Bear Sterns and Politics

TC sees the emerging financial and economic crisis as an event whose economic significance will be matched a few months from now by its political significance.

In U.S. politics that means the chatter about Obama's preacher, or the Hillary Clinton campaign's feud with Daily Kos, will be long forgotten in the midst of a debate about the U.S. economy. TC's view (for what its worth) is that Obama, barring a Spitzer-like episode, is going to be the Democratic nominee. Much of what Clinton is now doing looks like what you would expect from a candidate whose campaign is slowly unwinding.

In the meantime there are a number posts on the web about the economic crisis worth reading including:

1. Paul Krugman's column today and his blog (I especially liked this).
2. Harold Chorney's post on the Bear Sterns takeover.
3. This column by Nouriel Roubini, now a few weeks old.
4. And finally this post by Marc Lee [with the wonderful title Monetary policy in the time of (financial) cholera] who gets the final word:

To the extent that this financial crisis spreads to the real economy, we (Canada) will need to limber up our fiscal policy. If that happens, the first place to start is by running a deficit – a deficit will happen “naturally” due to weakening macro forces given the razor thin surpluses in Ottawa looking forward. The trick is not to start cutting spending for the sake of a balanced budget under any circumstances.