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Friday, September 26, 2008

Financial markets do a "Gordon Smiley" ... the real economy is next.

One of the dudes who is forever in the Randy Parker Hall of Fame is a gentleman named Gordon Smiley. In the qualifying for the 1982 Indianapolis 500, he told his pit crew "I'm either going to make this race or you are going to peel me from the wall." A true gambler with the ultimate wager. Watch this short video ...

It was Smiley's fault. If your car starts to have the back end skip out from under you and slip to the right, you don't turn right to try and save it and correct the slippage. Not at Indianapolis. You let it go and take your lumps, but live to fight on. Turn right and you are dead. Financial markets have now done a "Gordon Smiley". We need to peel them off the wall. At this moment in time I don't care who's fault it is. Blame it on Fannie and Freddie, blame it on Wall Street, blame it on me. But get that package passed. In a previous posting I suggested the urgency of the economic situation we are facing. Need more proof (thanks Phil)?

Let me say it as plainly as I can...NOW! Do it NOW! Go ahead and dither with the bailout and while you do, think of the opening to "60 Minutes". The real economy is ready to do a "Gordon Smiley" next.


Anonymous said...

Should we save Lou Reed also?

Andrew_Grodner said...

That's a funny analogy and probably better than anything that the talking heads are giving to us on TV. I think now the problem is that the politicians look at the polls and they see people do not like the idea of a "bailout". Of course, it is hard to sell the plan that you try to describe as "a rescue from financial distress" (Webster's definition). Especially when the perception is that guys at Wall Street put themselves in that predicament in the first place.

But I disagree with the characterization of the plan as bailout, and I believe it is a misunderstanding of where the economy is now and what needs to be done. When you peel someone of the wall (borrowing Randy's analogy), you do not "rescue" them to make the turn and keep going. The car crashed already and it is in pieces. The only thing that one can hope for is that the doctors at ER can now revive the driver. And that's what I believe it is - a "Revival Plan" for the financial system which basically stalled last week.

Here is an interesting link on how to sell the plan to general public as win-win situation. I am not sure how accurate it is but I would hope that both Paulson and Bernanke try to make a similar argument in plain English:

Andrew_Grodner said...

By the way, how about the Swedish solution - assuming it would do the trick, it seems much more selleable to the public: