Mishkin's Bubblenomics and the Crash of 2008 by Mike Whitney

[Crewleader]

Nov 12, 2009 - 01:26 AM

By: Mike_Whitney

Economics

Best Financial Markets Analysis ArticleThe Fed's monetary stimulus is driving the market higher. What started as a trickle has turned into a torrent buoying stocks and commodities on a river of liquidity. Oil has more than doubled in the last 8 months while stock indexes have gained 50 percent or more in the same period. Even the shunned homebuilders and battered financials have staged a comeback. Meanwhile, consumer credit continues to shrivel and the "real" rate of unemployment climbs inexorably towards 20 percent.

Overpriced equities with bloated P/E ratios of (average) 19 continue to produce record profits for breathless speculators, while the productive economy languishes in a Depression. The Fed's zero-rate policy and easing programs have created another bubble, further widening the chasm between the investor class and the working rabble.

Former Fed governor Frederic Mishkin delivered a defense of Bernanke's stock/commodities bubble in an article in this week's Financial Times titled "Not all bubbles present a risk to the economy". Oddly enough, Mishkin makes no attempt to dispute the Fed's bubblemaking strategy, but only to clarify the difference between good and bad bubbles. This may go-down as the most poorly-considered public relations campaign in history.

http://www.marketoracle.co.uk/Article14982.html

[pokercat999]

1. Also the worst economic policy.......ever. When the crash of

this "good" bubble comes there should be some public executions. Obama will get his, with the loss of the 2011 PRIMARY! Unless there is some kind of miracle. Sorry forgot this is American, the new corporate approved president will get a second term as long as he doesn't step out of line.