Friday, November 21, 2008

A counting game...

This is hot off the Associated Press. Please remember that the Associated Press is an organization of journalists, who are so-named because they practice something called "journalism."

Stocks jump on report of Geithner nomination - Yahoo! News

NEW YORK – Wall Street is ending a volatile week with an unexpected jolt of confidence following reports that President-elect Barack Obama plans to name New York Federal Reserve President Timothy Geithner as Treasury secretary. The major indexes have jumped more than 5 percent, with the Dow Jones industrials surging nearly 500 points.

Stocks have erased about half of the losses that came in steep selling Wednesday and Thursday.

Wall Street appears buoyed by reports that Obama plans to name his economic team on Monday — offering investors some hope of a smooth transition in an uncertain market.

The Dow is ending up 494, or 6.5 percent, at the 8,047 level.

Now, go back and count a) the number of facts, and b) the number of entirely unsubstantiated conjectures. Which is greater? Which of the two, facts or conjectures, are likely to be seen as the "point" or "theme" of the story?

Thursday, November 20, 2008

George Friedman On G-20 and GM

George Friedman of Stratfor is a relentless geopolitcal realist. He gives too much weight to State power, but he's very smart and extremely plugged in. Whenever I want to know what's really going on in the world, who the players are, and what the calculus is, I see what he has to say.

Where were you in 1997?

The S&P 500 last traded at today's prices in April, 1997...and that's NOT adjusted for inflation.

Mikey G. on Deflation

Mike: what's the deal here? Not to sound like a punk, but I feel like a modest deflationary trend in the real cost of goods is a pretty good thing for people like, well, Becky and I, who carry almost no debt, have highly marketable skills, a relatively robust amount of liquidity, and a very broad time horizon in terms of investment.

Tell me where deflation is going to hit me hardest. 

Also, I'm working up a post in response to your comments yesterday. 

And you should get ScribeFire, if you haven't already. I just hit F8, type up some stuff, and, as Madden would say, BOOM.

A followup... yesterday's bit about having it both ways on oil prices. Look at this hyperbolic release from the AFP:
LONDON (AFP) – Oil prices sank under 50 dollars a barrel in London on Thursday, reaching the lowest levels for three and a half years, as the market was plagued by weak energy demand.
Oh those halcyon days of $150/barrel oil! Oh, how we dreamed that it might reach $200! But then, even as we were tempted by the gods, this plague of cheap-as-hell energy befell us!

Wednesday, November 19, 2008

Some really good stuff in the roundup this morning.

Jacob Sullum on the unbelievable case of forgetsies the press seems to suffer from. The daily headlines that manage to combine falling oil prices with economic ruin ("Oil falls to 22-month low as fears of recession sharpen") would be merely puzzling if the press hadn't hooted and hollered mere months ago over the prospects of $200 barrels of oil. It begs the question, which can only be asked with incredulity by anyone with the ability to recall events and facts that occurred more than 30 days prior in time: "Where the hell have you been?"

I see gas under $2.00 in Winston and think to myself, "Wow--this is great. The amount I'll save from all our Christmas driving alone will pretty much pay for gifts this year." That doesn't even begin to address the benefits our battered and imperiled middle class will be reaping when they get this year's energy bill. The question remains: if increasing oil prices are unequivocally bad, which the press has claimed ad nauseum for the better part of a year, then the decline in oil prices has to be good simply by the law of non-contradiction. The less child-like observer--even those with little experience in the field of economics--knows that the press simply doesn't understand things like supply and demand--and therefore doesn't understand that rising oil prices are not simply a natural disaster, like earthquakes.  Rising oil prices are exactly what they are--an increase in the price of a good--and they will be offset by future developments or decreases in demand.

But this childishness is not the exclusive domain of the press, as Louis CK points out here on Conan.

Count your blessings, says Mankiw.

In other news, anyone interested in the future of libertarianism, particularly in the age of corporatism, owes it to themselves to follow the debate at Cato Unbound, initiated by Roderick Long. His piece and the several replies to it are all required reading. I've got my own response to this brewing, but it'll have to wait for some quiet time.

Finally, George Will on the auto bailout. Will seems to be suffering from a bit of Rip Van Winkle syndrome; he writes as if he just woke up from a 20-year slumber and doesn't quite recognize the people around him. Yes, George, this is your party--I'd get moving if I were you.

Tuesday, November 18, 2008

Shark problem? Add blood!

No other metaphor captures the pure insanity of the bailout like the shark one.  Here's another reason why:

Nov. 16 (Bloomberg) -- Genworth Financial Inc., the insurer spun off by General Electric Co., said it’s in negotiations to acquire InterBank Fsb and with it eligibility for the U.S. Treasury’s $750 billion bailout program.

Genworth is seeking to buy the Maple Grove, Minnesota-based thrift in order to gain recognition as a savings-and-loan holding company. Talks are in progress and terms are being negotiated, Genworth spokesman Al Orendorff said today.

Genworth Financial would join the more than 50 regional banks offering stakes to the U.S. Troubled Asset Relief Program. The bank is seeking to tap bailout funds after a surge in claims at its mortgage insurance unit and investment losses.

An attempted response.

Mike poses an important question, and one I've been struggling with lately.  The most depressing feature of the bailout--besides, of course, its existence--was the incredible disconnect between its facts and its normative import.  When we say something is "too big to fail," what do we mean? We mean that the sheer size and force of a company make it indispensable and thereby places it above the normal schema we employ when thinking about questions like this.  Undoubtedly, most said, there should be no handouts; undoubtedly, it is bad policy in terms of moral hazard and really bad policy in terms of blatant disregard for property rights--undoubtedly, we would never do this under normal circumstances.  Unfortunately, these aren't normal circumstances--this company and that company are too big to fail.  I remember the night the bailout passed, there was a Frontlines special on oil companies on PBS, and I remember them talking about this offshore oil platform Exxon had built that cost something like forty billion dollars.  Forty billion! Here's a private company with a single tool that costs forty billion dollars! And I thought, "this company is too big to fail."  I also wondered whether freedom was even possible in a world of companies as big as Exxon.

I teach political theory for a living.  I teach classical liberal theory for a living: Locke, Smith, Hume, Montesquieu, Madison, Tocqueville, Mill--you name it.  I teach this stuff because I think passing these thinkers and their ideas on is vital to the preservation of a free society.  Yet, some days I wonder why we don't just dump this stuff in the trash can and quit pretending it matters.  Locke's theory of property, Tocqueville's ideas about civic freedom, even Madison's ideas about checks and balances and limited government--these seem like a joke today.  Few people read them, fewer people believe them, and even fewer are willing to do anything more than nod to them when things are going well.  We're a nation of Locke-lovers and Founder-worshippers when things are going well, but, oh buddy, when things go wrong! Don't talk to me about the Second Treatise when my 401k is tanking; don't talk to me about limited government when my entitlements are about to be cut. 

Which is why I've always taken a certain pride in being affiliated with groups like Reason and IHS, why I've always taken a real pride in seeing Cato's latest press release--because these guys mean it, and they mean it as much as I do.  In the face of ruin, these organizations stuck to their principles--a set of ideas about property and the extent of government that, despite its unpopularity and despite its hard lessons in liberty, remains the single best framework for organizing society.  I was proud to be a classical liberal, even as I despaired at living in such a world.

This has become rather long-winded. 

If there is one thing for which I fault libertarians more than anything, it is their abandonment of the public sphere.  What is most galling about the abandonment of all things public is that many libertarians wear it as a badge of honor: "I certainly don't engage in politics, because that would be coercive; I don't engage in politics, because they just want my money; I don't engage in politics, because that's where the corruption/sin/evils of the world lie."  The sanctimony in the libertarian rejection of the public sphere is equaled only by its irrationality and unjustified disregard for every single member of the classical liberal canon.

I blame this on two shifts in the liberal tradition: the rise of Ayn Rand in the normative sphere, and the rise of the Austrian school in the economic sphere.  I've read the Rand oeuvre, and it was Rand that brought me to libertarianism in the first place; her work is of tremendous value and that is not in question.  But Rand was a wildly inconsistent philosopher for the simple reason that she mistook her own art for reality (and this, even though her own aesthetic theory should have made it clear to her that she dealt in works like Atlas Shrugged with a world that was nothing more than an idealized version of our own).  The problem with Rand is that freedom looks really, really easy; the good guys win because reality dictates that they must.  This is absurd.  To put this another way: Rand can so unequivocally endorse freedom in her own work because, in the world of Atlas Shrugged and the Fountainhead, fate itself is a libertarian! My beef with the Austrian school is less epistemological: it is, simply, that the Austrian school conflates growth with freedom, a conflation that normally goes unnoticed but which produces a real tension between principled liberals and Austrian utilitarians when the chips are down.  Tyler Cowen, for whom I have immense respect, was consistently for the buyout, and almost always for some bedrock value akin to "happiness," a word utilitarian liberals like to trot out even as they acknowledge its hopeless ambiguity and ultimate meaningless.  Tyler might not even be an Austrian, so maybe I should retract that.

What am I driving at? I'm driving at the fact that, to a man, the classical liberals conceived of liberty as something that could be realized only with some difficulty.  Liberty means responsibility.  It means sticking to your principles--namely, the principles of liberty--even when they are not convenient.  It means this further: that we are willing to embrace liberty in our lifetimes even if we knew, as a matter of fact, that something less than liberty would yield greater economic or utilitarian returns.  Why? From what position can we say that liberty is worth sacrificing well-being, that liberty is actually, really the greatest good and not just an instrumental good?

From the perspective that associates liberty with, to use an unpopular term, manliness.  Perhaps it is better to say that I equate liberty with adulthood.  The classical liberals, to a one, supported this liberty: a manly liberty that stressed above all else independence, individual responsibility, personal restraint, and an unwavering willingness to take care of one's affairs.  This is why liberals can tell overextended "homeowners" that, sorry, no handouts here: because to do otherwise would be to treat them like children.  The sad part is, of course, that they want so, so badly to be treated like children.

Where this all comes back to the question is on the matter of the public sphere.  Managing one's private affairs is a sign of adulthood--that much is clear.  What is just as clear, but has been apparently forgotten by libertarians for some time now--is that taking care of one's public affairs is just as important.  The public sphere is not some necessary evil--it is not some concoction of the simple-minded evil-doers who want a way of coercing the good, industrious, freedom-lovers who just want to be left alone.  This is a myth, and the faster we destroy it, the better.  Nowhere, and I mean nowhere, is the "right to be left alone" invoked, endorsed, or otherwise sanctioned by any classical liberal before the Randian/Austrian revolution in the 20th century.  Perhaps I overstate.  No classical liberal suggests, pace Rousseau, that attention to the public sphere should be required, that's true.  But none of them, not one, produces the fantasy of a perfectly self-regulating public sphere, a fantasy libertarians cling to with reckless disregard.  As soon as you acknowledge that there is such a thing as "public business"--and it is impossible and irresponsible to deny the existence of common problems (at least, such a denial has only emerged in the last seventy years)--then the notion of manly liberty compels everyone, including libertarians, to tend to this public business. 

Thus, my suggestion to libertarians everywhere: run for office.  Write an op-ed.  Tend to the public sphere.  It is your manly duty. 

Saturday, November 15, 2008

Open question.

We would like to advance libertarian principles in American policy. How do we allocate our time and treasure most effectively? Do we focus on the biggest long term threats to freedom? Things like entitlement reform, health care reform, free trade, global hearts +minds, etc. Do we push hardest on areas where we might have public opinion in our corner already? Issues like school choice, fair tax policies, protecting speech and privacy and reducing government waste seem like good candidates.

Do we push for huge changes or collaborate for incremental positive steps?

Friday, November 14, 2008

This Amorphous Bailout

At his Wednesday press conference, Hank Paulson came clean that, no, he didn't intend to use TARP funds in the way he previously agreed promised was apparently bound by law said he might use them--namely, to buy up bad securities. We'll now be using it to recapitalize banks directly (so they can resume lending, remember? remember guys? resume lending, right?) and to free up consumer credit. Bailouts for the auto industry and credit card companies appear imminent.

Tyler Cowen reflects on his own bailout position. That one of the more intelligent bailout-backers finds the need to reassess is troubling.

Here's another bailout-backer backpedaling a bit.

Here's Arnold Kling, who I've agreed with the most consistently since this whole thing went down. Kling posts often, and many of them reach beyond my understanding of macroeconomics, but this is him at him most lucid and organized--a compendium, of sorts, of Kling-on-Bailout. A nice read.

The question, of course, is why I prefer Kling to Cowen, two macro guys whose disagreements, no matter how fundamental, exist at a level of economic comprehension that far exceeds my own. That is, in response to the question of whether I have a rational, reasonably-well-reasoned preference of Kling over Cowen--the answer is no.

Why the Kling preference, then? His zombie-banks approach is intuitively appealing, for one, and his dexterity in BS-sifting is considerably greater than most. More than anything, however, is the congruence in terms of conceptualizing the market. Kling is a Hayekian on these questions; so am I. Everything about Paulson and TARP is a bad idea because it runs counter to everything Hayek has to say about markets, information, and the relationship between these as a function of centralization. What is growing abundantly clear is that Hank Paulson has an incredible amount of power and no idea how to use it. This is no knock on Paulson, because no human being could possibly know how to coordinate markets in the way Paulson is being asked to coordinate them.

Then again, this last sentence should not read: "Paulson is being asked to coordinate them." This is a gross error on my part. Paulson has asked to coordinate markets in this way; Paulson has repeatedly threatened economic ruin upon those who would oppose his coordination of markets. I'll repeat: Henry Paulson is a tyrant. Unfortunately for us, he is not one of the cleverer tyrants.

Thursday, November 13, 2008

Global financial crisis explained

Bad debt, mortgages, etc = pie. Insert preferred villain as LardA##

Sad but true? Well, sad for sure.

From "Overheard" in the WSJ this morning:

Circulating in Asia, a view of how the Chinese stimulus package fits in history:

1949 (Chinese revolution): Only socialism can save China.

1979 (Deng Xiaoping reforms): Only capitalism can save China.

1989 (Fall of Berlin wall): Only China can save socialism.

2008 (Global crisis): Only China can save capitalism.

A recent discussion on TARP

“There are no atheists in foxholes, and no libertarians in financial crises.”
-- Paul Krugman- Economist and New York Times contributor

"In a credit crisis, a central bank should lend freely against good collateral at a high rate of interest"-- Walter Bagehot, Editor of "The Economist" in the 1860's

I've been thinking that I could and should write something about the extraordinary events of the past weeks and months, and the extraordinary request by Hank Paulson for a $700 billion dollar fund to use at the Treasury's discretion. Most of you who read this note will probably be surprised that I support the Paulson/Bernanke/Bush part of this plan. Clearly I and my industry are in "the foxhole" currently. I will not blame anyone who dismisses this note as an abandonment of principle under fire.

It is easy to point out many policy prescriptions that, had they been followed, may have prevented this mess. The mistakes at the government level were myriad 1) Massive government incentivization of home ownership 2) Massive government funding to assist homeownership 3) Legislative extortion of lenders to lend to those who should not have borrowed. 4) Persistent positive inflation causing money illusion and over-borrowing 5) Accounting Rules which were pro-cyclical and did not promote transparency or honesty. The list goes on.

However, none of this is relevant to the world that we live in. Here is the case as I see it, and how this action can be supported. Keep in mind that masochism is not policy and schadenfreude is a particularly pointless emotion. Also keep in mind that I totally disagree with Paul Krugman, and Libertarians can support action in the real world without sacrificing their beliefs. The fact is that in present form our "financial markets" are not free. For better or worse, in the wake of the Great Depression we decided that the act of providing long term credit to those who needed/demanded it was in many ways a social function that needed to be highly regulated. What we have is an intricate web of public and private actors, goals, interests, and incentives that form our financial market.

It is tough to think of a good jumping off point to explain the current financial situation, but here goes nothing. Let’s start with the fact that, our currency, the dollar, is a fiat currency. This means that our currency is NOT freely convertible into any recognized store of value (e.g. gold) AT A RATE SET BY LAW (it is of course freely convertible into almost anything at rates set by the market--a hugely important point). In other words, all that it is backed by is the full faith and credit of the U.S. government and, by extension, your tax dollars and your productivity (assuming we don't have a revolution). The Department of the Treasury is responsible for the management of the supply of this fiat currency in concert with the Federal Reserve. What does this mean?

Here is the normal, semi-Faustian bargain that the people have with the managers of a fiat currency:

1). Rational economic agents recognize that the monetary authority will permit and even desire mildly positive inflation over time because the central government will tend to run deficits and issue debt and, as the nominal value of debt is fixed, inflation will erode the real cost over time.

2). These same rational economic agents quickly learn to treat the currency as a unit of account, but not as a store of value. Immediate consumption occurs in terms of the currency, but stored productivity (savings) occurs in real or financial assets that offer positive or perhaps neutral real returns (stocks, bonds, houses, gold, coins, art, etc.)

3). As time marches on, rational economic agents additionally recognize that their wealth can be increased by borrowing in nominal terms of the unit of account, and investing the borrowed money in real assets (taking a mortgage). Lenders, in a stable positive inflationary environment, can price fixed nominal debt in such a way that they earn a positive spread over time. Everyone is happy.

Occasionally, in periods such as the years leading up to 2007, markets enter manias where flawed assumptions and flawed math lead everyone to believe that the nominal prices of certain real assets will never again go down. When everyone reaches this conclusion, there follows a massive expansion of credit as people attempt to capitalize on this opportunity to build real wealth. For the purposes of this piece, I will just assert that this happens without trying to explain its genesis. It can be seen over and over in the historical record. We have just had one of these in residential and commercial property.

What is the aftermath of such a "mania"? It is important to know the answer, because we are currently there. There comes a time when people start to realize that imprudently high prices have been paid, and perhaps the stored value of their productivity is not safe after all in their recently acquired assets. They try to sell them. If they all try at once, we have a real problem. Why? Remember that the nominal value of the debt that they incurred in the unit of account (the dollar) is fixed. However, the price of the real asset is floating (or sinking in this case). When you have a massive increase in the supply of an asset priced in dollars, the price of that asset in dollars goes down. At the same time that this is happening, lenders start to realize that some horribly imprudent loans have been made, and that they are going to have problems. They begin to call for more collateral to support the loans they have made, and to stop making new loans to protect their own balance sheets. Collateral calls force asset owners to do more selling, further depressing prices. At some point, equity in these assets (value of asset less value of debt supporting asset) disappears. When that happens, the asset owner loses all incentive to continue to pay for and manage the asset. He or she gives it back to the bank in order to satisfy the debt. This is a disaster for banks. They operate on preciously thin capital cushions. For most, an 8-10% loss of asset value would make them totally bankrupt. They do not want to own and manage real assets. They want to own paper claims on future cash flows. Banks tend to sell assets acquired this way almost immediately, perpetuating a downward price spiral. Eventually the reduced value of all the assets on the books of these banks falls below the value of their liabilities in terms of customer deposits and other borrowings. This is called insolvency, and leads to bank failures.

If the only result of these events would be that bad borrowers and bad lenders lost wealth and capital, the proper response would be to simply allow it to play out. However, the particularly vicious reality of a debt-driven asset deflation cycle such as the one I’ve laid out is that the severity of the cycle will harm otherwise prudent borrowers and lenders that potentially need not have been harmed. The Great Depression is the ultimate example of this situation. During the Great Depression, real GDP decreased by a third, and nominal GDP decreased by half. Suffice it to say, owners of assets do not retain much wealth in situations such as these, no matter how prudent they are. Outcomes such as these are truly disastrous for everyone, no matter what “street” they live on. The American people have far more debt today (and far more wealth) than they did going into the Great Depression.

Ben Bernanke is a student of the Great Depression. He knows (or believes) that the transmission mechanism which turned a business downturn and then recession 1929-1930 into the Great Depression was a debt-driven asset deflation cycle which caused a collapse in the banking system, a collapse in lending, and ultimately a collapse in the money supply. This is a view supported and promulgated by Milton Friedman and Anna Schwartz in their seminal work on money and inflation. No matter how likely you think this scenario is (for the record I think it is highly unlikely), it is to be avoided at all costs. I promise you that he has no vested interest in saving “Wall Street” other than his certainty that the potential (however slight) exists for enormous pain to be felt on Main Street.

Now let’s consider Hank Paulson’s view from the Treasury. He knows America as a nation is immensely wealthy. This is because we have the most productive labor force in the world that has flourished in a mostly-free-market regulatory environment that encourages wealth creation and risk-taking. It is also partly because of, and related to, the fact that people all over the world have recognized this and lent us their money to use to create wealth. They have done this lending in exchange for debt denominated in U.S. dollars. Most of this lending (or equity financing) has been to the private sector, but a lot of it (2.5 trillion) has been foreign lending to the U.S. Government. Since the start of this financial crisis last September, the U.S. dollar has actually performed remarkably well versus the rest of the world’s currencies. The dollar is roughly unchanged over this time period. The implication of this is that while foreigners may have been selling riskier dollar-denominated assets, they have then held the cash in U.S. dollars, or used the cash to purchase U.S. Treasury bonds, which are still perceived to be the safest asset in the world in terms of retaining principal value. The nightmare scenario is that you have a debt-driven deflationary cycle which engulfs the entire financial system, causing foreigners to totally lose their faith in its integrity as a whole. The flight of capital out of dollars and out of our country would add immeasurably to the pain of any downturn. It would dramatically increase the cost of capital for every project imaginable and harm our future wealth in a way that would take a very long time to repair. No matter how you feel about “foreign capital”, the reality on the ground is that our current standard of living requires billions of dollars of it to flow into our country every single day.

Let’s fast forward to today and then talk solutions. I have chosen to take at face value the fact that Paulson and Bernanke believe that there is a non-zero and growing chance that we will have a total collapse in our banking system. The ongoing stress in the credit and interbank lending markets corroborate this reality. The price tag of such a collapse is unknowable, but suffice it to say, it would be trillions and trillions of dollars. It will make $700 billion seem like a tag sale. The Treasury hopes that by buying assets from banks that can afford to sell to them, the collapse will be averted and the system will have time to absorb its losses in a rational manner. The optimal outcome is for good banks that are currently caught in the vortex to survive, and for bad banks and managements to go out of business. In some sense the Treasury’s plan can ensure this outcome by paying a price for assets that will bankrupt imprudent banks and recapitalize and buttress prudent ones. I do not know whether or not it will work or whether or not Paulson and Bernanke are even correct about the potential for a melt down. Let’s look at four possible outcomes though:

1) Approve plan, P/B wrong about meltdown. Markets don’t collapse, perhaps the money never even gets invested, tax payers make out like bandits on what they do buy.

2) Approve plan, P/B right about meltdown. Money gets invested. Perhaps the potential meltdown is averted. If so, taxpayers make out again. If not…we have a deep and prolonged recession with awful (but perhaps lessened) consequences.

3) Vote down plan, P/B wrong about meltdown. Markets don’t collapse, we experience some further stress, we have a mild recession, and growth continues

4) Vote down plan, P/B right about meltdown. Financial disaster ensues. Trillions of dollars worth of wealth that was honestly acquired and prudently protected is destroyed. America loses its preeminent position in the world financial system. A 10-20 year depression follows.

I believe alternative four is to be avoided at all costs, and further that delay is likely to cause wealth losses in this country that far exceed the $700 billion dollar price tag of this plan, even in scenario 3, no bill, no disaster. Exhibit A is the loss of 1.6 trillion in stock market wealth on Monday, along with huge losses in bond market wealth as well.

At this point it feels almost like a coda, but I believe a purely Libertarian argument can be made for this action on the grounds that the proper sphere of government is in preventing and redressing the harms that one man may inflict on all others as a direct result of his/her actions. I promise you that many many many extremely innocent players could be deeply harmed by continued forced liquidation of real assets at fire sale prices. If this causes a halt in lending, (as it already has in many cases) folks that have no debt may find themselves out of jobs they would have otherwise retained due to business failures during this downturn. The Paulson Plan could almost be seen as forced vaccination against a communicable and fatal disease (financial panic) like polio.

A pragmato-libertarian argument is that if this scenario could be prevented at a small cost to the tax payer or perhaps even at a tremendous gain, it could stave off the avalanche of increased and restrictive legislation that is certain to rain down on us in the aftermath and that could cause decades of unnecessary below-trend growth.

A purely pragmatic argument is that if Paulson is wrong, the cost is almost certain to be negligible to the tax payer, whereas if he’s right, the costs will ultimately be much much higher than $700 billion. In either case, he should have the ability and freedom to try.

You should be angry with our government and your representative for a pattern of action lasting over 70 years that was a major contributor to this problem. You should be angry that the mechanism for getting this passed seems to be stuffing it full of unnecessary goodies. There is plenty of blame to be leveled at both Wall Street and Main Street for the massive expansion of lending/borrowing which led us to this point. However, you should not let any of this stand in the way of the fact that almost no matter how small the probability of a total collapse in our banking system is, the weighted present value of such a collapse is likely to far exceed whatever losses we may all incur in an attempt to invest $700 billion dollars to unclog our banking system and allow for an expedient resumption of the necessary credit which is the engine of our financial system and economic growth.


Michael W. Griswold