Concise update as of Dec. 16, 09

Baseline Scenario from Dec. 16, 09 takes up Paul Volcker’s “Wake up gentlemen. I can only say that your response is inadequate.” comment to Wall Street.

Volcker is calling for more enlightened regulation and use of constraint of financial activities (my words, LSW).
Johnson asks how Volcker can prevail over the banks when “Even President Obama was reduced, yesterday, to asking the banks nicely to lend more to small business – against which Jamie Dimon will presumably respond that such firms either (a) are not creditworthy (so give us a subsidy if you want such loans) or (b) don’t want to borrow (so give them a subsidy). (Some of the bankers, it seems, didn’t even try hard to attend – they just called it in.)”

The answer is, according to Johnson that Volcker that Volcker is “moving the consensus”. As Johson says, “Paul Volcker wants to stop the financial system before it blows up again.”

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