The big terrible news today is that the DOW soared 417 points, its biggest single day gain in years. Lord knows my retirement account could use a historic rise. But it may be terrible news. Here's why. As is well reported, the spike came as a result of the Fed, in cooperation with central banks around the world, making 200 billion dollars available to banks which are suffering. This is bad news for at least three reasons.
1. It delays the inevitable and makes the inevitable even more inevitable (did I mention that Donald Rumsfeld is now helping me with my phraseology?)
2. A gesture of such magnitude and scope suggests that the Fed sees the banking system as beyond needing a prop up, rather it needs emergency life support measures enacted.
3. For the first time in history, the Fed is allowing the banks to use mortgages as collateral. This is what makes today truly terrible. The banks are in trouble precisely because of the mortgage mess. Now, the backstop to the system, the Fed, is getting itself tied to mortgages!
Enjoy your earnings today. But, whatever you do, don't put that money in the bank!
(BTW, are Hillary, Hussein or McCain addressing this stuff in any substantive way?)
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3 comments:
http://www.cnbc.com/id/23588079
Wow - that is an excellent article and video - exactly what I believe (which must be why I like it). Everyone should read it and heed it. What we need is for members of congress to wake up and start asking, "what the heck is going on here?"
They are worried about steroids in baseball while Rome burns.
Agreed. Very insightful article.
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