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  • The Fed is Part of the Problem Too

    We have long believed that the Treasury Department’s TARP interventions have become possibly the single most disruptive force in the global economy. Under the header The Beatings Will Continue Until Morale Improves, EconLog’s David Henderson flags a New York Times story suggesting that the Fed has become just as unhelpful an actor:

    The New York Times today carries a story about how the Federal Reserve Board is making decisions about who gets loans and who doesn’t. The reporter, Edmund Andrews, writes:

    But the financial crisis has drastically changed the role of the Fed, forcing officials to get their fingernails a bit dirty.

    Since March, when the Fed stepped in to fill the lending vacuum left by banks and Wall Street firms, officials have been dragged into murky battles over the creditworthiness of narrow-bore industries like motor homes, rental cars, snowmobiles, recreational boats and farm equipment — far removed from the central bank’s expertise.

    Note the author’s use of the word “forcing.” This is one of the most misused words in reporting and, indeed, in modern conversation and writing. No one forced the officials to do what they’re doing. They chose.

    Here’s the passage that led to this post’s title:

    Fed officials say they, too, are uncomfortable with their new role and hope to end it as soon as credit markets return to normal.

    Umm, do you think there’s any connection between the Fed’s role in allocating credit and the credit markets not returning to normal?

    Posted in Economics [slideshow_deploy]

    3 Responses to The Fed is Part of the Problem Too

    1. Pingback: The Fed is Part of the Problem Too « Conservative Thoughts and Profundity

    2. reader says:

      How on earth can you quote an author who has been thoroughly discredited on this topic without disclosing his own "dirty fingernails" and his "forcing" of JPM to renegotiate his loan balance?

      Is it possible that you do not know that this journalist was taken to task by the public editor of the NYT less than two weeks ago for being "too close" to the mortgage situation to report competently on the subject?

      God lord, the man took out several "liar's loans" between 2004-2007 and is in arrears by 7-10 months (depending on which news source you trust) and is, so far, barely skirting foreclosure by JPMorganChase? Yes, he's waiting for JPM to offer him a loan mod so he can keep "his" house. The one he falsified (or failed to report) his income, his child support and alimony obligations on, his current wife's one bankrupcty (prior to the original loan), his current wife's second bankruptcy in 2007 while married to him after multiple refinancings while (I think but am not completely certain of) claiming her short termed income of high five figures before she was fired from that job?

      I understand that you are pointing out the florid and inaccurate language in his report, but I am floored by the fact that the NYT already has him back and reporting on something he is tainted to cover.

      I truly think you can do better and I am astonished that the NYT continues to let him report on TARP, mortgages or anything else relating to the housing collapse.

      For shame, please find a less compromised reporter for your next article or provide the pertinent background information on the reporter beyond the words "forcing" and "dragged".

      For reference, please see Clark Hoyt's public editor/ombudsman column dated 5-23-09 http://www.nytimes.com/2009/05/24/opinion/24pubed….

      Or Megan McArdle's research at The Atlantic,
      You can backtrack the whole saga from that one post.

      Or Brad DeLong's further research and numerous articles regarding Mr. Andrews' financial and moral dilemmas.

      Or say, Steve Malanga's take on it: http://www.realclearmarkets.com/articles/2009/05/

      Or, even, the petty petty bills they stiffed the L.A. library for, the botox and restylane (alleged) docs, the vet bills, her sister, her lawyers, her credit cards as well as utility bills, cell phone bills, internet and cable TV bills (all allegedly hers although they were from many different providers).

      Seriously the 1998 bankruptcy dwarfs the 2007 bankruptcy but there's still no excuse for Mr. Andrews to still be reporting on the economy. This repudiation of debt had to have been done with his full knowledge and support at the same time he had his hand out for his book advance, something not commonly available to that "average schlub who got taken in by those big bad mortgage bastards".

      I have nothing but disdain for Mr. and Mrs. Barreiro-Andrews II, my condolences though to Mrs. Andrews I and her children who are being "dragged" "forcefully" through this circus.

      My condolences to the Sisson and Andrews children and to Mrs. Andrews I and Mr. Sisson.

      As far as I can tell, and as much as I have read/found online, you all – with the exception of these "two children" with midlife crises deserve all the respect in the world, no matter how hard they try to deflect their own blame onto you.


    3. Pingback: The Hill’s Blog Briefing Room » MIDDAY ROUNDUP

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