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Tuesday, October 14, 2008

As I suspected, they have no clue.

For a while, I thought the Keynesians running the fasci corporatis banks printing presses might be able to stabilize their ridiculous system. Sure, it would be at the cost of the stolen livelihoods of millions of working poor and oil tycoons and children's birthday presents, and it would be longterm epic fail lol, but at least it would accomplish its avowed purpose of restabilizing the monetary sytem at its current level of suck.

Then Bernanke released this pathetic attempt to calm the rioting capitalists and populists.

"As in all past crises, at the root of the problem is a loss of confidence by investors and the public in the strength of key financial institutions and markets."

No, not quite. The root of the problem is an artificially created, unsustainable increase in demand, coupled with local land use restrictions that created a housing price bubble. It was inevitable, inevitable, that it would collapse back to previous levels. Increased leverage requires increased stability in order to accomodate its lower margin of error.

The government then proceeded to pile a minimum wage hike on top of inflationary government spending and a spike in oil prices. The result was a devaluation of the dollar, which increased interest rates, which caused a ballooning in monthly payments for the poor people with ARMs, which caused an increase in default rates, which reversed the profit margins on trillions of dollars' worth of derivative contracts, which necessitated the owners of those contracts to increase their capital cushion to assuage creditors, which sucked all the credit out of the market and caused a series of bank collapses which will surely continue.

First, they tried to treat the most blatantly obvious symptom by propping up the banks. For a year, that was their strategy.

Now, they're trying to treat the immediate cause of that symptom by reinjecting credit.

Now Bernanke has the gall to say,

"History teaches us that government engagement in times of severe financial crisis often arrives very late, usually at a point at which most financial institutions are insolvent or nearly so. In these conditions, the consequences and costs of inertia and inaction can be staggering. Fortunately, that is not the situation we face today."

More rants to follow, I'm sure.

1 Comments:

Anonymous arcs_n_sprks@yahoo.com said...

The government then proceeded to pile a minimum wage hike on top of inflationary government spending and a spike in oil prices. The result was a devaluation of the dollar, which increased interest rates, which caused a ballooning in monthly payments for the poor people with ARMs, which caused an increase in default rates, which reversed the profit margins on trillions of dollars' worth of derivative contracts, which necessitated the owners of those contracts to increase their capital cushion to assuage creditors, which sucked all the credit out of the market and caused a serious of bank collapses which will surely continue.

That is the best in-a-nutshell description I have seen. Thank you.

12:12 PM  

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