Monday, September 13, 2010

If the killing did not work the first time, let's try again

Economic Docs Find Remedy Amid Bubble Rubble: Caroline Baum
Even the most casual observer of the events of the last five years -- the housing bubble, the bust and the digging-out process -- would be struck by the similarities between the policies that got us into this mess and the prescriptions for getting us out.
Whether it’s ultra-low interest rates, borrowing and spending (too much then, too little now), or artificially inflated home prices, the cure bears an uncanny resemblance to the cause.
I’ve identified five areas where policy makers need to reexamine their recommendations or do a better job of explaining why yesterday’s mistakes will be tomorrow’s remedies.
Full text
Comment: Caroline is surely right. Policymakers sell now as a cure what has brought about the mess in the first place. The logic behind the current measures is that if policy measures haven't completely killed the economy the first time, let's try it again a second time.

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