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Here's my 2 cents...
Our current Fed Chairman [like myself] is a
monetarist. He cut 'official rates' to placate the
ranters and ravers. But to monetarists, prices are
everything and he has noticably NOT allowed
indiscriminate borrowing at the discount window by
those in trouble--which Greenspan loved to allow.
He is looking at tghe very broad measures of money
supply growth and they are growing at a very large
rate annualy. He knows he cannot allow the money
supply to increase at this rate. He'll let these
portfolios fail over and over first--see Paul Volcker
and his policies for those of you too young to
remember someone that ain't gonna step in too far.
Greenspan was a pushover for these guys compared to
Volcker and though our current Fed Chairman has yet to
prove he is a pimple on Volcker's chair...well, you
get the point. Don't expect him to be bailing these
folks out by going to an expansionary monetary policy,
no matter what Cramer and friends spout on TV--they
are a part of the problem, not the solution. It's not
gonna be pretty...we have a real mess on our hands,
but if we are not careful, we'll have a bad economy
AND 20+ pct inflation....remember those days? Not
good.
Only one man's opinion.
Tim Morge
--- BobsKC <bobskc@xxxxxxxxxxxx> wrote:
> It's sad that these financial institutions involved
> themselves in the
> sub-prime paper which in turn, has now adversely
> impacted the entire
> market. I understand that everything has a value
> and that greed
> drove the decisions to buy these bundled mortgages
> which would have a
> high default rate but would give off a high yield
> until that time
> came. Still, I hope that our government doesn't
> compound the
> mistakes and greed by bailing them out since that
> would send a signal
> that regardless of how stupid your business
> decisions are and
> regardless of the motive for making the errors, the
> tax payers will
> pay your losses. Shifting these risks and losses to
> Fannie and
> Freddie would do exactly that. MER hiding the loses
> by burying them
> into hedge funds only proves their inept leadership
> and increases the
> lack of trust in their institution which is no doubt
> already
> rampant. One would think that when a large bank or
> money center of
> any kind picks new executives, they would not only
> look for Harvard
> MBA's but test these people for what level of common
> sense they
> possess. The degree may only be a tool to know how
> to make horrible
> mistakes rather than the sense to not make them at
> all.
>
> Ok, end of rant
>
> Bob
>
>
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