"It doesn't seem to me that a lot of the decisions we are going to have to live with for a long time have to be made by Friday," Robert Lucas, a Nobel prize winning University of Chicago professor, told Bloomberg in an interview Friday. "The situation may get urgent but it is not urgent right now. Right now it is a financial sector problem."
Well, doesn't that just say it all. A University of Chicago professor who is as clueless as the Princeton University professor who runs the Federal Reserve.
Of course, everything about this statement is wrong. The fact that companies cannot borrow, the fact that businesses aren't able to consummate transactions, the fact that student loans are going to be hard to get and mortgages extremely difficult to acquire in the hardest-hit areas, are all upon us now.
Just a financial problem? You mean like in 1929? Just a few banks, like in 1929?
It is stuff like this that is going to wreck this economy and it will wreck it in a couple of weeks. We are in so much trouble and it grows by the day.
I don't think that these professors have seen anything coming. They haven't because what is going on is all behind the scenes in places where they have never worked or understood. They don't get the way the real economy works or how fast it is deteriorating. And none of them has seen it coming.
To them I say, "Have you looked at Washington Mutual (WM) ?" Have you checked out what happened to Morgan Stanley (MS) and Goldman Sachs (GS) last week? How about Lehman, AIG (AIG) and Merrill (MER) ?
Or is it because they are "financial" they don't matter, despite the fact that finance is one of our great businesses? Do you want to have more sweetheart deals with fat-cat banks like JP Morgan (JPM) ripping off the FDIC, or do you want to have a stake in the process with the bailout plan?
The deadline here, the urgency, is all in the data and in the price of Treasurys and the valuations of all sorts of bonds. Does the deal need to be done today?
Actually, it needs to be done a year ago. These professors might sing a different tune if the biggest thrift goes under.
Maybe that will light the fire they need to get the urgency going. Hey, wait! That did happen..........