Fading into Irrelevance
Itâ€™s probably just the side of the bed I woke up on this morning, or the way the day has gone in general, but two stories caught my eye this afternoon in a way that seemed to point to the irrelevance of government with respect to solving problems.
First off, this from the Associated Press about President Bushâ€™s pending visit to the Middle East. Heâ€™s going to â€śbring up the effect that high oil prices are having on the U.S. and global economies.â€ť Thatâ€™ll be helpful. No doubt King Abdullah will run right outside and crank open the spigot when he hears that news. Iâ€™m not sure, though, if I were King Abdullah that I would trust Mr. Bush to tell me how high gas prices are affecting anyone. Flash back to Feb. 28 news conference:
Q: What’s your advice to the average American who is hurting now, facing the prospect of $4 a gallon gasoline, a lot of people facing —
THE PRESIDENT: Wait, what did you just say? You’re predicting $4 a gallon gasoline?
Q: A number of analysts are predicting —
THE PRESIDENT: Oh, yeah?
Q: $4 a gallon gasoline this spring when they reformulate.
THE PRESIDENT: That’s interesting. I hadn’t heard that.
Another AP story moved on the wire this afternoon quoting Federal Reserve Chairman Ben Bernanke saying turmoil in the financial markets had â€śeased somewhatâ€ť but that things are still â€śfar from normal.â€ť This after the Fed has employed every tactic short of direct email solicitation to grease the skids of the global credit markets. Letâ€™s see, the Fed has agreed to accept as collateral the same cruddy paper that other banks wonâ€™t accept as collateral from other banks to provide loans, allowed investment banks access to its discount window, injected billions of dollars into the credit markets and cut the federal funds rate to 2% despite the already weakened dollar. Additionally, the federal government in March eased restrictions on the capital requirements for Fannie Mae and Freddie Mac, the United Statesâ€™ two largest mortgage companies, essentially reducing the amount of capital both must keep on their books in an effort to free up more money for mortgage financing. Of course, those caps were put in place in 2006 after the two Government-Sponsored Enterprises suffered some well-publicized accounting lapses. But I digress. Mr. Bernankeâ€™s comments speak to the fact that despite the federal governmentâ€™s best efforts, problems in the credit markets persist. In fact itâ€™s questionable at this point why heâ€™s even considered enough of an authority on the troubles in the financial markets to warrant a story based on such innocuous comments.