The New York Times, reporting on Federal Reserve and Treasury warnings the housing crisis may be more protracted then first thought:
Officials said that the Federal Reserve remained concerned that the
declining housing market would not reach its bottom and financial
markets would not become more stable before some time next year,
This struck me as unexpectedly accurate given the source. Also, I couldn't help but think of Rothbard:
Only if there is no interference, direct or threatened, with prices, wage rates, and business liquidation will the necessary adjustment proceed with smooth dispatch. Any propping up of shaky positions postpones liquidation and aggravates unsound conditions. (America's Great Depression, Ch. 7, p. 185)
Is the FED now willing to push back against the agony-prolonging calls to prop up prices and slow foreclosures? Unfortunately, even their own understanding of the need for restraint is insufficient to rival their hunger for control and power:
[Bernanke] outlined a series of steps the Fed is
considering in the coming months. One such step would extend
low-interest lending programs to Wall Street’s largest investment banks
into next year. . . Mr.
Bernanke also recommended that Congress grant the Fed broader authority
to monitor and supervise the financial markets to assure greater
stability in the future.
[Treasury Secretary Henry M. Paulson, Jr. indicated] the Bush administration was working to prevent as many home foreclosures as possible