Rogers just told Bloomberg that a sharp correction is needed, whereby unhealthy companies and banks go belly up, to clean up the system. He asked "since when is it the goal of free market economies to artificially prevent recessions and bank failures?" He also stated that it wasn't until the Japanese let their banks fail that they were able to get out of their 15 year recession. He stated the best that could happen would be a 40% correction to clean out the system. http://www.thisismoney.co.uk/news/a...d=452718&in_page_id=2&position=moretopstories Tough questions for Hank on bailout plan James Doran, Evening Standard 25 September 2008, 12:09pm Hank 'The Hammer' Paulson, US Treasury Secretary and former Wall Street Titan, is to some an unstoppable hero capable of saving his country from certain economic doom. But to others his agenda strays so far from the basic rules of the free market that he is cast as an un-American leftist agent forcing a socialist agenda on a fearful and powerless populace. While such a portrayal of the former All-Ivy-League American football star, long time donor to the Republican Party and ex-chief executive of Goldman Sachs sounds ridiculous, just listen to how some of Paulson's former friends are describing his $700bn bailout plan. Senator Jim Bunning, a Republican from Kentucky, called it 'socialism' and 'un-American' shortly after declaring 'the free market for all intents and purposes is dead in America'. Harsh words indeed. Others have taken to calling him Comrade Hank while billionaire investor Jim Rogers opined last week that 'America is more communist than China right now'. But behind all this Cold War era rhetoric lies a certain amount of truth. If Congress gets its way and the US government takes some sort of 'Golden Share' as collateral from all those firms that want to offload toxic mortgage-backed derivatives into Treasury coffers, it will mark the biggest financial services nationalisation programme in history. And if the US Treasury gets involved in limiting boardroom pay, you might as well turn the lights out on Wall Street and watch as all the bright young MBAs depart for Dubai. These seemingly extreme measures are not Paulson's own preferred ideas, though. They are provisions he is willing to accept to get his $700bn rescue package passed through Congress in a hurry. They are by-products of his hastiness to press on with his plan coupled with a seeming disregard for the consequences of his actions. You see, Paulson means well, but each of his good points is overshadowed by a far more onerous bad point. In the same way Lehman Brothers had its 'good-bank bad-bank' elements, the US Treasury seems to be have 'good-Hank bad-Hank' for a boss. It is very good, for example, that Hank Paulson knows Wall Street and all its top players very well. He knows how they think and, more importantly, he knows their businesses inside out, making it harder for them to lie to him. But it is also bad that Paulson is so close to the big financial industry players, especially to Goldman, as it makes the $700bn he is offering look a bit like a 'Get out of jail free' card for his old chums. Yet it is also a good thing that Paulson acted so quickly to decide the fate of Bear Sterns, Lehman Brothers, AIG, Fannie Mae and Freddie Mac. Had he delayed in any of these cases, we might have faced even greater market turmoil in the short term. But his swiftness to call time on some institutions while extending a helping hand to others has led to charges of inconsistency and unfairness. If Lehman had known about the current bailout plan, for example, it would not have needed to file for bankruptcy and 10,000 people or so would not be heading for the dole queue. Another good thing that Paulson advocates admire is his flexibility. He is able to bend the rules and write new ones to accommodate each particular problem facing banks, insurance companies or odd companies like Fannie Mae and Freddie Mac.
well the last time the authorities decided to listen to 'austrian liquidationists' like rogers the top income tax rate went from 25% to 79% in 1936, social security was born and welfare from cradle to grave became a 'moral' thing I sure heck they dont listen to them this time
That is completely irrelevant to me. I am interested in a working global financial system and brokerage firms that let me trade instead of going out of business and freezing/holding funds until further notice.
Like Asia in 1998? Recovered fine within a year or two. USA from 1928-32 was under Hoover, an ardent interventionist. Then FDR, an even more ardent interventionist. Look what happened. Not sure how you can claim the 1930s were a failing of capitalism, when it was socialist law after socialist law that kept getting passed and kept unemployment in the 10-20% range for the only sustained time in US history. Notice how places like Sweden that followed the most laissez-faire policies recovered far quicker and didn't even have a depression, just a recession. The UK was less interventionist and suffered less than the USA (stocks fell 50% not 89%, GDP contracted far less). The evidence doesn't support your assertion. The most recent Keynesian experiment was 1990-2000 Japan - didn't do well.
After we get through this, and the Democrats extract their pound of flesh by passing tens of thousands of pages of regulations and God knows what else, what makes you think there will be any markets worth trading?