12 Oct 2008

Larry Kudlow Sells Out Even More

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On Friday the WSJ ran a truly awful op ed that blames banking crises on Thomas Jefferson (I’m serious); I have done my best to organize a response. And yet Kudlow praises the article. Kudlow goes on to explain:

Paradoxical as it may be, strong government actions to stabilize banking are necessary to preserve the free-market-economy system. No free-market economy can survive without stable banking and credit. Without readily available credit, entrepreneurs can’t put their new ideas into commercial practice. And without that vital innovation, economic growth suffers.

Right, and that’s also why we need a strong government to stabilize schooling, food production, housing, and computer manufacturing. A free-market economy can’t survive without literate people who can eat, find shelter, and email each other.

Ah but here’s the funniest part:

The trick now is to use government levers in smart and efficient ways. Banks need to be recapitalized without punishing current and future shareholders. Henry Paulson is working on this.

Yep, I have no doubt that Paulson is working on ways to smartly and efficiently transfer a lot of that $700 billion into the hands of the shareholders of Goldman and others.

I’m not going to waste my time, but I would bet 2-to-1 that before the bailout passed, Kudlow wrote articles explaining that we had to be careful about “moral hazard,” and not to reward current stockholders. Free Advice readers, you can be famous! Find such a Kudlow quote and make it into the headlines here! For a hint, try looking up Kudlow’s discussions of the AIG bailout. I bet he explains why the government had to wipe out the common stockholders to avoid moral hazard.

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