2007-12-14 — homeguide123.com
``Bailing out the banks and propping up the economy was Japan's fallacy. If we allow U.S. politicians to bail out banks by expanding the capabilities of the FHA and lifting caps on Freddie Mac and Fannie Mae, we will delay the inevitable price correction just like Japan did.''
The problem, of course, is that politicians and banking elites like Japan's approach, because it leaves power and wealth in their hands, at the expense of general economic stagnation (but that is easy to blame on external factors). Still, as I discussed on the last Radio Free Wall Street podcast, I'm not sure the US power structure is sufficiently unitary and coordinated to pull off a Japan-like "slow deflation".
Around here, we vote for getting the full correction over as soon as possible, even if it means a few big banks an brokerages have to take their medicine.
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