I'm Trying To Laugh

This is unintentionally funny. From the NY Times:

"As long as housing prices kept climbing, fueled by ever-higher levels of debt, the problems were hidden."

"Bank regulators and executives generally agreed there would be losses, but they would be widely dispersed and the impact would be limited. The financial system, they insisted, had been made more resilient by deregulation, technological innovation and the globalization of capital flows."

"The complex debt products held by Lehman and others proved to be risk bombs. There was no central exchange, or open marketplace, where the mortgage-backed securities were listed or traded. More banks in the United States and Europe held more of the toxic securities than had been realized."

“No one appreciated how great the failure of risk management really was,” said Simon Johnson, a former chief economist of the International Monetary Fund."

But, earlier, they said this:

"This fundamental shift at least raises long-term questions about government’s appropriate role in financing and the economy. Will the government inevitably be tempted to guide lending decisions, steering loans to some and not to others? History shows that government intervention in banking systems can carry its own dangers, with money funneled to political favorites instead of an economy’s innovators."

I agree with the basic point, but after recognizing so much human stupidity admitted to by these concerns, one wonders how they can worry about the job the government might do. As opposed to what? Massive mismanagement and ignorance!

Then, there's this:

"In theory, the funds committed for everything from the bailouts of Fannie Mae and Freddie Mac and those of the Wall Street firm Bear Stearns and the insurer American International Group, to the financial rescue package approved by Congress, to providing guarantees to backstop selected financial markets is a very big number indeed: an estimated $5.1 trillion.

Still, that unnerving figure — equal to more than a third of the yearly output of the United States economy — is mainly a sign of the urgency that government sees in tackling the financial crisis. It is not a total for what will be spent. The unlimited guarantees to backstop lending markets, for example, are temporary confidence-building steps meant to give financially sound banks the comfort to deal with each other. Other steps, like the bank investments, could well turn a profit if the banking industry’s fortunes improve later."

It's a great job by the NY Times, to get these figures to admit to such ignorance, and then consider themselves competent to judge the government, which just saved them from their own stupidity.