Gar
>> OK, so fundamentally the argument is that this would patch things up
>> long enough to prevent a major crash until a new administration, that
>> it is a good enough patch to be better than nothing, and that this or
>> nothing were the choices. Essentially Doug convinced of this last
>> week. But then comes the same question Doug has not yet answered. This
>> is an empirical argument and to make sense has to falsifiable by an
>> empirical test. How bad can things get before the facts refute the
>> idea that this was better than nothing. It can just be a matter of
>> faith - no matter how bad the turn the economy takes this week, it is
>> still better than would have happened without it. It is a short term
>> fix for certain things - specifically the freezing of credit. So isn't
>> the test that credit unfreezes to some extent this week? IF that is
>> not the empirical test what is the benchmark. What is the point at
>> which you say "the bailout was valueless. it accomplished nothing of
>> we hoped" ?
>
Shag
> maybe i'm misremembering, but wasn't the next step in the predicted process
> that there would be a run on all the banks?
Gar The problem with this as a test is the Fed did several things that would prevent this *before* the bailout was passed - raising deposit insurance to $250,000, allowing mergers in violation of anti-trust so that survivors could eat the dead and prevent the waste of precious financial protein, lending money to banks in trouble without "frown" points. And I could swear that most of the discussion from Doug was about credit freezes and losses from that. And I mean a credit freeze really is a bad thing. If it does not loosen (and I have not check the news 11:00 A.M PDT so maybe it has) a lot of the things Yates was talking about will happen. For that matter I don't think the credit freeze can go on longer without bank runs. Anyway is that the line? If we don't have a run on all the banks the bailout succeeded? If we do it failed? Was that the bottom line back on Friday?
>
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