Beware ‘socialism for the rich’
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Lots of good, pungent commentary in the past few days about the Fed and the mortgage crisis. Quick hits:
Jim Grant will be popular here. He lays out the anti-bailout, anti-intervention, anti-interest-rate-cut case for the New York Times: ‘Ben S. Bernanke ... is said to be resisting the demand for broadly lower interest rates. Maybe he is seeing the light that capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.’
The New Yorker’s James Surowiecki writes that Bernanke’s decision to cut the discount rate was a bad move that will only help Wall Street -- not the housing market: . ‘...there is something unseemly about watching the avatars of free-market capitalism rely on the government to pay for their bad bets. And there is something scary about contemplating the even bigger bets they’ll make in the future if they know that the Fed is there to bail them out.’
On the other side of the argument, Jim Cramer isn’t the only one begging Bernanke to wake up and do more. Mortgage broker and Inman News columnist Lou Barnes (we know, we know: some of you don’t trust him) is hammering Bernanke for failing to revive the mortgage-backed securities market: ‘I don’t know if we need electrodes or explosives to get Mr. Bernanke into the real world, but once he’s here this job is a snap.’
Barnes believes the Fed needs to restructure or re-rate all those mysterious, top-secret, and un-marketable mortgage-backed products that are stinking up the entire financial system with their un-quantifiable odors. He suggests this can easily be done by throwing its weight around on Wall Street and telling everybody to show their hand -- now: ‘In the old days, one of the most feared events on Wall Street was an ‘information call’ from the Fed,’ he writes.
Lastly, former Clinton Treasury Secretary Lawrence Summers weighs in, sort of, by asking a bunch of questions in this L.A. Times op-ed piece. In keeping with Democratic Party orthodoxy, he endorses an expanded role for Fannie Mae.
Comments? Thoughts? Insights?
Photo Credit: Reuters
Hat tips: Patrick.net, kmvc