In an essay published today in the New York Times (NYT), Stockman wrote that Fed policies in the aftermath of the financial crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, has caused an “unsustainable bubble.”
“When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP (BX) and a former Republican congressman from Michigan. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”
Stockman, 66, is the author of “The Great Deformation: The Corruption of Capitalism in America,” which will be published April 2.
The Fed, led by Ben S. Bernanke, is purchasing $85 billion in assets every month. The Fed is leaving its key interest rate near zero while it tries to reduce unemployment below 6.5 percent and hold inflation below 2.5 percent.
The Standard & Poor’s 500 Index (SPX) rose to an all-time high last week, closing at 1,569.19 on March 28. That surpassed the previous record of 1,565.15 set in October 2007. U.S. stock markets were closed March 29 for the Good Friday holiday.
Gold Standard
Among the other culprits Stockman blamed for what he termed a “state-wreck” are President Franklin Delano Roosevelt for weakening the gold standard in 1933, President Richard Nixon for removing the convertibility of dollars to gold and “lapsed hero” Alan Greenspan, the former Fed chairman, for keeping interest rates too low for too long.
Investors will sell, Stockman wrote, at any hint that the Fed is starting to remove assets from its balance sheet.
“Notwithstanding Bernanke’s assurances about eventually, gradually making a smooth exit, the Fed is domiciled in a monetary prison of its own making,” he wrote, warning of unsustainable fiscal policies as well. “These policies have brought America to an end-stage metastasis. The way out would be so radical it can’t happen.”
This weekend I failed to convince several Progressives that The Bernake cannot land his helicopter softly and has no way out.
The edumacated Progressive mind is unshaken by any reason.
The edumacated Progressive mind is founded on beliefs in spite of facts.
Anything contrary to their world view is: In one ear, and out the other. It’s quite frustrating to watch this in action.
Their firm conviction is this: America will become a top energy producer, and that along with The Bernake’s easy exit plan will be enough to give jobs to everyone, thus everyone will prosper, thus more houses will be built to satisfy demand, and then everything will be back to normal.
The Bernake’s assurances about eventually, gradually making a smooth exit, are words which are Very powerful and seductive to some/many. More-so than I have patience. And I’ve often been told I have a lot of patience.
It went all downhill from there,… and I forgot to wear my boots.
Hi Downshift,
I have come around to the idea that most people simply cannot face the truth of things because it is just too much for them to deal with. I mean specifically those who invested their lives in this system – who are now middle aged (or older). They have to believe. What else is there to get them out of bed in the morning, into their car to spend an hour traveling to the cube farm so they can spend another day doing what they have always done? Imagine: You are tied to your townhouse in suburbia; you have $1,250 in the bank and a $1,700/month mortgage and $12,500 in credit card debt. You’ve got 22 years to go on your mortgage. All your eggs are in your “investment” (debt).
You have to believe….
There seemed to be something wrong with the cop in the video, 1st and 4th amendments “don’t matter”
Why was the cop reacting this strongly?
Especially with the way he interacted (argued, really) with his supervisor.
Is it because the cop knew that what he was participating in was very wrong, and it was just too much for him to deal with, so he buried his conscious with hostility and anger?
The contrast with that encounter vs. the cop in the video, ‘Green Cove Springs Police,Officer Graham in action!’ was stunning.
In the first video I thought of the words: concentration camp guard, or executioner, or puppy kicker.
In the second video I half-thought of the words: peace officer trying.
Hmm, that’s the same kind of thoughts I got when I read about the outlawing of The Constitution in Connecticut vs. the symbolic gesture in Georgia requiring households to have guns.
The Progressives I spoke to said there were simply not enough people who cared and would do anything in response to gun confiscation and such except to roll over and comply.
“You have to believe…” nothing will rock the boat.
It’s the first Tuesday of the month and the emergency sirens are going off to assure everyone: “THEY” are in control.
SNAFU.