The bailout of the overnight repo market by the NY Fed has raised a lot of questions. Why was the financial market unable to respond without Fed help? What caused such an unpredictable surge in demand that caused rates to double overnight? Such conditions are ripe for theories and I have mine.
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We mortals pride ourselves as rational beings, but we act emotionally. We get attached to previous positions, and will discount or filter evidence rather than change our minds. We read the news for confirmation rather than information. We are so
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We tend to look at our economy as a diversion from the norm after a record financial set back. But the economy we are in may well be closer to the norm. The former economy was distorted by government policies
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“Washington may also be tempted to go on as before for the same reason it did in the wake of its Continental Illinois and Long-Term Capital management bailouts. Back then government regulators and financial executives came to believe: if we
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