>>> Marvin Gandall <[EMAIL PROTECTED]> 12/13/2007 6:26 PM >>> Raghu:
> So now what? The Fed has no choice but to bail someone out. I just > think it'd be much better on many different levels, if the > beneficiaries are poor (sub-prime) people instead of Wall St. =================================== I think the real debate which is taking place - as always, in the absence of any real struggle between the classes - is the intra-class debate between the conservatives and the liberals. The Hayekians are fretting about a rerun of the Japanese crisis, which was characterized by the propping up of zombie banks and corporations and a decade-long stagnation. They want to ruthlessly "cleanse" the system`by a short, sharp recession rather than dragging things out. If it means Countrywide goes down the toilet and Citibank is broken up and there is a massive wave of personal and corporate bankruptcies, well so be it. At least the dollar will be strong and their paper assets won't be devalued by inflation. The Keynsians, of course, harken back to the Great Depression, don't believe the market can correct itself, and are more worried about the social consequences. The reflex of the Fed and the Treasury, charged with representing the general class interest, is to balance between the contending factions and are predictably satisfying no one - neither the conservatives who want to hold the line on interest rates and let insolvent banks, mortgage lenders, and homeowners go under, nor the liberals who want to see a more urgent response to contain a potentially uncontrollable crisis. Interesting, too, how a large part of the Marxist left echoes the Hayekians in objecting to any "bailout" of the banks - for reasons having to do not with revitalizing the system, of course, but of ending it. ^^^^^^^ CB: What's your position , Marvin ? What do you say should be done ?
