The New Political Mechanics

How to turn a minor Recession into the Great Depression, no Batteries required, with only an erector set of absorbed bad paper. The Federal Reserve has decided to become the quintessential Rube coming to the big city, willing to buy any gold-plated brick that Anyone can paint. All Sales are guaranteed to be final, and not worth the Paper they are written on. No need to declare Bankruptcy, the Fed will buy the Contents of the garbage can. And People have been asking me how We are getting the high Inflation! The Fed has found a new way to print Money, by taking perfectly good Script, and trading it for down-the-road taxation on Americans to pay for the mess. Is it not wondrous how White turns into Black, and Policy becomes Kindergarten silly puddy?

I must say that I was surprised by the Fed action, and even more surprised by the Market reactions to the Fed decision, I ignoring the News yesterday while Everyone decided to jump back into the Markets. I ask myself what projected action the Fed could take next Week, once Stockholders realize that the Fed’s expensive Window-Dressing will do absolutely nothing to promote Corporate Profits. The context of the Message bothers me somewhat, as it is a Green Flag to continued writing of bad paper while Consumption Demand stays down, with tacit understanding remaining that there is no market for that Paper. It is probable that the only real result may be the opportunity to declare justifiable Losses for next year’s Tax Returns. No one but I may mention this, but We have already spent more on the Credit Crisis than We had on the Savings & Loan Crisis of the mid-1980s; it notable that both were created by the same segment of the economy, who in both instances created Lending practices deficient in Repayment potential, solely to generate extreme Profits for themselves.

This might be a prime example of the malfeasant behavior of the Money Lenders. The Money Lenders come, convince local Yokels to purchase what they do not understand, draft their huge personal Profits, then wait for the deals to unravel. They always do, as they are too complex and intricate for all qualifications to be met; the malfeasance on their part resident in the knowledge that the mechanisms must work perfectly without leeway, else they will inevitably led to crisis and default. The last leaving the Yokels, this time as usual Taxpayers, with a bill much larger than the original amount that they had hoped to avert. The Money Lenders make Millions from the deals, and Taxpayers wind up paying Billions for those deals. There was the old political joke that said Politicians were Criminals in $400 Suits ($4k today with Inflation); Bankers and financial analysts must be assumed to wear $150,000 Suits. lgl