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Wednesday, December 17, 2008

John Authers' tales of dumbfuckery

John has a holiday roundup of your four biggest policymaking errors of 2008! uh, only four?
  1. Ben Bernanke and the Fed for totally wigging out in January and cutting interest rates too much after fears of the systemic consequences of a collapse of the monoline insurers (holy shit, remember those?). These cheap monies scared teh markets and led to a final wave of commodity speculation, because the BRICs were going to save us, remember. This was much like double-bouncing your little brother directly off of the trampoline.
  2. Jean-Claude Trichet and the ECB for actually raising interest rates 25bp in July, because its not like there was a credit crisis going on. The ECB hates inflation so much.
  3. Everyone in the US for letting Lehman collapse. I remember being in favor of this at the time, because, you know, capitalism. But then creative destruction immediately turned into regular destruction, with money and commercial paper markets seizing and all sorts of fun CDS contracts being breached that no one was ready for. The Fed has had the entire financial system on an intravenous drip ever since. The point is I'm dumb. More morphine please!
  4. The last d'oh! goes to the Bush administration, who else, for their impeccably designed rescue plans. The TARP bailout dealie was originally meant to recapitalize banks by having the Treasury buy their toxic (shitty) assets. Academic nerds said um hey, just give them the money then. So they did. But Treasury still said it was going to buy the shit, for price discovery, even though the price had long since been discovered at zero. Treasury then waited forever and finally said haha fuck it, not buying! This was all meant to calm teh markets which totally worked.
Mr. Authers rounds out the list with 2008's "most dramatic admission of error" from serial bubble-blower Alan Greenspan who said
"Those of us who have looked to the self-interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief."
This of course is not an admission of error at all.

We all remain in a state of shocked disbelief that a libertarian was in charge of the federally mandated institution designed to control our monied populations' baser instincts. Markets!

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