Thursday, February 25, 2010

Ben Bernanke warns of Greek tragedy; Paulson prescribes how to prevent (another) one

Fed Chairman Ben Bernanke warned Congress Tuesday that the Federal Reserve will not be able to control the ballooning debt by printing money, leading to further periods of inflation. But a Washington Times story Wednesday Feb. 24 (“Bernanke delivers blunt warning on U.S. debt”) by Patrice Hill was subtitled by “Stage is set for Greek tragedy” based on the problem of Greece’s runaway deficits. The link is here. There is a related story “Feds look at high-risk contracts on Greek debt” (that AP story is here on Yahoo!). The Greek situation helped bring down the market today.

On Feb. 15, former treasury secretary Henry Paulson wrote an op—ed for the New York Times, “How to watch the banks”, link here as if the banks were like jobs running on a mainframe computer accumulating excp’s.

Paulson warns that at the end of 2008 we were at the edge of a James Cameron abyss that could have led to another great depression with 25% unemployment. Paulson wants two major reforms: a “systemic risk regulator” and “resolution authority” to sell off failing institutions before they fail. I’ve heard friends say that Paulson was actually a Democrat in disguise in a cabal with the Bushies.

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