Bring back Paul Volcker

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Since the fiasco with Arrow, I have been too petrified to write anything on economics or finance. But what the hell, here goes. May the Mos Def fans forgive me.

Seeing the Bear Stearns rescue, for some reason I remembered an apocryphal story about a eastern european central bank in the early 90s, whose meager reserves got wiped out as the male employees got together in a conference room and called phone sex lines. Ummm, they must have called many times, and I admire their prudence in making the money last by getting together in a conference room.

That must be a fun way to piss away your reserves compared to what the Fed is doing.

In the UK, they spent $200bn of taxpayers money to save the 5th largest mortgage bank. In the US, they had already offered to exchange $200bn of treasuries for mortgage backed securities, and then Bear Stearns, the 5th largest investment bank collapsed, forcing them to come up with another rescue plan that might cost, say another $200bn. The Fed has already spent 60% of its balance sheet in this crisis. In one week.

Why not a simple John Galt plan for this crisis? Please let these idiot banks fail.

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