Maggie's Farm

Terrific piece at ZeroHedge today using Christmas Trees and land management as an allegory for the Fed's interventions in the market, and why it's dangerous.

We can increase moral hazard by taking effective steps to 'insure' against its downside.  At some point, however, everything has to revert to the mean.

A quote:

From a forestry point of view, the lessons were learned. In 1995, the Federal Wildland Fire Management Policy stated, "Science has changed the way we think about wildland fire and the way we manage it. Wildland fire, as a critical natural process, must be reintroduced into the ecosystem."

Herein are pearls of great wisdom for central bankers today. Central banks are creating a tinderbox by keeping alive many very bad investments, fertilizing them with everything from artificially low interest rates to preferential liquidity to outright securities purchases. As these institutions and instruments overrun the financial landscape, they hamper the economic ecosystem and perpetuate the environment of low growth and high unemployment in which we currently find ourselves.