WORTH READING A Dose of Reality About the Cause of this Crisis (and the solutions)

[David Farber <dave () farber net>]

Begin forwarded message:

From: "Norman MacLeod" <gaelwolf () waypt com>
Date: October 17, 2008 4:36:48 PM EDT
To: "'David Farber'" <dave () farber net>
Subject: RE: [IP] A Dose of Reality About the Cause of this Crisis  
(and the solutions)

http://www.garynorth.com/public/4146print.cfm

Interesting take on the way things are . . .

            Norm

From: David Farber [mailto:dave () farber net]
Sent: Friday, October 17, 2008 1:08 PM
To: Norman MacLeod
Subject: Re: [IP] A Dose of Reality About the Cause of this Crisis  
(and the solutions)

do you a url for this?

On Oct 17, 2008, at 1:29 PM, Norman MacLeod wrote:


Dave —

Please allow me to contribute the following “translation” of Mr.  
Bernake’s speech to the Economic Club of New York.  It comes from a  
follower of the Austrian school of economics, and brings Fed-speak to  
a level more comprehensible to the rest of us . . .

-----Original Message-----
From: Gary North's Reality Check [mailto:reality () dailyreckoning com]
Sent: Friday, October 17, 2008 5:19 AM
To:
Subject: Reality Check - Lipstick On Bernanke's Pig

                   Gary North's REALITY CHECK



Issue 798                                        October 17, 2008

                   LIPSTICK ON BERNANKE'S PIG

     On October 15, Chairman Ben Bernanke delivered a lecture to
the Economic Club of New York, titled, "Stabilizing the Financial
Markets and the Economy."

     I am sure the title resonated to members of the Economic
Club of New York, who saw the Dow Jones Industrial Average fall
another 733 points before the day was over.

     He began his speech with these inspiring words:

     I will focus today on the economic and financial
     challenges we face and why I believe we are well
     positioned to move forward.

     I am reminded of Mort Sahl's comedy album in 1958: "The
Future Lies Ahead."  Yes, it does.

     I, for one, have no desire to be well positioned to move
backward.

     The problems now evident in the markets and in the
     economy are large and complex, but, in my judgment, our
     government now has the tools it needs to confront and
     solve them.

     Does he mean that only now does the government have the
tools?  Is he saying that for the last sixty years, Keynesian
economists, Chairmen of the Federal Reserve System, and
Secretaries of the Treasury did not have these tools?  They said
they did.  Were they wrong?

     The government has always had the tools by which it has
dealt with the crisis over the last six weeks: taxation,
inflation, and blarney.

     It would have been polite of Dr. Bernanke to tell us about
these "large and complex" problems.  He didn't.  He gave no
indication of a looming crisis so large that it would bring the
international capital markets to gridlock, i.e., "frozen."
Actually, the capital markets were not frozen.  I was offered a
30-year fixed-interest mortgage for 5.7% two weeks ago, with 10%
down.  Prevailing interest rates revealed no evidence of freezing
up, according to free market economist Robert Higgs.

But without the hoopla about frozen markets, politicians around
the world would not have capitulated to an increase of government
debt of something in the range of $4 trillion in one month.

     Our strategy will continue to evolve and be refined as
     we adapt to new developments and the inevitable
     setbacks.

     "Evolve."  "Be refined."  Translation: "Making this up as we
go along."

     But we will not stand down until we have achieved our
     goals of repairing and reforming our financial system
     and restoring prosperity.

     "Restoring prosperity."  Yes.  Yet somehow I do not recall
that Dr. Bernanke, President Bush, or Henry Paulson ever admitted
before that we had lost our prosperity.  As I recall -- I am
getting older -- they all insisted repeatedly that there was no
recession at all.

     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.

 <snip> 


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