Self-Fulfilling Prophecy?
3 October 2008 at 1:06 pm Peter G. Klein 3 comments
| Peter Klein |
Commentators seem to take it for granted that this week’s crazy stock-market performance, particularly Monday’s 700-point drop in the Dow, proves the reality of the financial crisis. But in today’s Fed-watching age, in which even the most cryptic pronouncements of Federal Reserve officials send traders rushing to their keyboards, do you think the repeated statements by the Fed chair, Treasury secretary, and other insiders that the economy is on the verge of total collapse might just have a teensy, weensy effect on financial markets?
“Henry, banks are still lending. Hurry, say ‘credit crunch’ again and maybe we can scare ’em off!”
BTW isn’t it interesting that the phrase “not lending” has become a synonym for “lending less”? The Paulson plan “could channel enough money to enough banks to get them to resume lending,” says Knowledge@Wharton. So banks are currently making zero loans? Wow. I sense a profit opportunity. Hmmm, Don Boudreaux points to a Christian Science Monitor piece revealing that “only 63 percent of consumers applying for a car loan are being approved compared with 83 percent a year ago.” Yep, sounds like zero lending to me.
Entry filed under: - Klein -, Public Policy / Political Economy.
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1.
K.Folie | 3 October 2008 at 1:25 pm
After reading your blog, thought you would be interested in this…
“The Entrepreneurs” will re-air Sunday at 10p ET on CNBC. The show features the founders of FEED Granola Jason Osborn and Jason Wright and the creator of SPANX Sara Blakely. They will be discussing the methods which led to their respective business empires. Additional web extras can be found at http://theentrepreneurs.cnbc.com.
Please let me know if you would like any additional information.
Thanks,
Kevin
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2.
The Bailout: It’s Better Than World War I « 36 Chambers - The Legendary Journeys: Execution to the max! | 3 October 2008 at 4:31 pm
[…] The Bailout: It’s Better Than World War I Filed under: Curmudgeonliness, Economics — Kevin Feasel @ 5:31 pm Man, does Arnold Kling sound pessimistic today. I can’t say that I disagree with him, though. Effectively, Congress and the President passed a bill allowing Obama’s Treasury Secretary (as, unfortunately, the likelihood of his victory has jumped beyond 50% and is probably in the upper 60s right now) to pass out hundreds of billions of dollars to supporters, keeping all of the institutional problems in place. What are the benefits here for effectively making government the top player in the financial sector and opening doors to all kinds of bailouts and interventionism? I guess it keeps Hank Paulson and Ben Bernanke from crying that the sky is falling (leading to a self-fulfilling prophecy). […]
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Rafe Champion | 3 October 2008 at 11:22 pm
It is tempting to say that the only thing we had to fear, was fear itself. But now we can be afraid with good reasons!
I wonder how many people Dave Prychitko can put up on the farm?