Sunday Clean-Up

• Since Hurricane Tropical Storm Irene turned out to be much less damaging than feared, some have predictably begun to criticize the level of governmental action in preparing for the storm.  That criticism strikes me as nonsense.  Given experts’ inability to predict how the storm will move and play out together with the monumental potential consequences of being under-prepared (market parallels anyone?), the actions taken seemed entirely appropriate to me. 
• George Sugihara is a really smart guy, with wide-ranging interests and broad expertise.  He gave an interesting interview in my local paper today (available here).  The market prognosis he offers is not good. 
• Barry Ritholtz in The Washington Post today:  “In fact, the banking system was not saved [by the bail-out]. The massive injections of liquidity temporarily salved the day-to-day operations of banks, but they did not repair the more profound troubles. Indeed, pouring billions into nearly identical management teams that mismanaged risk, overleveraged exposure and drove banks off the cliff in the first place was an invitation for another crisis.”  I completely agree.  This view is also consistent with some off-the-record comments by people with more direct knowledge of what bank balance sheets look like that I do.
• Yikes.
• When safe havens aren’t so safe.
• More (and representative) reaction to Bernanke at Jackson Hole here;.  He’s right that politics is a big problem, but I don’t see a political fix anytime soon.  Moreover, what bullets does the Fed still have in its gun?

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