Monday, April 21, 2008

Hanke On Hank

Steve Hanke:

U.S. Treasury Secretary Henry Paulson's blundering is becoming more breathtaking with each passing week. At the end of March he rolled out a grand plan to crown the Federal Reserve as the nation's new financial stabilizer. The Fed a stabilizer? That's who created the financial mess we're in.

If this wasn't bad enough, Secretary Paulson then donned his cheerleader's uniform and encouraged Beijing to let the Chinese yuan appreciate against the greenback. All the while favoring in this fashion a debasement of the U.S. currency, Paulson proclaimed that we should remain calm and confident because the economic fundamentals are sound. He reminds me of the stockbroker who performed a valuable service to his partners by always being wrong.

The rest is here. In this post in January, I called for Paulson's exit based on his disastrous housing market assessment, which was either incredibly naive or willfully misleading. Hanke's a former economics professor of mine (and a good one) and his stridency in blasting the Treasury topper is noteworthy.


Anonymous Anonymous said...

Do remember that in order to head any department of the Federal Gov't, you must be a Bush "loyalist".
Being a good professor doesn't absolve him from selling his soul.

4/21/2008 11:14 AM  
Anonymous goldhorder said...

Retain (and add to) your gold hedges.

Excellent. My kind of guy.

4/21/2008 12:03 PM  
Anonymous John B. said...

just a note on the inflation chronicles:

in SW VA, in the past 10 days regular unleaded gasoline has gone from $2.28 a gallon to $3.50.

4/21/2008 1:22 PM  
Anonymous judyo said...

It's been $3.39 in Western WA (@ Costco, no less) for the past 3 weeks. Assume since VA has now "caught up" that it's higher today.
Great ride.

4/21/2008 1:40 PM  
Anonymous Anonymous said...

I know your an 'investment professional' and all but Wall Street is the land of the Pigmen. Men who can never have enough and Hank is one of the Pigmen kings.

Goldman, Hanks firm, by the way provided the shove which sent Bear over the edge in 3 short days. Intended or not you have to say this, JPM and the NY Fed were ready. That's how the world works.

Hank wants to socialize the financial markets, for the sake of systematic stability. Goldman's balance sheets expanded by $69.2bn during Q1 (24.7% annualized) to $1.189 TN, That's more than 10% of GDP I think. Correct me if I'm wrong. Obviously Hanks onto something. If the Pigmen cumulatively have assets approaching the total GDP their safety and 'liquidity' will need ever more protection. No price is going to be too high to pay to keep the system going, for the good of everyone of course. That it's expecially good for the Pigmen is an unintended consequence I am sure.

4/21/2008 5:14 PM  
Anonymous Anonymous said...

The fact is that Ben and Al were worried about the deflation of financial assets and real estate assets. So while they studiously avoid ever thinking about the rise in asset prices as inflation they always see the fall in asset prices as deflation.

Do they ever admit this to themselves? God only knows. Without ever rising prices for financial assets Americas elites cannot imagine life is even worth living. The inflation of those assets is the only reason the government exists now. Oh sure, there are the endless attempts to reduce business taxes and regulation and gazillion dollar no bid contracts to their buddies to give them so cash flow but it's the asset price that matters.

They will blow up the entire world, starve billions and who knows what else in order to continue to gain wealth beyond the imaginings of kings of yore. They and we may go down a little or a lot more but someone is going to pay in blood. A lot of someones.

4/21/2008 8:17 PM  

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