Thinking about the economy is my passion. Some of you may know I have an MBA from the Chicago School, and a PhD in Macroeconomics from the Stanford Post-Doctoral Institute. My thesis was on government bailouts in over-leveraged inflationary markets, with a secondary focus on discretionary bailouts in stagflationated markets. For my final grade, I modeled a three-quarter recessionary market on a bell curve with five hedge funds.
So, of course, now is the time for me to really strut my stuff and put all other econ-bloggers on notice.
Basically, the current bailout proposal will only work if liquidity is brought to bear on those terminal assets the “shadow banking system” has been folding into mortgages. I always have to “LOL” when I hear journalists say the markets will absorb any underutilized bonds within two quarters, per the so-called “Dirty Dollar Paradox.” Guys, I hate to break it to you, but bonds are not indexed to the phases of the moon. Never have been, never will be — unless we upgrade our dollar-pegged assets to the Euro and then convert everything into PayPal money. And I, for one, don’t see that happening.
Then again, maybe Ben Bernakanke (sp?) knows something I don’t?
All I’m trying to say is, “if you throw water on a burning penny, don’t be surprised if you wind up with nickels all over your face.”
And you can take that to the bank — the money bank.