NYT Econ Journalist David Cay Johnston: It Doesn’t Add Up

From Open Left.

NYT Pulitzer Prize-winning journalist David Cay Johnston, author of Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill, has written a letter to fellow journalists that deserves wide attention, urging a fundamentally skeptical approach to reporting on this purported crisis, warning against repeating the mistakes of the recent past, reporting on other Bush Administration panics…

Here are some question to ask:

Do we need a bailout of American and foreign banks? Show us in detail the reasons for this, and the numbers: make the case.

Is there a market solution to this? If so, why impose a government solution? If not what does that tell us about our entire economic theory?

Is there a less expensive solution?

How do we know this will not just be a downpayment on a much bigger
bailout?

Is there a solution that provides direct help to those who took out these loans, rather than those who sold them?

If AIG and others are too big to fail, what does that tell us about government anti-trust policy and regulatory policy and inaction?

Why have both Goldman Sachs and Morgan Stanley made clear that they want IN on this deal? Get skeptical and ask the basic questions — who benefits, how much and what makes this plan so attractive that Goldman and MS want to participate? Ditto for GE. That they are others want to be included should prompt a great deal of skeptical questioning.

How does banning short selling of the stocks of 900 companies help the markets? (The markets are heavily biased toward the sell side, so why constrain the shorts, who often turn out to be right about stocks whose share prices has been artificially inflated.)

How is banning short selling of this growing list of companies show a commitment to “free markets,” a stated goal of this and a long lost of previous administrations?

During this short selling ban, why are there no parallel controls on insiders getting out of their positions?

Reporters, hit the streets and telephones to ask business owners if their credit lines have been frozen. Look at swings in the stock market and put the recent swings in perspective.

Look on the Internet and see all of the ads for the very toxic mortgages that are supposedly at the core of this mess. Ask why are 1.9% loans (in which you pay that in cash and the rest of the interest is added to your mortgage balance) still being sold? Find out who continues to buy these loans.

[From Poynter Online – Forums and Open Left]

One Response to NYT Econ Journalist David Cay Johnston: It Doesn’t Add Up

  1. kevin September 23, 2008 at 7:15 pm #

    I think these are all really fantastic questions. However, just because we have these problems and unresolved issues doesn’t mean we can sit on our ass and just think at the problems and refuse a temporary fix to keep it alive. Further more, if the existence of the market is threatened, then there is the priority of keep the market moving so there is actually a market left for these questions.

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