Sunday surprise: Fed steps into credit crisis
Enhancing “the stability, liquidity and orderliness of our markets,” or pouring gasoline on a flame?
2 Responses to “Enhancing “the stability, liquidity and orderliness of our markets,” or pouring gasoline on a flame?”
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Bernanke’s claim that this is a liquidity crisis is a lie, frankly. A liquidity crisis is where a bank has short term debts and perfectly good long term assets. They are fundamentally sound but have difficulty liquidating assets to pay debts. That doesn’t describe the current situation at all.
This is a credit crisis, a problem of enormous amounts of bad investments, loans made that won’t be paid. Bernanke is creating more dollars to buy this toxic waste, bailing out the financiers and putting the burden on the taxpayer. In the process, he’s destroying the dollar.
The problem has been created by the Fed (Greenspan and Bernanke) and the Federal deficits (Bush). Since Bush was elected, the U.S. has had continual expansionary monetary and fiscal policy. Even the Keynesians suggested you must occasionally turn off the stimulus.
Bernanke *might* avert an officially recognized recession (but I suspect not), but it’s 100% certain he’ll wreck the dollar, and make us poorer, all in order to save the hides of well-connected financiers. (Bear-Stearns isn’t even a bank, and isn’t under purview of the Fed.)
Nouriel Roubini hits the nail on the head:
http://www.rgemonitor.com/blog/roubini/249924
Jim Rogers has the right solution: Abolish the Fed
http://www.cnbc.com/id/23588079
Risibility
http://www.theonion.com/content/news_briefs/jpmorgan_chase_acquires