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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: see clearly now who wrote (86439)9/24/2008 8:20:31 AM
From: axial2 Recommendations  Read Replies (1) of 116555
 
The Meltzer Plan (at least, the part identified) sounds like a VERY constructive proposal.

"if they're going to do something, then what they ought to do is make loans, which the financial institutions have to repay with interest. And if you think -- that's an idea which the Chileans have used in a bigger crisis than this for them in 1982, and it worked for them. People paid back the loans. They weren't allowed to pay dividends until they repaid the loans. They weren't allowed to take bonuses until they repaid the loans."

~~~~~~~~~

Here's a link to the transcript, including Meltzer's comments:

pbs.org

Partial quote:

"ALLAN MELTZER: Well, I've listened to governments tell me for 40 years that there was a crisis and the world was going to fall apart if we didn't do this or that. But there have been a few cases where they weren't able to do that.

One was the commercial paper crisis in 1970. There have been several others. The world did not fall apart. Last week, we had Lehman Brothers went into bankruptcy. Within three days, most of the assets were sold.

We had AIG turn down three offers to buy the company because they thought they would get a better deal from the government. It turned out they didn't get the better deal from the government. Now the stockholders suddenly woke up and said -- the major stockholders said, "We'd like to buy the company."

Well, that's what I think we need to do. We need to get the government's hand out of this, and let's see whether we can't get a market solution.

The market people caused this problem. They ought to be the ones that pay the cost of having it cleaned up."

Jim
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