plain fact is no one has a stimulus solution because there is none. The best we can do to provide a sound, long term policy and structure and let the markets work it through.
Secretary Paulson, shame on you, you should know better. George Melloan certainly does.
No comments:
Post a Comment