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Former Head of Fed’s Open Market Operations Says Bailout Might Make Things Worse

Posted By admin On October 3, 2008 @ 3:54 am In Featured Stories | Comments Disabled

George Washington’s Blog [1]
Friday, Oct 3, 2008

Another key insider has said that the Paulson plan might make things worse. Specifically, the former head of the Fed’s open market operation – the key Fed agency which has been loaning hundreds of billions of dollars to Wall Street companies and banks – was quoted [2] in Bloomberg:

“Every time you tinker with this delicate system even small changes can create big ripples,” said Dino Kos, former head of the New York Fed’s open-market operations . . . “This is the impossible situation they are in. The risks are that the government’s $700 billion purchase of assets disturbs markets even more.”

In other words, it might do more harm than good [3].

Mr. Kos joins a long list of other leading experts who question the bailout, including:

  • A prominent economist [11] (Nouriel Roubini) says “The Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown.”
  • A highly-regarded economist [12] (Michael Hudson) says that the bailout is a giveaway that will cause hyperinflation and dollar collapse

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URLs in this post:

[1] George Washington’s Blog: http://georgewashington2.blogspot.com/2008/10/former-head-of-feds-open-market.html

[2] quoted: http://bloomberg.com/apps/news?pid=20601087&sid=aFzDKV89fQ0g&refer=home

[3] more harm than good: http://georgewashington2.blogspot.com/2008/10/first-do-no-harm.html

[4] The Dallas Federal Reserve Bank President: http://globaleconomicanalysis.blogspot.com/2008/09/feds-fisher-says-bank-rescue-plan-would.html

[5] The former Secretary of the Treasury: http://abcnews.go.com/print?id=5887486

[6] The director of the nonpartisan Congressional Budget Office: http://www.washingtonpost.com/wp-dyn/content/article/2008/09/24/AR2008092402799.html?nav=hcmodule

[7] The former Chairman of the FDIC: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=amvlLMejTsM0

[8] Hundreds of leading economists, including numerous nobel prize winners: http://georgewashington2.blogspot.com/2008/09/prestigious-group-of-economists-slam.html

[9] Former White House economist: http://www.cnbc.com/id/26441422

[10] Nobel prize economist and former chief economist of the World Bank: http://www.zogby.com/Soundbites/ReadClips.dbm?ID=18369

[11] A prominent economist: http://www.rgemonitor.com/roubini-monitor/253762/rge_conference_call_on_the_economic_and_financial_outlookand_why_the_treasury_tarp_bailout_is_flawed

[12] A highly-regarded economist: http://therealnews.com/t/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=2408&updaterx=2008-09-26+19%3A18%3A57

[13] Many other leading economists: http://news.yahoo.com/s/politico/20080921/pl_politico/13689

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