Four blog entries from Paul Krugman today --

[DeepModem Mom]

NYT: October 9, 2008, 6:31 pm
Please go away

The last thing we need:

"President George W. Bush will address the nation tomorrow to tell Americans they should remain 'confident' amid falling stock markets and a worldwide credit crisis, administration spokeswoman Dana Perino said. The president wants to 'assure' the country that Treasury Secretary Henry Paulson and other administration officials are taking 'every effort to stabilize our financial system,' Perino said. 'Economic officials are aggressively taking every action,' she said. “The Treasury is moving quickly to use new tools to improve liquidity, which is the root cause of this problem."

And by the way: liquidity is not the root cause of this problem. It’s terrifying that the Bush administration still thinks it is.

*

October 9, 2008, 6:24 pm
Must reading now

I would be remiss if I didn’t link to the insta-booklet from Vox EU, Rescuing our jobs and savings. I agree completely with Baldwin and Eichengreen’s summary of what must be done — this weekend, if at all possible:

"Policy makers must move boldly to stabilise the financial system. The basic elements are:
A quick bank recapitalisation with global coordination
A guarantee of deposits and/or loans with global coordination
Further, coordinated macroeconomic stimulus."

*

October 9, 2008, 6:18 pm
What happened today?

Tough to write a column — I mean, nothing much going on in the financial world …

Seriously, I’m sure we’ll be hearing all kinds of explanations of today’s drop — it’s Paulson saying that he’ll inject equity, or Obama’s rise in the polls (yes, seriously, that’s the right-wing line), or some obscure ruling by some government agency.

But you want to remember Robert Shiller’s classic real-time study of the 1987 crash. Basically, the crash had nothing to do with any news item. Investors sold because — drum roll! — prices were falling....

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October 9, 2008, 3:22 pm
Dow 9,000!

Stock prices are, however, the least of our worries. The money markets are frozen; the TED spread is 4.14%.

G7 meeting tomorrow, IMF-World Bank over the weekend. Now is the time for major action — an announcement of coordinated capital injections, liquidity measures, and more. If we’ve had nothing except vague assurances by Monday ….

http://krugman.blogs.nytimes.com/