Central banks are stealing from the average citizen

[FreeStateDemocrat]

What happens when fiscal irresponsibility gets rewarded with bailouts? You get more fiscal irresponsibility. Let's stop rescuing greedy financiers and investors.

By Bill Fleckenstein
As regular readers know, I have been a longtime critic of the Federal Reserve. Not too far back, that view was a decidedly minority one.

But as our credit bubble undergoes an ugly unwinding, it's dawning on folks that central banks lie at the epicenter of the problem. Andy Xie nailed it in Tuesday's Financial Times, which is why I've chosen to begin my column with quotes from his article "It's time for central banks to stop bailing out markets."

The bailout stops here
He writes: "The global credit bubble is bursting. This bubble is primarily leverage financing for owning risky assets. The people who were responsible for what happened played with other people's money, marketed arcane financial products with false promises of fat profits, but stuffed their own pockets with big bonuses. Neither these masters of the universe nor their greedy but naive investors deserve to be bailed out. They deserve what is coming to them.

"The central banks should focus on price stability, not financial market stability, and should provide liquidity only to contain the multiplier effect of the bubble bursting on the economy. Nor should central banks stimulate to avoid recession at any cost. Business cycles are not bad. Excesses must be followed with cleansing. . . .

http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/CentralBanksAreStealingFromTheAverageCitizen.aspx?gt1=10328

[fasttense]

1. Thanks for posting this.

I found this little tid bit interesting because I've seriously considered walking away from my mortgage. I didn't know others have had the same thought. It's not because I can't afford my mortgage, but because if our "gobermint" is going to bail out irresponsible corporations and banks, why should I work at paying back my debt?

"Turning to the intersection of big-bank and little-guy bailouts, a contact in the housing ATM notes that more folks than ever are electing not to pay their mortgages. Apparently, the thinking goes something like: "Gee, if some folks are not paying their mortgages and are going to get bailed out, why shouldn't I? Particularly if I have a little equity in my house."

Then this one:

"Macho men crying 'Mommy'
One final comment about the financial world: It's populated with rich, hypocritical whiners. Wall Street, the hedge-fund community and their lap dogs in the news media continually brag about how much they love capitalism and free markets.

Yet when the creative-destruction component of capitalism rears its ugly head, they want the central planners to bail them out immediately, before they take any pain. And the ones clamoring the loudest are the very same folks who behaved the most irresponsibly."

Like I said, why should I pay my loan back when they don't have to? Why should I be left hold the bag?

[Doremus]

2. Because they make the rules.

Pay or don't pay, that's up to you. Just realize that, even as they whine for bailouts, they won't offer you such benevolence. They'll add ungodly finance charges and interest, wreck your credit and if you have any money they'll probably end up getting it anyway.

Seems like there'd be less painful ways to make a point, like a LTTE.

[fasttense]

4. Yeah, but a LTTE doesn't get them where it hurts.

If I didn't have a family, I would probably do just that - walk away from the mortgage. I would first hide my money in someone else's account that I trust or move it to an account in another country - maybe Dubai.

I can't stop paying my taxes because again they would add fines and penalties and ruin my credit. This is such a rigged system. Seems like the average Joe can't get a break.

[msongs]

3. some people are moral, some people are not nt