07 April 2009
Curing Irrational Exuberance
The pain and suffering of the American people that Ariana Huffington says on the April 7, 2009 Huffington Post she wants to alleviate was caused by a sudden awakening by the suppliers of our banking system's liquidity to the fantasy of overvalued stocks, real estate, credit card debt, etc. Sure, that misery will disappear for a short time with a morphine-like infusion of cash directly to consumers through credit unions and community banks. But such a measure will not prevent financial disasters due to "irrational exuberance" in the future.
A careful approach, relying on the smart guys who unfortunately got us into this trouble in the first place, and under close supervision in spite of the bankers' complaints about interference, is the cure the Obama team appears to be prescribing. Let's give them begrudging support for a few more months.
The pain and suffering of the American people that Ariana Huffington says on the April 7, 2009 Huffington Post she wants to alleviate was caused by a sudden awakening by the suppliers of our banking system's liquidity to the fantasy of overvalued stocks, real estate, credit card debt, etc. Sure, that misery will disappear for a short time with a morphine-like infusion of cash directly to consumers through credit unions and community banks. But such a measure will not prevent financial disasters due to "irrational exuberance" in the future.
A careful approach, relying on the smart guys who unfortunately got us into this trouble in the first place, and under close supervision in spite of the bankers' complaints about interference, is the cure the Obama team appears to be prescribing. Let's give them begrudging support for a few more months.
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