Stiglitz on the bail out plan
“Trickle down economics… sees the fundamental problem as a crisis of confidence. That no doubt is part of the problem; but the failure of confidence is because the financial markets made some very bad loans. That’s not just a matter of imagination or perception. It’s reality” link
It’s interesting that so much of libertarian economic theory relies on a kinda bluff. Ya know as long as people think you’re the best… etc. The Government bailing out finance companies shouldn’t restore confidence in them, if anything it means that the same people who made incredibly bad loans are still working at those companies…
Mr. Stiglitz goes further to point out that regardless of what bail out plan the finacial companies recieve, the U.S. economy is based on borrowing, housing prices still have a lot of room to fall, and the millions in devalued houses will have to cut their spending regardless of how their mortage is restructured.