Years of Poems and Spirits

Just heard that the Fed has started buying commercial papers directly from non-financial corporations. Someone on WSJ said recently, “If the commercial-paper market was a place, it would be at the intersection of Wall Street and Main Street. That should make Washington’s intervention a little more palatable”. 22 years ago, the Black Monday started with a sudden drying-up of the commercial paper market. Reading that part of the history left me with a lasting impression.

As bad as things are getting (Iceland may go “national bankrupt”–wasn’t that called devaluation? Russian stock market is closed indefinitely, Bank of America can’t hardly find buyers of its $10B stocks), I still think we are fortunate to have Bernanke and Paulson running the ship.  Although Bernanke declared a rate cut today (almost), but that only came after oil price dropped to below $90 and Australian CB cut its rate by 1% (adding further pressure to current account balance I suppose). Once the dark days are over, looking back, I think it will be safe to label Bernanke a “conservative” monetary policy maker.

Paulson–for whatever mistakes he’s made–he did what he could to link up the political and financial world quickly. McCain, for that matter, wasn’t too far off when he said the “foundamentals of the economy is sound”. The speculative assets may be crashing, the capital assets are still productive (at least I have not heard otherwise). If there is a national ROA I’d like to get that number.

I think US will take a long time (between Japan’s decades and 1987’s month) to recover. But depression? I really have to see it to believe it.