Friday, October 10, 2008

Economical Numbers and the Dream of Regulation

The Paulson plan which aimed to "save the US/Global economy" was a 3 page document. The number 700 billion was based on NO data points. The best brains of the best capitalist economy -Paulson was a long time CEO of Goldman Sachs- chose an arbitrary large number. An ARBITRARY number. With suggestions that the Lehman's toxic assets only can be as large as 400 billion, this number may not be enough.

With such bright minds in the leading positions of the government, I cannot understand how people can be lured with the dream of regulated markets.

By the way, here is a quotation from a real bright mind about this issue.

There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers.

Richard Feynman

PS: Have a look at this hilarious mock e-mail that explains Paulson plan as one of those mails you receive from the governor of third world central bank. According to Paul Krugman, this is not all that wrong actually.

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