Friday, February 22, 2008

Save the Country; Save the Banks

"Janet Yellin, president of the [Fed] of San Francisco, ... said, when the time comes, the Fed will have to move in a 'timely way' to remove the stimulus to prevent inflationary pressures. ... The Fed doesn't want its recent interest-rate cuts to be perceived as bailing out markets, Ms. Yellin said, adding that people are taking losses on bad bets, and its ridiculous to suggest otherwise", WSJ, 13 February 2008.

"The banking industry, struggling to contain the fallout from the mortgage debacle, is urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government. ... The fact that the plan is receiving serious consideration suggests that the level of concern in Washington as housing problems worsen. ... "Everybody is looking at everything,' [FDIC] Chairman Sheila Blair said. 'The door is not closed on anything'," WSJ, 14 February 2008.

Madame Yellin, we are not that stupid. That "people are taking losses' is irrelevant to whether or not the Fed's actions were bailouts of markets. The issue is: are the losses they're taking smaller than they would have been had the Fed done nothing. Does this nitiwit think we are all so stupid?

Consider Blair of the FDIC's statement, "The door is not closed on anything". Does that include deceiving the public about the inflation rate? How dare you ask? WC Varones has a 14 February 2008 post on this article worth reading at as does Yves Smith at


Buzz Saw said...

There is not one person in the fed gub that is honest, competent, and effective. Sigh.

Independent Accountant said...

Buzz Saw:
This is a problem with respect to foreign policy also. See my 6 August 2007 post.