Thursday, October 2, 2008
Another key insider has said that the Paulson plan might make things worse. Specifically, the former head of the Fed's open market operation - the key Fed agency which has been loaning hundreds of billions of dollars to Wall Street companies and banks - was quoted in Bloomberg:
"Every time you tinker with this delicate system even small changes can create big ripples,'' said Dino Kos, former head of the New York Fed's open-market operations . . . "This is the impossible situation they are in. The risks are that the government's $700 billion purchase of assets disturbs markets even more.''In other words, it might do more harm than good.
Mr. Kos joins a long list of other leading experts who question the bailout, including:
- The Dallas Federal Reserve Bank President (Richard Fisher) said the proposed bailout would plunge the U.S. government deeper into a fiscal abyss
- The former Secretary of the Treasury (Paul O'Neill) questions the bailout
- The director of the nonpartisan Congressional Budget Office (Peter R. Orszag) said the bailout could deepen the crisis
- The former Chairman of the FDIC (William Isaac) doubts the bailout will work in its current form
- Hundreds of leading economists, including numerous nobel prize winners, question the bailout
- Former White House economist (Steve Hanke) adamantly opposes the bailout
- Nobel prize economist and former chief economist of the World Bank (Joseph Stiglitz) opposes the bailout
- A prominent economist (Nouriel Roubini) says "The Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown."
- A highly-regarded economist (Michael Hudson) says that the bailout is a giveaway that will cause hyperinflation and dollar collapse
- Many other leading economists question the bailout