Dodging the Big One

[question everything]

NOVEMBER 25, 2009

Dodging the Big One

By JAMES B. STEWART
WSJ

As we sit down this week to give thanks, investors face a cornucopia of blessings. Federal Reserve Chairman Ben Bernanke and other economists have proclaimed the end of the worst recession since the Great Depression. The gross domestic product grew 2.8% in the third quarter. For the stock market, this year seems destined to enter the record books. From its low on March 9, the Dow Jones Industrial Average has soared just under 60%. Almost every asset class has gained, some dramatically. Gold has been hitting new records, commodity prices have surged, and the residential real estate market has shown renewed signs of life. Even art is making a comeback.

This state of affairs is all the more remarkable considering where we were just a year ago. The economy and stock market were in free fall. The uncertainty was unnerving. The mood was as bleak as anything I've experienced as an investor. So why are so many people so angry? To listen to the Glenn Becks of the world, we've gone straight to hell in a handbasket, thanks to the triple threat of central banking, government bailouts and stimulus spending. And this is before any health-care reform is enacted, which will really unleash Armageddon.

The leading villains in countless conspiracy theories are Mr. Bernanke and Treasury Secretary Timothy Geithner. Rep. Ron Paul has introduced legislation to curb the independence of the Federal Reserve, and this summer told Mr. Bernanke that "the Federal Reserve, in collaboration with the giant banks, has created the greatest financial crisis the world has ever seen." Last week, Mr. Geithner confronted calls in Congress for his resignation and accusations that he is too cozy with Wall Street. Mr. Bernanke, Mr. Geithner, and then-Treasury secretary Henry Paulson played the leading roles in steering the nation through the perilous shoals of last year's financial crisis. The Obama administration, with Mr. Geithner at Treasury, has embraced continuity, essentially implementing policy set by the Republican Bush administration. The Troubled Asset Relief Program, or TARP, was enacted on Mr. Bush's watch; the stimulus bill was pushed by the Obama White House. Taken together, they're about as close to a bipartisan approach as is likely to be achieved in Washington. This may be why Messrs. Bernanke and Geithner get attacked from both the left and right.

(snip)

I took the time to read TARP Special Inspector General Neil Barofsky's latest report, a detailed chronology of the American International Group bailout and its aftermath. With the luxury of hindsight, the report pointedly questions some of the mechanics of the bailout and related payments to AIG's counterparties. But it doesn't challenge the fundamental need for the bailout and cites the "systemic" risk of an AIG failure. Even if the criticisms are warranted, they strike me as footnotes to the fact that the AIG rescue was instrumental in staving off a 1930s-style global depression.

I hope most of the recent Fed- and Geithner-bashing is political theater, destined to subside as the economy improves, the unemployment rate drops, and prosperity returns to a broader swath of the population than those of us fortunate enough to have money in the stock market. Tinkering with the independence of the Federal Reserve could have dire consequences and shouldn't be undertaken in a spirit of vengeance. There's no doubt that many challenges lie ahead, and well-intentioned people of all political persuasions may—and should—have lively discussions and principled disagreements about how best to handle them. But distorting the past and scapegoating officials who have just rendered an enormous public service won't get us anywhere. We're a lot better off today than we were a year ago. This week I'll be giving thanks for that.

Printed in The Wall Street Journal, page D4

http://online.wsj.com/article/SB20001424052748703819904574555760305289146.html

[Demeter]

1. No, It's NOT Political Theater

It's the outraged public seeing its lifeblood siphoned off to keep Zombie Banks, Vampire Corporations, and bloated, Too Big to Fail multinational organizations afloat.

And by the way, the Big One is still coming, and getting bigger, every day.

[Nay]

2. A bit premature in congratulating themselves, aren't they? We

have not seen the end of this recession, by any means.

[Diclotican]

3. question everything

question everything

Well, from history, specially from the Great depression who in many cases ended first after world war two when US had the possibility, and the ability to build up europe from scratch, and make a lot of money in the progress if I might point that out. We know that the great depression was not finished by the early 1930s, but rather was given every democratic country in the world bigger and bigger problems as the depression was going deeper and deeper and more and more people was not able to hold a work at all, because everything was broke and no one wanted more, but rather trow many out of homes, and out of work, and out to the bitter highway.. For millions in europe, and millions in US, and more or less the same story all over the planet, this was a decade of really bad life and many was drawn to the radicals.. Either it was on the right (fascism, nazism) or the left (socialism, communism) and so on.. And in the 1930s both US and Europe discovered the real fear of people who doesn't had a future, nothing to look to, not a job, not a house, who could not afford to keep their children feed decent.. In Germany after 1933 (The last couple of years, the Weimar Republic dosen't had the resources to discover who bad the working germany was indeed because of the social unrest, and economical and political decline) the government, discovered that millions of children either doesn't had 3 square of food at all, or had bad food to eat. And a whole generation of germans was on the brink of having a lot of sickness and illness because of the bad food, or lack of food they had to endure since the great depression started... (I know the great depression startet in 1929, but the germans born before 1929 was already poor, and had not given descent shelter and medical help by the Weimar Republic. The Weimar Republic had on the surface one of the most modern face in the world, but the fact was that millions of dirt poor germans was living in slums just 500 meter from Kurfurstedam who then, and now is one of the finest shopping gates in Germany and Berlin.. Who in the end was drawn either to the communist cause in the 1930s, or to the nazi st in the 1930s because they was promised a better future, and was also given some they don't had in the Weimar Republic.. But for the most part the germans was not free under the new Nazi rule by all means.. Maybe they was indeed worse off now, then they was when they was under Das Keisar)

I fear that this telling of "dodging the big one" is not over yet, the big one can hit us all any time and I fear that we, as an human will endure much more than just this recession we have seen to now.. If anything goes around, the history tell us that everyone believed that the great depression was just cornered, and then another corner hit.. As short as in 1931 the german government believed they could survive because of a economical upturn, who lasted 6 months, and then broke the democratic neck of the German government who for some reason survived to january 30 when Hitler was elected as Chancellor of Germany (Reichchanclor) and a despotic, tyrannic dictatorship was born...

It is ironic to tell, that in 1939, when germany was going to war with Poland, and then with France and UK Germany was more or less broke because of the weapons build up.. In 1939 Germany was far bigger military than most nations in Europe.. On land Germany outmatched in many cases both France and UK.. Even tho their forces was not that big as the West feared germany to be then...

US is today the greatest military power in the world. And many is telling me, that US have to sacrifice to fight the evils... What broke the neck in germany before world war two was in most cases military spending.. Today the same is the case in US too.. US is spending to much on military hardware - even weapons who the forces doesn't need, and never will need.. But US can if they choose to stop the breaking at the neck of times. And reduce this insane spending on military hardware no one need... Who need a missile system who can shoot down a "dummy" 5 of 8 times..? And who use to blow up nuclear weapons from "rouge" nations like North Korea and so on at best is doubtfull...

Diclotican