Markets losing confidence in Fed, Treasury
I can't help but thing that if Fed and Treasury officials spent more time preparing for the unfolding calamity IN ADVANCE -- and less time issuing speeches about how the subprime mortgage crisis was contained ... how the problems in the mortgage world weren't too serious from a credit availability perspective ... and wouldn't spill over to the regulated banks and thrifts -- then we wouldn't have to do these hastily arranged, weekend bailout scrambles.
Am I being too tough on Washington policymakers? I don't think so. Heck, I'm not even griping about the other, multiple errors they've made in recent years: The Fed keeping interest rates too low for too long, thereby creating monetary conditions ripe for the inflation of a housing bubble ... the banking regulators not cracking down more aggressively on high-risk lending when there was still time ... policymakers denying there was a housing bubble over and over, even as many of us could see it plain as day. You get the picture.
Why am I bringing this up today? Well, this slapdash policy approach is causing international investors to lose (even more) confidence in Bernanke and Paulson, as near as I can tell. Just look at the dollar. The value of the dollar is determined by many things. But one of the most important ways to look at it is as a barometer of international confidence in the U.S. economy and its stewardship.
Right now, investors are giving these guys a big "thumbs down." The EUR set an intraday, all-time high this morning ... the AUD set a 25-year high ... the GBP is back above the 2-dollars-per-1-pound mark ... and the Dollar Index is within a few ticks of its all-time low (recently 71.50 vs. a low of 70.69 on 3/17 of this year).