Monday, August 20, 2007

Fleckenstein Rants

Bill Fleckenstein is a perma bear who is at least thoughtful about his bearishness. While I rarely agree with his relentless pessimism, I do respect his analysis. In his latest piece for MSN Money he rants about the role Central Banks have played in getting us to this point in the credit bubble:

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.

Fleckenstein uses quotes from an article by Andy Xie in last week to make the point that the Central Banks should not bail out stupid investors:

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.

Read the whole thing by clicking on the title of this post.

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