Friday, February 22, 2013

Are Banksters Reading EPJ?

Oswald Calvario of Seven Mile Capital Partners emails:

Are Banksters reading EPJ?… and summarizing the last several weeks’ worth of posts in a presentation to the Bernank?

Of course he curtly brushes off any statistics or logical deduction critical of his money printing ... Are these critics not schooled in Keynesianism? Do they not know that he taught at THE Princeton University??  ….

Keep up the good work, between this and the recent spastic posts from Krugman and Weisenthal, seems like you’re getting under the skin of all the right people!!!

1 comment:

  1. I had never before seen this Krugman piece from 5/27/05 (ht2 “Locus”, commenter @ Krugman-in-Wonderland). If banksters do read EPJ, they should read this too:

    As Mr. McCulley predicted, interest rate cuts led to soaring home prices, which led in turn not just to a construction boom but to high consumer spending, because homeowners used mortgage refinancing to go deeper into debt. All of this created jobs to make up for those lost when the stock bubble burst.

    Now the question is what can replace the housing bubble.

    Nobody thought the economy could rely forever on home buying and refinancing. But the hope was that by the time the housing boom petered out, it would no longer be needed.

    But although the housing boom has lasted longer than anyone could have imagined, the economy would still be in big trouble if it came to an end. That is, if the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. If housing prices actually started falling, we’d be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession.

    So what happens if the housing bubble bursts? It will be the same thing all over again, unless the Fed can find something to take its place. And it’s hard to imagine what that might be. After all, THE FED’S ABILITY TO MANAGE THE ECONOMY MAINLY COMES FROM ITS ABILITY TO CREATE BOOMS AND BUSTS IN THE HOUSING MARKET. If housing enters a post-bubble slump, what’s left?
    [emphasis added]

    Who knew?