The Fed Draws Fire
"Is that Bernanke or Lenin?"
That's what some readers wondered when they saw the cover of our Mar. 31 issue. Our Special Report on the financial crisis described the Fed chairman as a "reluctant revolutionary," language we also put on the cover. The photo, rendered in poster style, is indeed of Ben Bernanke. And yes, we were aware he looked a lot like Lenin. Of course, readers responded to more than the image. Many said the Fed went too far in orchestrating the purchase of Bear Stearns (BSC) by JPMorgan Chase (JPM). Others asked why taxpayers should save an investment bank. A few supported the Fed's move. It will be interesting, six months from now, to see if people feel Bernanke did too much—or too little, too late.
The Federal Reserve's actions are doing long-term harm to the economy and to American taxpayers. The Fed is trying to encourage economic growth—hoping that it will somehow outpace inflation. This smacks of central economic planning&. This is not a revolution by the Federal Reserve but a step toward socialism/communism.
Screen name: Jake
Bernanke is doing the right thing under the circumstances. But he can't repeat [Former Fed Chairman] Alan Greenspan's mistake of leaving rates too low for too long.
Our financial system needs to swallow some painful medicine, but allowing the system to collapse isn't productive.
Screen name: JoeSchmoe
What gives with the Bear Stearns bailout? I thought we were supposed to trust the market. Is it just a coincidence that your cover pic of Bernanke looks a lot like Lenin, not as reluctant a revolutionary?
LAKE VIEW TERRACE, CALIF.
In "None So Blind...," part of your Special Report, you ask: "Why didn't the people in charge see it coming and prevent it?" The answer seems clear. Our fiscal and monetary leaders have forgotten that recessions are a normal remedy to rising imbalances in a market economy. Their attempts to "smooth" those cycles can indeed postpone a recession, but at the cost of even greater imbalances and a more painful subsequent downturn.
While the Greenspan-led Fed stimulated the housing bubble with absurdly low interest rates, the Bernanke Fed, with its latest round of deep interest-rate cuts, will all but guarantee an even deeper recession and virulent inflation.
Why should I and other prudent taxpayers shell out funds to rescue dolts who didn't read the fine print? Nor should we rescue mortgage lenders who practiced poor business. [Nor] lose more money by bailing out intemperate clowns.
The root cause of all these now very visible problems was the Fed's throwing money into the system at a ridiculous 1% interest rate.... This organization, ostensibly set up to watchdog and safeguard the U.S. economy, has done just the opposite and brought it to within a hair's breadth of ruin.
Screen name: Jim Cunningham
Help me, I'm confused. Does Bernanke work for the Federal Reserve or for the New York Stock Exchange (NYX)?
Screen name: Student of the New Economy
How About The Wire?
I was disappointed that "HBO (TWX): From Hitmen To Hitless?" (In Depth, Mar. 31) made no mention of the network's other groundbreaking drama: The Wire. Many fans would argue that The Wire eclipsed other HBO programs, including The Sopranos.
Free Trade: Balancing Wages and Bargains
The key to free trade is to have a balance ("Refighting Nafta," In Depth, Mar. 31). And balance will occur only if the law mandates that manufacturing in Mexico or China can involve only a 10% difference in pay, wages, and benefits compared with [what's offered in] the U.S.
Screen name: Metera
We don't complain about free trade when our computers cost $500, a huge drop from where prices used to hover, because Dell (DELL) can save money by outsourcing call centers.
Screen name: Lady M
Foreclosures: Not the First Breakdown
I got a chuckle when I read "Recession Time" (In Depth, Mar. 24). It quoted Raghuram G. Rajan of the University of Chicago Graduate School of Business regarding the breakdown of the "social compact" and foreclosures. The good doctor must have missed the impact of shrinking wages, corporate greed, and the disappearance of pensions.
Bailouts: What's Good for the Goose
About "A Grand Old Problem for the GOP" (In Depth, Mar. 24): U.S. voters don't want the government to give financial help to borrowers who can't afford to pay their mortgages. But they seem willing to support the shotgun takeover of Bear Sterns by JPMorgan Chase. Remember the bailout of Long-Term Capital Management by the Feds? When top execs lose, the Fed bails them out! Yet it lets ordinary citizens go under. It's a troubling double standard.
It really does not matter who's in [Washington]. Both political parties are supportive of maintaining a Federal Reserve Bank, and it's the Fed that is the guilty party here. Using monetary policy-like interest-rate fluctuations to promote growth only causes inflation.
Screen name: c.o.
Another Route to MBAs for Soldiers
Some active-duty military personnel don't wait to leave the service to begin their MBAs ("From The Battlefield to B-School," Personal Business, Mar.24). They use the Internet. Five of 17 students in the online Advanced Corporate Finance class I teach are on active duty.
HILTON HEAD, S.C.
Sharing Eco-Expertise with China
We are eons ahead of China in terms of environmental knowledge and technology ("China's Carbon Explosion," Sci Tech, Mar. 24). Yet as we moved production to this country that's been forced into rapid industrialization, we did little to supply assistance to reduce the likelihood of carbon-emission expansion.
Richard Teremi Sr.
Auto Insurance: A Green Tip Pays Off
Although my insurance carrier was not mentioned among the eco-friendly insurers in "Insurance Goes Green" (Personal Business, Mar. 17), I contacted my agent and requested a discount for driving less.
I promptly saw my rate drop nearly 50%. I would never have thought to ask for this "green" reward without having read your article. Thank you for helping me to save money and the planet.