Niall Ferguson, Larry Summers, Tim Geithner, and Ben Bernanke all share at least one goal:
Maintain asset prices, especially home prices, well above their free market level, by any and all means necessary. This includes massive taxpayer-funded intervention, as current subsidies, or as future subsidies (aka loan repayment guarantees).
Almost all homeowners support this. That’s over 60% of our population, and a higher % of voters, so 80-99% of politicians support it. Almost all company managers – and therefore their lobbyists – support it, because switching to a lower asset price regime would put us through a (temporary) recession that would put them in danger.
So hearing a chorus of people from a broad spectrum, including Niall Ferguson, vote for asset price supports (e.g. gobs of cheap money) is not a sign of the policy’s ultimate economic effectiveness. It’s just a sign that a lot of people’s ox will be gored in the short run by the alternatives, and most people are driven by their personal short-run outlook.
