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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (107270)	3/27/2009 2:49:16 PM
From: Steve Lokness	Read Replies (1) \| Respond to of 541791

Krugman! There was an article in yesterdays NYTimes on the value of economic experts. The article said that experts were little better than throwing darts at predicting the future. It went on to say that the louder the expert (Cramer; yes - Krugman; ?) the worse the predictions. But it has become increasingly clear over the past few days that top officials in the Obama administration are still in the grip of the market mystique. They still believe in the magic of the financial marketplace and in the prowess of the wizards who perform that magic. And yet today bank official after bank official has been on CNBC saying we want to give TARP back. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try. This I absolutely agree with - but why does that prevent banks from operating again? They can only operate in the new paradigm? Why then are some more conservative banks - especialy some regional banks doing well under the old paradigm? steve

To: Dale Baker who wrote (107270)	3/27/2009 2:54:49 PM
From: KyrosL	Respond to of 541791

Although I disagree with Krugman's call for wholesale bank nationalization, I agree with his views on securitization and other financial "innovations". I think they encourage excessive debt and lending to those that shouldn't borrow, and have been instrumental in the huge increase in debt as a percent of GDP -- the fundamental problem in this crisis. They greatly encourage unproductive use of human talent -- financial engineering rather than real, goods producing engineering.