A Silver Lining

14 November 2008 at 1:48 am 3 comments

| Peter Klein |

As I mentioned in a recent talk, one good thing to come out of the bailout disaster is the diminished reputation of St. Alan the Wise. It was fun watching the same Congressional clowns who months earlier praised the “Maestro” as the greatest Fed chair in history slap him down for failing to prevent the housing bubble. Of course, Greenspan, like these clowns, ignored the issue of credit expansion, expressing regret only that he had put “too much trust” in market forces. Ha! 

Now Paulson, never too popular in the first place, is suffering a similar fate, as he abandons the Troubled Asset Relief Program — the rationale for the bailout itself — and praises Congress for giving him the broad authority to do, well, whatever the hell he wants. Oh, please, let Bernanke be next!

BTW, Bob Higgs continues to offer some of the best commentary on the disaster — the political, journalistic, and educational disaster, I mean, not the supposed economic disaster. I hope his term, “Bailout of Abominations,” catches on.

Update: The Economist puts it this way: “One of the most humbling features of the financial crisis is its ability to humiliate policymakers who, thinking that they have a bazooka in their closet, soon discover that it is a mere popgun.”

Entry filed under: - Klein -, Austrian Economics, Bailout / Financial Crisis, Classical Liberalism, Public Policy / Political Economy.

Bill Shughart’s Review of Prophet of Innovation Towards Beyond

3 Comments Add your own

  • 1. pj  |  14 November 2008 at 8:13 am

    Bernanke’s reputation is already shot. His first move at the beginning of a deep recession was to give away the Fed’s balance sheet to bankrupt Wall Streeters, trading $2 trillion in Treasuries for “toxic trash” worth ten cents on the dollar. Now he has no policy tools, except massive inflation, to address the recession. He allowed Wall Street sharpsters to cheat him, at Paulson’s urging, and now he’s trying to keep his idiocy a secret, even as Bloomberg sues for openness. He was a man of one idea — prevent the Great Depression by maintaining the solvency of financial institutions — and this made him history’s biggest sucker for today’s most greedy con artists. His reputation will live in the con victim hall of fame.

  • 2. spostrel  |  17 November 2008 at 9:00 pm

    Methinks Greenspan’s long tenure with high growth, low unemployment, and low inflation are not going to be forgotten by history. I certainly don’t want the Fed going around deciding when asset prices are “too high” and then raising interest rates to “pop the bubble.” Greenspan’s unwillingness to do this strikes me as a plus–interest rates and money supply are the wrong tool to regulate asset values, if indeed we want govenment officials regulating them in the first place.

  • 3. Peter Klein  |  17 November 2008 at 10:34 pm

    Steve, the point about Greenspan isn’t that he should have somehow “popped” the bubble, but that he shouldn’t have created it in the first place with a ridiculously easy monetary policy.

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