The People In Charge Of Our Financial System Are Clueless

10:38 pm EST March 16th, 2008 | News | 10 Comments

Completely and utterly. As I’ve noted numerous times before, one does not have to be a financial wizard to realize that the panicky cutting of the interest rates in the last six months is a sign of a system in trouble. Along comes news that the Fed has cut rates again, on a Sunday night.

In related news, JP Morgan Chase is buying Bear Sterns – the mismanaged company being bailed out by your tax dollars – for $2/share, it had been trading for $50-something.

They. Don’t. Know. What. They’re. Doing.

UPDATE: This seems like a good time to remind folks of this quote from John McCain: “I don’t understand economics very well”

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10 Responses to “The People In Charge Of Our Financial System Are Clueless”

  1. Walker says:
    March 16, 2008 at 11:16 pm

    Obama should be running ads about Greenspan and the repeal of Glass-Steagall. It is possible to blame our banking crisis on both Clinton and Bush. This would allow him to score a knock-out on Hillary with regards to the economy without empowering the Republicans.

  2. Robster says:
    March 17, 2008 at 12:13 am

    Hell yes!

    Even if the Clintonistas say that it was Congress that passed the bill to repeal it, then all we have to ask them is “How come the Clintons didn’t have the judgment to veto the bill when it arrived on their desk?”

    Go Obama!

  3. merlallen says:
    March 17, 2008 at 5:00 am

    No problem, corporate welfare to the rescue.

  4. somejackass says:
    March 17, 2008 at 6:19 am

    Actually, a year ago Bear Stearns was selling at around $150. The fact that the feds approved this means we’re in some deep shit.

  5. Mark says:
    March 17, 2008 at 8:02 am

    I am very worried about the state of the world economy. Half the time – it’s almost as if they are making stuff up as they go along. So much of the wealth of the world can’t be tied to anything, the worth of the US dollar is based on what people “think” it’s worth (the US no longer has the gold standard), and people will invest or sell based purely on emotions and speculation. The world’s economy seems to be buoyed by people “thinking” it’s doing well.

    How rich are companies? How much profit do they REALLY make? Is it tied to anything concrete? How do people calculate the wealth of the dollar? No one has ever given me good answers to any of those questions, and the text-books are so confusing as to be utterly useless.

  6. Jay says:
    March 17, 2008 at 8:36 am

    You do realize that the rate they cut is a discount rate that covers short term loans financial institutions get from the Federal Reserve and is not the key rate that they have been reducing? It doesn’t seem that you understand the difference.

    You’re accusation that they don’t know what they’re doing is nothing but a political statement because if they had done nothing over the last year or so, you’d be burning up the RSS feeds with entry after entry about how “They’re not doing anything!”

    But they’re doing something and you’re claiming the moves are “panicky.” That makes no sense. The moves would be “panicky” if they were doing it and the system wasn’t in trouble. But you acknowledge the system is in trouble, so why would their moves be “panicky”?

  7. Oliver Willis says:
    March 17, 2008 at 8:47 am

    Because their reactions are erratic. They seem much more along the lines of “maybe this will work”, “no, maybe this”, “oh, shit, maybe this?”. Which are fine if I’m trying to get my windows machine back up but not so much the biggest economy in the world.

  8. Sean D. Martin says:
    March 17, 2008 at 12:49 pm

    Jay: “The moves would be “panicky” if they were doing it and the system wasn’t in trouble.”

    So, by that definition it’s impossible to panic when something is actually going wrong.

  9. Zython says:
    March 17, 2008 at 6:38 pm

    The moves would be “panicky” if they were doing it and the system wasn’t in trouble.

    Waiting to do something at the very last minute seems more “panicky” to me.

  10. C.S.Strowbridge says:
    March 17, 2008 at 10:02 pm

    “But they’re doing something and you’re claiming the moves are ‘panicky.’ That makes no sense. The moves would be ‘panicky’ if they were doing it and the system wasn’t in trouble. But you acknowledge the system is in trouble, so why would their moves be ‘panicky’?”

    Look up the word, ‘panicky’ in the dictionary, along with the term, ‘per capita.’

    They are making the move out of desperation because they didn’t fucking do enough previously to avoid the serious trouble we are in now. That’s why we were complaining that they weren’t doing enough earlier and are complaining about what they are doing now.

    Why am I not surprised we have to explain this to you?