Thursday, April 17, 2008

More Fed Newspeak

"I want to briefly provide some thoughts on issues related to the so-called too-big-to-fail (TBTF) problem. As you may know, I have long considered this an issue of particular importance and relevance given the growth of large banks, their increasing complexity, and the history of government support for such institutions when they get into trouble. ... As we detail in the book, managing expectations of protection requires that policymakers take steps before a crisis to make it less likely that the failure of large or important financial institutions 'spills over' to other insitutions, markets and the rest of the economy. ... We simply cannot allow widespread perceptions of government support to pervade the financial system", my emphasis, Gary Stern (GS), Minneapolis Fed Chairman at the WSJ, 10 April 2008.

Fed "Chairman Ben Bernanke said Thursday that future financial crises can't be completely prevented. ... He said it was 'critical' for policy makers to talk to market participants to monitor conditions. ... 'We do not have the luxury of waiting for markets to stabilize before we think about the future,' Mr. Bernanke said", WSJ, 11 April 2008.

"What is perfectly clear is that Ben Bernanke and Henry Paulson are using someone else's money to help bankers: our money. ... This amounts to taking a little bit of value out of every dollar-denominated savings account to pay the bankers and brokers. ... If Bear goes belly-up, so what?", Frederick Horn (FH) letter to Barron's, 31 March 2008.

Note: GS is concerned about perceptions, not substance.

Now Helicopter Ben (HB) channels the old Hillary Clinton who wanted to hold millions of conversations. Who does HB think he should talk to? A frugal elderly person whose life savings no longer produce an adequate income for him or her because HB decided to save those institutions which are TBTF? Oh, sorry, there are none. Hey HB, what do you think of FH's letter? Will you tell us he is unenlightened, or ignore him? Economic Logician, if you want to understand gold, read FH's letter.

1 comment:

Buzz Saw said...

The whole system makes me dizzy from all the bull shit fumes.