Over at the Federal Reserve, Ben Bernanke is still getting some really bad press. A few examples:
- Tim Price, at the Price of Everything, uses Blackadder to help explain why a crisis of solvency cannot be resolved by the provision of any amount of liquidity, quoting Marcus Ashworth of Mitsubishi along the way:
The latest emergency measure “probably only postpones the latest series of fire sales, allowing some to meet margin calls and hang grimly on pro tem, but it does not recapitalise the financial system. In fact, it helps banks to own [impaired debt] for longer,” and it merely delays what must inevitably come — the transfer of toxic waste to safer longer term hands, where it can either be held, or extinguished.
Price has some sympathy with the recent ghoulish predictions of the FT’s Wolfgang Münchau, and declares:
A ‘new paradigm’ market environment requires a different sort of investment thinking from the traditional. Return of capital trounces return on capital when the financial markets have become essentially unhinged. Preservation of capital — in real terms — becomes the primary objective.
- Meanwhile, Paul Krugman at the New York Times reckons that the ugly economics of the financial crisis will soon create some ugly politics:
I used to think that the major issues facing the next president would be how to get out of Iraq and what to do about health care. At this point, however, I suspect that the biggest problem for the next administration will be figuring out which parts of the financial system to bail out, how to pay the cleanup bills and how to explain what it’s doing to an angry public.
Related links:
Central bankers cannot stop this contagion
