Text size
Print Share Email

Depression or bust

Apr 02, 2008
By FLYP Staff

It seems that we might just leapfrog past the debate about whether to use the “r” word—as in recession—and go directly to the debate about the “d” word—as in depression.

At least that’s what seems to be going on in the lofty world of the Fed and other central banks.

First, the Fed dusted off authority not used since the 1930s to lend $29 billion to JP Morgan to buy Bear Stearns on the cheap. Then, it opened its lending facilities to investment banks—again something not done since the Great Depression—that are borrowing billions every day as they try to avoid Bear’s fate.

American and foreign central bankers have begun talking publicly about more radical solutions to the global financial mess. They’re talking massive governmental purchases of bad loans and bad investments, suspension of accounting rules to make things at least look better, taxpayer-funded capital for shaky banks and temporary changes to rules that require banks to have solid capital bases.

Nothing like these policies have even been discussed since Roosevelt was in the White House and all we had to fear was fear itself.

If the world’s moneymen are worried enough to be acting like it is 1933 again, maybe the rest of us should, too.

How worried are you?




login or register to post a comment

Get the latest look at the people, ideas and events that are shaping America. Sign up for the FREE FLYP newsletter.