From George Will yesterday, this great quote:
The Fed has no mandate to be the dealmaker for Wall Street socialism. The Fed’s mission is to preserve the currency as a store of value by preventing inflation. Its duty is not to avoid a recession at all costs; the way to get a big recession is to engage in frenzied improvisations because a small recession, aka a correction, is deemed intolerable. The Fed should not try to produce this or that rate of economic growth or unemployment.
It’s too bad Bernanke and company don’t share Will’s view.
UK House Bubble
Bubble Meter
Mish's Global Economic Analysis
Northern Virginia Housing Bubble Fallout
Ohio Fraudclosure
Breaking News Relevant Articles© Copyright 2012 Housing Doom | Copyright© 2011, AuthentiCraft, Inc.
Twist-
Are you sure you haven’t had any “dark blue sedans” or a cable tv van parked down your street for an unreasinable amount of time? Lol! Someboby somewhere might put a frown-face on your “file”.
I’m sure twist has been on the rabble rouser list for a long time already.
billydlight, JimAtLaw-
I think my kids would think that calling their mom- who’s favorite radio station is classical and who’s dress style tends toward khaki and long skirts – a “rabble rouser” pretty funny.
I’ve never really thought of myself as the “Bad Girl of Housing”, but I suppose I’m not on everyone’s favorite blogger list. If I see any suspicious vehicles out on the street though, I’ll let you know. : )
I was in the bank the other day making a very small deposit. The subject of bailouts came up. I asked the banker why bail anyone out? Let the banks fall just like everyone else. She said that would be bad for everyone. Bail the banks but noone else. There are some very smart people on this site. Would there be chaos?
I have to disagree with George Will (would not be the first time). I have changed my mind on the issue. I would think that the contagian effect would be very bad if we let the banks fail, because it already has been bad even with the infusiions of cash.
Without the fed greasing the works with cash the economy would lock up. Already the auction rate loans have dried up and very solvent entities like the Port Authority of NY NJ have had to pony up 20% for normal operating expenses.
Ah, but what are we comparing it to metro? Are the possibilities really limited to doing nothing or giving our taxes to the rich bankers who blew them speculating and helped others do so?
How about giving ME back my money instead? I’ll spend it, I promise, and do just as much for the economy if not more! Or more to the point, how about tax rebates, or reduced tax rates going forward, for those who were actually responsible over the past few years? Or how about just for everyone? Tax cuts are a well known device to jump start the economy – how about broad cuts, rather than targeted social welfare for bankers?
And before you say “that’s not realistic,” how is it less realistic than, oh, I don’t know, having the Fed bail out hundreds or thousands of millionaires working at Bear Stearns and all their investors?
The idea of having the government bail out speculators, including banks, is morally repugnant, and IMHO, is NOT the only solution that should be on the table.
Jim,
I agree it is repugnant but immoral? I am worried more about the collateral damage than how it is unfair to give the wealthy bankers a pass.
Just remember these bailouts are not free, they will come with more regulations and oversight which will likely be coming with the next president.
The problem is that Will is not on point. The Fed is simply an expression of social policy. If the political system decides that the Fed is going to turn into the new version of the Resolution Trust Corporation, or a social welfare agency, then that’s going to happen.
The point is that, where there are few very individually enforceable rights (you, the reader, have virtually none), the political system expression of that is fluid boundaries between branches of government and, indeed, government and the private sector. Sound like an organization you know?
Yeah, it sounds like the Federal Reserve System. There is no economic rationale behind the Fed, but there is a political rationale.
The thing to look for now is the “liquidate liquidate liquidate” point–NOT the point at which whatever expression of the political system engages in “monetization,” or a “bailout” or a “criminal conspiracy with bankers.”
No, the point to note is when that STOPS. That is, when will there be a Hoover-style moment, when it becomes clear to everyone that the power in the country is removing government from the society, letting the society decline.
But since we don’t have sufficient individually enforceable rights (no right to housing, no right to medical care, no right to education), there’s no way, currently, that we as individuals can put a stop to social decline.
That’s the point. Even a decline in economic activity, which is what is going on, is beside the point when you’re simply talking about social conditions declining. That’s fundamentally what’s happening, and there is no mechanism to stop it.
Oh yeah, there is one: ban housing evictions. Then at least people will stay housed.
But I forgot–that’s moral hazard. And we can’t have moral hazard, even if there’s no society left to have moral hazard about.
Sounds like we’re in the process of destroying America in order save America.
I’m glad we learned from the Vietnam War.
I forgot to mention, since when has Will been the champion of the little guy and berator of the fat cats? This is more of his disingenuousness. I think he has an ulterior motive for writing this piece.
Let’s all stop paying taxes, and make the banks finance the war! Or better yet, let’s send the bankers to Iraq, they’re the moral hazard.