$800 Billion for RTC 2.0 - Then What? - Seeking Alpha
$800 Billion for RTC 2.0 - Then What? - Seeking Alpha:
I say you are so right on - I have been drawing the Japan connection for some months now. We are repeating history - and have not learned from it. So disappointing.
"The government, in fact, may inhibit the repair process if it endlessly delays the attainment of the clearing price within the economy. This is what happened in Japan, and why many have made the Japanese analogies to America today.
In fact, one could make a cogent argument that we are in this mess because the government never allowed market prices to clear after the collapse of the Tech Bubble. By inflating our way out of the tech collapse, we avoided taking the medicine we needed to clear out the excesses in the economy. The secondary and tertiary after-effects of these policies created an even bigger asset bubble and more daunting problems in the economy, which almost certainly would not have happened had the Federal Reserve not kept interest rates so low and the government not run enormous deficits. It is easy to be an arm-chair critic in hindsight, but by not taking our medicine, we merely delayed the inevitable and made the problem worse.
Similarly, If RTC II delays the attainment of the clearing prices within the mortgage and housing markets, economic growth will be slow at best and possibly delay and damage the economy at worst."
I say you are so right on - I have been drawing the Japan connection for some months now. We are repeating history - and have not learned from it. So disappointing.
"The government, in fact, may inhibit the repair process if it endlessly delays the attainment of the clearing price within the economy. This is what happened in Japan, and why many have made the Japanese analogies to America today.
In fact, one could make a cogent argument that we are in this mess because the government never allowed market prices to clear after the collapse of the Tech Bubble. By inflating our way out of the tech collapse, we avoided taking the medicine we needed to clear out the excesses in the economy. The secondary and tertiary after-effects of these policies created an even bigger asset bubble and more daunting problems in the economy, which almost certainly would not have happened had the Federal Reserve not kept interest rates so low and the government not run enormous deficits. It is easy to be an arm-chair critic in hindsight, but by not taking our medicine, we merely delayed the inevitable and made the problem worse.
Similarly, If RTC II delays the attainment of the clearing prices within the mortgage and housing markets, economic growth will be slow at best and possibly delay and damage the economy at worst."
posted by Tolli at 1:07 AM
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