The scene: on one those bloated vacation cruise boats (often cursed with some debilitating gastro-intestinal event). One can vividly imagine one the throngs of really swinging crowd of post 50 years old trying to do the ‘mambo’. [See reader Perusio’s correction below — for ‘mambo’ read ‘limbo’. Our bad, as the kids say]. The rope sinks lower and lower. Until either his or her lower back collapses, the pants rip, or balance fails and the whole stunt ends in adrunken embarrassment.
So now to Bernancke and the Fed. The Fed Open Market Committee’s 5.25% rate has fallen to the brink of free money: 2.0%. Still, nothing. As we have seen with every other rate cut, banks refuse to extend credit to the general market. The U.S. credit crisis continues. Despite Bernake’s efforts including the Fed’s dramatic rescue of Bear Stearns. Even arrangements to allow banks and quasi banks to treat locked and illiquid assets as liquid guaranteed by the U.S. government? Nada. Zip.
Inflationary pressures continue to spiral. Most observers (and we mean beyond the eye candy-Erin Burnett-figurettes) argue that 2% is as low as Bernancke can go in his mambo ‘limbo’. The risk of massive inflation is too great, they say. We disagree with those who argue that Bernancke already has been successful and may actually seek inflation. From what we see, he has acted primarily to save the U.S. and international financial system by injecting capital. Even Asia has caught the U.S. flu.
Commodity hoarding is not too fantastic imagine but is not yet here. It was a hallmark of the Weimar inflation (driven in part by the government of pay off the ridiculous Versailles reparations with junk money). What we see at Costco is merely media driven frenzy. Yet the Stiftung hears more and more talk about it among the chattering classes with soft, unmarked hands. Inflation is taking a toll. I.e., among people whose idea of honest labor is to mark up a document and give it to a secretary (male or female). These are the people who are supposed to take a tax rebate check and put a down payment on a BMW lease. We doubt it. Consumers are cutting back, IRS cheques or not.
All this is not to say 1923 is around the corner. Yet Bernancke really can’t do much more. If he dropped the rate to 0% as the Japanese did in the Lost Decade it is unlikely to change current conditions. Our political leadership have done nothing to prepare the American people for the ‘creative destruction’ ahead. And its impact on consumer lifestyles. There is a curious willful ignoring of the problem, waving it aside as a mere re-enactment of the S&L crisis.
Aside from the effete Crown Prince or the other candidates, one does wonder what real American populism would look like circa 2010. One doubts it would be limited to “crosses of gold” and end with an epic and civilized trial about evolution.
DrLeoStrauss says
What Perusio said. You can tell we tear up a dance floor. We’ve made the corrections above. Thanks. Everyone gets the gist but limbo is definitely what we were aiming for.
Whether it is advancing age, the youthful embrace of beverages catching up, or simply being overawed by CHANGE, neurons let us down more and more lately.
perusio says
Dude, the mambo has nothing to do with a rope. You’re thinking of the limbo. Also, it’s Bernanke.
Aldershot says
Soros prefers Obama:
“Woodruff: Bringing us back to this country in the midst of this economic credit crisis that you write about and that you’ve been describing, we are also in the middle of a presidential election. You endorsed Barack Obama the day he announced. Why him rather than your home state senator, Senator Clinton?
Soros: Well, I have very high regard for Hillary Clinton, but I think Obama has the charisma and the vision to radically reorient America in the world. And that is what we need because I’m afraid we have gotten off the right track and we need to have a greater discontinuity than Hillary Clinton would bring.
Woodruff: You have no concern that he lacks the experience to lead in this dangerous time that we live in?
Soros: I think that he has shown himself to be a really unusual person. And I think this emphasis on experience is way overdone because he will have exactly the same advisers available as Hillary Clinton, and it will be a matter of judgment whom he chooses. And actually, he is more likely to bring in new blood, which is what we need.
Woodruff: Recently, Senator Obama has endorsed some of the things we’ve been talking about: greater financial regulation, having for example the Federal Housing Administration insure unaffordable mortgages against default. Do you think this goes far enough, what he’s talking about? Did he talk with you at all?
Soros: No, I’ve had absolutely no contact with him or any of the Democratic leadership on this issue. Now that my book is out, maybe I will in the future. But these are my ideas and they are not responsible for them.
Woodruff: From what you know about what he’s saying about the housing crisis, do you think he goes far enough?
Soros: No, nothing right now goes far enough and Representative Barney Frank, who really understands the issues, is not pushing that far because, in order to get bipartisan support, you can’t. So if you want something done, you have to set your sights lower. And that is what he has done and I think he is getting a few things through. But they are not enough.”
Dr Leo Strauss says
Here’s Soro’s take on it all, interviewed by the somewhat fawning Judy Woodruff:
http://www.nybooks.com/articles/21352
He makes the Stiftung seem almost on massive tranquilizers.
Anon says
Is Franzen plagerising Tommy Franks re Feith?
http://www.observer.com/2008/jonathan-franzen-michiko-kakutani-stupidest-person-new-york-city
Btw – neither Feith nor Kakutani are stupid – both have the last laugh. Frivolous sneaky trendoids? Maybe. Stupid? No.
Hunter says
“Then just jab the fang into any fleshy part of your victim. For lack of a Russian, I’ll use this cardboard box.”
Hunter says
A few choice quotes:
On the Watts riots: “Courageous young black resistance defied the system and destroyed their own environment… ”
On making bombs: “Well bless your heart, anyone can make a bomb… this is tedious work for one, but can be fun for the whole family, if you can drag them away from the TV for a while…”
PRICELESS! Thank you, Aldershot.
Aldershot says
And I heard a voice in the midst of the four beasts say, A measure of wheat for a penny, and three measures of barley for a penny; and see thou hurt not the oil and the wine.
-Revelation 6:6
http://video.google.com/videoplay?docid=-6669351592755260685&hl=en