Saturday, September 12, 2009

Commentator or Fiction Writer?

Simon Johnson has another barely-coherent article in The New Republic about financial crises past, present, and future. Johnson has never been interested in making serious, fact-based arguments, but this article has to be his worst. I think this part amused me the most:

During the heady days of summer 1927, the Fed had done something else that would contribute to the Great Depression: It lowered interest rates.
The "heady days of summer 1927"? The U.S. was in a recession in the summer of 1927. I guess if the facts don't fit your conspiracy theory, you just change the facts. He also manages to describe the LTCM crisis without ever even mentioning that a consortium of fourteen Wall Street banks bailed out LTCM to the tune of $3.625 billion. (Johnson conveniently omits any reference to this massive debt-for-equity swap, even though he's previously argued that, with debt-for-equity swaps, "the problem of moral hazard . . . would at once be forgotten.") Instead, he focuses on the moral hazard created by the Fed's decision to cut rates 50bps in the weeks following the LTCM crisis. I kid you not. These two examples are just the tip of the iceberg. TNR's editors should be thoroughly embarrassed.

5 comments:

Anonymous said...

He's really popular with the Huffington Post crowd.

The Federal reserve is under attack from some really stupid people. It's sort of scary.

Anonymous said...

he or she
Diablo III Gold targets this moral threat produced by the actual Fed's choice to slice premiums 50bps within the months following the LTCM crisis. My partner and i child happened. Those two good examples are just the tip from the iceberg. TNR's editors needs to be Billig Diablo 3 Goldextensively embarrassed.

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