I'm just a layman here, so I have no idea if this would help with the underlying issues, but wouldn't it be possible to simply shut down trading on all world stock markets for a couple of weeks while these folks get their shit together? That would staunch the hemorraging at least, I would think.

How hard would it be to get everyone on board for a two-week trading moratorium?

A Plan! A Plan! My Kingdom for a Plan!

Jennifer:

You mean a "stock-market holiday"? Better idea than anything the Bush team of geniuses has come up with so far.

Again, we see the absence of leadership. The G7 came to the USA, for crying out loud. And they found the USA to be -- still -- led by a functional moron who only knows how to mouth platitudes in a slurred Texas twang.

The Bush team is completely helpless in the face of utter disaster. Crisis of confidence, indeed.

Seriously, did anyone really expect the G7 to come out with a concrete plan after one weekend. I mean, they make decisions at a glacial pace, even when they are relatively easy decisions. This one, I suspect, is difficult. A show of unity is actually a lot better than what usually comes out of a G7 meeting. Part of what is driving the speed of this whole meltdown is panic fueled by the speed of telecommunications in the modern age.
In a Hobbesian environment are threats that we are running out of time going to make people cooperate? I tend to think not, but maybe I am wrong.

I'm not so sure that Paulson wants a solution. If the economy is going to go to hell, why not let it drop all the way into nothingness?

The economic problems will keep Obama tied up and from enacting any progressive reforms. Four years from now, they can make him a pinata.

I'm not sure if a trading holiday would help, but at this point, it couldn't hurt. So far, nothing has helped - not propping up AIG, not $700 bil, not banning shorts. Surely, the Bush admin is utterly incompetent, but really, so much damage has been done wrt the subprime/CDO/CDS/commercial paper debacle that I think the storm just has to play out its course until the healing/rebuilding can begin.

Bush already wasted two weeks with the non-starter "wheelbarrows full of cash" bailout plan, to pander to Paulson's banker pals.

Can we just impeach him now?

in the past, the U.S. would lead, but now we find Europe--Europe!!!!--pushing out ahead of us. Clearly Paulson is being dragged forward on a plan that economists (e.g., Krugman) were saying two weeks ago was needed because the Paulson plan just wouldn't cut it. So again the last few days Bush gives the bluster of leadership when he is being (slowly) reactive. The American Age is over, folks. How quickly Bush brought it to an end!

I'd like to see some of the best economic minds allowed to come up with a quick plan: George Soros, Warren Buffett, that guy at US News and World Report (Zuckerman?). Nouriel Roubini is another expert.

ASK them as patriots to come up with a plan and do what they conclude.

Sure beats doing what Paulson said.

We have "prepared a certain number of decisions"
France and Germany

We have "appealed for patience"
United States

We will"take decisive action"
G7"

We will "take all necessary steps"
G7

We have "staged repeated displays of unity."
Group of 20

We have done "the absolute minimum required not to have their Washington DC meeting on Friday, October 10 characterized as an abject failure."
G7

Is it just me---or do all of these ostriches, with their collective heads stuck in the same bit of sand, sound just like a John "I-don't-know-diddle-about-the-economy" McCain economic speech?

We are running out of time.
Hilzoy

That may prove out to be an understatement....

The Dutch Minister of Finance, who has been in Washington for multilateral talks on coordinating action on the financial crisis, went on the local news today and with surprising bluntness said that his American counterparts seemed strangely disengaged, almost lackadasical about working towards a solution. He expressed a little understanding for the fact that the US has a very lame duck administration, but that did not temper his frustration with this major critical player was on autopilot at a critical time.

>it be possible to simply shut down trading on all world stock markets

I don't think you can do this.

First, the announcement (or even strong rumors, and you know there will be leaks) would make things even crazier than they are now - if you can imagine that - as people try to "lock in" positions.

And some of those positions would definitely be biased towards cash (meaning a big selloff) as there are many entities (individuals and things like pension funds) that as a matter of course turn equities into cash.

I have a friend that freelances. He is a pretty gutsy investor and he has always played the market when he is working and then slowly cashed out during down times. Basically liquidating the relative dogs in his portfolio.

What if he woke up one morning and found out he couldn't do that for not a day, but for months? He would be totally screwed, he couldn't pay his mortgage, he couldn't buy food...

This isn't a rich guy by any means, no dot-bubble millionare. The 90's spawned a lot of people like him, and I suspect many very small businesses work this way, too. Nobody would buy the "commercial paper" of a >it be possible to simply shut down trading on all world stock markets

I don't think you can do this.

First, the announcement (or even strong rumors, and you know there will be leaks) would make things even crazier than they are now - if you can imagine that - as people try to "lock in" positions.

And some of those positions would definitely be biased towards cash (meaning a big selloff) as there are many entities (individuals and things like pension funds) that as a matter of course turn equities into cash.

I have a friend that freelances. He is a pretty gutsy investor and he has always played the market when he is working and then slowly cashed out during down times. Basically liquidating the relative dogs in his portfolio.

What if he woke up one morning and found out he couldn't do that for not a day, but for months? He would be totally screwed, he couldn't pay his mortgage, he couldn't buy food...

This isn't a rich guy by any means, no dot-bubble millionare. The 90's spawned a lot of people like him, and I suspect many very small businesses work this way, too. Nobody would buy the "commercial paper" of a less-than-100 person firm, but they wouldn't want to just hold low-return cash either.

So handling equities as a storehouse of liquidity seems like it would be common for them, too.

"I'd like to see some of the best economic minds allowed to come up with a quick plan: George Soros, Warren Buffett, that guy at US News and World Report (Zuckerman?). Nouriel Roubini is another expert."

I agree completely. In fact, Nouriel Roubini tells an interesting story in his blog about how he and Soros and 'other economists' were contacting senior aides in the House on the very day of the last House vote, trying to get the legislation changed to include recapitalization of banks. Paulson had been against having the government take an equity stake in banks (mostly for ideological reasons) but these economists felt that such a recapitalization plan was absolutely necessary. They were told that there wasn't enough time to rewrite the legislation. Finally the economists and aides came up with a plan whereby the word 'assets' was defined by Jim Moran in debate that day, not only as mortgage debt but also as preferred and common shares of stock. Without that definition being entered in debate the 'bailout bill' probably wouldn't have legally authorized the government to buy bank stock and we would really be up the creek now. Paulson, after all, has a BA in English from Dartmouth and an MBA in Business Administration from Harvard. Not saying he isn't smart, just that he doesn't have the background to analyze such an incredibly complicated economic situation. I hope that by now the government is calling people like Roubini and Soros for help rather than the other way around.

OK, let's all step forward and lend some of our entitlements to support a strong, global bank. Hilzoy seems so concerned.

, lets all step forward and lend some of our entitlements to support a strong, global bank.

I will be the first since Hilzoy seems so conserned.