dave lj, I won’t argue against your thesis that market pricing sometimes overestimates true values and sometimes underestimates them.
What we’re discussing is what government actions should be taken in response to that fact. It’s pretty clear that, when market prices may be too high, government does not intervene effectively. (“What bubble?”) It’s also pretty clear that when market prices may be too low, government intervenes vigorously, apparently without limits. This asymmetry is often not acknowledged (e.g. “if you allow us to inflate low prices now, we promise in the next bubble we’ll do what it takes to deflate prices”), but the asymmetry is real. I don’t accept without a good argument that this asymmetric government intervention is better than no intervention. That’s why I am skeptical of your arguments for asset price and banking industry supports now.
