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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (89570)	2/16/2001 4:21:02 PM
From: Freedom Fighter	Read Replies (3) \| Respond to of 132070

Sam, >>But sometimes the risk of action is outweighed by the risk of inaction.<< I believe there is a 3rd risk. The risk of over-reaction. And I think that's what Mike is talking about. No one is advocating letting the system crash and burn. I think those that are critical of Greenspan and Rubin are simply saying that they went way too far in their efforts to keep things humming. The net result was a huge bubble. A transfer of wealth from taxpayers to connected financial institutions. And a massive transfer of wealth from the middle class to brokers, investment bankers, options holding executives, etc...

To: Sam Citron who wrote (89570)	2/16/2001 5:52:10 PM
From: Knighty Tin	Respond to of 132070

Sam, I agree that the new administration may be slow to react. However, I also think that, as we have seen with AG's latest huge rate cuts, the techniques that helped prolong the bull market and economic growth are no longer as dependable. In 1998, smaller cuts than this got us up 50% on the Naz in a few weeks and sent consumers scrambling. I am not sure that Rubin could provide a put for any current crisis, though I think he could have been counted on to try.

To: Sam Citron who wrote (89570)	2/17/2001 9:37:54 AM
From: Thomas M.	Read Replies (1) \| Respond to of 132070

Moral hazard is a risk in any intervention. You missed Michael's point. The risk of moral hazard is greatly amplified when the perpetrators go unpunished. When the FDIC bails out a bank, the offending management is booted and stockholders are given the shaft. When Warren Buffett offered to buy out LTCM at a good price, part of the deal was not allowing the clowns who were running it to stay on. Since those clowns had many friends at the Fed, the Fed rejected that offer. And those clowns are still managing money. That's crony capitalism at its worst. Similiarly, nobody at Goldman Sachs was forced to suffer when Rubin engineered the Mexican bailout. Perhaps it was because of Rubin's ties to that firm. Tom