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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (68309)	8/30/2007 7:29:59 PM
From: Elroy Jetson	Read Replies (3) \| Respond to of 116555

There's nothing wrong with a central bank if they operate the within the constraints of reality. It was fine for Greenspan to introduce a lot of money in the month after the Asia Crisis, just so long as the money is taken back over the next few months. This is what Greenspan failed to do, and it provoked a great deal of criticism by many economists. Central banks can effectively calm panics by providing liquidity, but they can't eliminate the economic decline resulting from the underlying problem. If they attempt to do so, they only postpone this downturn for later with the compound interest of additional misdirected investment. The money has to be taken back within a short period of time, or it merely enlarges the problem. As economist Joseph Schumpeter said, "Policy doesn't provide a choice between depression and no depression, but between depression and worse depression later. Greenspan ignored this and apparently believed he was pioneering a new economic theory. What ever his "theory" was,it has failed. .

To: mishedlo who wrote (68309)	8/30/2007 10:08:17 PM
From: Sunny Jim	Read Replies (1) \| Respond to of 116555

<Bernanke proves he cannot distinguish problems from solutions.> Bernanke is obviously smart enough to sort out what the problems are and come up with solutions. My opinion is that he is perfectly capable of balancing such things but he acts far too much like a politician. For example, his job description doesn't include providing housing for the poor. His job description doesn't include providing credit for over-exposed hedge funds. His job description doesn't include ensuring that the stock market never corrects more than 10%. His job description doesn't include aiding and abetting asset bubbles. However, he watched Alan Greenspan do all these things (and get praised and re-elected) so I guess he just assumed that's what he needs to do to be considered successful in the job. He, like all politicians is striving for his place in history - he better be careful what he wishes for.

To: mishedlo who wrote (68309)	8/30/2007 10:22:31 PM
From: Shtirlitz	Read Replies (1) \| Respond to of 116555

Just curious. What solution do YOU propose ?

To: mishedlo who wrote (68309)	8/30/2007 10:57:12 PM
From: sea_biscuit	Respond to of 116555

What "creative" mortgages is Bernanke proposing? 100-year mortgages? Don't we already have interest-only loans? Those are, in effect, INFINITE-year mortgages. Ron Paul might abolish the Fed. But bear in mind that he proposes abolishing the SEC too. And without the SEC, EPA, FDA, FTC and who knows what else he is going to abolish, that will be total chaos. Keep in mind that it is what the regressive Republicans want as well. But at least Ron Paul is honest about it!

To: mishedlo who wrote (68309)	8/30/2007 11:18:56 PM
From: ballsschweaty	Read Replies (2) \| Respond to of 116555

Bernanke is no fool. He knows exactly what he's doing. He needs to keep mortgage credit growing or the whole house of cards falls. Do you really expect him to announce that the credit bubble has burst and we all need to take our medicine? He knows that credit has to keep growing and the government's fiscal policy needs to be on full throttle just to keep the bubbles we have from deflating. His Deflation speech from 2002 tells everyone exactly what he plans on doing. "If lowering yields on longer-dated Treasury securities proved insufficient to restart spending, however, the Fed might next consider attempting to influence directly the yields on privately issued securities. Unlike some central banks, and barring changes to current law, the Fed is relatively restricted in its ability to buy private securities directly.12 However, the Fed does have broad powers to lend to the private sector indirectly via banks, through the discount window.13 Therefore a second policy option, complementary to operating in the markets for Treasury and agency debt, would be for the Fed to offer fixed-term loans to banks at low or zero interest, with a wide range of private assets (including, among others, corporate bonds, commercial paper, bank loans, and mortgages) deemed eligible as collateral."