White House Chief of Staff Rahm Emanuel famously said crises shouldn’t be wasted. Lucky for U.S. financial markets, the 80s savings and loan debacle wasn’t. Reforms passed in response meant U.S. regulators were better prepared than their European rivals to process the current crop of bank failures.
The blog prophet of euro zone doom (Thomas, NYT)
Hoenig wants a rate increase (Kelleher/Gillam, Reuters) He won’t get it. The Fed has trapped itself. The only way to keep the economy “growing,” is to pump ever more copious amounts of credit into it. If we’re not willing to put up with any recession whatsoever in order to pay-down/write-off debt, well, then, eventually we become Greece. Even central banks that print the currency in which their debt is payable can’t defy gravity forever. The Japanese have tried for the better part of a generation….hasn’t worked so well….
Quote of the Day: Absolving Moody’s for failing to see the housing bubble, Warren Buffett employed the “who-could’ve-known” defense when he told the Financial Crisis Inquiry Commission today that “rising prices are a narcotic” that corrupt the critical thinking of rational people. To that Chairman Phil Angelides responded that rising prices may be “a narcotic, but don’t we expect ratings agencies to avoid it? You don’t want [the credit] police trading crack.”