Wednesday, November 12, 2008

The memory hole

On Sept 29, Congress voted down the original Paulson Plan, where he sought $700B to buy troubled assets from banks.

On Sept 30, the responsible media, and Brad DeLong blamed the subsequent drop in the stockmarket (which was not even that subsequent) on Congressional Republicans, and declared the vote to be a terrible mistake.

On Oct 2 (approx) TARP was finally passed, and there was wide rejoicing, as the responsible media declared it a victory for right thinking people.

On Sept 30, the day after TARP 1 was killed, the S&P opened at 1164. It has since fallen to 850 despite TARP 2 being passed. Moreover, Paulson has abandoned the plan behind TARP 1, and instead is doing what TARP 2 enabled him to do but TARP 1 did not.

I have yet to see a single story retracting any of the pieces of received wisdom that were widely distributed by the responsible media on Sept 30.

1) The stock market decline on Sept 29 had nothing to do with TARP 1 failing.
2) TARP 1 was a bad plan, and it was good that it failed.
3) The original Congressional vote against TARP 1 was correct.

Note that all of this happened two months ago, and yet the recorded history is completely different from actual, easily recalled events.


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