Mish: Instead of having dinner with those that caused the problem and have no idea how to fix it, the powers that be should have instead sat down with the top 20 economic bloggers as to what to do. We have been warning about these problems for years.
Volcker, for his part, says the current crisis has its roots in the lack of restraint inherent in the highly leveraged system that evolved, one in which winners were rewarded exorbitantly but the inverse didn't seem to hold.
"The first panacea for a mismanaged nation is inflation of the currency; the second is war."
-- Ernest Hemingway, Esquire magazine, September 1935
"Price stability is something which is essential for the poorest and the most vulnerable of our citizens. They cannot protect themselves against inflation. It is extremely important that we understand that moderation today is necessary if we want to deliver price stability in the medium term."
- European Central Bank president Jean-Claude Trichet, April 2008
Nothing Broken... for now!
What do you think is it that we see here, a lie or a statement by an extremely dumb person?
Since few years ago, the opinions on US Economics conditions had split noticeably. There appeared a well defined "Doom" camp, while all the educated and graduated economists in government and mass media were saying that "Nothing is fundamentally broken", and thus they could be defined collectively and a "positive" camp or positivists.
The doom camp is further divided into inflationists and deflationists, which by the way, can be simply defined by their answer to the question in the beginning of this article, even though many would not like to be defined in such an uncomplicated way. (Nevertheless, they are. Past all of the discussions about interest rates and consumer confidence, exchange rates and types of economic policies, lies simple and all defining answer to the all-determining question. But that is beside the point of this writing.)
As the time progressed, those in the positive camp were forced to acknowledge their lower intelligence and to say that there are "some" problems with economy. A little more time passed, and again, the positivists had to admit themselves being wrong yet again. This seem to keep happening as the collapse of US economy is gaining force and speed, these idiots are falling with their faces in the dirt, daily it seems, and yet the general public still refuses to take a look at the hard truth.
And the hard truth is, that someone who correctly called current events years ago, is immeasurably more intelligent than some PhD, who's only achievement was that he managed to comply with the rules of academia to pass the test and get the stamp, that he is, supposedly, intelligent too, and yet who can not predict 3 month forward, the outcome of few simple economic conditions. In case of our dumb FED Chairman, he can not correctly predict even three month forward the outcome of processes that he is directly managing and affecting. Are you not laughing yet?
Now in the first paragraph of this article, I have guessed that it might be the dishonesty rather than stupidity, that makes them to be wrong predicting the economic course. As it is proven many times in criminal court, people overwhelmingly prefer to be called dumb rather than accused of having criminal intentions. Accordingly, out of mercy, I am too choosing to call those wrong on their predictions stupid, rather than malevolent liars.
And so the circus continues, with prominent bureaucrats like the Helicopter Ben, who has never commanded a real world business and who sucked on a government tit for as long as he can remember, living off our sweat, our labor and our gain, nothing more than a stinky little bloodsucking leach, never producing a single gram of anything useful, coming forward with statements like the one above, and pretending that there is a part of economics that he can actually comprehend with his poorly developed mind, shielded from the reality of life by a decades of chalkboards. And as soon as he finishes with his calming message, he falls with his own face on his own pampers, as it becomes glaringly clear that he does not, in fact, know what he is talking about.
I've seen my share of these weak shadow leaches. Always scared of everything, covered in cold sticky sweat, they all ultimately fail. There is no way Helicopter Ben is going to come through. He is too weak and lacks real life experience to do that. His part is that of a lamb, and not that of a lion. He is already making the mistakes that will bury him in near future, all the while thinking that he's building a ladder that will take him out of the hole.
Is there a third explanation, huh? Anything beside stupid and lying, that could be put forth to explain constant misses on economic predictions for even as near term as three month by majority of establishment?
And if you have not came up with a third explanation, then we are here for a ride, and it's either a criminal or an idiot behind the wheel. Hang on for your dear lives! The driver says we're doing just fine!