Who needs Money?

I do not think much of Mike Shedlock’s idea of letting Warren Buffet buy Wells Fargo; still, I would like to hear the Tender Offer. Berkshire might have serious problems with the Acquisition that Buffet might not have contemplated, especially Treasury review of his own Books. Warren may be particularly perceptive in estimating there is still real problems in Housing; I believe that the Government support of the Banks had an unfortunate effect on Home Prices, which need to reduce another 8% (my estimate–solely contemplative) before We actually reach real value in the market. I am glad Warren had a pleasant Weekend, though he should have sent me a Ticket for the free food. I promised I would not have written on the Event (unless, of course, there was something to write about); I am always too busy Eating to take Notes.

Those who have the time should pursue this Paper by Lopez, Jewell, and Campbell. The abandonment of Property rights by the federal government under Kelo will eventually bring great losses to every Property holder. The basic problem will be multiple interpretations of property rights by the various States, with a consequential Result of financial institution resistance to subscription of mortgages in particularly offending States. The lack of unified definition of Property rights will lead to the degradation of cellular worth in aged Property, alongside a loss of diversity in the Capital landscape. We will wind up with channeled Development with an increased readiness to abandon effective Property in pursuit of new developmental factors; it bringing a forest of clutter and lowers overall Property values.

One can get a history of past Inflation in this article. Allan Meltzer also presents a good discussion of why Fed reaction when it comes will do little to contain Inflation. It is connective process which will build inflationary pressures within a relative stability, then the pressure is released in a Rush to underwrite residual sustained losses. The Fed must be Willing and Able at the time of Release to immediately raise Prime rates to 7%, else the inflated Pricing simply grind forward. Ben Bernanke is not prepared to accept an Prime rate above 5%, even if you stole his personal equity assets. Pumping funds into an Economy unprepared for expansion will not stimulate Production, only Inflation; while expansion must be governed throughout by Consumption Demand for the excess Product. We are in a Time of sated Demand, and with the only high Interest rates being on actual Consumption; We don’t need the extra Cash. lgl