The paper starts out by admitting there is a crisis.
If you look at chart on page 15, commercial paper by non-financial institutions hasn’t fallen significantly, but commercial paper by financial institutions has nose-dived.
Yes, and this is a good thing. Just as sub-prime borrowers are having trouble borrowing, so should the banks that paid themselves 50% of net revenues as salary and bonus, and then levered up on sub-prime debt. That nobody wants to lend to them is precisely a sign that the credit markets are working just fine.
“If you look at chart on page 15, commercial paper by non-financial institutions hasn’t fallen significantly, but commercial paper by financial institutions has nose-dived.”
But the Berneke, Paulson, Obama, media story-line is that “the crisis” spread from the bad real estate assets/loans (never a majority of all mortgages outstanding) to “financial banks” to “retail banking” and “main street”, saying that banks couldn’t/weren’t lending to each other - but they were at exactly when those comments were first made, and that non-financial institutions and consumers were unable to get loans/financing. But the data says differently.
If Reagan were running for President, now, and got a copy of this paper, he’d have a press conference, demand a speedy (24 hour) answer from Berneke, and, if that answer was not satisfactory, demand that Bush ask Berneke and Paulson to resign, immediately.
Is someone lurking here for John McCain??????? They should be!!!!!!!!!!!!!!!!!!!!