"The [Fed's] rescue of Bear Stearns Cos. will come to be seen as its 'worst policy mistake in a generation,' a former top Fed staffer said. ... Congress and analysts have deferred to the Fed's judgment. ... [Vincent] Reinhardt said the bailout 'eliminated forever the possibility the Fed could serve as an honest broker.' In 1998, the Fed coaxed private creditors of Long-Term Capital Management to bail out the hedge fund but didn't have to put up its own money. If it ever tries a similar maneuver on a Wall Street cohort, the said, 'The reasonable question any person in the room will ask is, "How much money will you contribute to the solution?''", WSJ, 29 April 2008.
The WSJ is too kind to Helicopter Ben (HB) (1590 SATs). HB ain't stupid. I doubt HB believes as much in the significance of "core inflation" as he does the tooth fairy. I conclude HB believes as I do, core inflation was invented to deceive the public. This is now permeating the MSM. See my 24 April 2008 post citing a Fortune article. I agree with the WSJ, HB lacks the guts to tell Henry Paulson and the inflationists "get lost". HB is Clark Kent, not Superman. Would HB call a press conference to explain to the American public what he is doing, who he is helping and how? No way.
I agree with Reinhardt the Fed bailout was a mistake. However, Bear was not bailed out, the rest of the Street was. Was this mistake more serious than lowering interest rates with the dollar collapsing? More serious than the Greenspan Fed igniting the housing boom? As for asking the question, welcome aboard Reinhardt. What do you think Henry Paulson has pushed for months? Using public funds to bail out Wall Street firms. See my 7 April 2008 post, among others.