Since the massive interest rate cuts by the Fed a few weeks ago, I’ve been thinking that the economy is far shakier than we are being led to believe. It wasn’t from the numbers (which I can’t say I understand) nor from some ideological belief about market economies (which I generally like). Rather, my worries about what the Fed knows and can’t tell us stems from the fact that the Fed can’t seem to stem the tide. The Fed cannot continue to bail out companies like Bear Sterns constantly, every week or every few days. If lending is shut down entirely, we will enter a massively scary economic crisis that could make 1929 look like fun. It’s truly scary. The Fed’s lack of transparency here or willingness to provide true oversight of these massively over-leveraged companies, combined with Mr. Bush’s blind confidence in their capacity, makes for lots of worries. No Fed leader wants to say the word “recession” let alone “depression” but those two words came out today for the first time (to my ears) from a number of pundits on NPR.
P.S. This piece from my pal, V.S., via Jon Stewart: “If you want to do the Jedi mind trick, you have to be a Jedi.”