Category Archives: Did The Fed Play A Role in Asset Bubble

Government: Don’t you know the stress test is a lose-lose

 

are-you-an-overnight-make-money-online-superstar1-300x287My Comment: I’m sick of hearing about bank stress tests.  It’s a joke and the Government has mismanaged this from the beginning.  First the Government couldn’t decide if they were going to publish the results.  Now, they say they will publish the results and that no bank will fail the test.  So is this a case of participation alone gets you a gold star?  The public and investors are supposed to feel good about a transparent “stress test” that no bank fails. 

 

In my opinion, the results should not be published.  The Government will have the ability to pick and choose which banks win and lose from the stress test, by publishing which banks are healthy than the others.  Another potential problem is how much data is the Government going to release; just the score or a detailed report.  If the release is skinny on details, I suspect investors will view this as a bad sign, because the government is trying to hide just how bad the results are. 

 

From the Los Angeles Times

 

Bank bailout plan’s ‘stress tests’ already causing stress

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Filed under Credit Crisis, Did The Fed Play A Role in Asset Bubble, Economy, Politix, President Obama, Stock Market, The Bailout Sucks

Great Article from Nassim Taleb author of the Black Swan

socialism-vs-capitalismTen principles for a Black Swan-proof world

By Nassim Nicholas Taleb

 

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

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Filed under Credit Crisis, Did The Fed Play A Role in Asset Bubble, Economy, Personal Finance, Politix, President Obama, Stock Market, The Bailout Sucks

Quote of the day: Doug French

 

Although we don’t know what the next asset bubble will be, we can only be certain that the incessant creation of fiat money by government central banks will serve to engender more speculative booms to lure investors into financial ruin.

 

Doug French: Quote from the article “Blowing Bubbles” which is also the introduction to his book Early Speculative Bubbles and Increases in the Supply of Money.

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Filed under Credit Crisis, Did The Fed Play A Role in Asset Bubble, Economy, Inflation, Random Quotes

Battle: Baum’s Response: Greenspan Forgets Where He Put His Asset Bubble:

Commentary by Caroline Baum

March 12 (Bloomberg) — “Counterfactuals from such flawed structures cannot form the sole basis for successful policy analysis or advice, with or without the benefit of hindsight.”
Even if one missed the headline (“The Fed Didn’t Cause the Housing Bubble”) and the byline (Alan Greenspan) on the op-ed in yesterday’s Wall Street Journal, there could be no confusion over authorship: That “Master of Garblements” and former Federal Reserve chairman was back to defend his legacy. Continue reading

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Battle: Greenspan’s Opening Argument: The Fed’s Not To Blame for Asset Bubble

On March 11 Alan Greenspan wrote an op-ed in the Wall Street Journal shielding The Federal Reserve from culpability in creating the housing bubble.    Continue reading

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