"Presumably, there would have been less mortgage lending, fewer home equity loans "

not necessarily so

if the income to payment ratio were set right
you'd get
only smaller mortgage amounts and thus less lot value inflation
and i suspect
if that meant
lower induced non supply regulating
ground rents
--- here taking the form
of mortgage payments ----
then
no decrease in real economy activity

but as to the its a macro problem

i agree
only to me its a matter of effective demand management thru
say a package of ...
pri sec job creating
pri sec wage increasing
fiscal and job reg policies

Posted by: paine | Link to comment | April 02, 2008 at 08:17 AM

paine says...
to be clear

fed policy
besides lender of ghastly resort
ought to be about the dollar forex
ie
close the f in trade gap

leave direct management of jobs growth
to the executive branch
fisc deficit and reg wise
of course
as over sighted and mandated by
our people's reps over at the US congress

Posted by: paine | Link to comment | April 02, 2008 at 08:22 AM

paine says...
ryebread

"a financial engineer who pursues credit policies to directly influence the economy, whether using the Taylor Rule or some other, distorts the time value of long-lived assets "

the hi fi cap values are circularly caused
the whole hi fi set up
produces multiple equilibria
some parteo superior
to your " spontaneous "
commodity money paradigm

but nice stuffy tyrolean presentation none the less

hari

you could go crazy
trying to detect
those real "nuances "
amidst all the cover noise of hugger mugger

i suspect the after math
of the latest
excess
of spec market zeal
will be very different
from that after
either
the s and l fraud
or
the dot plop

this time " we mean business "
might amount to ....
a partial truth

Posted by: paine | Link to comment | April 02, 2008 at 10:52 AM

paine says...
"What I get upset about, (I really do!), is the idea that the current structure just needs more regulations or that current regulations just need to be enforced in order for the Taylor rule to work"

and rightly so...

but i suspect they'll try to quick shuffle
for a spell more yet
hoping the crisis is passed

then lead us merry maid like
thru a job grinder for 7 quarters

Posted by: paine | Link to comment | April 02, 2008 at 10:55 AM

paine says...
hey maybe once again they dodge the show down
in the "real " economy they deserve
for fucking over the hi fi system

what in hell do i know

but if they don't dodge it
and after all the two systems are interwired
then
this time ther might be unlike the last pair of tit twisters
a deep dark real bear of a hell
waiting for us up ahead

worse then the volcker two scoop
---the one that mortally wounded
industrial america----
maybe

and if so
the electorate will wake up and scream

we could be in for some sporting times indeed

Posted by: paine | Link to comment