This was a day for me not to blog all day, so maybe I had the mistaken idea that things had slowed down. So I didn't check Krugman, who's on fire, along with his hair, and along with the global financial system.
His blog: A clear explanation of the Moran interpretation (and the precedent in the UK), a nooge to G7, why no jumpers, must reading on policy from Vox EU, a request to Bush to please go away ("It’s terrifying that the Bush administration still thinks" that liquidity is the root of the problem), and why banks come first.
His column:
I don’t think so, but it will be very alarming if this weekend rolls by without a credible announcement of a new financial rescue plan, involving not just the United States but all the major players.
Why do we need international cooperation? Because we have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together, and need a shared solution.
Why this weekend? Because there happen to be two big meetings taking place in Washington: a meeting of top financial officials from the major advanced nations on Friday, then the annual International Monetary Fund/World Bank meeting Saturday and Sunday. If these meetings end without at least an agreement in principle on a global rescue plan — if everyone goes home with nothing more than vague assertions that they intend to stay on top of the situation — a golden opportunity will have been missed, and the downward spiral could easily get even worse.
What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort.
And the time to act is now. You may think that things can’t get any worse — but they can, and if nothing is done in the next few days, they will.
Great, but who exactly from the administration sits at the table and represents the US?
Maybe Paul Volcker, on secondment from the Obama campaign? Only person I can think of. Paulson, as Krugman points out, hasn't exhibited "clear thinking." Can somebody name a clear thinker in the administration? Bueller?
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I don't buy it....
the idea of a 'rescue plan' of any sort at this point is beyond ridiculous --- its like trying to intervene in the collapse of a house of cards, or trying to rescue a pyramid scheme.
Rather than throwing cash around at financial institutions (next crisis--hyperinflation!) the focus now has to be on reducing the pain that the international economic collapse is likely to bring to the average person. The only efforts that should be made on the economic front should be triage directed -- making sure that institutions that are solid remain open.
Someone needs to ask "where is all this money going?" because while the government is injecting hundreds of billions of dollars into the economy, losses of wealth in the stock market are in the trillions of dollars. And what does all this mean?
BTW, no one seems to have noticed that this is going to cripple the federal budget -- what happens to receipts from capital gains taxes when everyone is suffering capital gains losses?