Tue, 24 Feb 2009

Can Bernanke, please!

"Bernanke says recession to linger but banks will survive". Would somebody PLEASE fire Bernanke before he does any more damage! The banking system is full of instability right now, with so many assets having unknown value. The FedGov needs to supply stability right now. Like it or not, that means doing Either Zero or One Things, not the dozen different things that Bernanke has proposed, or the dozen different forecasts that Bernanke has made. Note that I'm not proposing that nothing happen. The choice here is between the government doing something, or the financial system doing something. As long as the government threatens to do more than one thing, or the timing of that one thing is uncertain, the instability will continue, and the financial system will do nothing itself. Who in their right mind would take any risks, when the government might screw you at any moment, like it screwed the Preferred Stockholders of Fannie Mae?

There's a reason why the Constitution prohibits the FedGov from doing many things, and binds the states not to modify contracts. Once those constraints are broken, you're on the road to rack and ruin

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