Steve Forbes accused Federal Reserve Chairman Ben S. Bernanke and U.S. Treasury Secretary Henry Paulson of being guilty of "Zimbabwe economic".
The U.S. prefers a "weak" dollar because it helps the nation's exporters, Forbes said. "That's Zimbabwe economics."
Why is Forbes upset? After all, Zimbabwe's stock market rose 322,111% last year. That's the best performing stock market in the world. Doesn't Forbes want the American stock market to rise 322,111% this year? Property prices in middle-class areas of Harare are in a huge boom, some now costing more than houses in London. Doesn't Forbes want property prices to rise?
Oh, yeah. There is the tiny, insignificant problem of Zimbabwe's 14,000% inflation rate.
Despite Zimbabwe's soaring real estate and stock markets, the nation is getting poorer at a faster rate than any other country in the world.
So maybe inflating asset prices aren't the road to prosperity.
During the Latin American and Asia currency crisis America gave tough-love advice: Don't bail out distressed banks. Don't intervene when stock market and real estate bubbles pop. Let your overblown economies shrink to their natural levels.
The other day billionaire investor George Soros said that the world was facing the worst financial crisis in 60 years.
"The situation is much more serious than any other financial crisis since the end of World War Two," Mr Soros was quoted as saying in an interview with the Austrian newspaper, Standard.
He said that politics had been guided by some basic misunderstandings over the past few years, stemming from something which he called "market fundamentalism" - the belief that financial markets tended to act as a balance.
"This is the wrong idea," he said. "We really do have a serious financial crisis now."
Asked whether he thought the US was headed for a recession, he said: "Yes, this is a threat in the United States."
America is the center of this financial crisis. We are now in the position that Latin America was in 1982 and 1994, and east Asia in 1997. So are we going to take our own tough medicine like we suggested to the rest of the world?
Of course not.
To date, U.S. officials haven't followed any of the advice they so readily dispensed to others. They have tried to aid troubled banks. They have slashed interest rates to help the struggling housing and stock markets. They have made it clear that they will go to extreme lengths to keep the American economy out of recession.
[...]
"It's just amazing the hypocrisy in which the U.S. has indulged," said Gary C. Hufbauer, a senior economist with the Peterson Institute for International Economics in Washington.
"When other countries were causing financial contagions, we verbally spanked them for the lack of transparency in their financial systems and adequate regulations," he said.
Now that the U.S. is the country causing the contagion -- with global stock markets plummeting earlier this week on fears of spillover from the American economy's woes -- the root of the problem turns out to be remarkably similar, Hufbauer said: Financial institutions engaged in extraordinarily risky lending, using complex mortgage securities that defied understanding, with lax or nonexistent regulation.
America's big bankers were supposed to be "so good at financial risk management, they could regulate themselves," economist Stiglitz said. "It turns out these guys did very bad risk analysis and have created a mess."
The bailouts have only just begun.
Congress is approaching an agreement for government-sponsored agencies (GSE) to prop up the real estate market (aka bailout).
Sources in the House, the Senate, and the White House are all indicating today that a tentative consensus has been reached that the economic stimulus bill that Congress will send to the President will include much of the FHA Reform Legislation including raising the FHA loan limit max to match the FHA conforming limit AND a one year raise of the conforming limit to $625,000 with the possibility of an additional one year extension at expiration.
After years of asset inflation flowing into the real estate market, until homes are virtually unaffordable in many areas of the country, the taxpayer will now be subsidizing these overinflated prices via GSE's.
Will that fix the problem? No. The houses will remain unaffordable. The only difference is the people who bought those over-priced assets will get bailed out at the taxpayer expense. Or to put it more accurately, at the expense of future taxpayers (since all this debt burden will be laid on the shoulders of our children).
And that doesn't even count the headline item of this stimulus package - the tax rebate.
Here's a quick question: what do you call getting a tax rebate today from borrowed money? It's called debt.
Statistics released Wednesday by the nonpartisan Congressional Budget Office indicate that the federal deficit - the gap between what the government spends and the revenue it collects - is projected to leap to $250 billion in the current budget year. That's up 53 percent from the $163 billion deficit in fiscal 2007.
If Congress approves the roughly $140 billion economic stimulus plan now being discussed, the deficit for the current 2008 fiscal year, which began Oct. 1, 2007 could swell to almost $400 billion.
Once again, our children will pay for the economic problems that we brought on ourselves. That's immoral.