Tuesday, February 24, 2009

Japan Considers Stock Buying as Market Slides



Exactly what I said the Fed should be doing here. It would help to boost confidence quickly and be a much more effective transmission mechanism to the real economy. Far better than all these confused solutions to help banks. Bank lending is pro-cyclical anyway, so to the extent that supporting the stock market helps the real economy, that would go a long way toward helping the banks. Japan did this in 2002 and J.P. Morgan and a bunch of bankers and financiers did it in the Panic of 1907. It worked.

Read article here.

Read about the Panic of 1907.

3 comments:

Matt Franko said...

Mike,
Caught your podcast this evening.

Perhaps the public officials have fully bought into the "we're a debtor nation" line and think then it follows that all they have to do is "get the banks to start lending again" and the spendthrift American public will start borrowing to spend again. WHEN THE OPPOSITE IS TRUE!
Check the Feds latest consumer credit report and it is down 3-5% yoy, the American people are not stupid, they will not increase leverage to finance declining assets.

BTW, I heard Boone Pickens on C-SPAN this morning and he was advising Americans to NOT BUY A CAR THIS YEAR BECAUSE ALT FUEL VEHICLES ARE COMING next year or the year after.

I again will miss your bizradio bcasts and hope you find a new microphone soonest!

All the best,

Mike Norman said...

Matt,

Yeah, how sad...because this is really all so easy to fix.

cuOnTheOtherSide said...

Obama suggests buying stocks, defends econ plan

By TOM RAUM
The Associated Press March 3, 2009, 6:00PM ET

Trying to pump up the nation's confidence, President Barack Obama said Tuesday that Wall Street has been hammered so hard that "buying stocks is a potentially good deal," and he dispatched top aides to Capitol Hill to defend his plans for pulling the economy out of its deep recession.

http://www.businessweek.com/ap/financialnews/D96MRD800.htm