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Bernanke Chooses

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February 27, 2008 – Comments (5)

Haven't had a chance to write much about the latest economic news, so I've only got this to say: It appears Bernanke has chosen a path out of the mess he created in housing (and the related economy) by refusing to properly regulate the dangerous banking practices of the past few years. (Greenspan started it, but Bernanke finished it up.)

That path is inflation.

With inflation hitting new highs despite a slowing economy, and Ben and Co. repeating their lines about "risks to the downside," it's pretty clear that Bennie and the Inkjets seem set on simply inflating away Americans' debt problems, to the detriment of anyone out there whose behaved responsibly and saved.

Of course, there are still those generous bank bailouts, with more in the works. Bankers and their investors pocketed -- ahead of time -- billions of dollars, and now that the bets they made are coming bad, they're looking for taxpayers to purchase the lousy debts they underwrote, that the free market refuses to consume.

Are we on the cusp of a glorious new American state, where profits are private, and the losses are shared? Where spending beyond your means is perfectly fine because the government will erase your debts via fiat? Where bad risks are rewarded, so that there are fewer incentives for proper allocation of capital?

5 Comments – Post Your Own

#1) On February 27, 2008 at 10:20 AM, abitare (31.24) wrote:

where profits are private, and the losses are shared?

yes, 

Where spending beyond your means is perfectly fine because the government will erase your debts via fiat?

Yes, it looks that way 

Where bad risks are rewarded, so that there are fewer incentives for proper allocation of capital?

Yes, LTCM? 

Again, I must spam Ron Paul. For give me CAPS gods:

Grilling Helicopter Ben 

 

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#2) On February 27, 2008 at 10:25 AM, griderX (96.66) wrote:

"Are we on the cusp of a glorious new American state, where profits are private, and the losses are shared? Where spending beyond your means is perfectly fine because the government will erase your debts via fiat? Where bad risks are rewarded, so that there are fewer incentives for proper allocation of capital?"

I love your above statement....it really irks me to hear about government bailouts and the foolish 1% of the housing market signing their name on a mortgage they could never afford...I say let them lose their house...let them go back to renting...why should you and I tax paying citizens care about them?!?  It's a capitalist country strong and smart survive and the foolish perish!

It also shocks mean when I hear these major banks writing off all these billions of dollars...is there someone doing an research to see if they happen to lump in other non-real estate default investments in there?  Would that be considered fraud blaming all those bad loans?

What's with the media touting were in a recession...the last time I opened my text books, the true definition of a recession is two consecutive quarters of negative GDP growth...according to the latest FOMC meeting notes...the US is stated for positive but lower 2008 GDP growth.  Oh well enough ranting...I'm fully invested in the market which is the best thing anyone can do regardless of all this housing and recession talk.

griderX 

 

 

 

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#3) On February 27, 2008 at 11:16 AM, mickeyc21 (29.36) wrote:

Foolish 1%?!!

Haahhahaaa damn I haven't had a belly laugh like that for a while. If you think 1% of mortgages are bad you deserve to lose your money.  

You trust the FOMC because of what exactly? The stunning track record of being completely unaware problems were on the way?

The smart survive indeed. 

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#4) On February 27, 2008 at 12:28 PM, saunafool (98.58) wrote:

Buy Gold.

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#5) On February 27, 2008 at 12:58 PM, griderX (96.66) wrote:

Go back and do some research only about 1-2% of outstanding loans are in default (foreclosure).  Look at the big picture and don't feed into the media hype.  :) 

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