Stock market guru Jim Cramer says there is plenty of blame to go around among federal policymakers for the financial markets mess.
Cramer said the financial markets are going to decline further still. He faults Federal Reserve Chairman Ben Bernanke and other fed governors for their "happy talk."
"For two years, the credit markets have been submerged under central bank happy talk and a sense that worries were about inflation," Cramer says.
According to Cramer, the low inflation policy worked a few years ago, but it's not what is needed now for the struggling U.S. economy.
"We were able to jump-start the economy in 2003 with rates as low as 1 percent. But our rates are twice that now even though we are in a deflationary spiral, not an inflationary one," said Cramer.
Cramer says that Bernanke and his colleagues are excellent at public relations, but they haven't handled the crisis properly.
"Fed Chairman Ben Bernanke studied the Depression, or so they say, and knew more about how to stop it than anyone. Actually, he knew less than anyone, and he and his merry band of governors and presidents presided over the deflationary destruction of Western finance with a bias toward — are you ready? — inflation," says Cramer.
"Yes, that's still their bias," he says.
William Gamble agrees with Cramer. In a note to clients, the president of Emerging Markets Strategies said that policymakers and investment bankers "had enormous amounts of information, but they never considered the quality or what information was not there."
According to Gamble, "Everyone suspected that the structure was rotten, but no one had any numbers to put into the models, so the risk that the numbers were bad, was ignored. This was a gross error committed by everyone."
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