[lbo-talk] Discussing the Crisis/Bailout

[Gar Lipow]

On Mon, Oct 6, 2008 at 6:05 PM, Doug Henwood <dhenwood at panix.com> wrote:
>
> On Oct 6, 2008, at 5:31 PM, Gar Lipow wrote:
>
>>  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.
>
> We just don't know. There's no counterfactual available, nor are there any
> modern instances of letting a debt deflation continue unchecked in a rich
> country. "This week" is a ridiculously short timescale. We're going to have
> a recession, and maybe a bad one. But without a bailout, what do you think
> the results will be? Anyone who knows the experience of the 1930s (or 1870s)
> isn't willing to play chicken.
>
> Doug

I'm not arguing that something was not needed. The question is, will
this stop or slow down debt deflation? Are you going to say there is
no test for that?  The logic can't be be. "We must do something. This
is something. Therefore we must do this."   Are you saying there will
never be any way to know whether this particular action made things
better or not?  And if a week is an absurdly short time frame to know
whether it had an effect, why wasn't it an absurdly short time frame
to pass a bill?