bloomberg.com/EU-Digest - "Fire Bernanke ? - There he goes again" - Fed `Rogue Operation' Spurs Further Bailout Calls - by Craig Torres

Thomas-Jefferson -"When patience has begotten false estimates of its motives, when wrongs are pressed because it is believed they will be borne, resistance becomes morality."

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"Fire Bernanke ? - There he goes again" - Fed `Rogue Operation' Spurs Further Bailout Calls - by Craig Torres

A month after the Federal Reserve rescued Bear Stearns Cos. from bankruptcy, Chairman Ben S. Bernanke got an S.O.S. from Congress for more help.This time to prop-up the student loan lenders.

``It is appalling where we are right now,'' former St. Louis Fed President William Poole, who retired in March, said in an interview. The Fed has introduced ``a backstop for the entire financial system.''. Critics argue that the result will be to foster greater risk-taking among investors emboldened by the belief that the government will bail them out of bad decisions. The Fed's loans to Bear Stearns were ``a rogue operation,'' said Anna Schwartz, who co-wrote ``A Monetary History of the United States'' with the late Nobel laureate Milton Friedman.``To me, it is an open and shut case,'' she said in an interview from her office in New York. ``The Fed had no business intervening there.'' There are already indications that investors perceive the safety net to be widening as a result of the actions by Bernanke, 54, and New York Fed President Timothy Geithner. The Bear Stearns bailout and an emergency facility to loan directly to government bond dealers triggered a decline in measures of credit risk for investment banks and for Fannie Mae, the Washington-based, government-chartered company that is the nation's largest source of funds for home mortgages.

``If there is a public purpose in lending to investment banks, and taking dodgy mortgage securities as collateral, then it is a question of degree about other potential lending,'' Vincent Reinhart, former director of the Fed board's Division of Monetary Affairs, said in an interview. ``That's the consequence of crossing a line that had been well established for three- quarters of a century.'' Note EU-Digest: Reading Fed-watcher William Fleckenstein's new book, "Greenspan's Bubbles: The Age of Ignorance at the Federal Reserve," you get the feeling that for 18 years America's banking system was run like a "new age" hippy commune, by a Ayn Rand free spirit who believed "anything goes." Now the Fed's run by a college professor and Fleckenstein says he's "in over his head." Except this is the real world, a $13 trillion economy in a $48 trillion world, not a college seminar on economic theory.

In 1807 Thomas Jefferson said to M. deStael, "When patience has begotten false estimates of its motives, when wrongs are pressed because it is believed they will be borne, resistance becomes morality." It is time for the people to take destiny in their own hands and clean up the mess, greed and inequality this so-called "Global Free Market Economy" has brought the world.