Federal Reserve vice chairman Stanley Fischer’s speech yesterday met with disbelief and snickers when he announced that those who commit financial crimes should “suffer”.
So where was Mr. Fischer back before the statute of limitations on the largest crimes ran out?
Of course, we know.
He was busily destroying the US economy with a deadly cocktail of unproven, fringe economic theory. Now that the Fed has failed for the third time in a row, with no indication that it’s strategy was ever successful, poor Stanley is clearly starting to sweat. It’s clearly time to point some fingers.
Here’s Fischer displaying his formidable powers of insight, via Bloomberg:
“Individuals should be punished for any misconduct they personally engaged in,” Fischer said in a speech to bankers Monday in Toronto. While massive fines are being imposed on banks, “one does not see the individuals who were responsible for some of the worst aspects of bank behavior, for example in the Libor and foreign-exchange scandals, being punished severely.”
While we applaud Stanley’s baby-steps into the realm of rational thought, we can’t help noticing that it was Mr. Fischer and his cohorts who like the DOJ, also concluded that the banking system was too-big-to-fail. And it was Mr. Fischer and friends who’s direct actions made bankers wealthier and more powerful than they have ever been in history: ie: Above the law.
On the subject of “who should have gone to jail”, we also think rapists, embezzlers, murderers, con-artists, kidnappers and other vermin should go to jail. But apparently one doesn’t need to preach such obviousness when it comes to criminals who don’t support lawmakers with a portion of their loot.
Three Trends in FedSpeak We’re Watching:
Which brings us to a larger point: Fischer’s profound statement vis-as-vis criminals r bad, seems to be part of a growing chorus of Fed officials covering their collective asses. There are three subtle but important trends we’re starting to notice in Fed speak –all of which bear watching:
1) The Fed now clearly seems to know they’re losing the PR battle: There’s a very obvious dawning of awareness among Fed officials, that they themselves are perceived by the public at large (and increasingly by Wall Street) as a systemic economic problem, and a root cause of the financial crisis.
2) The Fed is increasingly having to defend it’s core thesis: Five years ago stimulus was “unquestionably” the panacea for all manners of economic ailments. Today, the Fed is increasingly shifting to the defensive over the most fundamental building-block of their policy.
3) The Fed is increasingly attempting to shift the burden of failure on to other branches of government. Fischer points to the DOJ and SEC and suggests “suffering” for y’know… crimes. Yesterday, Bernanke blogged that it was “government’s” job to redistribute wealth, and therefore the obviously fed-caused increases to social inequality weren’t really their problem. (As if the public doesn’t notice that one single entity gave trillions of dollars to a criminal class which has a well established track record of strategically sharing the wealth with key members of said “government” class)
All three of these trends point in a single direction: The game is over. The finger pointing has begun. And the battle for “how history tells it” is ramping up.
* By “fringe economic theory”, we mean theories which are unproven and already suggested to be false by mountains of evidence to the contrary – and yet still popular among a set of non-critical thinkers who adhere to a belief-based mode of thought.