QE 3 Is On The Fed's Drawing Board

With the possible exception of the National Weather Service in the case of predicting the path of an incoming hurricane, the entirety of the federal government suffers from a heavy institutional bias toward preternatural optimism.  This is true of all parts of any government bureaucracy, which seeks to both mollify the taxpaying citizens who perpetuate its existence, and justify its funding with measures of success in promoting public welfare.  But it is almost pathologically embedded in the case of officialdom at the Federal Reserve and U.S. Treasury, charged with oversight of the nation’s economy and monetary system.  Consider the following, from the stormy year of 2008, in the run-up to the failures of Bear Stearns in March, followed by the meltdown of Fannie Mae, Freddie Mac, AIG, and Lehman Brothers in September: