Today's update on the Fed's Printing Press Operations

Just when you thought the Fed could not blow more money on attempted market manipulation comes word that we are now on the hook for up to 450 billion more. With this latest round of fiscal malfeasance, the Fed and Treasury have add over a trillion and a half dollars in debt just this year. In other words, the debt level added this year is more than a quarter of what the total national debt was in 1993. Hurray for the party of small government.

Here's a video where Bush claims his 2003 budget will cut the deficit in half in five years. This pretty much sums up the legacy of Bush on economic matters, speak a big game and fail to follow through.

Getting Drunk on The Taxpayer's Money AIG Style

Apparently billions of dollars in the past two weeks has not been enough to satiate the pirate at AIG, as they are now tapping on a paper purchasing agreement from the Fed worth up to ten billion dollars. The same company that took 87 billion, or $87,000,000,000 of my money and your money, then received an additional 37.8 billion, and now they want a little extra time at he government trough.

Why is a company too big to fail? In a country where for years the economic mantra has been that "free market capitalism is the best way to achieve wealth" there should be riots in the streets over such government intervention. Instead, the corporate fascism is accepted as though government actually has power to do good for the economy. The problem is that government cannot effectively decide what 300 million people want on a daily basis, and no corporation can do so either. If the people do not want to invest in companies because they are illiquid, then government can only delay the problem because they cannot make every illiquid company liquid so that investors will flock to financials. If only someone actually advocated personal responsibility in DC...

final debate, final analysis

To borrow a tired cliche, McCain accomplished too little, too late. He finally came out swinging and bringing up the dubious connections Obama has with people like the terrorist Bill Ayers and Obama's propensity for government largesse. When McCain referred to Obama as "Senator Government" I actually saw a spark of life in their campaign. Unfortunately, a quick joke won't roll back the huge market losses, the bailouts, the high oil prices.

McCain also brought up the issue of school vouchers which are long overdue. Competition between schools for students is necessary because the current educational system is stuck in neutral since the current funding allocation gives high funding to both high and low performing schools. This means that the incentive for a poor performing school to improve is not that great since a lot of funding will dry up if there is too much improvement. If students could choose where the tax money for education went, then school districts would have to treat the students and parents as customers rather than serfs. As it is now the taxpayer is only seen as a dollar amount by the school districts since they are tied to the land via geographical school tax assessment. Vouchers will free the taxpayer from the school district fiefdom, which is long overdue.

Market volatility and political reality

Last week saw people losing over half their portfolio value in one week, and Monday saw the largest absolute increase in the Dow in history, so are happy days here again? The answer is that we will not know until the injection of capital into the financial system is completed. If(and that is a big if) the bailout plan succeeds the velocity of money should increase, which would avoid a depression since a low velocity means money is not being loaned out or used to purchase goods and services.

Even if the bailout succeeds, the political landscape will be changed by the economic realities of the last eight years. The first lesson is that the Republican party cannot claim to be the party of financial responsibility as they have presided over the complete removal of any spending restraint. Secondly, the McCain/Caribou Barbie campaign is in very dire straights with three weeks left in the election. Since early votes are already beginning in some states and will all be starting by next Monday, this last debate is really the final gasp in the campaign. If McCain comes across as badly as he has the last two debates, with stumbling and playing for a tie, prepare for the polls showing Obama up double digits to increase. Is the debate performance going to be too little too late?

Thoughts on the economic meltdown

From hearing the word on the street, I get the impression that everyone is going to bail out of stocks soon who is still in. That is only a wise idea if you need the money to live offi n the very near term. Otherwise, withdrawing the stocks locks in losses, since the stock price is only set when you sell and buy, so right now it has no value until you cash it in. Also, moving to cash right now is also a losing proposition since the interest rates at banks are in the mid fours, meaning you get a negative rate of return on cash accounts. Government CDs are also negative return gainers, so rather than fret over immediate investment I would rather see people save some money and use some of it that they can spare to buy things before the post bailout0bearstearns-aig-stimulus payment borrowing starts to really kick up the inflationary dust storm. I feel confidernt having invested in the growing wheelbarrow market. It is the next big thing in banking.

Another day, another bit of corporate welfare.

Apparently the executives at American International Gang got a new nearly $40 billion dollar loan from the Weimar Republic, I meant the US Federal Reserve. This comes after they were reported to have blown $400k on a spa day which you and I paid for.

Here are some quotes from de Tocqueville as he toured the nascent America for you to contemplate against the backdrop of the rape of the American experiment by the suits on Wall Street:


"In towns it is impossible to prevent men from assembling, getting excited together and forming sudden passionate resolves. Towns are like great meeting houses with all the inhabitants as members. In them the people wield immense influence over their magistrates and often carry their desires into execution without intermediaries." Compare that to the closed door meethings between energy companies and the government which end up with more powerful companies and more gouged consumers.

""The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money."" No more needs to be said.

Think about those two ideas when you hear about how dangerous certain ideas are from different candidates or about how we taxpayers must give our hard earned money to billionaires. If this is a free, capitalist society, I would not want to know what a socialist one is like.

This is the face of America's downfall.
(Former AIG CEO Martin Sullivan)

Congress just gave you a pay cut

Today's bailout means that everyone in this nation just took a pay cut thanks to the inflation which will follow the bailout. When more money is printed to cover debts, inflation occurs because the scarcity of money decreases. I was physically ill listening to Nancy Pelosi cackling at the press conference, like a school girl who just got dad's credit card. I need to sleep and dream of a fiscally conservative country, since I won't be waking up in one.