I DID IT AGAIN!

Little Paulie Krugman got so upset on my last two efforts that he wrote probably the stupidest op ed of the year and the Times, bless them, was dumb enough to publish it. I better stop getting under this guy's skin because one day they just might take his Nobel back which would render him just another Left-wing hack and decent economist in a narrow field which does the world no good at all. To make his point that it is up to the Fed to pull us out of this mess he points out that his Princeton buddy Bernanke way back in the nineties told the Bank of Japan to do just what Paulie has been telling the Fed to do: buy up every piece of paper in sight to get things rolling again through increased liquidity.

Just a few points worth mentioning:

1. In the nineties, the Japanese economy collapsed due in great part to the collapse of the property market. Sound familiar?
2. That collapse was created in no little way by the enormous liquidity in the system. Sound familiar?
3. The bubble was financed by the Japanese banking system. Kinda familiar?
4. There was no real capital market at the time in Japan. Not familiar is it?
5. The banks were bust and stayed that way for years> Not familiar at all.
6. For all of Japan there was not alternative source of credit aside from the banks. Beginning to see the difference? We could go on and on.

And yet, this fool, with 2 TRILLION dollars sitting in corporate coffers, a robust bond market, a robust and international capital market not to mention a bunch of healthy major financial institutions stuffed with cash, still thinks that the problem is a lack of liquidity and the inaction of the Fed. Now I'm going to write this very slowly so even Paulie can get it: THE PROBLEM DUMBO, IS NOT THE FED. IT THE APPARENT RECOGNITION OF THE FACT THAT NO ONE HAS ANY TRUST IN THIS ADMINISTRATION ITS POLICIES (whatever the hell they may be) OR THE DIRECTION IN WHICH THE COUNTRY IS HEADED. Got that Paulie? Now read on.

A perfect example of what it is that I am speaking was the report that our friend, Poo Bair was forced the other day to, along with her partner, John Dugan at the Comptroller's office to admit that they hadn't a clue how to implement that portion of the Fin Reg act that applies to the credit rating agencies and which has already resulted in the seizing up of the $1 trillion-plus asset backed securities market.

Now regular readers will certainly remember that this column is no friend of the actions of the Moody's and S & Ps of this world, but we have managed to build a system that has relied on somebody telling investors what their proposed risk-holding looked like and until we find a better way--and there is one--life is going to be very confusing in the interim. Of course the dynamic duo of Chris the Crook and Barney never thought of that, hence the evolving mess. Naturally, like a good bureaucrat, into this black hole comes Mr. Dugan who seems to be thinking about the creation of a non-public entity to do the job. How fast can you say "government allocation of credit?" Of course this mob would LOVE that. So would Paulie. But Paulie, old son, stop looking at the Fed to bail out your idiot friends on the political left who led with ideology without a clue as to what happens in the real world. Then again, with the comic strip "Cathy" shutting down, we all need a laugh from time to time. Maybee you should keep writing...