The Supposed Premise of the Bailout Plan is False
Wednesday, October 1, 2008
The Entire Premise of the Bailout Plan is False
Today, Congressman Defazio said that the Paulson bailout plan won't create liquidity. He also referred to reports that banks are reducing their loans to consumers and to each other in anticipation of the bailout bill passing.
What's he talking about?
A professor of economics and an expert in liquidity explained:
"I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,'' said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.
--MORE--
The Entire Premise of the Bailout Plan is False
Today, Congressman Defazio said that the Paulson bailout plan won't create liquidity. He also referred to reports that banks are reducing their loans to consumers and to each other in anticipation of the bailout bill passing.
What's he talking about?
A professor of economics and an expert in liquidity explained:
"I suspect that part of what we're seeing in the freezing up of lending markets is strategic behavior on the part of big financial players who stand to benefit from the bailout,'' said David K. Levine, an economist at Washington University in St. Louis, who studies liquidity constraints and game theory.
--MORE--