Yet More on the Bogus Credit Crunch
Casey Mulligan has designated this “WMD week” on his blog. His point is that the Bush Administration’s expensive (and liberty-sapping) efforts to avert financial disaster were as poorly justified as the invasion of Iraq to eliminate WMD.
Although I love the spirit of his task, my problem for some of his earlier posts was that Paulson et al. were claiming that their plan would avoid disaster–not that we would get disaster anyway. So since the plan passed, and disaster didn’t happen… You see the problem?
However, in today’s post, Mulligan looks at payroll data and argues that the scare-mongering clearly was bogus. He deals with my problem by pointing out the exact timing of when the TARP, er, CPP money actually reached the troubled banks. Further, he points out that you can’t even say, “Well, once the plan passed, the businesses knew help was in sight, so they went ahead and paid their employees.” Because remember, the whole point was that even sound businesses wouldn’t be able to use short-term credit markets to make payroll without giving the banks an injection of quick cash.
