Monday, March 17, 2008

The Fed Factor

I don't like the Fed right now. I've been complaining about them for a while. The lowering of the rate to bail out the subprime mortgage industry has lowered the dollar, lowering liquidity, draining the economy and causing a spiraling effect. The dollar has not hit a new bottom yet.
This whole business with Bear Stearns from my perspective is just a scapegoat. They're not the only one who are going to post HUGE losses this quarter. I am watching these bobbing heads on CNBC, MSNBC and other news programs and what needs to happen is to make the world want to buy products made in the US, but is there still enough of a manufacturing base to make that happen?
I think there were a ton of bad loans out there. The fed was lending money out to all of these banks that took the money to leverage each other instead of putting it where it was needed. There should have been strings attached to these loans and there weren't... that's like giving an alcoholic money and telling them not to spend it on booze.
I've mentioned this before, but when the Fed lowered rates it was like spiking punch at an AA meeting. Sure it's a lot of fun, but there's a huge hang over to look forward to. All this time, the housing markets still aren't acknowledging the fundamental problems that started this whole problem! The assessors are still over estimating property value. There were bad lending practices set in place. Realtors are still telling John Q Public that there are up and coming neighborhoods and they are not. A bunch of yuppies are stuck with two mortgages and are losing their houses. Just go ahead and keep an eye on the ever increasing number of bank owned housing in the US!
What are these banks going to do with all these houses? They don't make money off of empty housing. There's no liquidity... this is BAD PAPER. This is almost as worthless as the $600.00 check you might receive from the government. This is all too little too late. Where is this money coming from? Who is staking these claims? Where is the money coming from?
If we want to talk about reasonable banking practices, we must... MUST put an end to the banks who lent like this. The Fed has the collateral, but I firmly believe that the Fed should not bail out the housing sector. The Fed had an opportunity two years ago to change this.
Right now, stop what you're doing and think about places where your money can hide. Metals? Foreign currency? Transportation companies? Oil?
Is oil getting more expensive or is the dollar just worth less?
Praise Alan Greenspan? Ben Bernanke?
Give me a break.
Tomorrow I hope the Fed does NOTHING!!!
How do you change this trend?
1. Buy US assets and dollars.
2. Don't cut rates any further!!!
3. Establish a price stability target.
4. Get government out of the economy!
5. Make something that you can sell to China, India, & Europe.
There's a lot more! Happy St Patty's Day!