Monday, February 08, 2010

Panic, Not Crash

The second commenter to this post puts a bit more succinctly what others have said since the crisis in the financial system really blew up. From the beginning it seemed that elite policymakers believed we had a liquidity crisis rather than an insolvency crisis, just a temporary lack of money sloshing around. Another way to put this, as the commenter does, is that they believe the problem was a panic.

Too much of what has been done has been about re-inflating the bubble, which you'd only do if you didn't believe there was a bubble in the first place.