Harpers Magazine The Next Bubble by Erik Janszen - Superb Read for All
CallMeASeeker : "They Know Nothing" (CNBC clip via Google/Youtube) was Jim Cramer's now immortal take on the Fed and I could not agree with him more. The Fed is clearly clueless and needs a major update in what I will call Tactical Economics and Technology to actually meet its charter. In this absolutely brilliant article by Erik Janszen of Harper's magazine the yawning gap between the Fed's Theories vs Market Realities and its effect on "asset price hyperinflation" are clearly explained. Bubbles have become the Norm rather than the exception and The Fed does not yet understand how to really handle this. This is what Buffett was alluding to as well in the 2002 BerkshireHathaway Annual Report where he termed mortgage backed derivatives as Financial WMDs(See Report Page 14 ). These financial instruments need to be regulated to an extent where they do not wreak the kind of havoc we see today. The days of using interest rates as leverage to control inflation and the money supply are over. The policy and regulatory controls of the Fed should be reviewed and overhauled. The Fed should look to state-of the art Hardware and Economic Model-based Business Intelligence to monitor and pre-empt dangerous fluctuations in the money supply, the credit/asset and securitization markets that can derail the global economy. The Technology is out there but this is not your boiler plate IT implementation and thats putting it mildly, this needs a Google like approach backed 100% by every branch of government concerned. The Googles and Apples of the world have delivered gadgets, toys, search engines and Orkut but nothing that has come out of Silicon Valley has solved any of our real problems in the 2 most critical areas - energy and the economy. The IT industry needs to rise to the occasion and work with the economists of our time to deliver innovation that allows the Fed to monitor the economy. For that to happen the IT industry's techno-whiz kids need to understand economics - period. As dry a subject as it is , it forms the very fabric on which American and global prosperity and peace depend. Mis-informed economic and monetary policy have caused much pain to the poorest amongst us. The food price bubbles in 2008 have already triggered a civil war in Haiti and rioting in Egypt. Economics and Monetary policy is the 10,000 pound gorilla in the room that we have chosen to ignore - and when we ignore something you can be sure our politicians and leaders will do the same. So start right here, Educate yourself ...Change comes from the ground up!! Vote Barack Obama 08 'Harper's Magazine Feb 2008 Erik Janszen : The next bubble:Priming the markets for tomorrow's big crash - Absolutely Brilliant Article - A must Read! "The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitization, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours. More.....in extended post
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