This is supposed to calm down the markets Monday morning. The Fed opened its swap lines with other central banks and treasuries to provide dollar liquidity as investors flock to the euro. Mish says short squeeze.
Someone made money when the market plunged 700 points and someone made money when it went up 600 points. Liquidity has its good points and bad points. Without it the market would have cratered.
Bear's execs say, "We didn't do it. It's not our fault. Evil speculators conspired against us, and investors irrationally made a run on us." They have no clue and they sound pathetic. Perhaps they should have read two little books.
While the current economic data appears rosy, it won't be sustained without credit or rising wages or job growth. Much of existing spending is from a drawdown of savings and various transitory stimulus programs. These things won't last.
Whether you like it or not, Goldman is THE scapegoat for what is perceived as capitalism's failures. Goldman was not the cause of the boom or the bust, but Congress is looking for heads. The threat of criminal indictment hangs over Wall Street. Let the bloodletting begin.
I just saw an offering of the famous Screaming Eagle 1997 cab for $52,000 for the case. Parker gave it 100 points. I passed. I don't think anyone told the purveyors that the market has loosened up a bit. Wine prices are falling and vineyards are going into foreclosure.
These nominees are prominent members of the Washington-Wall Street-Academia Economics Complex, whose members shift between government, Wall Street, and academia. All of the nominees are Keynesian economists. They are known as regulators, technocrats, and inflationists.
Before I get pilloried for this article, just forget everything you believe about Goldman and their ethics and role in the economy because those mean nothing in this case. There is one issue and that is, within the facts set forth in the SEC complaint: What did Goldman do wrong? Here is a way to analyze it.
For those of you interested in economics, capitalism, and Austrian theory, and a lot of other things, I've created a new Reading List page on my blog, The Daily Capitalist.
When I make a mistake I will admit it.
In my analysis of consumer spending I asserted that the sources of increases in spending were (1) a draw-down of savings and (2) the redirection of defaulted mortgage payments to spending. I was half-right which another way of saying I was half-wrong.
I missed one the basic laws of economics, Bastiat's "Broken Window Fallacy." Ouch!
Christina Romer, chair of the president’s Council of Economic Advisers, is channeling J.M. Keynes. She stubbornly sticks to the Keynes Manifesto. In fact you could say that Keynes is Obama's chief economic advisor. These are the people who got us into this mess and we ask them to lead us out?
