The problem is that it WILL occur again and the "weaponry" won't be there to combat it the next time.
Bubbles are only bubbles if the bubble bursts. Otherwise there is no bubble. Bernankes lifespan kinda makes this a bubble though... It's not like the guy is going to be around forever to make the big gambles that stabilize the system and keep it going...
we cannot be certain if a child is blowing bubbles unless the bubble bursts. your remark is a gem of logical thinking.
saving zombie banks and their executives is kicking the can down the road. and rewarding the incompetent. these banks should have allowed a natural death. other banks would have been created out of the ashes of the failed banks. instead of allowing the economy to heal naturally you are giving it the economy the equivalent of steroids. there may have been stabilization on the surface but under- neath these financial institutions continue to exist not as a benefit to the economy but to maintain the jobs of highly paid executives. jamie dimon of jp morgan chase is the perfect example. the latest loss in trading, approximately 6 billion took place because he understands that the FED will always bail him out.
B]It might occur again but the past event at the time was a virtual certainty. [/B][/QUOTE] a down cycle is the best thing that can happen to an economy. it rids the economy of the excesses from the previous up cycle. if this process is not allowed to take place you create a bigger bubble which when it finally bursts much bigger pain is the result i.e. contraction of business activity, more unemployment, misallocation of resources and more government interference in the economy. the end result is hyperinflation. the US economy is overleveraged. at some point the world will stop accepting $US and the piper will be paid. its role as a reserve currency is a fading one. watch the euro. the dollar is only relatively strong against a currency which is sick and should be allowed to die. the euro is in trouble because of excessive borrowing. there has never been an economy which became strong by borrowing money, printing money and debasing the currency.
You might be right. I'm not an economist. But I do know things were pretty bad in 2008 in the real economy and printing money to shore up the capital markets was a great thing. The world truly stopped spinning then. As to now, there will be consequences to this money printing. What they will be I don't pretend to know. I do know that the US households are deleveraging at a healthy speed. We are getting back to the long term level of debt accumulation (which itself is bad, but the 2000's were way way worse). I don't pretend to be an economist but given that they have pumped trillions and trillions into the economy and we haven't had meaningful inflation yet does say something. Where is that money going? My guess is that bondholders are being paid off and that's it. So bondholders are consuming at the rate they would have if there was no crisis. If the money wasn't injected then those bondholders would be consuming nothing that we'd be in a deep recession/depression. So the federal govt is taking the debt burden off the private sector (who creates the jobs and produces the goods but can't handle this debt) and will overtime hopefully solve it. It would have been better if we never got here in the first place, but given that we have what they are doing doesn't seem dumb. EDIT: Sorry if I misquoted you, the browser messed up the
"My guess is that bondholders are being paid off and that's it. So bondholders are consuming at the rate they would have if there was no crisis. If the money wasn't injected then those bondholders would be consuming nothing that we'd be in a deep recession/depression." the money for the bailout is sitting on the balance sheets of the bailed out banks who rightfully don't lent money out because they don't have confidence in the US government or the future of the US + they are rebuilding their balance sheets at the taxpayer's expense. "EDIT: Sorry if I misquoted you, the browser messed up the
If this market keeps stable at these levels and the fed manages to keep them here over the next ten years... Absolutely nobody is ever going to call this a bubble. It will be called the "Bernanke Miracle!" By your logic every single company and business in existence is a "bubble" because it has a beginning and an end... Nothing lasts forever.