11/8/07
While reading the otherwise decent page A1 article in today’s Wall Street Journal concerning the sources and origins of yesterday’s (i.e., 11/7’s) stock market debacle, I ran across a curious sentence:
“Central banks are acutely aware of the danger posed by inflation, and declare their readiness to move quickly to combat it.”
Huh? Perhaps this argument could be made of the ECB, or even the BOJ, but the Fed? Lately, every time the legion of stentorian mouthpieces for Wall Street that inhabit our financial media begin to wail that the tough guy traders are suffering so much as a hangnail (These are the same bold free marketeers that tell the blue collar guys (but never to their faces) who lose their jobs to globalization that they ought to suck it up; it’s the wondrous “free market” at work. Besides, these seven and eight figure wise men tell us, the working types deserve it because they are asking too much money for their 8-12 hours of back breaking labor per day. They ought to learn to do something more productive, like putting on ill-advised positions that cripple major financial institutions. But I digress.), the Bernanke Fed has stood ready to provide generous succor in the form of an endless supply of credit in order to “stabilize the markets.”
The Bernanke Fed says it is sensitive to the dangers posed by incipient inflation and a falling dollar. But, by what it does, it demonstrates that it is far more sensitive to the human suffering that will result from Wall Street bigwigs’ having to suffer the ignominy of losing their jobs with seven or eight figure exit packages due to their boneheaded trades, which suddenly have become the responsibility of all of us. Think of the fallout! What, by God, will happen to sales at Neiman Marcus, Tiffany’s, and Mikimoto? We have to act!
The Fed (and the “free market” Republican administration) sees its job as follows: Socialize the risk, privatize the profit, and prop up the wise men who “make our economy work.” Let the working stiff deal with the rising prices of food and gasoline (They don’t count anyway.) and the consequences for the economy of the games Wall Street plays.
And people wonder why the markets, our economy, and our society are in trouble.
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2 comments:
Kimosabe,
Our man Bernanke is making some rookie misstakes. He has recanted his story on the economy and now believes that housing will bleed into the rest of the economy. He is talking like the Fed is doing special monitoring of bank balance sheets. He is squandering a lot of credibility here. Inflation could rise simply because of the declining confidence that he is warranting in the marketplace.
Agreed--and a Fed chief's job is made easier if he has a healthy reserve of credibility. A Fed chief in whom the markets believe does not have to be as severe in his actions as a Fed chief striving to build, or rebuild, his bona fides.
The Pontificator
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