In sports, all great competitors know that they have a choice, even when confronted with daunting, insurmountable odds. They can lay down and let the larger, stronger opponent run up the score. Or they can find a way to compete, to make a game of it. A good loss is a dignified way to show what you are made of, that you have grit, attitude and brass, and you aren’t to be trifled with, even in defeat
The financial crisis delivered a significant blow to the economic well-being of the U. S,, indeed, the world. There were two responses to this challenge, one of a great competitor, and one of a pathetic loser. The response to the threat of overwhelming defeat is instructive, not only for its policy implications, but for how we as individuals should respond challenges that seem hopeless.
Consider the policy makers of the Federal Reserve, terrified as they were of the entire system collapsing. Regardless of your views of the impact of the Fed — and I was an early critic — one must grudgingly admire they’re determined and innovative responses. Consider not what they did but their attitude and creativity when confronted with what appeared to be an insurmountable challenge: They stepped up their game big time. If they were going to lose this battle, they were going to go down fighting.
They threw away the rule book. The new liquidity facilities were certainly never envisioned 100 years ago on Jekyll Island, where the Fed was born. But that didn’t stop them.
There are no mercy rules in economics. The Fed knew this, and rather than let the clock run out — a few decades of indecisive dithering probably would allow the excesses to be wrung out eventually — took a bold stand. Continues here