Comments on: Calculated Risk and other financial blogs http://polizeros.com/2008/03/17/calculated-risk/ Musings on politics: anti-war, global warming, peak oil and otherwise Thu, 08 Jan 2009 02:01:38 +0000 http://wordpress.org/?v=2.7 hourly 1 By: DJ http://polizeros.com/2008/03/17/calculated-risk/comment-page-1/#comment-149903 DJ Mon, 17 Mar 2008 19:34:48 +0000 http://polizeros.com/2008/03/17/calculated-risk/#comment-149903 His first line of defense should be to prop up the currency. People are more inclined to lend if they know the dollars they get back will be worth something. But accelerating inflation compounds the already risky economy. Interest rates MUST rise if credit is to be available. His first line of defense should be to prop up the currency. People are more inclined to lend if they know the dollars they get back will be worth something. But accelerating inflation compounds the already risky economy. Interest rates MUST rise if credit is to be available.

]]> By: Bob Morris http://polizeros.com/2008/03/17/calculated-risk/comment-page-1/#comment-149900 Bob Morris Mon, 17 Mar 2008 14:46:01 +0000 http://polizeros.com/2008/03/17/calculated-risk/#comment-149900 I don't think he has a choice. he needs to flood the markets with money to try to unfreeze that which is frozen. And he can't just let Bear collapse, because of the counterparty agreements Bear has with others - doing so could easily cause cascading collapses in other firms. I don’t think he has a choice. he needs to flood the markets with money to try to unfreeze that which is frozen. And he can’t just let Bear collapse, because of the counterparty agreements Bear has with others - doing so could easily cause cascading collapses in other firms.

]]> By: DJ http://polizeros.com/2008/03/17/calculated-risk/comment-page-1/#comment-149897 DJ Mon, 17 Mar 2008 13:12:19 +0000 http://polizeros.com/2008/03/17/calculated-risk/#comment-149897 A commentator on NPR yesterday made the point (oft made over the years by conservatives, but you won't find many of those in the White House these days) that the best approach to recession is the let it run its course. He noted that down cycles are normal, and they weed out companies with inefficient management. Yes, they have unpleasant side effects-- but as we're seeing, the liberal Keynesian approach just makes things worse. I'm baffled that, as worldwide confidence in the dollar plunges, Bernanke keeps dropping interest rates and flooding the market with more dollars. Does he own gold stocks or something? In an economy where inflation is running 6.8% (NOT including food and fuel-- real inflation may run as high as 12-13%), it doesn't matter how low you drop the interest rate. It's not going to free up credit, because no one can make any money at the lower rates! A commentator on NPR yesterday made the point (oft made over the years by conservatives, but you won’t find many of those in the White House these days) that the best approach to recession is the let it run its course. He noted that down cycles are normal, and they weed out companies with inefficient management. Yes, they have unpleasant side effects– but as we’re seeing, the liberal Keynesian approach just makes things worse.

I’m baffled that, as worldwide confidence in the dollar plunges, Bernanke keeps dropping interest rates and flooding the market with more dollars. Does he own gold stocks or something? In an economy where inflation is running 6.8% (NOT including food and fuel– real inflation may run as high as 12-13%), it doesn’t matter how low you drop the interest rate. It’s not going to free up credit, because no one can make any money at the lower rates!

]]>