At an allegedly private fundraiser, President Bush had this to say about the cause of the current economic problems:
“Wall Street got drunk — that’s one of the reasons I asked you to turn off the TV cameras — it got drunk and now it’s got a hangover,” Bush said Friday, according to a video obtained by Houston’s ABC affiliate KTRK. “The question is how long will it sober up and not try to do all these fancy financial instruments.”
I actually think that is a pretty good analogy, although I would add condo flippers to the list of those who got hammered during the real estate boom. But if Wall Street got drunk, Alan Greenspan was the bartender. I think continuing to serve drinks to someone well after they have had enough is something for which bartenders can be held responsible. I suggest we sue Mr. Greenspan for the $500 billion or so that has been written off by the banks and brokers so far.
As for the hangover cure, Bernanke has come up with a cure:
1 shot of interest rate cuts
1 shot of TAF
1 shot of TSF
1 investment bank bailout
2 GSE bailouts
1 dash of talking nicely about the dollar
It’s called Hair of the Dog but its effectiveness is still unknown. Wall Street has built up such a big resistance at this point that it may take two of these to reach that Greenspan buzz.