Re: [Pen-l] Krugman

["Gar Lipow" <gar.lipow@xxxxxxxxx>]

On Tue, Oct 7, 2008 at 1:43 PM, Jim Devine <jdevine03@xxxxxxxxx> wrote:
> ken hanly wrote:
>>  I don't see how the bailout could work. It is to take until the New Year until the bailout starts bailing. Who knows what will happen in the intervening months. I thought the crisis was now and that is why action had to be so fast. But no immediate action takes place just preparations to do something next year.<
>
> it's supposed to help expectations become more optimistic.

And by the way, expectations ARE part of what has to be done. Yeah
this is a bursting bubble represents real losses. But you not
everything is toxic and some of the toxic stuff has real value. So the
point of this was to manage expectations so the exchange value of
stuff that does have use value does not drop to zero. In that sense,
the bailout can work or fail long before the first dollar is spent.

On the bright side, we know that the absolute maximum number of the
days the stock market can drop this far is 19.  Because, thanks to
limited liability, the value of stocks can't drop below zero. In fact
given the quality of the paper printing used in producing stock
certificates, they will always retain some use value as decorative
wall paper.
_______________________________________________
pen-l mailing list
pen-l@xxxxxxxxxxxxxxxxxx
https://lists.csuchico.edu/mailman/listinfo/pen-l