12 May 2009 at 11:35 am 1 comment

| Peter Klein |

winnersCraig Pirrong is concerned about the stress tests:

[Bernanke] emphasized that they were a “confidence-building exercise.” That seems like assuming the conclusion. I would like a fact-finding exercise, with a clear statement of the findings, good or bad. Stating that the objective is to build confidence suggests a pre-ordained result — Kabuki Theater. It’s like saying that something is needed to build “self-esteem.” Success builds self-esteem, not the other way around. Similarly, success builds confidence; confidence-building does not ensure success.

This reminds me of something I read the other day from Isabel Paterson, quoted by Stephen Cox:

[I am] tired of being told that “credit depends on confidence.” Fudge. Credit depends on real assets, sound money and a clean record. . . . When any one asks us to have confidence we are glad to inform him that the request of itself would shatter any remaining confidence in our mind.

Entry filed under: - Klein -, Financial Markets, Myths and Realities.

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1 Comment Add your own

  • 1. Michael F. Martin  |  12 May 2009 at 12:10 pm

    The Paterson biography by Cox is very good, and full of interesting details about this extraordinary individual.

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