Arnold Kling  

My Talking Points

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The Pity Fund... Ben and Me...

For not doing a bailout:

1. We don't need to bail out Wall Street to protect Main Street. All we have to do is make sure that sound borrowers, especially small businesses, have access to credit. Banks can do the job, although regulators may have to reduce capital requirements.

2. The mortgage securitization industry is brain-dead. If it does not revive on its own, we should not spend taxpayer money trying to resuscitate it. The industry right now is a focal point of rent-seeking, but it has little relevance to the economy as a whole.

3. The stock market seems to want a bailout. While I hope for higher stock prices, I think that public policy needs to take into account more than just daily fluctuations in the Dow. In 1971, the market gave a huge thumbs-up to wage and price controls, which turned out to have damaging economic effects that persisted for years.

4. There is no reason to rush. President Bush wants to ram this through without deliberation, because that is how he operates. The Democrats want to act without deliberation, because putting the financial sector under government control is what they want. The rest of us would be better off if the issue were carefully debated first.


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COMMENTS (11 to date)
tim writes:

"Main Street"

Stopped reading right there. Anyone who uses the phrase "main street" in their "talking point" automatically loses all credibility....

floccina writes:

Those of us more than 10 years from retirement want lower stock prices. The Vangard total market fund is only paying 2% dividend, that means to live off the dividends one most have about $1.5 million invested (I can live well on $30,000 per year). That is a lot of money.

Gabe writes:

So are you FOR the alternative presented by the McCain Republicans? If not, why not?

There seem to be lots of non-Wall Street economists who think recapitalisation needs to happen, do you differ from them on this, or just on the timescale?

floccina writes:

BTW lower home prices would also be better for first time buyers and people who would like to trade up and people holding cash.

Arnold Kling writes:

Gabe,
No, I am to the right of the House Republicans. See this

abe writes:

"Main Street"

Stopped reading right there. Anyone who uses the phrase "main street" in their "talking point" automatically loses all credibility....

Yet you took the time to comment? I don't like people who use the accepted lexicon either, it makes them too understandable.

Dan Weber writes:

Even if it's to say "here's why 'doing this to save Main Street' is a stupid reason"?

Devin Finbarr writes:

Arnold,

Have you been reading Mencius Moldbug's commentary? His post today is excellent. He seems to grasp the fundamentals of the crisis better than anyone else I've I read. What do you think?

Chris writes:

Tim must be recovering from brain transplant surgery (let's hope it was a "trade up"). Anybody that's been thinking for a week or more understands that "Main Street" is the accepted metaphor for the "average Joe."

Tim will certainly have difficulty understanding the current crisis (unless he was part of the problem) if he stops reading anytime metaphors are used. It'll certainly lighten his reading load.

Having said that, talking point #3 is "right on target" and really "hits the bull's eye." Further, Wall Street's opinion on any deal should be "taken with a grain of salt."

Brad Hutchings writes:

Someone needs to Freudian slip "baling out Wall Street to protect K Street". That would be funny, and probably closer to the truth than anyone in their right mind should be comfortable with.

Mike Huben writes:
"The Democrats want to act without deliberation, because putting the financial sector under government control is what they want."

Pathetic libertarian trash talk. So much else that I agree with, and that seems credible, but this is simply assertion without a public choice argument or any evidence that Democrats actually want this.

The financial sector is already under government control in that it is regulable and partly regulated already. There's not really any evidence that Democrats want anything more than better-working regulations.

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