Stimulus update

The financial crisis has made my life busier and that means more to blog as well.  Here is the latest:

Sen. Charles Schumer,
a senior member of the Senate Banking Committee, said that if
Washington undertakes an effort to buy up bad assets from struggling
U.S. banks, it could cost taxpayers up to $4 trillion.

I don't know if he means net or gross but I am assuming the latter.  It's still a lot to pull out of capital markets.  And:

Democratic amendments are expected as well. Senate Banking Committee Chairman Christopher Dodd said he might try to insert a 90-day moratorium on home foreclosures, which have been skyrocketing.

Addendum: More info here.


According to Goldman Sachs, bad bank needs balance sheet of 4 trillion dollars.

I'm agreeing with Ricardo Caballero on Essentially the US needs a massive FDIC on all bank debt, not just deposits. The longer uncertainty prevails about 4 trillion dollars (!) of loans, the more likely people will all hoard cash at once and the more likely these nightmare scenarios are to come true.

Can Chris Dodd also outlaw the rain during the day? Why can't it just rain at night and be sunny in the day? Let's try a 90-day moratorium on that.

Oh yeah, buy American.

Especially cars.

I'm sure the Pelosi GTxi SS/RT will be a huge success!

I have a new proposition, for any state to receive bail out money, all politicians who were elected pre 2006 have to resign. This is a joke. Where is there any accountability in the government?

hi guys its all about financial turmoil, who is responsible for all this
mase.we have been hearing blames being shifted from US to china now it is
even taking a new look,Some of the strongest economies like japan and
germany are feeling the temparature.but to some of african countries
are not even in a position to explain how the problem can affect their
countries leave alone taking measures to see how this problem can be

"It's still a lot to pull out of capital markets."

So the fed expanding its balance sheet by 1.5T almost overnight without any effect on "the capital markets" except to decrease interest rates hasn't led you to reconsider your beliefs about how such markets function and how a sovereign currency issuing government and its central bank in a floating exchange rate regime interacts with them? (Hint: it has something to do with the fact that they can print money.)

Sigh. Why, oh why, can't we have a better economics profession?

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