A front-page story in the Wall Street Journal over the weekend reads like spin control as managed by the Federal Reserve: Crises Fall Short Of Going Global‘. This orchestrated sigh of relief reminds one of the scene from Dr. Strangelove when the George C. Scott character, Gen. ‘Buck Turgidson’, offers up a prayer in the War Room when it appears that the U.S. has successfully thwarted an accidental nuclear attack on Russia. Turns out they were wrong: One bomber has actually slipped under Soviet radar, dropping a nuclear payload that would trigger The Doomsday Machine.
Well, it’s true that the financial markets have not collapsed as they did in 2007, notwithstanding the fact that the news from Greece and China has been more than a little worrisome. But to infer that the financial system is in the clear simply because there has not been a panic seems to be inviting trouble. To be sure, the reporters who filed the story, Greg Ip and Jon Hilsenrath, are two of the Journal‘s best. And they do make clear that any number of problems, some of them not even on the banksters’ radar, could set off a financial chain reaction that could have devastating consequences for the global economy and the banking system. But the emphasis is mainly on the “good” story about how well we seem to be coping. So far.
However, one statement in particular, from McKinsey Global Institute spokeswoman Susan Lund, would seem to tempt the Furies. Lund is quoted by the Journal as saying that each of the current problems is localized, “without big international spillover.” As such, she said, they are more like the S&L crisis of the early 1990s than the mortgage collapse of 2008. Oh really? This isn’t quite as fatuous-sounding as Prof. Irving Fisher’s statement, just before the 1929 Crash, that stocks appeared to have reached a permanently high plateau, but it certainly seems like the kind of understatement that Mr. Market loves to trash.
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