Posted on 10/13/2008 8:33:26 AM PDT by ChessExpert
Panic on Wall Street -- and in every foreign financial market -- was supposed to be calmed by the Bush/Paulson $700 billion bailout of the financial industry. Confidence among investors and bankers would be restored, we were told, if only this huge chunk of our free market were nationalized. XXX ... --- XXX First, let’s minimize government intervention in the free market. If it is necessary to inject capital into banks directly, let it be by loans, not by purchasing the banks. Coupled with that must be cancellation of Paulson’s monarchic plan to make the government the home mortgage broker of last resort. People who cannot afford to keep their homes shouldn’t be bailed out by a Treasury Department mortgage welfare program that will burden taxpayers for decades to come.
If there’s any way to prevent the housing market from recovering it’s nationalizing it as Paulson intends. It would be a vast improvement to remove the government compulsion for banks to make home loans to people who are not financially qualified to repay them.
Second, let’s tell the truth. This financial crisis, like the ones that have come before, must be worked out by free market forces or it will not be worked out of at all. And this will take time: months, perhaps years.
Throughout history, courageous action has often proved to be nothing more than refusing to act rashly in response to panic. Demonstrating that sort of courage will do more to increase market confidence than anything else the government can do. The more government intervenes, the longer the recovery will take.
(Excerpt) Read more at humanevents.com ...
However, many believe that the Fed NOT acting pro-actively in the early part of the 20th century exacerbated the Depression.
” However, many believe that the Fed NOT acting pro-actively in the early part of the 20th century exacerbated the Depression.”
True. Milton Friedman came to that conclusion. I believe he also said that had there been no Fed, there would have been no depression. As I understand it, the Smoot-Hawley tariff (a tax) triggered the depression. Hoover raised income taxes during the depression. Roosevelt raised income taxes higher. Roosevelt tried to maintain prices. Had prices fallen they would have stimulate buying/employment, etc. (MV=PQ). FDR attacked industry, doubtlessly sending money fleeing. Most government interventions during the depression made matters worse.
In this case, I take the behavior of the stock market as an indicator. When the House voted no on the bailout, the stock market went up. When the G7 failed to provide anything but hot air, the stock market went up. The stock market went down when the President proposed the bail out, when the Senate approved the bail out, and when the House approved the bail out. I wasn’t watching, but I suspect it went down when the President went to the G7 for “help.”
That's not true.
The market took an 800 point tumble that day immediately after the "no" vote came in.
I think you are wrong on the timing.
The No vote was Monday 29 September. The market rallied about 500 points on the 30th. At the time, I took this to mean that the market was relieved that the bill had not advanced.
It’s true that CNN blames the stock market fall on the 29th (800 points ?) on lack of agreement. But then, that’s what I would expect from CNN. Another reading is that the market fell on the 29th on the expectation that the bill would go through. Once the bill failed (29 Sept), the market rallied (30 Sep).
I only want to be correct on this. I assume you feel the same way. A lot of this depends on data, interpretation and, with some sources, spin. Any data and sound interpretation is welcome.
Yes, the market fell 800 points after the "no" vote.
The next day in the morning (30th) Harry Reid announced that the Senate would take it up and the DOW then rallied after his announcement.
“Yes, the market fell 800 points after the “no” vote.”
Do you have the hour of the No vote? Did the plunge take place in the remaining hours of the day?
“The next day in the morning (30th) Harry Reid announced that the Senate would take it up and the DOW then rallied after his announcement.”
I’m a little skeptical that a mere announcement by Harry Reid would have such an effect after an actual failed vote in the House. I tend to think that the actual vote in the House would have more impact than a future hypothetical vote in the Senate with a hypothetical re-vote in the House.
Are the preceding quotes your recollection of within day timing? Do you have a sources?
After the defeat the stock market plunged ending just under 800 points down for the day.
I’m a little skeptical that a mere announcement by Harry Reid would have such an effect
It wasn't exactly a "mere" announcement. The announcement by the Senate leader announced the entire Senate's intentions. Confidence was then raised that the Senate backed the bailout and would come up with solutions/compromises to get the thing passed (which in fact is what happened). It wasn't hypothetical. Reid said they would vote...in fact not theory.
Are the preceding quotes your recollection of within day timing?
I'm not sure what you mean by "preceding quotes" or "within day timing."
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