In only a few paragraphs, Bill Conerly (author of Businomics and a fellow New College of Florida graduate) has accurately deconstructed the Bear Stearns bailout.
Conerly makes clear that it is not Bear Stearns but its reckless counterparties who have been bailed out, and that Mr. Bernanke's fears of financial turmoil and his enabling responses will fuel further recklessness in the financial markets.
If Bear Stearns (and with it the Wall Street speculation machine) were the alcoholic, then the Fed is the codependent partner who thrives on the continuing illness.
Conerly sums it up as follows:
"Dr. Ben rode to the fire in a big red truck. But his truck was leaking gasoline all over town, setting up the street for another major conflagration that could be far worse than the Bear Stearns fire.
"Someone should have pulled Bernanke aside and told him to chill. The economy is pretty resilient. It can withstand a lot of turmoil. Instead, the chairman is too afraid of financial turmoil, and as a result, he's going to get more of it."
Bill's book is available at Amazon.com.
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