Spitting in the wind, Zimbabwe, and Baghdad Hank's financial perpetuum mobile

Bloomberg today reports 'Fed Risks ‘Spitting in the Wind’ With New Aid Pledges'. This is in the context of the most recent addition of alphabet soup monetary pumping measures (amounting to a cool $800 billion), which apparently will monetize a good chunk of MBS and ABS.
These, as has been widely reported, bring the total of government backed pledges aiming to save capitalism from itself by destroying it to $8,5 trillion.

Yes, that's trillion with a 'T'.
Take heart though dear reader: as the Reserve Bank of Zimbabwe reports here, recently, fraudulent checks amounting to Z$ 60 hexillion (yes, that's hexillion with an 'H') were 'intercepted' in Zimbabwe in the 10-day period from November 10 to Novermber 20.

A hexillion isn't as bad as it sounds. This is the Greek name for what English-speaking people normally know as the generally more harmless sounding quintillion, which is only 1000 quadrillions, or 1 million trillions. So in ten days, checks for 60 times 10 to the power of 18 Zim-dollars sorta bounced. And you thought we had a problem!

The governor of Zimbabwe's Reserve Bank, Dr. Gideon Gono, a kind of Baghdad Bob of central banking, is understandably incensed.
Evil stock market traders are pushing stocks up by 2 million percent a day , and that, so he says, 'creates inflation'.
Who would have thought!
He knows it though - it's simple enough: " This clearly dwarfs the $1.1 hexillion making up 100% of all the quasi-fiscal operations the Reserve Bank engaged in over the past 5 years."
See? They only printed up 1,1 hexillion!
There is a very good reason for that, which is helpfully supplied as well in the document: "The Reserve Bank cannot miraculously stretch existing National Printing capacity beyond the fixed physical levels that are in place over the short term."

Read: "We ran out of paper and ink" - always a good first step toward stopping inflation in its tracks one supposes (if not for those evil stock market traders, that is).

One can already imagine the press releases a month or two from now: "We only printed up 1 googolplex of Zimdollars, not 10!"

Here is what Dr. Gono recently had to say about the actions the Fed and other Western central banks have taken (he really said that):

"As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their National interests.

...That is precisely the path that we began over 4 years ago in pursuit of our national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification, and demonization we have endured from across the political divide. [Bold in original]

...Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander.

...As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances."

As a friend remarked via e-mail, this is akin to being commended on your human rights record by Hitler or Stalin.

Bloomberg's colorfully titled article on the Fed's most recent monetary contortions meanwhile contains an absolute gem by Hank Paulson, who is apparently also vying for the Baghdad Bob title...you know, the Baghdad Bob of treasury secretaries.

We all fondly remember his " This is far and away the strongest global economy I've seen in my business lifetime," declaration of July 2007, which heralded the fact that everything was about to go down the financial toilet real fast, as well as his often repeated "the subprime crisis is well contained" mantra, and his bold assertion that "our financial institutions entered this period well-capitalized, and we expect them to remain so,".

Some would say that taken together, these and other Hank bonmots uttered in the course of what is nowadays known as the 'biggest financial crisis since the Great Depression' (formerly know as the 'far and away strongest economy'), should actually suffice to earn him the Baghdad Hank moniker, but he really cinches it with this:

"Treasury Secretary Henry Paulson said the mortgage debt purchases are a “great investment for the taxpayer” because the government already stands behind Fannie and Freddie."

One wonders why nobody has thought of this before - why does the government only now realize what great deals it can make for tax payers?
They could have been doing these great deals for years already, and we'd all be rich by now!
Can't you see the quintillions dancing before your eyes?
In a masterstroke, Hank has invented the financial equivalent of the perpetuum mobile! He's a...i don't know, a financial William Sommerset perhaps?

My personal guess though is that Orwell's 1984 dictionary has been updated.
The new entry, courtesy of Hank 'Baghdad Bob' Paulson, the new Marquis of Worcester:

Loss is profit!

See, buying these crappy bonds is really a good business for you, because we guarantee them already in your name.

It appears that as a busy interventionist, one soon develops circular logic syndrome. It is not certain yet if the affliction can be treated.

the original Baghdad Bob and his worthy successors, the Baghdad Bob of central banking, Dr.Gideon Gono, and the Baghdad Bob of treasury secretaries, Hank Paulson:







Going shopping in Zimbabwe (Photo credit: Tsvangirayi Mukwazhi / AP):