Economically and monetarily speaking, the Western world, particularly the U.S. has been in trouble for a long time. We've had a series of rolling crises which have been masked or papered over by the Federal Reserve, the U.S. Treasury, Wall Street and the Central Banks of the world, all in an attempt to keep the party going.

			Look out for the Bond Bubble ahead!
			2010:  the Decline of America Looms Larger

Bill Brown wrote that  "Moral Hazard is the alignment of incentives that encourages the pursuit of short-term gains with scant regard to (or even responsibility for) potential long-term costs." Go here for the whole article or here for more on Moral Hazard. A little bit of fresh air in terms of the analysis of the problem, how we got there in broad terms without focusing on the symptoms themselves such as sub-prime. Some commentators are arguing whether there has been enough regulation or not. I'm not sure of the answer to that question but I'm reasonably certain that the regulators didn't regulate responsibly. Oftentimes, they did precisely the opposite to what was needed as an expedient way to keep the party going at all costs and to satisfy both broad public and private short term interests as well as and particularly those of Wall Street. Part of the problem has to do with objectivity, if you want to say it politely. Some might refer to it as corruption and greed on a large scale. Alan Greenspan held numerous director positions with companies such as Mobil, Morgan Chase, General Foods et alteri. Some observers, including Nobel Prize-winning economists Joseph E. Stiglitz and Paul Krugman, assign a large degree of culpability for the devastating Economic crisis of 2008 to Greenspan.  Recently, the Federal Reserve under Paul Bernanke ponied up $30 Billion so that JPMorgan Chase could acquire Wall Street investment bank Bear Stearns Inc. Current U.S. Secretary of the Treasury, Henry Paulson, is similarly implicated in terms of objectivity. He was CEO of Goldman Sachs. In 2004, at the request of the major Wall Street investment houses, including Goldman Sachs, then headed by Paulson, the U.S. Securities and Exchange Commission agreed unanimously to release the major investment houses from the net capital rule, the requirement that their brokerages hold reserve capital that limited their leverage and risk exposure. H'mmm. More recently, note how nobody rescued Lehman Brothers, a Goldman Sachs competitor. So, in addition to pursuing dangerously expansionist and credit risky policies, this is followed by very selective bailouts of firms at public expense. I would argue that bad (dishonest, even treacherous) regulation is still being pursued and that, all too frequently, the foxes are in our collective chicken-houses as we unwittingly look to them for salvation.

  - George Zurakowski, December, 2008

$819 Billion Stimulus package, February 12, 2009: The details on the new Obama/Geithner stimulus package are out with $819 Billion of additional government spending. It seems Obama is an adherent of "tidal wave" economics and big government. His administration is determined to spend and inflate its way out of this mess. I'm even more scared than I was a couple of months ago. For details of the bailout package go here.