Bill Fleckenstein on bailout nation.
Under the current Fed chairman, the central bank's modus operandi has changed. Not only has the Bernanke Fed strayed far from its long history of supplying liquidity to just AAA government credits, but, via JPMorgan, it is basically setting up an LLC (a limited-liability corporation, similar to a special-purpose investment vehicle) to hold the dreck that almost ruined Bear Stearns.
It's a structure similar to the off-balance-sheet financial instruments that caused so much pain for so many other financial institutions in the first place.
...Sadly, as my friend Jim Grant put it to me recently, the speculators have gained control at the expense of the savers. It's a variation of what I said last week: that the prudent are bailing out the reckless. The Fed seems under the impression that its role is to act as enabler-in-chief. As such, the Fed is an abomination.
