The other day I reported things are looking like 2008 all over again, economically speaking. I must have had it all wrong. The Dow came back over 300 points based on rumors of limited oil production and a statement from the Federal Reserve Bank of New York.
New York Fed President William Dudley said things are just dandy. He said the financial industry is “clearly stronger” than it was ahead of the last financial crisis. Cleary. Cleary the banks were not very strong then as their condition precipitated the crisis. What are words anyway? Nothing more than descriptive terms.
This rosey description rang a bell in my memory. I recall hearing something similar before.
Ah, yes. Just prior to the 2008 crisis the Fed Chairman, Ben Bernanke said the financial sector was just dandy – as strong as ever. He kept repeating that lie … um, line right up until the meltdown was undeniable. As late as May 15, 2008 Bernanke said:
I strongly urge financial institutions to remain proactive in their capital-raising efforts. Doing so not only helps the broader economy but positions firms to take advantage of new profit opportunities as conditions in the financial markets and the economy improve. (Emphasis mine).
That was just after Bear Stearns sold at a fire sale price and just before Lehman Brothers went under. Then came TARP, Bush’s betrayal of real capitalism, and tens of Trillion$ in Fed funny money for banks in the U.S. and Europe. You may recall the housing crash and high unemployment. Fun stuff. Never stronger.
The lesson learned is if the Fed says the economy is well, then the bottom is about to fall out. It’s deja vu all over again.