On Jan 3, 2009, at 7:57 PM, James Heartfield wrote:
> well, let's be realistic, there is going to be some considerable
> contraction of the economy ('real' or otherwise). What's more,
> financial services are going to contract, too.
Of course. The recession is already deep and it's not over yet. And the finance boom is more than over.
> The bailout just delays the inevitable, and at some cost. Better to
> expose the banks to the full cost of their errors to force them to
> reform, than to indulge their weaknesses.
You sound like Andrew Mellon: "“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people."
Amity Shlaes says he's still ahead of his time <http://www.post-gazette.com/pg/07161/792705-109.stm
>.
Like I said, following the course you recommend will turn a sharp recession into a depression. Or don't you agree?
> As to distorting your views, I think maybe you are being a bit
> touchy. You surely did use the rhetorical ploy of painting small
> town america as dependent on the cities,
How many times do I have to say this? It is an empirical fact that the states that vote Republican are net recipients of federal aid ant the states that vote Democrat are net contributors? Can you respond to that point, which is a well-establish fact, instead of resorting to caricature?
> but now here we see the US bankrolling NYC to the tune of one
> trillion.
New York City? Really? Including the folks half a mile east of me in Bed-Stuy, where the average household income is around $25,000?
> There are limits to deficit spending, and its capacity to overcome
> real barriers to growth.
Well yeah. "Deficit spending," as you phrase it in Hayekian fashion, is supposed to prevent deflationary collapse. It can't restart growth in any significant way.
Doug