Re: PKE and WTC disaster

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

My remarks are bipartisan.  The inept policies I refer to related to Fed
policies and the credit bubble, the back-loaded tax cuts, not to mention the
lock-box SS fantasy.  Even that was not the main thrust of my post which made
the point that denial of a recession is no longer necessary since inept policies
need not be acknowledged.  You are intelligent enough I trust to discern the
difference?

Henry C.K. Liu

Sean Reilly wrote:

> If this is meant to be a slam on Bush, vis-a-vis the statement that the
> current economic slowdown is due to inept policies, maybe you should take a
> refresher on Public Finance.  The policies that have been playing out up to
> this point have been those of the Clinton Legacy.  We are still under his
> last Fiscal Budget until October 1st of this year.
>
> ----Original Message Follows----
> From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
> To: pkt@xxxxxxxxxxxxxxxx
> Subject: Re: PKE and WTC disaster
> Date: Thu, 13 Sep 2001 18:23:54 -0400
>
> It happened today in the bond market in Chicago.  Traders were unusually
> less aggressive towward their NY counterparts, instead of maximizing
> profits.
>
> There is no doubt that the effect on the market of the terrorist attack
> would be outright CB intervention in both exchange rates and equity prices.
> The Fed just announce a $50 billion eurodollar swap with the ECB for 30 days
> to banks with dollar liquidity.  Countercyclical moves by the Fed will now
> be justified in the name of stability and patriotism.  Foreign CBs will fall
> in line in the name of stability and sympathy.
>
> The denial phase of the recession ends with responsibility for the slowdown
> pinned on terrorist attacks, rather than inept policy.  In the name of war
> on terrorism, all manners of government control will be instituted, the
> market will not be exempt.  This marks the end of market fundamentalism and
> the beginning of war planning in the name of defense of freedom.  Military
> Keynesianism is on the move.
>
> Henry C.K. Liu
>
> "Forstater, Mathew" wrote:
>
>  > Paul - You have argued here before, I believe, that PK analysis
>  > concludes that natural disasters can end up stimulating the economy by
>  > giving rise to various types of emergency expenditures that then will
>  > have multiplier effects.  I believe you made such an argument with
>  > regard to California a few years back.  Certainly, the argument has also
>  > been made in terms of military destruction.  I wonder if you think that
>  > we may expect a similar effect as a result of the WTC disaster, and if
>  > you think that these effects may more than compensate for any
>  > destabilizing effects.
>  >
>  > I also wonder whether there might be other relatively stabilizing
>  > effects as well.  For example, is it possible that such a disaster gives
>  > rise to sentiments (sense of duty, responsibility) that may curb some
>  > excessive moves on the part of some market participants?  For example,
>  > is it possible that a 'big player' might resist a big sell-off in the
>  > context of this kind of disaster, where they might not under 'normal'
>  > circumstances of markets turning sour?  Also, would certain kinds of
>  > 'coordination' be acceptable under these circumstances, where they might
>  > not usually?  Or would certain appeals, e.g. for calm, have a greater
>  > chance of being heeded?
>  >
>  > Also, will the disaster be blamed for things turning economically sour,
>  > even if it may have been the case that things were heading that way
>  > anyway?
>  >
>  > Thanks,
>  >
>  > Mat
>
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