Tell Me What You Think?

Like any author, I'm eager to hear what people think about what I've had to say and how you think the Fed and Bernanke in particular have handled the Great Panic. Post here -- but keep them polite and keep them short, please.

Comments

[Gilbert T. Bremicker, Jr. Cherokee, Iowa]

David -
There were two factors that contributed to the sub prime mortgage problems that I wish you had discussed in your book. The first is real estate dealers that sold clients more house than they could afford. The second is appraisers that did not do a professional job and some times asked the realitor what price they needed to make the sale. The licensing boards of realtors and appraisers in California, Arizona, Texas and Florida need to investigate and cancel some licenses.

To get a copy of your book, our City librarian dove 120 miles round trip to get a loaner edition fron from the Sioux City Library.

[Ron Israel, M.D.]

In Fed We Trust really was helpful. Having tried to follow the events of the past several years many things were put in context for me. As a 'layman' in finance I found the book clear. There surely is a huge difference in reading a book by a journalist who knows how to write rather than one by an economist. For my upcoming book club I would like to update some of the information
and learn where the government stands now with their (our) loans, guarantees, and investments. Any suggestions as to where on the web I might find some summaries. I think that the Fed/Treasury saved us from a meltdown but probably at the cost of prolonged high unemplyment and low growth. Thanks for all your work in doing this book

[Howard Phelps]

Something you said at a book signing some time back has stuck with me. In answer to the question,"How could so many smart economists fail to foresee the oncoming recession"? You said it was a "failure of imagination", Let's take that a bit further; there are lots of calls for increasing employment these days but not so much about increasing demand which I believe must be the percursor to increased employment. Just looking some very gross data, let's say for the moment that the annual dollar value of gross imports is $500 billion. what would be the inpact both long and short term of cutting into imports with U.S. production? If, say we could increase the demand for US goods and services in the US 20%as a percentage of imports or roughly $100 billion annually(without debating "how" for the minute, but it is not more Buy American restrictions, etc), could we develop a curve showing over time the impact in terms of potential added jobs?

The "how" is a consumer based promotional/advertising program not associated with government along with a data base on the scale of a Google but none of which has been "imagined".

[Darko Oracic]

Dear David,

There is a huge blind spot in your book. It's the role of high interest rates in the housing bust. Bernanke continued with the monetary tightening started by Greenspan, bringing the federal funds rate to 5.25% in mid-2006. In the same year, real residential investment growth turned negative (-7.3%. Just a coincidence? I don't think so. All the recessions in the past were caused by monetary tightenings. The last one is no exception.

[Bill Grimson]

You mention the role of laypersons on one committee in your book. Do you think laypersons at various levels in banks, FED, and other bodies might have avoided the panic. (Laypersons who are educated, but not necessarily in finance or economics, but have absolute integrity).

[Darko Oracic]

Dear David,
A key point is missing in your book: the Bernanke's fascinating speech before the Economic Club of New York on March 20, 2006, entitled "Reflections on the Yield Curve and Monetary Policy". He said: "... historically, the slope of the yield curve has tended to decline significantly in advance of recessions. What is the relevance of this scenario for today?" None, he said, this time it's different: "I would not interpret the currently very flat yield as indicating a significant economic slowdown to come...". Maybe you should put this in the chapter "The Age of Delusion".

[Frosty]

Mr. Wessel--
Your CSpan program with Alice Rivlin was excellent. Please, please gather your cohorts and press for better regulation against "gambling" with insurance and bank deposits and other investor money. This situation eventually will bite us big-time if we do not get a handle on it. U.S. MUST be the leader in this. We are very concerned as investors and grandparents. There is NOTHING wrong with true conservative investing with compounding working its magic. This "thin air" economy is spooky. Your program was the MOST HONEST outing and we were grateful to you both for telling the truth. Now, we need action. If we can help, please let us know. We know that Bernie Sanders has some legislation, but what else is there we can do to help? We both have worked in banks before we retired. We understood how it worked in the "old days" you were talking about! Thank you! Frosty in Phoenix

[Kris Hammargren]

Great book, David. In fact, Stephen Malpezzi in the University of Wisconsin's real estate program put it on his Reading for Life list. He posted his review of it this week at http://wisconsinviewpoint.blogspot.com/

Keep up the good work!

[Ross Corace]

David, I received your book as a gift over Christmas and could'nt put it down. I t was very interesting and informative-as far as it goes. You failed to mention that Paulson's reason for bailing out AIG could have been to protect his buddies at Goldman. I know he was supposed to have sold his stock when he accepted the Treasurer's position (he probably has some squirreled away), but why not at least mention this as a possibility. Also,I think you should have had a Chapter on unintended consequences of the Fed's actions. This country will not insulate itself from more panics until it embraces hard work, individual liberty, savings, production, investment, sound money, de-regulation, exports, budget surpluses, capitalism, limited government, and respect for the Constitution. As a resul of Bernanke's interference, I feat we will continue to have more panics with less time in-between.

[Carol A. Wilson]

Dear David,

After reading reviews and hearing you talk about your book, I am waiting for my copy to arrive (along with a copy for a friend). Congratulations! Do you mind if I say I knew you - oh so many years ago.

Carol A. Wilson, Architect
Falmouth, Maine

[Darko Oracic]

Ben Bernanke has been chronically wrong. First, he supported overly low interest rates to prevent deflation. As that created inflationary pressures, esp. in housing, he increased interest rates too far, ignoring recession warnings coming from their term structure. When the recession started, he slashed interest rates to zero. That, of course, will recover the economy first and then bring high inflation. Then he will fight inflation with overly high interest rates and start a new recession, etc., etc. He will continue to err because he thinks he is so smart. And, of course, he will continue to deny any past wrongdoing on his behalf.

[Susan Durham]

David,
Thank you for explaining the Panic so that an ordinary retired person can understand it. It was especially helpful to finally read about the "unbanks".

Susan

[Marie Gauron]

"Why didn't the Fed force AIG counterparties to take less than 100 cents...."

What about various articles I have read that say AIG is a big front organization for CIA operations? Maybe that's why they honored all the obligations. Why can't we ever know the truth in these matters?

[Laurence Clark Day]

Again, I object to the"snide" word remark about Krugman referring to "zombie" banks. They were zombies. I know. I worked for decades with brokerage firms/ investment banks, one of which was run by the Walker branch of the Bush clan.

Paul Krugman is the best that Princeton has to offer and the return is the finest educational experience of any university bar none. A teacher par excellence. Ask Shirley Tilghman, Princeton's President, who affirmed that in a personal letter to me.

Krugman should be running the Fed or Sec't of the Treasury, not some young pup beholden to self-serving unpatriotic Wall Street and its ill-gotten millions who have brought our country down and laugh about it.

[Laurence Clark Day]

Paul Krugman "generally unpopular with students and colleagues...". Not to my knowledge. Is that a swipe at him from the editorial page perspective of the Wall Street Jrnl? What is your research for such a comment. You were in his classes at Princeton I gather and you have first-hand knowledge. I was at Princeton.

Hope your book is more informative than that uncalled for remark. Should I read on or get a refund.

[joan callender]

Unlike the unselfish Wall Streeters you represent I am one of those who thinks I have a right to resources. I do even if I don't have the value of a Bernanke, Bloomberg, Rubin, Blankfein, etc. God, I'm tired of people like you being lionized and fawned over because you have the courage to tell people like me that we better stop taking more than we give. Go tell it to Goldman Sachs.

[Susan Nee]

David: Your book is such wonderful and scholarly piece of work. You describe with great clarity and skill the complex issues confronting Bernanke and the other "musketeers" during the Great Panics. I'm a layman but I was able to follow most of the story without getting too lost. Thank you for that.

I think this Thanksgiving I will give thanks that our country still has men such as Bernanke, Geithner, and Paulson (as rough he is, I liked him). These guys did as much to save our country from certain ruin as Grant & Sherman, Eishenhower & Bradley. They fought as tough a battle with as much uncertainty as to the outcome as any general involved in great battles of our country's past.
Yes, there's still high unemployment and things are still not settled down. But, the patient lived.

I look forward to reading more of your work.

[Bill Dahl]

David:

Spectacular! PERIOD!

I have reviewed your book here.

http://www.billdahl.net/featured/in-fed-we-trust-%E2%80%93-ben-bernanke%E2%80%99s-war-on-the-great-panic-%E2%80%93-how-the-federal-reserve-became-the-fourth-branch-of-government/

Spectacular! PERIOD!

[Bet Mulligan]

I'm about 140 pages into your book. I have to say you are one of the best non-fiction writers out there.

I'm familiar with the melt-down story from many different perspectives, but I wasn't aware of Geithner's closeness with Bernanke during the first few months as the crisis unfolded. It's made me want to know more about Geithner's involvement.

[Patrick Crotty]

Dear Mr. Wessel,

I just finished your book "In Fed We Trust" and enjoyed it immensely. One criticism I have is that you often include the month of an event or anecdote but leave out the year which makes it difficult to follow chronologically.

My only other criticism of the book is your assumption that a Depression had been prevented by Mr. Bernanke and Co's action. That my friend, is yet to be seen.

Best Regards,

Patrick Crotty

[Stacey Jeffers]

I love the book. I enjoyed reading your detailed account of how the FED handled the Great Panic. I also enjoyed the inside stories of the key players from the FED and the Treasury. However there is one question that always puzzles me. Why this big Housing Bubble (which led to the Great Panic) was not detected and prevented earlier? As you mentioned in the book, "WS Journal asked 55 economists in March 2008. With the benefit of hindsigt, if the FED was too slow to raise the federal funds rate...". 84 percent said yes. However why didn't the economists detect this problem when it was happening? When people are taking 100% loans to buy houses they cannot afford, that should be a sign. And this craze went on for quite a few years. Greenspan repeatedly denied there was a housing bubble. However people with common sense could tell this was happening. The FED was busy fighting the inflation and deflation, but they lost sight of the most visible threat to the economy...

[matthew emery]

David I too thoroughly enjoyed the book. My rebuttal to the thoughts you closed the book with are as follows: Congress never would have approved the dollars for any of the firms, institutions et. al. in the size that was needed, on a timely basis. When they were asked - they hesitated for sometimes a week, and the markets plunged irrationally! Next point: Lehman was no longer the player it once was (80's was their setting sun), for that matter neither was "Bear". Both relegated to the status of "retail shops" in the minds of institutional players. One of the two was probably perceived to be expendable by the actors in this situation. It so happened that JPChase came along in the "white hat" for Bear so it was Lehman that went down. (They probably saved the wrong one. Lastly, The idea that there could have been 1st, 2nd or 3rd tier plans for prudence sake, doesn't seem to me realistic. The Fed is after all a large "aircraft carrier. I believe they were already moving at "hyper-speed", for them, in order to catch up with the housing bust and all the ramifications that followed.

Matt Emery

[Stu Martin]

David,
Excellent book which illuminates what was going on behind the scenes during this crisis. Your ability to describe the workings of the market, the Fed, and Treasury, leads me to believe you missed your calling as an instructor of some sort. Many thanks. I learned a lot, enjoyed your book, and felt the need to buy it for family members.

[Steve Williams]

Enjoyed your book....have recommended to friends.

Now idea for the sequel....the US debt.....getting US government to post liabilities to its balance sheet....adding them up.....and dealing in a strategy on how to pay.....

[Grant Dinehart Langdon]

Perhaps house prices go to high becasue there was to much money looking for a place to "park." It is clear many of the people purchasing houses did not make enough money to meet their obligations. The push to invest in ousing came from the people that had more money than the needed or could find a productive use for. I place a lot of the problem on the tax cuts to the wealthy who needed a place to "park" their surplus funds. The tax cuts were unproductively invested. A more progressive tax policy is needed to restore balance. The rich simply accumulated to much of the nation's wealth