Sunday, April 19, 2009

Regulating Bubbles: Gas Out or Gas In?

Politico discusses today the rather remarkable Obama proposal to assume the duty of identifying economic bubbles and de-bubblifying them, thereby ending the perpetual cycle of enthusiasm yielding to fear that we call the business cycle.

We leave it to the insightful writers at Politico and elsewhere to note the problems in doing such, not least when a politician does so for ideological or purely political reasons.

Instead, we note that the very President who makes this pledge also pledges to devote unprecedented dollars to the development of as-yet untested "green" energy initiatives. If that isn't creating a bubble, we don't know what is. For those who question our judgment, we appeal to the ethanol debacle of 2007-08.

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